This is what the IRS states - https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation
1.Add Lines 1 thru 7 on the Form 1040
2.Add Lines 1 thru 6 on the Schedule 1
3.Any amount on Line 8 Schedule 1 (not the exclusion amount if shown)
4.Total of 1, 2 and 3
5.Any amount on Line 10c of Form 1040
6.Add 4 and 5
7.Is the amount on line 6 $150,000 or more?
a. [ ] Yes. Stop You can't exclude any of your employment compensation
b. [ ] No. Go to line 8
From the IRS worksheet -
Unemployment Compensation Exclusion Worksheet – Schedule 1, Line 8
- If you are filing Form 1040 or 1040-SR, enter the total of lines 1 through 7 of Form 1040 or 1040-SR. If you are filing Form 1040-NR, enter the total of lines 1a, 1b, and lines 2 through 7.
- Enter the amount from Schedule 1, lines 1 through 6. Don't include any amount of unemployment compensation from Schedule 1, line 7 on this line.
- Use the line 8 instructions to determine the amount to include on Schedule 1, line 8, and enter here. Do not reduce this amount by the amount of unemployment compensation you may be able to exclude.
- Add lines 1, 2, and 3.
- If you are filing Form 1040 or 1040-SR, enter the amount from line 10c. If you are filing Form 1040-NR, enter the amount from line 10d.
- Subtract line 5 from line 4. This is your modified adjusted gross income.
- Is the amount on line 6 $150,000 or more?
a. [ ] Yes. Stop You can't exclude any of your employment compensation
b. [ ] No. Go to line 8
- Enter the amount of unemployment compensation paid to you in 2020. Don't enter more than $10,200.
- If married filing jointly, enter the amount of unemployment compensation paid to your spouse in 2020. Don't enter more than $10,200. If you are filing Form 1040-NR, enter -0- .
- Add lines 8 and 9 and enter the amount here. This is the amount of unemployment compensation excluded from your income.
- Subtract line 10 from line 3 and enter the amount on Schedule 1, line 8. If the result is less than zero, enter it in parentheses. On the dotted line next to Schedule 1, line 8, enter "UCE" and show the amount of unemployment compensation exclusion in parentheses on the dotted line. Complete the rest of Schedule 1 and Form 1040, 1040-SR, or 1040-NR.
When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.
