The IRS is sending the fourth round of refunds related to the mid-tax-season change that made much of the unemployment received by tax payers not taxable after they had already filed their tax returns. These refunds effect the 13 million taxpayers who paid taxes on unemployment benefits. Payments are being made by direct deposit, for taxpayers that had their refund direct deposited, and by paper checks mailed to those for who the IRS does not have direct deposit information.
If you don’t get your refund in this batch, be patient as this will not be the last batch of these refunds the IRS has to process.
What’s taking so long? It’s not just unemployment compensation tax refunds that are going out. The IRS is still sending out: regular 2020 tax refunds, third round stimulus payments, plus-up stimulus payments for those who got shorted, as well as monthly advanced payments of the 2021 child tax credit. As of July 24, 2021, the IRS had 14.7 million unprocessed individual returns, according to today’s operations update. As far as the unemployment refunds, the IRS says it started with the simplest tax returns and is now reviewing more complex returns.
In most, but not all cases, taxpayers don’t have to do anything to get any additional unemployment refund dollars or other credits they’re due. That includes the Recovery Rebate Credit (that’s a balance of 2020 stimulus payments not received in advance), the Earned Income Credit if no dependents, and the Advance Premium Tax Credit (the health insurance subsidy). Essentially, the IRS says will automatically amend your return and issue a refund.
If you have questions or concerns consult your tax advisor, but remember the IRS is not providing answers and some of this will take time, it turns out lots of time, to shake out.