What You Should Know About Unemployment Tax Refund

Unemployment Insurance (UI) is usually considered as a taxable income. But the American Rescue Plan that was announced in March 2021 waived the federal tax on up to $10,200 for individuals or up to $20,400 for married couples filing jointly.

Since the Rescue Plan was signed into law, millions of Americans have filed their taxes, mostly without or little knowledge of the new tax break. The Internal Revenue Service (IRS) has identified people and announced that it would automatically start issuing unemployment tax returns.

The Internal Revenue Service stated that it is currently issuing unemployment tax refunds in less than 21 days. But in some cases, the process may take longer. The IRS also said that issuing refunds for tax returns that require determining Earned Income Tax Credit (EITC), and Additional Child Tax Credit (ACTC), recovery rebate credit amounts may take longer than 21 days.

Reasons For The Delay In Unemployment Tax Refund

As stated above, some refunds may take longer than 21 days. The IRS has listed the top reasons for the delay in unemployment tax. They include:

Your refund is incomplete
Your tax return has errors
Your return needs further review
Your tax refund has been affected by fraud or identity theft
You filed for the Additional Child Tax Credit or Earned Income Tax Credit
Your tax return includes Form 8379 (PDF), injured spouse allocation, which could take 14 weeks to process

When Can You Expect To Receive Your Refund?

Usually, the IRS issues tax refunds within 21 days, except for people who filed a claim for an EITC and ACTC. The date you get your unemployment tax refund also depends on how you filed your tax return.

For instance, if you are receiving your refunds through your bank account via direct deposit, then it could take an additional 5 days for your bank to put the money into your account. This means you would have to wait for up to 26 days to receive your refund (21 days for the agency to process your money + 5 days for your bank five days to post it). If you had sent your tax return by mail, it could take about 6 to 8 weeks to process and receive your tax refund.

If you haven’t received your refund within the given timeline, you can track its status online. Below, we will tell you how to track the status of your tax refund.

How To Track The Status Of Your Refund Online?

You can use IRS trackers to check the status of your unemployment tax refund. Note that you will need certain information to check the status. They include your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), your filing status (single, married, or head of household, and your refund amount (in whole dollars).

Once you gather all the information, go to “Where’s My Refund” in the IRS tool. Then enter your SSN or ITIN, your filing status, your refund amount, and then click Submit.

Note – If your entered information is correct, you will be redirected to a page that shows your tax refund status. If not, you will be asked to verify your personal information and tax data and try again.

IRS2Go App

You need not worry if you don’t have access to a computer and cannot use IRS tools to track the status. The IRS has a mobile app called IRS2Go, using which you can track your tax refund status.

What Do The Messages mean?

The IRS tools (online and mobile app) show one of three messages to explain your unemployment tax return status. The meanings of those messages are as follows:

Received: The Internal Revenue Service now has your tax return and is working to process it
Sent: Your tax refund is now on its way to your bank via direct deposit or as a paper check to your mailbox
Approved: The Internal Revenue Service has processed your return and confirmed the amount of your refund (if you are owed one)

Alternatively, you can call the IRS to check your status. Note that the agency’s live phone assistance is currently limited, so we recommend you to wait on hold for a while to talk to a representative.

Closing Thoughts

Do not worry if you haven’t received your unemployment tax refund yet. The IRS is sure to send refunds to all eligible Americans within the given time frame. However, if it has already been more than 21 days, you can contact the IRS representative at 800-829-1040 and inquire about the reason for the delay.