For 2021: The unemployment exclusion is no longer available. The unemployment exclusion was only permitted for tax year 2020.
For 2020: If you live in a community property state and are filing a Married Filing Separate return, you must divide the income in half equally and file Form 8958, Married Filing Separate Allocations.
How does the Unemployment income get reported?
You would report half of your unemployment compensation and half of your spouse's unemployment compensation on your tax return. Your spouse would do the same; report the other half of your unemployment compensation and half of his or her unemployment compensation on his or her tax return.
How does the Unemployment Exclusion get reported?
Exclude up to $10,200 on your tax return if your modified AGI is less than $150,000. Your spouse should exclude up to another $10,200 on his or her tax return if your spouse's modified AGI is less than $150,000. Neither of you should exclude more than the amount of unemployment compensation you report on your Schedule 1, Line 7. The program will automatically calculate this for you.
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