Stimulus Update: IRS Announces Average Payments of $1,232 Sent to Millions. Here's Who Is Getting Them

Are you getting some of the $14.8 billion the IRS is sending out?

The American Rescue Plan Act provided $1,400 stimulus checks to most eligible adults and dependents. But it did much more than that. In fact, some provisions of the American Rescue Plan Act are continuing to pay off for taxpayers even today.

On Friday Jan. 6, 2023, the IRS announced that it would be sending around 12 million tax refunds to Americans. These payments will go to individuals who are eligible to get extra money back due to the American Rescue Plan Act. These refunds total around $14.8 billion, and the average amount eligible individuals will receive is $1,232.

Here's why the IRS is distributing this money -- along with some details about who may be eligible for a payment in their bank account.

Why is the IRS sending out more money?

When the American Rescue Plan Act was signed into law by President Joe Biden in March of 2021, one of the key provisions of the COVID-19 relief bill involved excluding some unemployment benefits from taxation.

Specifically, up to $10,200 of unemployment benefits paid out in 2020 would be excluded from taxable income for each spouse if a couple filed their taxes as married filing jointly. This exclusion was applied for those with individuals under $150,000 (with this income limit applied regardless of tax filing status).

Many people had already submitted tax returns before the American Rescue Plan Act was passed. As a result, they had already declared this income and paid taxes on it. The IRS opted to review tax forms submitted prior to the passage of the American Rescue Plan Act to determine who had been affected by this law change.

On Jan. 6, 2023, the IRS indicated it had conducted its review and corrected 14 million returns -- which is now resulting in refunds totaling $14.8 billion being sent to 12 million people.

Who is eligible for this money?

Anyone who paid taxes on all of their unemployment compensation earned in 2020 could potentially be entitled to money back from the IRS after this review. The IRS also indicated it made corrections to tax returns for other issues relating to the Earned Income Tax Credit, other COVID-19 stimulus checks, or the American Opportunity Tax Credit.

The IRS found most of these issues and is processing refunds automatically, but it also said in its news release that taxpayers entitled to the funds who didn't have their returns corrected will need to file an amended 2020 return to get their money. This can be done with online filing software and should be done ASAP to avoid leaving funds on the table.