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IRS refund status update: You might get an unemployment tax payment this week

The American Rescue Plan Act reduced the tax burden for unemployment recipients in 2020. Now, people who overpaid are receiving refunds.

IRS refund status update: You might get an unemployment tax payment this week
[Photo: Ljupco/iStock]
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If you filed your taxes early this year, and you paid on 2020 unemployment compensation, this could be your lucky week.

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The Internal Revenue Service (IRS) has identified 10 million taxpayers who could be eligible for an additional refund because they filed taxes before the American Rescue Plan Act went into effect. The law reduces the tax burden for unemployment recipients by up to $10,200, but because it wasn’t passed until March 11, many unemployment recipients who filed early paid too much.

The IRS had previously said it would automatically correct returns and issue refunds beginning in May, but it did not provide an exact date. In its latest update on Friday, the agency said payments will start to go out this week and that it will continue to disburse checks throughout the summer.

Taxpayers who are eligible to receive the payments do not have to do anything unless they are also eligible for “certain income-based tax credits not claimed on their original return.” Then, they might have to file an amended return. (The IRS uses the example of couples who are eligible for the Earned Income Tax Credit for their qualifying child.)

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The IRS says it has already begun to correct “simple” returns and will move on to more complex ones (e.g. married couples filing jointly) in the weeks ahead. The entire process is expected to be finished by the end of the summer.

You can check out the full announcement here.

About the author

Christopher Zara is a senior staff news editor for Fast Company and obsessed with media, technology, business, culture, and theater. Before coming to FastCo News, he was a deputy editor at International Business Times, a theater critic for Newsweek, and managing editor of Show Business magazine

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