Is the IRS taking money away from people who received unemployment benefits?

That is what a Facebook post implies. The tweet includes a snapshot from the IRS’s IRS2Go app, which informs the user that “your refund amount has been reduced by $13,424.40 to pay a past-due obligation such as child support, another federal agency bill, or state income tax.”


This post was highlighted as part of Facebook’s ongoing effort to tackle fake news and disinformation on the social network’s News Feed.

We questioned tax professionals about the possibility that getting unemployment benefits may result in a decreased tax refund.

They informed us that if unemployment benefits were claimed properly, a taxpayer would not be required to repay them but would be responsible for income taxes on the amount received.

According to Erica York, an economist with the Tax Foundation, any tax refund can be decreased if the taxpayer owes money to the federal or state governments or owes outstanding child support. This nonprofit group examines tax policy.

A refund occurs when a person overpays their taxes for the year or when they are entitled to refundable tax credits that exceed their tax due, York explained.

The Treasury Offset Program enables the Bureau of Fiscal Service to decrease a tax return to collect outstanding federal nontax debt, unpaid child support, or state debt, whether tax-related or not. A state debt may involve fraudulently obtained unemployment benefits that must be returned.

According to the New York Times, several states handed unemployed applicants more money than they were qualified for in 2020 and requested repayment, even if the recipients were not guilty of the error or were unaware they were being overpaid.

If unemployment benefits are obtained properly, a taxpayer is not required to repay them but is liable for income taxes on the amount received.

Unemployment recipients can have federal income tax deducted at a 10% rate or make estimated quarterly payments.

She explained that if someone claims unemployment benefits legally but overpays taxes on them, the next return may be lowered to meet delinquent government debt or unpaid child support.

Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, characterized the IRS as a “middle man” and said that the Treasury Department’s Treasury Offset Program collects a debt by reducing tax refunds.

In 2020, the IRS ceased collecting income taxes on most unemployment benefits collected but resumed collection in the 2021 tax year.

Each taxpayer’s situation is unique, and refunds are determined by the amount of taxes paid, eligibility for tax credits and deductions, and a taxpayer’s specific outstanding government bills or unpaid child support. Unemployment benefits are not subject to a uniform tax penalty.

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Our decision

According to a Facebook post, a tax refund might be lowered if an individual gets jobless assistance.

According to the screenshot from the IRS app and the poster’s statements, it looks as though someone who got jobless benefits later had their income tax refund decreased due to an overdue obligation.

However, the government does not oblige recipients to repay correctly reported unemployment benefits. It does not diminish a taxpayer’s return if the taxpayer does not owe any government obligations or child support. This assertion is Mostly False.