IRS to send out another 1.5 million ‘surprise’ tax refunds this week

Updated: Jul 31, 2021 / 08:24 AM EDT

Americans refused, paid back or failed to cash 1,315,717 checks of the first-round $1,200 stimulus checks issued under President Trump’s administration at the beginning of the COVID-19 pandemic, according to Internal Revenue Service records. (Getty Images)

WASHINGTON (NEXSTAR) — If you received unemployment compensation last year, you might be in for a surprise this week.

The Internal Revenue Service announced on Wednesday another 1.5 million taxpayers will receive refunds averaging more than $1,600 as part of unemployment compensation adjustments made to previously filed income tax returns.

Refunds made by direct deposit started on July 28 and paper check refunds will begin on Friday. This is the fourth round of refunds related to the unemployment compensation exclusion provision.

Since May, the IRS has issued over 8 million unemployment compensation refunds totaling over $10 billion. Most eligible taxpayers will not need to take any action to receive their refund.

“To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify those people who are due an adjustment,” the IRS said in a statement earlier this month. “For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed.”

Earlier this year, the IRS said “over 10 million” people submitted their 2020 returns before the March 11 signing of the American Rescue Plan Act, under which the first $10,200 of unemployment compensation received in 2020 is excluded from taxable income.

“The IRS will send taxpayers a notice explaining the corrections, which they should expect within thirty days of when the correction is made,” the news release states. “Taxpayers should keep any notices they receive for their records.”

The IRS noted that any single or married individual with a modified adjusted gross income of over $150,000 is not eligible for the tax exemption. The agency also said that “not all adjustments will result in a refund.”

In some cases, taxpayers may need to file an amended return if they are now eligible for deductions or credits not originally claimed on their return.