Still waiting on your $10,200 unemployment tax break refund? How to check the status

HOUSEHOLDS who are waiting for unemployment tax refunds can check the status of the payment.

Millions of people are getting a payout if they filed their tax returns before the big tax break in the American Rescue Plan became law.

What are the unemployment tax refunds?

The American Rescue Plan Act, which was signed on March 11, included a $10,200 tax exemption for 2020 unemployment benefits.

The exemption, which applied to federal taxes, meant that unemployment checks sent during the pandemic weren't counted as earned income.

But because the change happened after some people filed their taxes, IRS is issuing refunds for overpayments or it may use it to pay other taxes owed.

It's important to note that the $10,200 figure is the amount taxpayers can exclude from their earnings, not the amount of the refund.

The latter will vary between households, depending on overall income, your tax bracket and how much of your earnings came from the benefits.

The average refund for those who overpaid taxes on unemployment compensation was $1,265 earlier this year.

In the latest batch of refunds announced in November, however, the average was $1,189.

The unemployment benefits were given to workers who'd been laid off, as well as self-employed people for the first time.

The $10,200 exemption applied to individual taxpayers who earned less than $150,000 in modified adjusted gross income.

While married couples filing jointly could exclude up to $20,400 of unemployment benefits from their earnings.

The IRS has identified over 10million taxpayers who filed their returns before the new act became law, but not all of them are due refunds.

How to get the refund

If you are owed money and you've filed a tax return, the IRS will send you the money or use it to pay off other owed taxes automatically.

You typically don't need to file an amended return in order to get this potential refund.

Instead, the IRS will adjust the tax return you've already submitted.

However, if you haven't yet filed your tax return, you should report this reduction in unemployment income on your Form 1040.

The deadline to file your federal tax return was on May 17.

When will I get the refund?

Unemployment tax refunds started landing in bank accounts in May and ran through the summer, as the IRS processed the returns.

The first phase included the simplest returns, made by single taxpayers who didn't claim for children or any refundable tax credits.

More complicated ones took longer to process.

In mid-July, the IRS issued 4million refunds, of which those by direct deposit landed in bank accounts from July 14.

Meanwhile, households who receive the cash refund by paper check could expect this from July 16.

Another batch of payments were then sent out at the end of July, with direct deposits on July 28 and paper checks on July 30.

The IRS didn't announce payouts in August, September nor October - but on November 1, it noted another 430,000 refunds had been paid out.

These refunds were worth a collective $551million.

The IRS also said it'll issue another refund batch before the end of the year, but as of December 30, it's yet to confirm when and how many it applies to you.

It comes as Erin Collins, of the independent Taxpayer Advocate Service within the IRS, in September revealed that 13million accounts had been processed so far.

She added that there were still about 436,000 returns yet to be processed, as they were waiting in the Error Resolution System (ERS) as of September 11.

This mean they had to be manually reviewed by the IRS, after which the refund was either released or the error confirmed.

How to check the status of the payment

One way to know the status of your refund and if one has been issued is to wait for the letter that the IRS sends taxpayers whose returns are corrected.

These letters are sent out within 30 days of a correction being made and will tell you if you'll get a refund, or if the cash was used to offset debt.

Sadly, you can't track the cash in the way you can track other tax refunds.

Another way is to check your tax transcript, if you have an online account with the IRS.

This is available under "View Tax Records", then click the "Get Transcript" button and choose the federal tax option.

After this, you should select the "2020 Account Transcript" and scan the transactions section for any entries as "Refund issued".

If you don't have that, it likely means the IRS hasn't processed your return yet.

This summer, frustrated taxpayers spoke out over tax refund delays after the IRS announced the cash for unemployed Americans.

Households who've filed a tax return and are due a refund get an average of $2,900 back - we explain how to track down the cash.