The IRS will begin issuing refunds on 2020 unemployment insurance taxes to some taxpayers this week, the agency announced Friday.
The refunds will be sent on a rolling basis. Single filers with the “simplest” tax returns will receive their refunds first, including those without children and those who did not claim any refundable tax credits, the agency says.
Unemployment insurance benefits typically count as taxable income. However, the American Rescue Plan (ARP), signed into law by President Joe Biden in March, excluded UI benefits of up to $10,200 from taxable income for 2020.
The IRS says it has identified over 10 million people who filed their tax returns before the ARP became law and might qualify for a refund or reduced balance on their tax bill.
The second phase will adjust more complicated returns, including for married couples filing jointly. The agency expects that to take “through the end of the summer” to complete.
Who is eligible for the refund?