The IRS Just Sent $510 Million to 430,000 Americans Unemployed During the Pandemic. Here's Who's Getting the Money

Could more money be coming your way?

On November 1, 2021, the IRS sent out more than $510 million in refunds to around 430,000 Americans. This is money that went to workers who were unemployed during the course of the coronavirus pandemic.

These 430,000 refunds that were recently issued are the latest in a long series of payments the IRS has been distributing to workers who were unemployed last year. Over $14.4 billion in total has been sent out in more than 11.7 million refunds over the course of this year. More money may be forthcoming as the IRS continues to process 2020 tax returns.

Let's take a look at who received the latest payments -- and who may be entitled to get money in their bank accounts in the future.

Here's why the IRS is sending out billions

The IRS is distributing billions of dollars of refunds because millions of Americans ended up paying taxes on unemployment benefits in 2020 that weren't actually taxable. They are entitled to have this money returned.

Normally, unemployment benefits are subject to income tax. But, the American Rescue Plan Act -- the coronavirus relief legislation that passed early in the year -- excluded $10,200 in unemployment benefits from federal taxes for individuals and married couples with a modified adjusted gross income under $150,000.

The American Rescue Plan Act wasn't passed until March of 2021. By that time, many people had already filed their tax returns for the prior year. Those who filed returns before the rules changed likely paid taxes on all of the unemployment benefits that the Act exempted from those taxes. The IRS is making adjustments to tax returns and automatically correcting them so it can send out the money that people overpaid.

An estimated 16 million taxpayers may be eligible for a refund of the taxes they improperly paid on unemployment benefits, and the IRS has been slowly working through the process of sending the money to those who are owed it. This latest batch of 430,000 refunds was part of their most recent effort to return money to Americans unemployed during the pandemic.

Those who received these refunds got an average of $1,189 from the IRS. The IRS has indicated this group is likely one of the last to get money, as the agency is almost done processing all of the returns that could be affected by this issue.

The IRS is also making other adjustments

As the IRS goes through returns, it is also making adjustments to the Earned Income Tax Credit, additional Child Tax Credit, and stimulus check amounts that may have been affected by the exclusion of unemployment benefits from taxable income.

If you were unemployed in 2020 and you didn't account for the fact that $10,200 in benefits was excluded from taxable income, you should be receiving an IRS refund if you haven't already. The agency will generally send out notices within 30 days of the time the IRS makes the adjustment to your return so you should be made aware that money is on its way to you.

If this could potentially apply to your situation, watch your bank account or the mail carefully to see if you get one of the refunds from this latest batch of payments or if you are scheduled to receive one in the future after the IRS gets done processing your return.