Did you receive Unemployment Compensation in 2020?
IRS code says that unemployment compensation is taxable. However, the American Rescue Plan Act of 2021 allows an exclusion of up to $10,200 of your unemployment compensation for the 2020 tax year.Â In the case of married individuals filing a joint Form 1040 or 1040-SR, this exclusion is up to $10,200 per spouse.
To qualify for this exclusion, your adjusted gross income (AGI) must be less than $150,000.Â This threshold applies to all filing statuses, so the married filing jointly income level is also $150,000. Also, you should include any unemployment compensation over $10,200 (or $10,200 per spouse if married filing jointly) on the tax return as taxable income.
Already Filed a 2020 Tax Return?
In most cases, if you have already filed a tax return that includes the full amount of your unemployment compensation, the IRS will automatically determine the correct taxable amount of unemployment compensation and the correct tax. If you paid more than the correct tax amount, the IRS will either refund the overpayment or apply it to other outstanding taxes owed.Â
The IRS expects to issue refunds starting in May 2022 and continuing throughout the summer. There is no need to call the IRS or file a Form 1040-X, Amended U.S. Individual Income Tax Return.Â
We Can Help!
Migration Resource Center has a team of tax consultants, tax attorneys, enrolled agents, and CPAs ready to help with your tax questions and issues. We can assist you with tax planning as well as help with reducing your tax burden. In addition, we provide workshops on Taxes and Personal Finance. We offer workshops both online and in traditional classroom environments. Contact Migration Resource Center Taxpayer Services now for assistance with your taxpayer concerns. Use our online form or call (646) 827-2959.
By Victoria Apostol-Marius; November 17, 2021