Unemployment Tax Relief and IRS 310 Tax Relief

Article Summary

The American Rescue Plan Act is best known for sending out $1,400 stimulus checks to many Americans and extending $300-enhanced unemployment. (“$300-enhanced unemployment” means state unemployment payments enhanced by $300 per week of federal stimulus.) But if you collected unemployment in 2020, you should pay attention to another part of the plan.

You were sure the federal government couldn’t possibly give out any more stimulus money. Then, not long after filing your taxes early, like you do every year, you hear some intriguing rumors. The rumors claim that many of the unemployment benefits you received in 2020 might not count as taxable income. This article tells you that these rumors are true. It also tells you how you could benefit from them if your income isn’t too high. It also answers questions you might have about when you might get any refund owed you and how to check the status of such a refund. Finally, it illuminates the mysterious “IRS TREAS 310 MISC PAY” notation some people have seen on their direct deposits.

Table of contents:

Unemployment compensation, the American Rescue Plan Act, and your tax return

If you received one or both of the 2020 stimulus checks, you probably knew not to report them as income. Officially, each of these “economic impact payments” was a refundable tax credit. “Refundable tax credit” is bureaucrat-speak for “when we send you this money, you should treat it just like a refund of taxes you overpaid.” Like the earned income tax credit, you don’t report it as income on your tax return.

Some of your 2020 unemployment benefits might not count as income

What you may not have known is that, because of the American Rescue Plan Act, a big chunk of your 2020 unemployment compensation doesn’t count as income. This third round of pandemic-era stimulus from the federal government goes beyond prior rounds in multiple ways. One of the ways is its exclusion of a lot of unemployment benefits from the 2020 tax liability.

If you’re a single filer, the first $10,200 of unemployment benefits you received last year isn’t taxable. If you’re married filing jointly, the first $20,400 of your 2020 unemployment compensation is tax-free. This means a bunch of money you thought you’d never see again could end up back in your bank account once the IRS finishes recalculating your tax return.

But in some cases, all of your 2020 unemployment benefits will count as income

But there’s an exception: If your household’s modified adjusted gross income (AGI or MAGI) was $150,000 or higher, your unemployment still counts as income. You must pay the full amount you would pay on unemployment compensation in any tax year. If you already filed a tax return that reported all your unemployment compensation as income, you’re done. The IRS won’t be correcting your tax return or sending you a tax refund. You only qualify for this tax credit if your household income was less than $150,000.

If you want more detailed information, the IRS FAQ may be a good place to start. If you need help determining what 2020 benefits are and are not taxable, the IRS’s Interactive Tax Assistant (ITA) might help.

What if I already paid taxes on unemployment compensation?

If you did, you’re not alone. Between 10 and 13 million U.S. taxpayers filled out tax returns too soon to take this tax credit into account. If you filed a tax return before the American Rescue Plan Act became law in March, you could be due a tax refund.

The IRS has already started sending out refunds, some as early as the end of May. During the first week of June, the IRS sent out nearly 3 million. It is expected to send out about as many the following week.

Will I get a tax refund from unemployment benefits?

So, if you received unemployment in 2020 and reported your benefits as income — and if your total household income was under $150,000 — you should get a refund from the IRS. You don’t need to file an amended return to get it. But if the change in your income has made you eligible for other tax savings, you may still want to do an amended return.

Assuming the change in your modified adjusted gross income (AGI, MAGI) doesn’t qualify you for new savings if you file an amended return, all you need to do is wait. The IRS will correct your tax return for you and issue a tax refund by direct deposit or paper check.

You don’t need to fill out an IRS form, visit the IRS website, or follow any complex IRS instructions. You don’t need to download an IRS booklet from the IRS website or ask for an IRS form at your public library.

Where is my unemployment tax credit refund?

After you filed your return, you heard that a lot of your unemployment benefits wouldn’t count as income, and you’d get a tax refund. You just read that all you need to do is wait, and the IRS will take care of it for you, but you can’t help asking, “So, where’s my money?”

Well, the check may be in the mail. Or the funds may be queued for transmission to your bank in the next batch of IRS direct deposits. Or your tax return may be more complex and scheduled for processing days or weeks from now. It’s hard to say.

The IRS indicates that it’s recalculating affected tax returns in phases, simpler returns first, more complex returns later. The simpler your tax return, the sooner you can expect your refund. The IRS says it will inform taxpayers of corrections to their tax returns within 30 days after making them, so you may receive written notification of the refund amount before the refund itself.

Whatever you do, don’t call the IRS to ask about your unemployment compensation refund

For many issues, you can call the IRS with questions. But, in this case, the IRS instructions tell you not to do so. We don’t know how helpful you found IRS phone support the last time you called them. Just know that they will be much less helpful if you call them about your American Rescue Plan refund. The IRS does not want to receive calls about the unemployment compensation exclusion, its effects on your tax return, or how long it will be before you get your refund by direct deposit.

So, how can you find out the status of your refund? Normally, you could find out by visiting the IRS’s Where’s My Refund? But experts doubt that this tool, or mobile-app equivalent IRS2Go, will work for these special-case refunds. If you decide to try anyway, you’ll need your Social Security Number or Individual Taxpayer Identification Number (ITIN) and your filing status. You’ll also need to calculate the exact amount of your refund.

