![]() Tax deadline extension: Individual income tax returns and tax payments for 2020 are now due on May 17, 2021. ![]() Millions of filers were left facing surprise tax bills. Even when people elected to have their tax payments withheld, states didn't always comply. The pandemic sowed confusion and chaos for both recipients and state unemployment systems. States are responsible for paying out benefits, and they typically let recipients choose whether they want 10% of their weekly check withheld to cover taxes or they want to estimate their tax liability and make quarterly payments. Unemployment compensation is generally included in gross income and taxed at the federal and state levels. All filers need to have modified adjusted gross income below $150,000 to get the tax break. That unemployment tax break doubles for married couples who file taxes jointly. One significant change allows many people who collected unemployment benefits in 2020 to exclude $10,200 from income tax (the relief doesn't apply to benefits you're getting in 2021). When President Joe Biden signed the American Rescue Plan into law on March 11, a bevy of changes to the tax code were set in motion. Refer to Q1 above to determine if you need to file an amended return.By clicking ‘Sign up’, you agree to receive marketing emails from InsiderĪs well as other partner offers and accept our The IRS is no longer making automatic corrections by recalculating your exclusion amount following this guidance and adjusting your account for the difference. Am I eligible for the exclusion?, you may need to file an amended return if the IRS has not already made the correction. If you entered an exclusion amount less than what it should have been based on FAQ I'm married and live in a community property state. Do I need to file an amended return if I live in a community property state and did not enter the correct exclusion amount on Schedule 1, line 8? (updated December 2, 2022)Ī2. Keep that notice for your records in case your tax return preparer or state department of taxation requests a copy. ![]() The IRS did not correct your account as part of the automatic correction process.ĭo not file an amended return if you already filed one to claim the 2020 unemployment compensation exclusion.Īny resulting overpayment of tax will be either refunded or applied to your other outstanding tax liabilities.Ī notice confirming the changes resulting from your amended return will be sent to you when your account is corrected.You already filed your 2020 tax return without claiming the exclusion.You are eligible to exclude up to $10,200 in unemployment compensation (up to $10,200 per spouse if you and your spouse file a joint return) that you reported on your 2020 return.If you are entitled to the exclusion and your account was not automatically corrected by the IRS, you may need to file an amended return to claim the exclusion and any applicable non-refundable or refundable credits impacted by the exclusion if all the following conditions apply: The IRS is no longer performing automatic corrections of tax year 2020 accounts to allow the unemployment compensation exclusion for taxpayers who claimed unemployment compensation on their 2020 return. Q1. What if I already filed my 2020 tax return? Do I need to file a Form 1040-X to amend my tax return to report the exclusion and claim any applicable credits/deductions? (updated December 2, 2022)Ī1. These updated FAQs were released to the public in Fact Sheet 2022-39 PDF, December 2, 2022.
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