Unemployment tax refund timeline: Next round of IRS payments expected soon

Weeks ago, the IRS sent out an initial batch of 2.8 million refund checks to Americans who paid income tax on jobless benefits collected in 2020. That means some single taxpayers without dependents should’ve seen refunds late last month. Refunds are expected later in the summer for married couples and those with dependents, but what about the second round of payments scheduled for mid-June? The exact timeline is still unclear, but we can walk you through checking your tax account online.

The refund payments are part of the March American Rescue Plan, which treated the first $10,200 of unemployment benefits ($20,400 for married couples filing jointly) as nontaxable income. The IRS identified some 13 million taxpayers who filed before the law went into effect and will have their returns adjusted in order to receive a chunk of money back. The amount each person receives will vary (if you owe taxes or other debts, the refund could be applied to cover outstanding balances). 

We will update this story as the IRS releases more info. Regarding other unemployment news, 26 US states have slashed the $300 weekly bonus payments and some are offering return-to-work bonuses. If you’re a parent expecting your first child tax credit payment on July 15, calculate how much you could get for your family and three ways to find out whether you qualify, including a new IRS letter. 

9 key facts about the unemployment tax break and IRS refunds

The IRS started sending refunds to taxpayers who received jobless benefits last year and paid taxes on the money. After some frustration with delays in the rollout, many single filers began seeing deposits in their checking accounts starting May 28, with 2.8 million refunds going out the first week of June. The IRS said the next set of refunds will go out in “mid-June,” but those payments have not yet been confirmed.

Here’s what to know:

• The tax break is for those who earned less than $150,000 in adjusted gross income. 
• The $10,200 is the amount of income exclusion for single filers, not the amount of the refund. The amount of the refund will vary per person depending on overall income, tax bracket and how much earnings came from unemployment benefits.
• Not everyone will receive a refund. The IRS can seize the refund to cover a past-due debt, such as unpaid federal or state taxes and child support. 
• Refunds started going out in May and will go out in batches through the summer as the agency evaluates tax returns. More complicated returns could take longer to process.
• The IRS is doing the recalculations in two phases, starting with single filers who are eligible for the up to $10,200 tax break. It will then adjust returns for those married-filing-jointly taxpayers who are eligible for the up to $20,400 tax break.
• If the IRS determines you are owed a refund on the unemployment tax break, it will automatically correct your return and send a check or deposit the payment in your bank account.
• Refunds will go out as a direct deposit if you provided 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.
• You don’t need to file an amended return to claim the exemption. (Here’s how to track your tax return status and refund online.) Some who used tax software such as TurboTax said they have seen their refund amount change due to the unemployment refund, although they have yet to see a check. 
• The IRS will send you a notice explaining the corrections within 30 days of when a correction is made.

How to check refund status through your online tax account

The IRS says eligible individuals should’ve received Form 1099-G from their state unemployment agency showing in Box 1 the total unemployment compensation paid in 2020 (if you didn’t you should request one online). Some states may issue separate forms depending on the jobless benefits — for example, if you received federal pandemic unemployment assistance (PUA). 

One way to know if a refund has been issued is to wait for the letter that the IRS is sending taxpayers whose returns are corrected. Those letters, issued within 30 days of the adjustment, will tell you if it resulted in a refund or if it was used to offset debt. The IRS says not to call the agency. 

The IRS online applications, like the Where’s My Refund tool and the Amended Return Status tool, will not likely provide information on the status of your unemployment tax refund. The only way to see if the IRS processed your refund online (and for how much) is by viewing your tax transcript. 

Here’s how to check online:

1. Visit IRS.gov and log into your account. If you haven’t opened an account with the IRS, this will take some time as you’ll have to take multiple steps to confirm your identity.

2. Once logged into your account, you’ll see the Account Home page. Click View Tax Records.

3. On the next page, click the Get Transcript button.

4. Here you’ll see a drop-down menu asking the reason you need a transcript. Select Federal Tax and leave the Customer File Number field empty. Click the Go button.

5. The following page will show your Return Transcript, Records of Account Transcript, Account Transcript and Wage & Income Transcript for the last four years. You’ll want the 2020 Account Transcript. 

6. This will open a PDF of your transcript: Focus on the Transactions section. What you’re looking for is an entry listed as Refund issued, and it should have a date in late May or June. 

If you don’t have that, it likely means the IRS hasn’t gotten to your return yet. 

Many questions that aren’t yet answered

The IRS has only provided some information on its website about taxes and unemployment compensation. We’re still unclear of the exact timeline for payments or how to contact the IRS if there’s a problem with your tax break refund. 

Here’s what we do know about contacting the IRS for stimulus check problems. For more on stimulus payments and relief aid, here is information about the child tax credit for up to $3,600 per child and details on who qualifies.