The IRS has released guidance on how to handle the 2020 unemployment exclusion

by LiteBulb88

Since it’s been asked about quite a bit here, the IRS has released guidance on how to handle the $10,200 unemployment exclusion:

www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemployment-compensation

The basic idea is that you’ll put in your unemployment amount on schedule 1, line 7 as usual, then on line 8 (“other income”) you’ll put in (10,200), with the parenthesis meaning a negative amount. That $10,200 needs to be offset by other items you’d put in “other income” and can change based on your filing status, AGI, and how much unemployment you actually received in 2020.

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I haven’t yet seen anything on what do to do if you’ve already filed your taxes, but I suspect you’ll need to amend to include the (10,200) amount in the “other income” line.

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EDIT: Thanks to Samueul’s post below for this. The IRS does NOT want people filing amended returns yet:

www.irs.gov/newsroom/irs-statement-american-rescue-plan-act-of-2021

For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.”

 

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