Here’s a link to it on the IRS website if you are filing on paper: /unemploymenttax. You need to file an Unemployment Compensation Exclusion form when you do your taxes, Oware said. The IRS printed its 2020 tax forms and TurboTax and other companies programmed software before the relief was approved by Congress. This either will eliminate a tax burden or significantly reduce it for many of those people. More importantly, in 2020, the federal government kicked in extra unemployment benefits and some recipients found the extra money jeopardized their earned income credits, causing them to owe money when they didn’t expect it.Īlso, many people filing for unemployment did not withhold taxes because their financial situations were dire and they needed all the money they could get at the time. If you are married and both spouses received unemployment, then both are exempt from paying taxes on the first $10,200 they each received. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation. The benefit only applies to those whose modified adjusted gross income is less than $150,000, according to the IRS’s website. The $1.9 trillion American Rescue Plan allows those who received unemployment benefits to deduct $10,200 in payments from their 2020 income. What exactly is the tax break for those who received unemployment compensation in 2020? The Denver Post consulted the IRS and Alex Oware, a certified public accountant at O&G Tax and Accounting Services in Lakewood and a freelance tax expert on, to provide some answers. The catch, though, is the break came in the middle of tax season - after forms had been printed and after many already filed their returns. If you lost a job in 2020 and received unemployment benefits to make ends meet, Congress this month approved a tax break for you. For those who choose to file a paper return, instructions and an updated worksheet about the exclusion are available on Replica Edition Home Page Close Menu ![]() These taxpayers should read New Exclusion of up to $10,200 of Unemployment Compensation for information and examples. People who haven't yet filed and choose to file electronically, simply need to respond to the related questions when preparing their tax returns. Tax preparation software has been updated to reflect these changes. Information for people who haven't filed their 2020 tax return ![]() These taxpayers may want to review their state tax returns as well. If they now qualify, they should consider filing an amended return to claim this money. Taxpayers can use the EITC Assistant to see if they qualify for this credit based upon their new taxable income amount. However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits but are now eligible to claim them following the change in the tax law. Taxpayers only need to file an amended return if the recalculations make them newly eligible for additional federal tax credits or deductions not already included on their original tax return.įor example, the IRS can adjust returns for taxpayers who claimed the earned income tax credit and, because the exclusion changed their income level, may now be eligible for an increase in the EITC amount.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |