At the beginning of June, it was announced that 2.8 million refunds had been sent out to taxpayers who had, erroneously or otherwise, paid taxes on the unemployment programs they were given by the government during the COVID-19 pandemic.

The main such program, the $300 per week federal unemployment program, has been the source of considerable controversy, and half the states in the Union have voluntarily ended it early on the basis that it discourages employment. However, in many states, the payments were already received and sent, and since they were taxed before March 2021, Americans who paid their taxes early paid too much and are owed refunds.

Why? The American Rescue Plan Act – President Biden’s signature COVID-19 relief bill, passed in March 2021 – retroactively provides for the first $10,200 in unemployment payments (twice this amount, or $20,400, for married couples) to be considered non-taxable income. This translates to thirty-four weeks of continuous unemployment; in other words, if you are still on the payments, and you have been since roughly October 2020, you will probably not need to pay any taxes on the payments. Crucially, the IRS has stated that, even if a person paid his or her taxes before the law went into effect in March 2021, the agency will retroactively reimburse them if they paid taxes on the income already, meaning that the IRS owes millions of Americans who inadvertently overpaid are owed a check.

There is a major qualification that must be met first; to receive the tax credit, the person in question needs to make less than $150,000 per year – a likely scenario considering the conditions of the unemployment benefits themselves. If this bar is reached, however, the IRS assures that a check will be sent, much like the “plus-up” payments sent to previous stimulus recipients who were not given all their qualifying benefits.

However, considering the IRS’s already ruinous backlog and its share of other matters to take care of – including stimulus and “plus-up” payments, as well as regular tax returns and the upcoming Child Tax Credit checks – it should not come as a significant surprise that unemployment tax refunds might take some time to arrive. Finally, the IRS can seize refunds to cover debts, such as past-due bills in areas such as unpaid taxes or child support.

Trevor Filseth is a current and foreign affairs writer for The National Interest.

Image: Reuters