BATON ROUGE, La. (BRPROUD) — The Internal Revenue Service (IRS) announced Tuesday that it will issue another round of refunds this week to nearly four million Americans who overpaid their taxes on unemployment compensation received in 2020.
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 14 and refunds by paper check will begin July 16.
The IRS identified approximately 4.6 million taxpayers who may be due an adjustment. For those who overpaid, the IRS will either refund the overpayment or apply it to other outstanding taxes, federal or state debts owed.
The average refund is $1,265.
The IRS previously issued refunds related to unemployment compensation exclusion in May and June, and it will continue to issue refunds throughout the summer.
Taxpayers generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made and the amount of the adjustment.