Jobless benefits payments are usually taxable. However, in response to the economic hardship brought about by the COVID-19 pandemic, Congress decided to make a portion of unemployment benefits paid in 2020 tax-free. If you're thinking "I paid taxes on unemployment benefits, will I get a refund?" you aren't alone.
The IRS issues refunds to people who overpaid taxes. Many people look forward to a tax refund every year. Some people use their tax refunds to invest in cryptocurrencies and stocks, save for retirement, or pay student loan debt to safeguard their credit score.
If I paid taxes on unemployment benefits, will I get a refund?
Congress made up to a $10,200 in jobless benefits payment in 2020 tax-free for people earning less than $150,000 a year. People might get a refund if they filed their returns with the IRS before Congress passed the law exempting a portion of unemployment payments from tax.
The IRS started issuing jobless tax refunds in May. As of July, the IRS had refunded more than $10 billion to some 9 million taxpayers. The IRS is expected to continue releasing the refunds throughout 2021.
When will I get my jobless tax refund?
The IRS normally releases tax refunds about 21 days after you file the returns. However, many people have experienced refund delays due to a number of reasons. First, the IRS is working through a huge backlog.
For the unemployment refund processing, the agency took it upon itself to adjusted people’s returns. That’s taking time and leading to delays in releasing refunds. The IRS decided to process jobless tax refunds for simple returns first. Therefore, people with complicated returns might experience delays in getting their refunds.
For some people, the IRS is sending out refunds as paper checks, while for others get a direct deposit to the bank account provided. How you elect to receive your refund can also determine how long you have to wait for it. The IRS offers a tool that people can use to check the status of their refund.
How much will I get in unemployment tax refund?
The amount the IRS has sent out to people as a jobless tax refund averages more than $1,600. The size of the refund depends on several factors like income level and the number of unemployment benefits received. With the federal stimulus payment program stopped, people are counting on jobless tax refunds to pay living expenses.
If you missed the tax return deadline, you might not receive the jobless refund and you could still owe money to the IRS. The agency slaps people with penalties and interests for late tax payments and the costs can be high. Therefore, the IRS might seize your unemployment tax refund to cover outstanding tax liabilities.
Individuals can visit the IRS website or call the agency if they have questions about their taxes. They can also use the IRS tracker tool to determine the status of their refund.