Manuel DaRosa, CPA
Accounting and Tax firm with offices in Taunton, Falmouth and Mansfield, MA
NEWSLETTERS

You might not realize the IRS still owes you a $1,600 stimulus check – here’s how to find out

September 15th, 2021 at 12:52 PM

By Andy Meek

IRS unemployment refund

One of the many tasks the IRS is busy with involves sending out a new kind of check to taxpayers. This stems from the $1.9 trillion stimulus law that passed in March. That’s in addition to other payments, such as a $1,400 stimulus check and the monthly child tax credit payments — the third of which will go out tomorrow, on September 15. Meanwhile, the issuance of IRS unemployment refund checks is ongoing, with an average of $1,600 being sent out to affected taxpayers.

Here’s what’s going on, who’s getting these checks, and why.

IRS unemployment refund coming soon

What we’re talking about here impacts only a subset of taxpayers who were on unemployment for at least a week in 2020. Specifically, any of those people on unemployment in 2020 who filed their federal taxes early this year — before the passage of the stimulus law in March — are likely affected by this news.

What the stimulus law did is exclude up to $10,200 in 2020 unemployment compensation from the calculation of taxable income. According to the tax agency, the exclusion applied to individuals and married couples. Specifically, those whose modified adjusted gross income was less than $150,000.

The IRS has spent the past several months, in the wake of the stimulus law, automatically re-calculating taxpayer filings. Where appropriate, it sends out an unemployment refund. The $1,600 average noted above means that some people get more. While, of course, some people get less — and others get nothing at all after the recalculation.

Additional facts to know

Through the end of July, there had been more than 8.7 million IRS unemployment refund payments sent out. Those totaled more than $10 billion, and the effort is ongoing.

“The IRS effort (is) focused on minimizing burden on taxpayers so that most people won’t have to take any additional action to receive the refund,” the agency said in a recent news release. “The IRS review means most taxpayers affected by this change will not have to file an amended return because IRS employees have reviewed and adjusted their tax returns for them. For taxpayers who overpaid, the IRS will either refund the overpayment or apply it to other outstanding taxes or other federal or state debts owed.”

Again, taxpayers don’t have to take any action on their part to receive one of the IRS unemployment refund payments. The IRS re-calculates everything on its end. And it sends out checks when appropriate.

The tax agency is completing all this, by the way, at the same time it’s busy with other important tasks. Such as preparing to send out more rounds of child tax credit payments. Check #3, for example, is set to go out on September 15. After that, there will be three more child tax credit distributions — on October 15, November 15, and December 15.

Tax Alerts
Tax Briefing(s)

WASHINGTON — The Internal Revenue Service today announced it is providing transition relief to certain employers claiming the Work Opportunity Tax Credit (WOTC). The WOTC is a federal income tax credit available to employers that hire certified members of certain groups specified in the Internal Revenue Code who face significant barriers to employment, including Designated Community Residents or Qualified Summer Youth Employees.


The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2021 and the lease inclusion amounts for business vehicles first leased in 2021.


The IRS has issued guidance for employers claiming the employee retention credit under Code Sec. 3134, enacted by section 9651 of the American Rescue Plan Act of 2021 (ARP), P.L. 117-2, which provides a credit for wages paid after June 30, 2021, and before January 1, 2022. The guidance amplifies previous notices which addressed the employee retention credit under section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136, as amended by sections 206 and 207 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, P.L. 116-260.


The Treasury and IRS have provided an optional safe harbor allowing employers to exclude the following amounts from their gross receipts solely for determining eligibility for the employee retention credit.


The IRS issued transition relief for certain employers claiming the Work Opportunity Tax Credit (WOTC) under Code Sec. 51. This would apply for certain employees beginning work after December 31, 2020, in response to legislation permitting the designation of an Empowerment Zone under Code Sec. 1393(b) to be extended from December 31, 2020, through December 31, 2025. Specifically, section IV of this notice provides transition relief by extending the 28-day deadline for employers to request certification from a designated local agency that an individual who begins work on or after January 1, 2021, and before October 9, 2021, is a member of the Designated Community Resident targeted group or the Qualified Summer Youth Employee targeted group.


The U.S. Small Business Administration ( SBA) is launching a streamlined application portal to allow certain borrowers to apply for Paycheck Protection Program (PPP) Loan forgiveness directly through the SBA. The SBA also is explaining why it discontinued use of Loan Necessity Questionnaires for PPP borrowers.


The IRS stated that families should use the Child Tax Credit (CTC) Update Portal to confirm their eligibility for the payments. If eligible, the tool also indicates whether taxpayers are enrolled to receive their payments by direct deposit. More information can be found at https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021.


The IRS provided additional guidance on the application of the American Rescue Plan Act of 2021 (ARP) ( P.L. 117-2) relating to temporary premium assistance for Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) continuation coverage. This notice supplements Notice 2021-31, I.R.B. 2021-23, and addresses additional issues.


The foreign tax credit did not apply against the net investment income tax (NIIT). The structure of the Internal Revenue Code made the credit inapplicable to the NIIT, and tax treaties did not override that fact.


A missing or unknown federal gift tax return could constitute reasonable cause for the late filing of an estate tax return.


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