Tax Refund

How many Americans will receive the $1600 Tax refund payment?

Another lot of refunds have been returned to taxpayers who received unemployment aid last year due to changing tax laws.

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How many Americans will receive the $1600 Tax refund payment?
Dado Ruvic Reuters

The IRS reported that another 1.5 million taxpayers will receive refunds averaging more than $1,600 as it continues to adjust unemployment compensation from previously filed income tax returns.

This is the fourth repayment after Congress changed tax laws relating to unemployment aid. Usually unemployment benefits are subject to federal tax, but President Biden's American Rescue Plan set a limit of $10,200 before any tax is paid. Any unemployment aid under this value would not be subject to any tax and those who overpaid are being retroactively refunded.

For this round, the IRS identified approximately 1.5 million taxpayers who are now expected to receive a refund. The refund average is $1,686.

The refunds come as the extra federal unemployment benefits are due to end in September. The IRS has had a historic number of tax returns to account. Currently, the backlog stands at a staggering 35 million tax returns to manually process.

How do I receive my refund?

Most taxpayers do not need to do anything to receive the refund.

However, the IRS notes that taxpayers should file Form 1040-X if they are now eligible for new reductions due to the change in tax law.

Taxpayers should file an amended return if they:

  • did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;
  • did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;
  • are now eligible for any other credits and/or deductions not mentioned below. Make sure to include any required forms or schedules.

Taxpayers should not file an amended return if they:

  •  already filed a tax return and did not claim the unemployment exclusion; the IRS will determine the correct taxable amount of unemployment compensation and tax;
  • have an adjustment, because of the exclusion, that will result in an increase in any non-refundable or refundable credits reported on the original return;
  • did not claim the following credits on their tax return but are now eligible when the unemployment exclusion is applied: Recovery Rebate Credit, Earned Income Credit with no qualifying dependents or the Advance Premium Tax Credit. The IRS will calculate the credit and include it in any overpayment;
  • filed a married filing joint return, live in a community property state, and entered a smaller exclusion amount than entitled on Schedule 1, line 8.

The IRS says those who receive a refund will receive a letter within 30 days explaining what kind of adjustment was made to their tax returns and why they are able to receive some of it back.