The American Rescue Package of 2021 was approved by Congress and is expected to be signed by President Biden on March 12, 2021.
This package makes the first $10,200 of unemployment benefits received in 2020 non-taxable. The IRS has not yet provided any instructions on how to calculate this.
The IRS will have no choice but to extend the filing deadline from April 15 to at least June 15 in order to provide time for tax preparation services like Turbotax to make changes to their software programming.
If you have NOT filed your 2020 tax return, my advice is to wait to file at a later date.
If you ALREADY filed your return, wait for instructions from the IRS in a letter that you will most likely receive with instructions. You will most likely have to amend your 2020 tax return, as the tax credit will only apply on your 2020 federaltax return.
Any unemployment benefits received in 2021 will NOT be affected by this law change, unless it is once again approved by Congress at a later date.
If you normally file a Married Joint return, and both you and your spouse received unemployment benefits, it may be advisable to file Married Seperate returns so that both of you can claim the credit.
