The Internal Revenue Service has set Friday, July 10 as the final deadline for taxpayers to claim a pandemic-era tax refund dating back to COVID-19 relief measures. Those who miss the cutoff become permanently ineligible for the money.
The refund stems from tax provisions enacted during the coronavirus emergency. Eligible taxpayers include those who received unemployment benefits in 2020 and claimed them as income on their tax returns. The American Rescue Plan allowed workers to exclude up to $10,200 of unemployment compensation from taxable income, but only for those who filed amended returns or claimed the benefit correctly on original filings.
Workers who already received refunds for this exclusion need not take further action. However, those who paid taxes on unemployment benefits without knowing about the exclusion window must file amended returns before Friday to recover overpaid taxes.
Claiming the refund requires filing Form 1040-X, an amended return, with the IRS. Taxpayers should include documentation showing they received unemployment in 2020. The IRS processes amended returns slower than standard filings, typically taking 16 weeks or longer for refunds.
Self-employed workers and gig economy participants who received pandemic unemployment assistance, also known as PUA, may also qualify if they reported these payments as income. The relief applied only to 2020 tax year unemployment benefits, not benefits received in subsequent years.
Tax professionals and advocates have stressed the importance of acting before Friday. Low-income workers and those unfamiliar with tax filing rules represent the largest group likely to miss this deadline. The IRS has not announced plans for additional filing windows after July 10.
Taxpayers unsure whether they qualify can consult the IRS website or work with tax preparers to determine eligibility and file amended returns before the deadline expires.