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What to Know If You’re Waiting for the IRS Unemployment Tax Refund


Those who received unemployment insurance last year should receive a tax break. But when?

Angela Lang/CNET

Two weeks ago, the IRS announced it would automatically issue tax refunds on 2020 unemployment benefits. That means if you treated your unemployment checks as income when you filed your taxes this year, the IRS will retroactively offer a tax break on the first $10,200 (or $20,400 for married couples filing jointly). Millions of Americans are slated to receive unemployment insurance tax refunds as part of new rules under the American rescue plan March signed into law.

Still, for many, those refunds have not appeared. While we know the agency is still processing tax returns and if we look at the taxes paid on the unemployment insurance, the refunds would start depositing this month and continue through the summer. The agency said the amounts will vary, meaning adjustments could result in a refund, reduced balance, or no change at all.

We explain what we do and do not know about the unemployment benefit exemption. You may also want to know that half of US states are opting out $300 Unemployment Benefit Bonus and other unemployment benefit programs as early as next month. If you are a parent, here are details about the enhanced child tax credit, how much you could get for your family and how to Upcoming IRS Child Tax Credit Portals. This story has been updated with new information.

What are the nine things you need to know about the unemployment tax refund?

The IRS claims it started sending refunds to taxpayers who received unemployment benefits as early as last year. But those still waiting for checks have posted their frustration on Reddit and Twitter at the agency’s slow rollout and lack of transparency.

Here’s what to expect:

  • The tax break is for those who made less than $150,000 adjusted gross income.
  • Refunds began the week of May 10, according to the IRS, and will continue through the summer while the agency reviews tax returns. More complicated returns may take longer to process.
  • If the IRS determines that you owe an unemployment tax refund, it will automatically send a check.
  • You do not have to submit an amended declaration to claim the exemption. (here’s how to) track your tax return status and refund online.) Some who used tax software like TurboTax said they’ve seen their refund amount change as a result of the unemployment refund, though they haven’t seen a check yet.
  • Refunds will be paid as direct deposit if you provided your bank account information on your 2020 tax return. Otherwise, the refund will be mailed as a paper check to the address the IRS has on hand.
  • The IRS performs the recalculations in two phases, starting with single filers eligible for the tax break up to $10,200. It will then adjust the returns for those married taxpayers who jointly qualify for the tax benefit of up to $20,400.
  • The IRS will send you a message explaining the corrections within 30 days of a correction being made.
  • You cannot track the progress of your refund through the IRS Get My Payment tracker, the Where is my refund tool, the Changed Return Status tool, or another IRS portal.
  • The IRS may seize the repayment to cover past-due debt, such as unpaid federal or state taxes and child support.

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What about the unemployment tax refund?

The IRS has provided information on taxes and unemployment benefits on its website. We still don’t know how to contact the IRS if there is a problem with your tax credit refund. (Here’s What We Know About Contacting the IRS for) stimulus control problems.) We’ve reached out to the IRS for clarification.

For more information, you can find information about the child discount for up to $3,600 per child and who is eligible?.

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