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Up to $10,200 of Unemployment Compensation Non-Taxable for Certain Taxpayers

 

Many taxpayers received unemployment compensation during 2020 due to layoffs and furloughs caused by the Coronavirus Pandemic. If you are one of those taxpayers and your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation. For married couples, each spouse receiving unemployment compensation will be allowed to exclude up to $10,200 each . Amounts in excess of the $10,200 will be treated as taxable income.  If your modified AGI is $150,000 or more, no exclusion will be allowed and the entire unemployment compensation will be taxable.

For those who have already filed for 2020, the IRS has advised that taxpayers should not file amended tax returns. The IRS will refigure the taxes using the excluded unemployment compensation amount and will adjust taxpayer's account accordingly and will send any refund amount directly to the taxpayers. 

As we await further guidance and more details, please do not hesitate to contact your C&J engagement team with any immediate questions. 

 

 
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Coulter & Justus, P.C.
Coulter & Justus, PC
(865) 637-4161
9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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