If you're still in financial pain from the COVID crisis, or if you could just use a few extra dollars, you're in luck: An unexpected windfall may come your way this week.
The IRS will send out another cluster of surprise tax refunds, courtesy of the pandemic relief bill President Joe Biden signed earlier this year. A previous wave went out at the beginning of June.
At that time the tax agency distributed over 2.8 million refunds to taxpayers as automatic payments — meaning it wasn't necessary for recipients to fill out any forms or sit on hold for an hour to get their money.
An out-of-the-blue refund might provide welcome relief if you're needing more money to help with expenses or pay down debt. Here's a look at whether the week ahead might bring you cash back from the IRS.
How to get one of these tax refunds
Millions found themselves on unemployment last year as businesses closed amid the pandemic.
Here's the story behind the surprise refunds: Millions who lost their jobs last year because of the pandemic (including some who might still be looking for work) were forced to file for unemployment as businesses closed or cut back operations.
Normally, jobless benefits are taxed like any other income. But the COVID-19 rescue package Biden signed in March has made up to $10,200 in 2020 unemployment compensation tax-free for individual taxpayers. Couples filing jointly get a $20,400 exclusion.
If you collected unemployment last year and filed taxes ahead of Biden's relief law, you may have overpaid based on what you thought you owed. So, you may have a refund coming, though only if your adjusted gross income (total income minus a few deductions) was under $150,000.
Some 40 million Americans received unemployment payments in 2020, according to the Century Foundation, and the average beneficiary got $14,000. Of that, $10,200 is now tax-free — leaving only $3,800 that's taxable.
In early June, the IRS said it had identified 13 million taxpayers who were potentially eligible for the adjustment. If you've been hoping for a fourth stimulus check, one of these refunds might be the next best thing, for now.
Surprise refunds will keep coming in groups
The refunds are a result of the president's COVID relief law.
"The IRS plans to issue the next set of refunds in mid-June," the agency said on June 4 when it announced the first group. There's been no further word since then — meaning that, barring any glitches, more taxpayers are in for refund surprises this week, during what still might be considered mid-June.
The distribution of refunds will continue throughout the summer, the tax agency says.
If you qualify for money back, you’ll receive the refund as a direct deposit or — if the government doesn't have your banking information — a paper check. The funds also may be applied to any taxes or other federal debts you owe. The IRS is automatically issuing the refunds, so there’s nothing you need to do to get yours.