The Internal Revenue Service (IRS) of the United States has sent out half a million payments earlier this year in connection to the stimulus check that will be given to Americans under the American Rescue Plan that the Biden administration has signed into law in March 2021.
Why Did the IRS Send Out Waves of Unemployment Tax Refunds?
According to BGR, the IRS needs to send out waves of unemployment tax refunds because of the law’s provision in which it excluded the first $10,200 in unemployment compensation that people got in 2020 from being taxed.
Typically, unemployment income is taxed just like any other kind of income. But given the special circumstances last year, wherein millions have lost their jobs due to the pandemic, the government has let people keep more of the jobless income that helped them get by.
IRS announced that the recent wave of unemployment tax refunds is the latest batch that will be sent out to 430,000 taxpayers totaling over $510 million. They noted that Americans have filed their taxes this year before the law was passed in March, which prompted the IRS to begin its review of tax returns, and is now looking for those who overpaid.
They also said that this will be the last batch of corrections this year as they have no plans of sending another at the end of the year.
How to Know If You’re Eligible for the Unemployment Tax Refunds
The IRS has already identified over 16 million taxpayers eligible for the unemployment adjustment but they pointed out that not all of them will be eligible for an unemployment tax refund.
Some will be able to receive the overpayment but overpayment of others will be applied to taxes due or to other debts. Taxpayers eligible for the unemployment tax refund will receive letters from the IRS within 30 days of adjustment to inform them of the adjustment and the amount.