IRS to refund 7.3 million who got unemployment checks. Could you get a $10,000 tax break? – CNET

If you received unemployment benefits in 2020 and already paid your taxes, the IRS could automatically refund your money. The American Rescue Plan Act from March includes a $10,200 tax break, which means that unemployment checks sent during the pandemic do not count as earned income for the year — therefore you can’t be taxed on it. If, however, you paid taxes on the money before the unemployment tax break went into effect, the IRS said it will automatically refund that money to eligible people. 

The IRS will begin sending the first refunds in May to roughly 7.3 million people, according to a report from the US Department of the Treasury. Refunds will continue through the summer, as the IRS processes tax returns. In addition to this unemployment tax break, the March stimulus bill also extends the weekly bonus $300 unemployment payments, authorizes a third stimulus check (what to know about “plus-up” payments) and boosts the child tax credit for up to $3,600 per kid.

Twenty-three million Americans filed for unemployment last year, according to the Bureau of Labor Statistics. Under Pandemic Unemployment Assistance, this included people who were laid off as well as gig workers, contractors and self-employed people who don’t normally qualify for unemployment insurance. We’ll explain the unemployment tax refund and the details we’re still waiting to learn. Here’s how to see if the IRS owes you extra tax refund money and how to get a $50 discount on your internet bill. This story has been updated with new information.

IRS unemployment tax refund: three main things to know

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Unemployment tax refund details we’re waiting to learn

“This new clarification from the IRS is good news for the millions of taxpayers impacted, but may still be confusing,” said Mark Steber, chief tax officer for Jackson Hewitt. “Some taxpayers may have questions as to the timing of any payment and whether it will come in a check or other form.” 

Steber also suggested checking in with a tax professional once you receive your automatic refund to make sure the IRS sent the right amount.

For more details, here are 7 ways to get money back on your 2020 tax return, everything about the child tax credit for up to $3,600 per child and what to know about the May 17 tax deadline.

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