The first monthly payment of the Child Tax Credit wasn’t the only thing sent this week by the Internal Revenue Service (IRS). Also 4 million checks went out to people who had paid more taxes for unemployment benefits received last year, amid the economic blow of the covid-19 pandemic.
Direct deposits of this new tranche of these types of checks began to be made on July 14 and the physical checks will go out this Friday, the IRS said in a statement.
“For this round, the IRS identified approximately 4.6 million taxpayers who were likely to have an adjustment. Of that number, about 4 million taxpayers will receive a refund. The average refund is $ 1,265, which means that some will receive more and others less, “the federal agency explained.
This tax relief only applies to federal unemployment benefits provided last year, when according to official figures about 23 million workers had to resort to them. Many did so for the first time, as economic relief packages passed in Congress expanded these benefits to include self-employed workers.
And it has two key points: applies only up to the limit of $ 10,200 stipulated in the American Rescue Plan ($ 20,400 for married couples filing jointly) and only to taxpayers with an Adjusted Gross Income (AGI) of $ 150,000 or less in 2020.
You may need to amend your tax return
“Most taxpayers do not have to take any action … However, if as a result of this exemption from unemployment assistance, the taxpayer is now eligible for other deductions or credits not claimed on the tax return, you have to file Form 1040-X “to amend it, the IRS added.
This is important because some people may now be eligible for the Child Tax Credit, which was enhanced for this year, and the Earned Income Tax Credit. Therefore, specifically those who have children eligible for these credits and had not applied for them must submit this form to modify their return.
Individuals who are adjusted by the IRS because they overpaid unemployment benefits will receive a letter within 30 days of the correction. It will detail the amount of the adjustment and whether that change produced a refund or was used to pay any outstanding debt with the agency.