If you file your taxes online and havent filed for 2020 yet, you may want to make sure your tax software is updated before filing your tax return. For online filers, the IRS has stated that tax software companies have updated their systems to reflect the unemployment federal tax break. The $150,000 income limit is the same whether you are filing single or married.įor paper filers, the IRS published instructions on how to claim the unemployment tax break: New Exclusion of up to $10,200 of Unemployment Compensation. This means that you dont have to pay federal tax on the first $10,200 of your unemployment benefits if your adjusted gross income is less than $150,000 in 2020. ![]() ![]() The latest COVID-19 relief bill, gives a federal tax break on unemployment benefits. Thats made things messy.Īlso Check: Can You Apply For Covered California If You Are Unemployed Unemployment Federal Tax Break The problem: A lot of taxpayers already had filed their 2020 tax return before Congress put in the retroactive tax break. ![]() The unemployment tax break was welcome news to many folks. Generally, unemployment benefits are taxable, including basic state benefits as well as the extra $600 weekly CARES Act federal pandemic benefits. Why the special unemployment benefits tax refunds? In the March 11th Covid-relief American Rescue Plan, Congress made up to $10,200 of 2020 unemployment benefits nontaxable for individuals and married couples whose modified adjusted gross income was less than $150,000.
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