Unemployment tax refund: The latest on the IRS payment schedule, tax transcripts and more

Unemployment tax refund: The latest on the IRS payment schedule, tax transcripts and more

]

Angela Lang/CNET

If you filed your taxes before the American Rescue Plan in March, you may be eligible for a bigger refund than expected. The first $10,200 of 2020 jobless benefits, or $20,400 for married couples filing jointly, was made nontaxable income. Taxpayers who filed their returns before the bill was passed could be eligible for a refund, which the IRS is supposed to issue automatically after making an adjustment – averaging at $1,686, though it depends on personal factors.

However, the IRS hasn’t disbursed any refunds for taxes overpaid on 2020 unemployment benefits in over a month – the last batch totaled 1.5 million refunds. Millions of families are still waiting on the federal refund checks and it’s unclear when the next batch of payments will be sent. While some have reported on social media that they have pending dates on their IRS tax transcripts, many other taxpayers say they haven’t received any money or updates at all. The tax agency is expected to send those refunds through the end of summer, but as of now, there’s no set date.

If you believe your refund is missing or haven’t received an update, we’ll explain how to access your tax transcript and what else we know. We’ll tell you why to look out for an IRS TREAS 310 transaction on your bank statement or an 846 code on your tax transcript. For other unemployment news, check out the latest on $300 weekly bonus payments ending soon (early September). And here’s how the child tax credit could affect your taxes in 2022. This story gets frequent updates.

10 facts about the IRS unemployment tax refunds

With the latest batch of payments, the IRS has now issued more than 8.7 million unemployment compensation refunds totaling over $10 billion. In late May, the IRS started sending refunds to taxpayers who received jobless benefits in 2020 and paid taxes on that money before the American Rescue Plan went into effect. That law waived taxes on up to $10,200 in unemployment insurance benefits for individuals earning less than $150,000 a year.

The first batch of these supplemental refunds went to those with the least complicated returns (single taxpayers with no dependents), and batches are supposed to continue throughout the summer for more complicated returns. On July 13, the IRS said it sent out 4 million more payments via direct deposit and paper check, and another 1.5 million went out starting July 28. According to an igotmyrefund.com forum and another discussion on Twitter, some taxpayers who filed as head of household or as married with dependents started receiving their IRS money in July or getting updates on their transcript with dates in August and September.

Here’s a quick recap of what we know:

The tax break is only for those who earned less than $150,000 in adjusted gross income

The $10,200 is the amount of income exclusion for single filers, not the amount of the refund. The amount of the refund will vary per person depending on overall income, tax bracket and how much earnings came from unemployment benefits.

Most taxpayers don’t need to file an amended return to claim the exemption. But if you think you’re now eligible for deductions or credits based on an adjustment, check the recent IRS release for the list of who should file an amended return.

If the IRS determines you are owed a refund on the unemployment tax break, it will automatically correct your return and send a refund without any additional action from your end.

Not everyone will receive a refund. The IRS can seize the refund to cover a past-due debt, such as unpaid federal or state taxes and child support.

Refunds started going out in May and will go out in batches through the summer as the agency evaluates tax returns. More complicated returns could take longer to process.

The IRS is doing the recalculations in phases, starting with single filers who are eligible for the up-to-$10,200 tax break. It will then adjust returns for those taxpayers who are married and filing jointly, who are eligible for the up-to-$20,400 tax break.

Refunds will go out as a direct deposit if you provided bank account information on your 2020 tax return. A direct deposit amount will likely show up as IRS TREAS 310 TAX REF . Otherwise, the refund will be mailed as a paper check to whatever address the IRS has on hand.

. Otherwise, the refund will be mailed as a paper check to whatever address the IRS has on hand. The IRS will send you a notice explaining the corrections within 30 days of when a correction is made.

Some states, but not all, are adopting the unemployment exemption for 2020 state income tax returns.

Now playing: Watch this: Your tax questions answered in 3 minutes

Check your IRS tax transcript for clues about your refund

The IRS says eligible individuals should’ve received Form 1099-G from their state unemployment agency showing in Box 1 the total unemployment compensation paid in 2020. (If you didn’t, you should request one online.) Some states may issue separate forms depending on the jobless benefits – for example, if you received federal pandemic unemployment assistance, or PUA.

One way to know if a refund has been issued is to wait for the letter that the IRS is sending taxpayers whose returns are corrected. Those letters, issued within 30 days of the adjustment, will tell you if it resulted in a refund or if it was used to offset debt. The IRS says not to call the agency.

You can try the IRS online tracker applications, aka the Where’s My Refund tool and the Amended Return Status tool, but they may not provide information on the status of your unemployment tax refund.

