Two weeks ago, Joe Biden signed the American Rescue Plan Act of 2021, waiving federal taxes on up to $10,200 of unemployment benefits for single adults making less than 150,000 per year. For couples filing jointly, that number is doubled to $20,400.
Since unemployment earnings are typically taxed just like normal wages, the unemployment tax break is good news for millions of Americans who have lost their jobs due to COVID-19.
If you haven’t already filed your tax returns, you can claim the unemployment exemption by using the IRS’s Unemployment Compensation Exclusion Worksheet to attach to your Form 1040.
But if you have already filed for 2020 and want the exemption, don’t file your amended return just yet.
We’re still waiting for the IRS to provide guidance for taxpayers who have already filed for 2020. The IRS moves slowly. And until it announces how early filers can claim the exemption, we’ll just have to wait.
Have Questions? Call Boxelder for a Free Consultation.
This has been an unprecedentedly challenging tax season for the IRS and
taxpayers alike. If you’re feeling overwhelmed, give Boxelder a call at 303-317-6111 for a free tax consultation.
Our team of tax accountants and lawyers can help you benefit from COVID-19 tax relief programs, file your returns, and maximize your deductions.
