Massachusetts Unemployment compensation received during the Covid-19 pandemic

Forum|Forum|5 years ago
April 6, 2021
3 replies
13 views

Should a married couple with Mass AGI of $$21,625 (Mass U/E compensation $23,481) be entitled to a $10,200 deduction from unemployment compensation?

LenaH

Employee Tax Expert

It depends on your total family size, including dependents. Per the State of Massachusetts, taxpayers with household income not more than 200% of the federal poverty level may deduct up to $10,200 of unemployment benefits from their taxable income on their 2020 and 2021 tax returns for each eligible individual. I have attached the income limits below.

Tax Filing Season Frequently Asked Questions

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Wdtax20Author

Level 2

Family size is only two. Husband and wife. Combined AGI $21,695. Unemployment compensation was $23,481 and a small business loss of $-1,786. Why doesn't turbo tax take the deduction on Schedule Y , Line 9?

ThomasM125

Level 15

You are under the limit so your unemployment should not be taxable to the extent it is under $10,200 for each of you. Does the unemployment income appear on line 8 of Form 1 but there is no adjustment for it on line 15?

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dave_the_rave

Level 2

Just talked to Mass Dept of Revenue, they are in the process of updating Form 1 and Schedule Y to reflect the new tax law which excludes the first $10,200 of unemployment compensation for filers whose AGI is less than 200% of the federal poverty level. The rep said "bear with us, we are working on it, should be done in a week or so". So I think this explains why TurboTax has not been updated to automatically reflect this law change, as the relevant MA tax forms have not yet been updated.

jlrpiano

Level 2

Thanks! I kinda figured as much. It is vague on the DOR website (I was just extrapolating based on other indicators), so I was just holding off a bit because hey, there's an extra month to file anyway, and extensions are always available too...

Ben Molony

Level 2

So the MA DOR finally released a worksheet to calculate Household Income to determine if you are eligible for the MA unemployment deduction (linked from the MA DOR website here https://www.mass.gov/info-details/tax-filing-season-freque[product key removed]ions).

Household income =Federal AGI then add back: untaxed interest, untaxed social security and the Federal Unemployment Compensation Exclusion ("UCE"). Compare to the 200% Federal Poverty Limit for household size.

It's a simple calculation, so TT should be able to implement it quickly. The original poster on this thread who had $22k of AGI would only qualify for the MA deduction if the UCE was $3.5k or less.

pmv1631a

Level 2

I already submitted my Massachusetts taxes via TurboTax. Now I get an update that added the 10200 unemployment deduction. Not sure what to do and TurboTax hasn't been any help. This is sad.

AmyC

Level 15

@pmv1631a Some states are adjusting the returns while other states want an amended return. MA says officially not to file an amended return now and more information will be posted. See Tax Filing Season Frequently Asked Questions | Mass.gov

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