(CBS NEWS) — The U.S. is delivering another batch of tax refunds to Americans who received unemployment insurance benefits last year and may have overpaid taxes on them. The Internal Revenue Service announced Tuesday it will send 4 million tax refunds the week of July 14, with direct deposits landing in people’s accounts that day and the agency mailing paper checks on Friday.
The refunds are for taxpayers who collected unemployment last year and who filed their 2020 returns before mid-March, when President Joe Biden’s American Rescue Plan decreed that up to $10,200 in jobless benefits would not be taxable.
Because unemployment assistance is subject to federal income tax in most years, the tax law change meant that millions of people are due a refund. The IRS estimated as many as 13 million people may qualify for a payment. This is the third round of refunds the agency is issuing, after issuing similar payments in May and June.
The average payment will amount to $1,265, according to the IRS. That means some taxpayers will receive more and others less. But taxpayers who owe money elsewhere may not see a refund even if they’re due to receive one.
“For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed,” the agency said.
How do you qualify?
Taxpayers who may have overpaid their taxes don’t need to do anything to correct their tax refund, the IRS said. The agency said it is reviewing tax returns and sending out refunds in batches.
The IRS started with the simplest returns — those filed by single taxpayers — and will then proceed with returns filed by married couples and heads of households.
Taxpayers who qualify for for a refund and provided the IRS with bank information when they filed their returns will get the money by direct deposit; eligible people who didn’t provide bank account details will get a paper check in the mail.
Do you need to file an amended return?
Most taxpayers do not need to file any new paperwork to get their refund. However, if a taxpayer has a dependent, and if taking out the unemployment benefits from last year’s total income drops it below the cutoff for the Earned Income Tax Credit, they will need to file an amended return to claim the tax credit, the IRS said.
That doesn’t apply to single taxpayers who become eligible for the credit — the IRS will adjust their returns automatically, the agency said.
To be eligible to claim the EITC, a parent of one child can make a maximum of just over $41,000 if single or $47,000 if married. The limits increase with more children.