Update on Unemployment Benefits on 2020 Tax Filings

When the American Rescue Plan was signed on March 11, 2021 with provisions aimed at helping the bulk of the taxpaying public suffering the economic consequences, it created a bit of mess as some of those measures were retro-active to 2020.

The measure that created the most concern amongst taxpayers (and us tax preparers) was the exclusion of unemployment benefits from 2020 taxable income up to $20,400 for married filing jointly and $10,200 for all others for those with less than $150,000 in adjusted gross income.

The IRS has announced that it will take steps to automatically refund money later this year to taxpayers who filed before the changes and were eligible for the tax relief. Taxpayers will not need to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.

So, you should double check that return if you’ve already filed to see if you need to refile, and if not, just be patient: they are on it.