Since I can’t call the IRS, what’s the best way to find out the status of my unemployment compensation refund?

The best expert guidance we’ve been able to find suggests that the “easiest” way to find out the status of your refund is to view your tax transcript. Here’s how:

Steps to view your tax transcript

  1. Go to IRS.gov, open an account if you don’t already have one, and log in. If you need to open an account, be prepared to take some time proving that you’re you.
  2. Logging in will take you to the “Account Home” page. Once there, click “View Tax Records.”
  3. On the page that takes you to, press the “Get Transcript” button.
  4. A drop-menu will let you select your reason for needing a transcript. Select “Federal Tax.” Leave the “Customer File Number” blank. Click “Go.”
  5. This will take you to a page displaying four items for each of the last four years: (1) “Return Transcript,” (2) “Record of Account Transcript,” (3) “Account Transcript,” and (4) “Income Transcript.” Locate and click the “Account Transcript” for 2020.
  6. If your browser is configured to open PDF files with its internal viewer, this will open a PDF transcript. Otherwise, your browser will ask if you want to open or download the file. If you opted to download the file rather than open it in your browser, open the downloaded file with your preferred PDF viewer.
  7. Once you’ve opened the PDF, find the “Transactions” section. Look for a “Refund issued” entry dated late May or June. If you find such an entry, your refund was processed on the date listed.

If all else fails, contact your Congressperson

Though patience really is a virtue, if your refund seems too slow to arrive, one option you can consider is contacting your Congressperson. People don’t normally think of this, but volunteer and paid staff for elected officials at all levels spend a lot of their time helping constituents work out problems with various government offices and entities. When you have a problem with a federal agency, you’ll sometimes find contacting your Congressperson can speed things along.

The best ways to contact Congressional offices vary from one Congressperson to the next. You can find the right office to contact by visiting the U.S. House of Representatives’ Find Your Representative page and entering your Zip code. When you find the House page for your Representative, it will likely link to the Rep’s own page, such as the page for Congressman Darrel Issa if you happen to live in the same California district as the writer of this article. Issa’s page is a helpful example because you can click Services > Help With A Federal Agency and see the information your own Representative will need to assist you.

What does TREAS 310 MISC PAY mean?

When you do receive your refund, the direct deposit will likely appear with a notation like “IRS TREAS 310 MISC PAY.” The last part obviously means “miscellaneous payment,” implying the IRS doesn’t have a nice memorable code set up for this one-off tax refund. The first part tells you where the payment is from. Rather than a numerical code that means the same thing as “MISC PAY,” it looks like the “310” might represent the issuing branch (Regional Finance Center or RFC). “310” represents the Kansas City RFC. If your deposit reads “TREAS 303,” the deposit could be from the Philadelphia RFC. If “TREAS 312,” it’s the RFC in San Francisco. So far, we’ve only received questions about the “TREAS 310” notation, so we’re not sure if any of these refunds will be issued from other RFCs.

Bottom line:  Wherever the money comes from, the notation indicates it is a genuine IRS payment and backed by the full faith and credit of the United States government. Use it wisely.

Key Takeaways

  • The $10,200 amount ($20,400 for joint filers) is how much 2020 unemployment compensation doesn’t count as income. This isn’t the refund amount.
  • Like all tax refunds, it can be seized if you have unpaid taxes outstanding (federal or state). Unpaid child support could also keep you from getting the money. Through September 2021, unpaid student loans won’t get their refund seized.
  • If your household’s modified adjusted gross income is $150,000 or more, any unemployment you received in 2020 will remain taxable. This special tax break doesn’t apply to you.
  • These refunds have been going out since the end of May, but the IRS might not process the most complex tax returns until summer. If you’re eligible, you’ll get your refund — eventually.
  • The IRS will determine who qualifies for this tax break and calculate their refunds. You don’t need to file an amended return unless you think you qualify for other savings you didn’t claim.
  • The IRS will notify you within 30 days after recalculating your return.
  • If you provided your bank account information on your 2020 tax return, your refund payment should come by direct deposit. If you didn’t, the IRS will send a paper check to the mailing address you used when filing.
  • Taxpayers who get a direct deposit that begins with “IRS TREAS 310” don’t need to worry. It’s a legitimate direct deposit from the IRS.

As long as we’re on the subject of taxes, may we recommend this article on how to avoid the most common mistakes next time you file? Do you need help filing an amended return or making sure you optimize your deductions for the next tax season?

Article Sources
  1. COVID-19 and DirectPayments to Individuals: Summary of the 2020 Recovery Rebates/Economic Impact Paymentsin the CARES Act (P.L. 116-136) — Congressional Research Service
  2. Green Book: A Guide to Federal Government ACH Payments and Collections — U.S. Treasury Financial Management Service
  3. IRS Is Sending More Unemployment Tax Refund Checks in June — Kiplinger
  4. IRS to recalculate taxes on unemployment benefits; refunds to start in May — IRS
  5. That Direct Deposit from “IRS TREAS 310” Is Legitimate — Taxable Talk
  6. The American Rescue Plan — The White House