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how to calculate total incomes for filing requirement

hgtc
Level 4

Client, a single person, had no earned incomes and small dividends.   but she received $16,323 unemployment incomes in 2020.  Congress waived $10,200 from taxable incomes.  Now, my client's taxable incomes are less than $8,000.  

Is she still required to file her 2020 tax returns?

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PKCPAMST
Level 4

No. Here is the reasoning.

Code Sec. 85(a) says gross income includes any amount of unemployment compensation. Sec. 9042(a) of the ARPA, headed for the President’s signature, amends Sec. 85(c)(1) to remove up to $10,200 in unemployment compensation from gross income.

Your client’s gross income becomes $6,123, which is less than her standard deduction of $12,400 under Sec. 63(c)(1).

View solution in original post

4 Replies 4
IRonMaN
Level 15

Most likely.

Barber! Why didn't I think of this before? Getting paid to give out bad tax advice - need I say more? I've run with scissors for years so it is a natural fit.
rbynaker
Level 11

I'll take the other direction, just so we have the bases covered.

Probably not.

PKCPAMST
Level 4

No. Here is the reasoning.

Code Sec. 85(a) says gross income includes any amount of unemployment compensation. Sec. 9042(a) of the ARPA, headed for the President’s signature, amends Sec. 85(c)(1) to remove up to $10,200 in unemployment compensation from gross income.

Your client’s gross income becomes $6,123, which is less than her standard deduction of $12,400 under Sec. 63(c)(1).

View solution in original post

rbynaker
Level 11

Unless maybe she's under 24 and a full-time student. 🙂

Otherwise my reasoning was the same as yours.

Rick