I am getting this message for clients who had unemployment compensation benefits paid to them in 2020. The American Rescue Plan Act exempts the first $10,200 of unemployment insurance benefits from federal income taxes, as long as those benefits were received in 2020 and as long as the household AGI is less than $150,000.
According to the IRS website New Exclusion of up to $10,200 of Unemployment Compensation | Internal Revenue Service (irs.gov), an amended return should not be filed at this time for taxpayers who filed before the law change. The IRS has not yet issued guidance on how they want this handled.
For taxpayers who filed after the law change, the tax software got updated fairly quickly, and their returns likely already have the UCE (unemployment compensation exclusion) included (look for it as a reduction on the other income line).
