On Thursday, March 11, 2021 the president signed the American Rescue Plan Act of 2021 (ARPA) into law. The new plan includes relief payments and tax provisions that will impact 2020 and 2021 returns.
Unemployment benefits for 2020 ONLY:
- The first $10,200 in unemployment benefits will be excluded form your taxable income.
- Married filing Joint filers who both had unemployment income can both qualify for the exclusion.
- This applies to taxpayers with AGI of less than $150,000.
What if I filed before the exclusion was enacted?
For taxpayers that have already filed their returns before the exclusion was implemented, the IRS asks that you do not amend the 2020 return. The IRS will determine the correct taxable amount of unemployment compensation and tax. Any resulting overpayment of tax should have been either refunded or applied to other outstanding taxes owed. If you have not received the additional unemployment income exclusion refund, you should reach out to the IRS directly.
For more information regarding the unemployment exclusion, please see our KB article.