You may have heard that some people, who had received unemployment benefits because they’d lost their jobs during the pandemic, are also receiving an additional check on their bank accounts. Why is that happening? And when will it happen to you too?
If you lost your job during the pandemic, keep on reading to find out when the unemployment tax relief will be available.
What is unemployment tax relief?
We need to take a step back in time to understand what unemployment tax relief is and go to last year.
Last year, many people who lost their jobs during the pandemic applied for an unemployment benefit, and many received it.
It’s a check that was allowed by the Government to help all the people who’d lost their job overcome the difficult times and financial crisis due to the pandemic.
On those checks, however, people had to pay taxes. So, when the taxes season came and people filled out their taxes, those unemployment checks ended on the list of incomes and were subject to taxes just like any other income.
The consequence of this where that people found themselves having to return part of the money they had received from the Government… to the Government.
Well, a year later, the Government decided to take a step back: Joe Biden signed the American Rescue Plan Act, and, in that plan, it was ruled that 2020 unemployment benefits were tax-free.
As a consequence, those who have already filed and paid their taxes are receiving a refund in their bank accounts.
Also Read: Precision Tax Review
When are you receiving your refund?
Refunds are being paid in chunks, so if you haven’t received them yet, it could be next week or next month.
However, before waiting for a refund, make sure you are eligible for it. You are eligible for unemployment tax relief if:
- you became unemployed during the pandemic and received government benefits;
- you’ve filed your taxes and already paid for the taxes on your benefit;
- the benefit you’ve received and paid taxes for was federal: for the moment, only federal benefits are tax-free; States will decide independently whether to refund their citizens’ taxes.
What can you do if you haven’t received your tax relief?
Refunds are being paid in these months, so you should be patient and simply wait.
However, if you have any doubts, you can contact your accountant or anyone who helped you file your taxes and ask them if you are eligible for a refund.
If you are eligible but still haven’t received the tax relief, there isn’t much you can do but wait. there is no document to be filled, no application to be sent: all you can do is wait.
Unemployment tax reliefs are being paid now, and it shouldn’t take long for you to receive yours.
Shefali Jain is a Content Editor & Writer at National Planning Cycles.
After completing her graduation in hospitality, Shefali decided to follow her passion and started writing. Shefali has been writing for two years now and contributes to our website as a skilled editor and content writer with strong research skills. Writing product and service reviews, biographies, and book reviews are some of her key areas, among many others in which she specializes.