Unemployment Backpay & $10,200 Exlusion

[Fin_Guy2006]

As many of you know, many state's unemployment systems were garbage during COVID.  If someone did not get approved for their benefits until 2021 but received all the backpay benefits from the point they applied in 2020, do they, and if so, how do they claim the $10,200 exclusion allowed for 2020 benefits.

I can't imagine that they would be allowed to be out of luck by having to include the benefits in 2021 and therefore not be allowed to use the $10,200 exclusion after being forced to go without benefits due to no fault of their own.  

[GeorgeDenseff]

That way the law now works, they are out of luck and not eligible for the $10,200 exclusion.  Hopefully that will be addressed before 2021 taxes are filed.

[xmasbaby0]

The waiver on federal tax for the first $10,200 of unemployment was only for unemployment received in tax year 2020.   It will take another act of Congress to change that to include tax year 2021.   So we will have to wait to see if Congress acts on it.