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  1. Taxes
  2. Tax Refund

The IRS Is Sending Extra Tax Refunds to 4 Million People This Week

By: Julia Glum
Julia Glum, expert in the IRS, taxes, credit scores, saving, colleges, mobile payment apps, and Managing Editor at Money
Julia Glum
Managing Editor | Joined February 2018
A graduate of the University of Florida, Julia has more than six years of experience in personal finance journalism. In addition to overseeing news and newsletters, she leads Money’s tax coverage, which includes extensive reporting on tax credits, policy changes and the IRS.
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Published: Jul 13, 2021 7:47 p.m. EDT 3 min read
An open envelop with the word Refund containing a United States Treasury Check
Money; Getty Images

Roughly 4 million Americans are set to receive another tax refund this week. No, the IRS isn't randomly feeling generous — it's due to a late-stage policy change involving unemployment.

What happened? This year's tax season officially started on Feb. 12. Almost exactly a month later, President Joe Biden signed the American Rescue Plan Act, which allowed individual and joint filers who earned $150,000 or less to exclude up to $10,200 per person in unemployment compensation from their 2020 taxable income. But a bunch of diligent people had already filed their taxes, essentially meaning they overpaid.

Instead of making everyone affected file amended returns, the IRS vowed to review people's Forms 1040 (and 1040SR) and determine who was owed what. Now the agency is making good on the promise. This is the third round of tax refunds it's issued in connection with the unemployment compensation change since May — and more are coming.

In some cases, people who paid too much will see the excess money applied to outstanding taxes and government debts. In most cases, they're getting a refund. The average refund this time around is $1,265, according to a Tuesday news release.

The IRS will send out the extra refunds via direct deposit starting on Wednesday, July 14, using the bank account it has on file from your 2020 taxes. If you didn't opt for direct deposit, you can expect to receive a paper check. Those will be mailed out Friday.

(FYI: These refunds will coincide with the first round of advance child tax credit payments, so your bank account may see a significant boost by the end of the week.)

If the IRS believes you're eligible for a special tax refund, you don't have to do anything. The agency will, however, typically send you a letter within 30 days with information about the adjustment. You should file this letter away. You may also want to look into whether the American Rescue Plan unemployment tax tweak made you newly eligible for certain credits and deductions.

More from Money:

How to Track Your Tax Refund and Any Stimulus Checks You're Owed From 2020

Child Tax Credit Eligibility: Who Gets IRS Payments This Week?

The Simple Reason Your Tax Refund Is Lower Than Expected