selfemployed4-copy
selfemployed4-copy

American Rescue Plan includes new exclusion of up to $10,200 of unemployment compensation

Read the Article

The American Rescue Plan of 2021, enacted March 11, 2021, includes a new exclusion of up to $10,200 of unemployment compensation.

Basically, if your clients’ modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan excludes from income up to $10,200 of unemployment compensation paid in 2020, which means your clients don’t have to pay tax on unemployment compensation of up to $10,200. If they are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If modified AGI is $150,000 or more, they can’t exclude any unemployment compensation.

The exclusion should be reported separately from unemployment compensation. See the updated IRS instructions and the Unemployment Compensation Exclusion Worksheet to figure the exclusion and the amount to enter on Schedule 1, lines 7 and 8.

Be sure to peruse all of the Tax Law & News articles on the Intuit® Tax Pro Center.

Comments are closed.