Unemployed workers could get more money from the IRS.
Sarah Tew/CNET

If you received unemployment benefits in 2020, March’s stimulus bill added a $10,200 tax exemption. Additional weeks of a $300 bonus payment were also included in the new legislation, along with a third stimulus check and a boost to the child tax credit. There’s some confusion surrounding how the tax break might work, but the IRS says it will handle the exemption and automatically send out refunds if needed in May.

The agency made an update to the unemployment benefits tax exemption in the latest stimulus bill on March 31, saying it will recalculate taxes for people who received unemployment compensation in 2020 and already filed their tax returns.

Last year, 23 million Americans filed for unemployment due to the coronavirus pandemic, according to the Bureau of Labor Statistics. Under the Pandemic Unemployment Assistance created under the CARES Act in March 2020, this included those who were laid off from their job as well as gig workers, contractors and self-employed people who don’t normally qualify for unemployment insurance.

Here’s everything to know so far

If the IRS determines the taxpayer is owed a refund, it will send a check automatically.The refunds will start in May and extend into the summer months.You do not need to file an amended return to claim the exemption (here’s how to track your tax return status and refund online).

What we don’t know right now

When exactly the payment will comeIn what form the unemployment refund will arriveIf you can track it with the IRS Get My Payment tool or some other portalIf you will receive a notice in the mail, as with stimulus checks, that you have been refunded tax moneyHow to contact the IRS if there’s a problem (here’s what we know for stimulus check problems)

“This new clarification from the IRS is good news for the millions of taxpayers impacted, but may still be confusing,” said Mark Steber, chief tax information officer for Jackson Hewitt. “Some taxpayers may have questions as to the timing of any payment and whether it will come in a check or other form. The IRS is still providing clarification on these and other questions related to the just announced program. Once taxpayers receive their automatic payments in the coming weeks and months it may be a good idea to check in with a trusted tax pro to make sure the IRS computed their amount correctly.”

For more details, here are seven ways to get more money back on your 2020 tax return, everything about the child tax credit for up to $3,600 per child and what to know about the new May 17 tax deadline.