IR-2021-159, July 28, 2021
WASHINGTON — The Internal Revenue Service reported today that another 1.5 million taxpayers will receive refunds averaging more than $1,600 as it continues to adjust unemployment compensation from previously filed income tax returns.
The American Rescue Plan Act of 2021, which became law in March, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
Refunds by direct deposit will begin July 28 and refunds by paper check will begin July 30. This is the fourth round of refunds related to the unemployment compensation exclusion provision.
Since May, the IRS has issued over 8.7 million unemployment compensation refunds totaling over $10 billion. The IRS will continue reviewing and adjusting tax returns in this category this summer.
The IRS effort focused on minimizing burden on taxpayers so that most people won't have to take any additional action to receive the refund. The IRS review means most taxpayers affected by this change will not have to file an amended return because IRS employees have reviewed and adjusted their tax returns for them. For taxpayers who overpaid, the IRS will either refund the overpayment or apply it to other outstanding taxes or other federal or state debts owed.
For this round, the IRS identified approximately 1.7 million taxpayers due an adjustment. Of that number, approximately 1.5 million taxpayers are expected to receive a refund. The refund average is $1,686.
The IRS started with the simplest tax returns and is now reviewing more complex returns. The average refund amount is higher for this round because the IRS included an adjustment to the Advance Premium Tax Credit (APTC).
Most taxpayers need not take any action and there is no need to call the IRS. However, if, because 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.
Taxpayers should file an amended return if they:
Taxpayers do not need to file an amended return if they:
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.