Understanding the federal and state 2020 unemployment exclusion

Federal unemployment exclusion

Please note that this unemployment exclusion is valid for 2020 returns only. If you create a 2020 now the program will handle the exclusion automatically when reporting unemployment income. 

If you are single, received unemployment benefits in 2020, and have an AGI of less than $150,000, you are not required to pay taxes on the first $10,200 you received. For married couples filing jointly, each spouse can exclude $10,200, for a total of $20,400. 

If you have not filed your taxes yet and need to take the federal unemployment exclusion, TaxSlayer is updated for this new exclusion and will automatically apply the exclusion to your return. 

Do I have to amend my federal return to claim the exclusion if I filed before the American Rescue Plan was put into place?

State Unemployment exclusion

Each state is deciding whether they will use the same unemployment exclusion that the federal government will use. They can use the same guidelines, alter the guidelines, or choose not to participate. We will update this article as we receive more information from the states. 

States that are accepting the exclusion:

*Massachusetts -The Massachusetts income threshold is different from the federal income threshold. Therefore,  some taxpayers may be eligible for a deduction on their federal tax return but not on their Massachusetts tax return.

States that are not accepting the exclusion:

States that are not adopting the exclusion or have not released guidance are listed below. Click on the individual state link for information on how to complete the state return.