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May 24, 2021
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The American Rescue Plan waived federal tax on up to $10,200 of unemployment benefits per person collected in 2020 and is preparing this week to start rolling that money out.

See: More States Opt to End Enhanced Jobless Benefits Early — Is Yours One of Them?
Find: Are You Missing Out on Free Money? 80% of Americans Aren’t Taking Advantage of COVID Relief

While 40 million Americans received jobless benefits last year as part of the stimulus relief bill, according to the Century Foundation, some factors might affect you receiving the refund.

Those who have past-due debts like federal and state taxes, child support, student loans and unemployment benefits that were overpaid in error can be collected by the IRS to offset a tax return, CNBC reported. This means that if you are past-due on any of these obligations, the IRS can automatically draw on your would-be refund to correct as much of your balance as possible.

Information on new exclusions from the unemployment income tax as well as instructions for how to fill out the appropriate forms for your student loan interest deductions, taxable social security benefits and more can be found on the IRS website.

See: How to Go Back to Work And Still Keep Unemployment Benefits
Find: New Stimulus Checks Could Start Hitting Your Account Automatically

As far as other debts are concerned, third-party creditors like banks or credit card companies can garnish refunds once they hit a taxpayer’s account, according to CNBC. These debts can include overdraft charges and other unpaid fees.

This tax waiver is available on the first $10,200 of unemployment benefits paid out. Any amount paid above that will still be subject to tax. If both you and your spouse received benefits, each of you is eligible for the waiver amount individually. If you have already filed your 2020 Form 1040 or 1040-SR, it is not necessary to file an amended return, as the IRS will automatically refund money to people who reported unemployment benefits on tax returns they’ve already filed.

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This article originally appeared on GOBankingRates.com: The IRS Can Seize Your Unemployment Tax Refund for These Reasons
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