An immediate way to see if the IRS processed your refund (and for how much) is by viewing your tax records online. You can also request a copy of your transcript by mail or through the IRS’ automated phone service by calling 1-800-908-9946.

Here’s how to check your tax transcript online:

1. Visit IRS.gov and log in to your account. If you haven’t opened an account with the IRS, this will take some time as you’ll have to take multiple steps to confirm your identity.

2. Once logged in to your account, you’ll see the Account Home page. Click View Tax Records.

3. On the next page, click the Get Transcript button.

4. Here you’ll see a drop-down menu asking the reason you need a transcript. Select Federal Tax and leave the Customer File Number field empty. Click the Go button.

5. The following page will show a Return Transcript, Records of Account Transcript, Account Transcript and Wage & Income Transcript for the last four years. You’ll want the 2020 Account Transcript.

6. This will open a PDF of your transcript: Focus on the Transactions section. What you’re looking for is an entry listed as Refund issued, and it should have a date in late May or June.

If you don’t have that, it likely means the IRS hasn’t gotten to your return yet.

Sarah Tew/CNET

IRS tax transcript codes explained: 971, 846 and 776

Some taxpayers who’ve accessed their transcripts report seeing different tax codes, including 971 (when a notice was issued), 846 (the date and amount of a refund) and 776 (the amount of additional interest owed by the IRS). Others are seeing code 290 along with “Additional Tax Assessed” and a $0.00 amount. Since these codes could be issued in a variety of instances, including for stimulus checks and other tax refunds or adjustments, it’s best to consult the IRS or a tax professional about your personalized transcript.

Steps to take if you’re still waiting on your refund

It’s best to locate your tax transcript or try to track your refund using the Where’s My Refund tool (mentioned above). The IRS says that you can expect a delay if you mailed a paper tax return or had to respond to the IRS about your electronically filed tax return. The IRS makes it clear not to file a second return: You should call if it’s been more than three weeks since your last update.

Keep in mind that the IRS has limited live assistance because the agency is juggling the tax return backlog, delayed stimulus checks and child tax credit payments. Even though the chances of speaking with someone are slim, you can still call. Here’s the best number to call: 1-800-829-1040.

What we don’t know about IRS unemployment tax refunds

The IRS has only provided limited information on its website about taxes and unemployment compensation. We’re still unclear on the future timeline for payments during the coming months (they’re a bit sporadic), which banks get direct deposits first or who to contact at the IRS if there’s a problem with your tax break refund.

Also, since some states fully tax unemployment benefits and others don’t, you might have to do some digging to see if the unemployment tax break will apply to your state income taxes. This chart by the tax preparation service H&R Block could give some clues, along with this state-by-state guide by Kiplinger.

Here’s how to track your tax return status and refund online and what we know about contacting the IRS for stimulus check problems. For more on stimulus payments and relief aid, here is information about the child tax credit for up to $3,600 per child and details on who qualifies.

There’s no fourth stimulus check from the IRS – here’s how you might get one anyway

]

Some people who’ve been wanting to know whether we’ll be getting more stimulus money anytime soon — in the form of a fourth relief check — have arguably been looking for that financial boost in the wrong place.

The federal government is bogged down with a number of catastrophes and politically thorny legislative priorities at the moment. The Biden administration, for example, is trying to call on every drop of political capital it can to push an infrastructure bill over the finish line. Meanwhile, unrelated crises in Afghanistan as well as damage stemming from Hurricane Ida are demanding immediate attention. All of which is to say, finding enough votes in Congress to pass some sort of new stimulus legislation that funds an all-new round of checks anytime soon seems like a mountain that no one has the stomach to climb right now.

Today’s Top Deal

AirPods Pro just hit the lowest price of the month at Amazon! List Price: $249.00 Price: $189.98 You Save: $59.02 (24%) Buy Now Available from Amazon, BGR may receive a commission

Available from Amazon BGR may receive a commission

More stimulus money from states

That’s not to say, though, that there’s not a base of support for this among ordinary Americans. Indeed, a Change.org petition calling for $2,000 recurring stimulus checks for the duration of the pandemic is now up to almost 2.9 million signatures. The thing is, though, just because no new checks will be coming from the federal government anytime soon, that doesn’t mean no new checks are coming at all, from anywhere.

Individual states, themselves, have taken up the gauntlet here. And have begun sending out stimulus checks of their own. Of different amounts, at different times, and to different recipients and demographics.

Here are a few examples.

California

New stimulus checks started going out to California residents on Friday, the result largely of a state budget surplus. The new payments will range from $500 to $1,100, depending on factors including whether the recipients have children. And this new stimulus money is going out automatically. To people who make $75,000 or less and who filed 2020 tax returns.

Texas

Some school districts in Texas are paying employees retention bonuses (which, in the Dallas suburb of Irving, are as much as $2,000). This comes as some school districts around the country have been tapping federal stimulus money to use as a reward for teachers.

