Some happy Americans woke up to a pleasant surprise this morning: The Internal Revenue Service (IRS) delivered money into their bank accounts.
No, it’s not a fourth stimulus check. All summer long, the IRS has been distributing additional refund payments to taxpayers who overpaid on 2020 unemployment. Although it hasn’t officially announced a date for the latest batch of these payments yet, a number of people posted on social media forums last week that their tax transcript had been updated with a date of August 18, which is today. A source familiar with the IRS’s timing confirmed that a batch of payments was due to be delivered this week.
Of course, many people who received their payments via direct deposit this morning had no idea they were coming, so don’t be surprised if you see expressions of joy on Facebook or Twitter today.
An estimated 13 million tax returns had to be adjusted after the American Rescue Plan went into effect in March, although not all of those adjustments will result in a refund. The federal law excluded up to $10,200 in 2020 unemployment compensation from taxable income, meaning many people who filed their taxes before it took effect are now owed money from the government.
In July, the IRS said it has already distributed some 8.7 million refunds relating to the unemployment adjustments, and the average refund size so far is $1,686. Expect an announcement about the latest batch of payments soon.