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Non Taxable Unemployment and AGI

maughact
Level 3

Does anyone know if the $150,000 AGI limit for the new unemployment exclusion includes or excludes the unemployment?  I'm trying to determine if my one client that made $154,000 will get the tax free unemployment if she's able to exclude it from the AGI calculation?

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rbynaker
Level 11

According to the IRS Worksheet (posted on the website on Friday evening--so take that for what it's worth) you "Include the full amount of unemployment compensation you received in 2020 on Schedule 1, line 7."

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym...

If not covered under a retirement plan you might see if a deductible IRA contribution would help.  You might also do an analysis of MFJ vs MFS.

TaxGuyBill
Level 14

As Rick pointed out, the $150,000 limit for AGI is calculated BEFORE any exclusion.

The law  for the exclusion say something like AGI calculated "without regard to this section".