New Mexico

A second round of checks for the neediest residents of New Mexico is coming in a “couple of months.”

That’s according to a recent announcement from state officials. And it follows more than 4,000 households in the state getting up to $750 in emergency stimulus aid.

Other states giving out stimulus money

States including Tennessee and Florida have also been pursuing similar efforts here. In the former, state lawmakers approved a 2% raise for teachers statewide then scrapped that in favor of a one-time, $1,000 payment for full-time teachers. $500 is going to part-time educators. And those checks are expected to go out later this year.

Florida, likewise, has been giving $1,000 stimulus checks to teachers. The state is also paying first responders including law enforcement officers and EMTs, among others, up to $1,000. Those payments were intended as a recognition of sorts for their work during the COVID-19 crisis.

Arizona will give refunds for taxes on unemployment benefits, but you’ll have to work for it

]

The Arizona Department of Revenue will issue refunds to state residents for certain unemployment benefits received in 2020, the department announced.

But if you’re eligible and want to claim this money, you will need to make the calculations yourself — and file an amended return on paper. The payoff could amount to hundreds of dollars.

Getting the money from the state is different from how the Internal Revenue Service is handling similar refunds at the federal level. The IRS is calculating refunds automatically for eligible individuals — people who received up to $10,200 in jobless benefits with modified adjusted gross income below $150,000.

Here are answers to key questions on this topic:

What’s involved?

Unemployment benefits normally are taxable to recipients, but Congress relaxed the rule retroactively for 2020. On March 11, 2021, the federal government enacted the American Rescue Plan, allowing individuals to exclude up to $10,200 in jobless benefits from federal income tax. Arizona later conformed state law to match that, so up to $10,200 of jobless benefits can be excluded from Arizona tax.

Who’s affected?

Arizonans who received unemployment benefits during 2020 and filed their 2020 state return before March 11 of this year will need to amend their return to receive a refund of the tax they overpaid for unemployment benefits.

By contrast, those who received jobless benefits in 2020 and filed their state tax return after March 11 “most likely already received the benefit of the unemployment exclusion and should not file an Arizona amended return,” the department said.

The department didn’t provide an estimate of how many people might be eligible for this refund. However, the department is advising that all Arizonans who received automatic federal tax refunds of jobless benefits from the IRS also should amend their 2020 Arizona tax returns.

Will Arizona calculate tax refunds?

No. Unlike the automatic refunds issued by the IRS, Arizona is requiring taxpayers to file an amended state return using Arizona Form 140X.

Can returns be filed electronically?

No. Amended Arizona returns must be filed on paper.

What about the timing?

Arizonans should file amended state returns for a refund only after the IRS first adjusts their 2020 federal returns automatically. Taxpayers here will have four years after the return’s original due date, which was the unusual deadline of May 17 of last year, to file the amended return. The department didn’t estimate how long it will take to process amended returns, though paper returns generally take longer.

What information is needed?

To file an amended Arizona return, taxpayers will need a federal transcript of their 2020 income taxes after the IRS makes the adjustment for the unemployment refund. Taxpayers may request this transcript at: https://www.irs.gov/individuals/get-transcript.

How are amended returns filed?

Simplified instructions for Arizona Form 140X can be seen at: https://azdor.gov/sites/default/files/media/FORMS_INDIVIDUAL_2020_140X-UI-Notice.pdf

Part-year residents and nonresidents will need to refer to the full instructions for Arizona Form 140X at: https://azdor.gov/forms/individual/individual-amended-return-form

Are amended returns worth the effort?

Because tax rates are much lower in Arizona than at the federal level, it remains to be seen if people eligible for modest refunds will bother to amend their returns.

“Most Arizonans who received unemployment were probably in the 2.59% (state) tax bracket,” said Bob Kamman, a Phoenix tax-return preparer. “If they reported the maximum exclusion amount of $10,200, their overpayment could have been as much as $264, or $528 on a joint return; many would want to claim those amounts.”

But others who received much less in jobless benefits might not bother, especially if they must pay a tax preparer an additional fee to file an amended return.

Nevertheless, as noted, the department is advising everyone affected by this to file an amended Arizona return.

Is the IRS still issuing jobless refunds?

Yes. As of July 28, the IRS had sent out more than 8.7 million unemployment-compensation refunds nationally totaling more than $10 billion, averaging roughly $1,150 per refund. The IRS said it expects to continue the process throughout the summer. The IRS has moved from processing simpler returns to more complex ones.

Most eligible taxpayers, as noted, don’t need to take any action, including filing amended returns, to receive the federal refund.

Reach the reporter at russ.wiles@arizonarepublic.com.

Support local journalism. Subscribe to azcentral.com today.