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Unemployment Compensation 2020 Taxation

Unemployment Compensation in 2020

On March 11, 2021 the American Rescue Plan Act of 2021 was enacted.

One of the provisions excludes up to $10,200 of unemployment compensation paid in 2020 for those with adjusted gross income (AGI) less than $150,000.

As this law was enacted during the tax filing season, the anticipated time until the IRS and software providers can make updates is late May 2021.

At this time the IRS is requesting that taxpayers do not file amended returns as they are still determining guidance on how best to accommodate

taxpayers who have already filed returns.

The IRS is considering automatically correcting returns filed with unemployment compensation without any need for amendments.