The Internal Revenue Service (IRS) is sending out $1,600 refund checks this week to taxpayers who took unemployment benefits last year and overpaid the taxes on them.
The IRS recently announced that it will be sending refunds to 1.5 million Americans. It made direct deposit payments beginning on July 28, and paper checks started arriving in mailboxes on July 30, CBS reported.
The average refund will be around $1.686, the IRS said, but amounts may vary. To qualify, a taxpayer must have been on unemployment benefits for at least one week in 2020.
IRS Has Sent Out Multiple Rounds of Unemployment-Related Refunds
This past spring, Congress amended U.S. tax laws to let unemployed Americans pay lower taxes on their unemployment benefits. Previously, unemployed Americans had to pay federal income taxes. The American Rescue Plan exempted unemployment benefits of up to $10,200 from the federal income tax.
As a result, the IRS has now sent out four batches of unemployment aid refunds. The previous three refunds were in May, June and early July.
The IRS says it has refunded $10 billion to 8.7 million taxpayers since those changes were passed.
Affected Taxpayers Should Get Letter About Payments
Most unemployed Americans eligible for the refund will not have to do anything to get the government money.
“The IRS review means most taxpayers affected by this change will not have to file an amended return because IRS employees have reviewed and adjusted their tax returns for them,” the IRS said in a statement.
However, some unemployed people may need to file an amended tax return (IRS Form 1040-X) to get their refund.
If they did not file a Schedule 8812 with their original return to claim the Additional Child Tax Credit, and are now eligible for it, they need to file an amended return. If they did not submit a Schedule EIC with their original return to claim the Earned Income Tax Credit, and are now eligible for it, they will similarly need to file an amended return. Finally, if they think they are now eligible for any other credits or deductions, they will need to file an amended return.
Tracking the refund should be easy, the IRS said. Most taxpayers should get letters from the IRS within 30 days of the unemployment aid adjustment. The letters will disclose the type and amount of the adjustment as it pertains to each taxpayer.