Unemployment Compensation Exclusion (UCE)
Tax Update

by: Income Tax Consultants LLC

Americans who received unemployment benefits last year (2020) can claim a special new tax break included in the $1.9 trillion American Rescue Plan Act enacted on March 11, 2021.

If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation for up to $10,200. Amounts over $10,200 for each individual are still taxable.

If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. ($20,400 Combined)

This currently applies to Federal only. States do not have to follow the Federal act and if you try to apply this to the state, you may be penalized for underpayment of Taxes (This will include interest and penalty as extra charges). It is better to file state without the exemption and have the state owe you money compared to you owe the state money.

For taxpayers that have not yet filed their 2020 tax return, our software has been updated to reflect the changes to the Form 1040, Schedule 1 - Additional Income and Adjustments to Income and program will automatically include the exclusion.

If you have already filed and completed your return for Tax Year 2020, you DO NOT need to file an amended return. The Internal Revenue Service will automatically refund you the overpayment from approximately July 2021 thru the rest of the summer. The refund will be in the form of a check if you decided not to file with a bank account number or direct deposit if you did. Direct deposit will be much faster than check because the Internal Revenue Service and the Treasury will complete direct deposit first. Checks may come one to two months later after direct deposit.

For more about the American Rescue Plan (ARP) tax credits and benefits, we will continue to post information in our future commentaries.



如果您修改後的調整後總收入(AGI)低於 $150,000,美國營救計劃,已於2021年3月11日生效,允許扣除最高 $10,200的從您2020年給付的失業補償金中,這意味著您不必為最高 $10,200失業金納稅。但每個人超過 $10,200的金額仍需納稅。

如果您已婚,領取失業救濟金的每個配偶都不必為最高 10,200美元的失業救濟金納稅。 (合計 $20,400)




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