Скачать или смотреть Is Pandemic Unemployment Compensation Taxable in 2020? (Update/Correction/Additional Info)

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If you received pandemic unemployment assistance or unemployment income from your state in 2020 because of the Covid-19/Coronavirus pandemic, is that money taxable? The answer is...partially yes and partially no.

If you are filing your taxes as single or head of household, you can exclude up to $10,200 of unemployment compensation from your 2020 gross income -- as long as your Adjusted Gross Income is below $150,000.

If you are married and filing your taxes jointly, you can exclude up to $10,200 per spouse from your 2020 gross income -- as long as your Adjusted Gross Income is below $150,000. You cannot SHARE that amount. Each spouse gets to exclude up to $10,200, no more. If one spouse received less unemployment compensation than $10,200, that spouse can only exclude the amount of compensation they received, and the other spouse cannot exclude more than $10,200.

Please NOTE: Your state may still require you to pay state income tax on the full amount of unemployment compensation.

After these exclusions, your federal AGI will be lower, and that means you might qualify for some valuable Earned Income Credit.

If you already filed your 2020 tax return, do NOT file an amended return yet to fix this issue. The IRS will issue some guidance in the coming days about what to do. They may correct your 2020 tax return themselves without you ever having to file an amended return. In that case, they will recalculate your Adjusted Gross Income, your Tax, and your Earned Income Credit and send you a direct deposit or check.

If you haven't yet filed your 2020 tax return and you received unemployment compensation in 2020, you should also wait for a few days to file your tax return. The IRS is still working on issuing guidance about how exactly to report the unemployment income exclusion on your taxes. Once they issue that guidance, the tax software companies will need to adjust their tax software.

So, everyone who received unemployment compensation in 2020 should just wait a bit before filing a tax return. The IRS will issue guidance in the coming days.