If You Did This in 2021, The IRS May Be Sending You More Money Soon
You could be getting a new refund via direct deposit or paper check.
For some time, the government was offering assistance to help offset the financial burdens of the COVID pandemic. But with the pandemic waning, stimulus checks have come to an end, and with most people having already received their tax refunds for 2021, it feels like any extra IRS payments have dried up. The money hasn't stopped rolling in for everyone, however. Families have just started to receive child tax credits from the agency, and now the IRS has announced a new group of people who will be receiving additional refunds to this month. Read on to find out if you might be receiving more money from the IRS soon.
If you overpaid your 2020 unemployment benefits, the IRS might be sending you a refund.
In a statement released July 13, the IRS announced that it would be issuing a new round of refunds to many taxpayers. According to the announcement, the agency is sending out refunds to nearly 4 million people who overpaid their 2020 taxes on the unemployment benefits they received last year. The American Rescue Plan Act of 2021 excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations, but this legislation was only passed in March. Some taxpayers had already filed their tax returns and overpaid before the exclusions were put in place.
These overpayment refunds may be given in a few different ways.
According to the IRS, overpayment refunds by direct deposit started on July 14. Paper check refunds will begin July 16, and the agency says it will continue to issue these refunds throughout the summer. But there is a chance you may not receive either form of payment, even if you are owed this refund. The IRS says it will either refund the overpayment for taxpayers who overpaid, or "apply it to other outstanding taxes or other federal or state debts owed."
You don't have to do anything to receive a refund if you're owed one.
The IRS says it has been reviewing the returns that were filed before the American Rescue Plan Act was enacted to both "identify those people who are due an adjustment" and to "ease the burden on taxpayers." The agency already even sent some taxpayers their overpayment refunds in May and June.
"Most taxpayers need not take any action and there is no need to call the IRS," the agency explains. "However, if, as a result of the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return."
The IRS will also send you a letter if you are eligible for this refund.
The IRS says that it will also be sending letters to taxpayers who are receiving this refund adjustment. "Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment," the agency explained. The refund average is $1,265, but you may receive more or less money with your refund, depending on how much you overpaid.