The IRS will distribute additional refund checks this week to approximately 1.5 million taxpayers who received unemployment benefits in 2020.

These refunds are for taxes paid on unemployment benefits received last year. Normally, unemployment benefits are fully taxable. However, the Biden administration's American Rescue Plan, passed in March 2021, provides up to $10,200 in benefits tax-free for individuals and couples earning less than $150,000 in 2020.

As a result, many people receiving unemployment benefits in 2020 will receive additional cash relief, even if it is only for a week.

According to the IRS, the average value of this refund check is $1,686; the IRS has provided unemployment benefit tax refunds to 8.7 million Americans since May, and refunds are still ongoing.

In most cases, refunds are distributed automatically, so taxpayers do not need to take any action to receive the unemployment benefit tax credit.

However, the IRS states that some individuals and families may be eligible for additional credits or deductions that they did not claim on their original tax return. These include the following groups:

Direct deposit of tax refunds will begin on July 28, and paper checks for unemployment tax refunds will be sent out on July 30.

The first round of expanded child tax credit direct deposit and paper checks went out almost two weeks ago, but eligible families must change their direct deposit information by August 2 or be disenrolled from prepayment prior to the August payment.

Families who fall into one of the following categories may consider electing the lump-sum credit on their 2021 tax return instead:

To update their information or change their election, visit the Child Tax Credit Update Portal on IRS.gov to update your information or change your election.