TurboTax Online was updated on March 25, 2021 and TurboTax CD/Download was updated on March 26, 2021 to include these unemployment updates.
The IRS, and most states, consider unemployment payments as taxable income. This means that you have to pay tax on unemployment payments and report them on your return. With this new law, if your household income is less than $150,000, the first $10,200 of unemployment will be tax-free, but any amount you receive above that will be taxed.
The Plan also provides a $300 federal increase to weekly unemployment payments and extends two key pandemic unemployment benefits programs through September 6, 2021.
The first $10,200 of unemployment payments are now tax-free for households with an annual income under $150,000.
If you’ve already filed your 2020 return, you should not do anything. The IRS will refigure your taxes and send any refund amount directly to you. Go here for more unemployment updates as they become available.
[edited 4/2/21 | 2:28 pst]
How Will the Stimulus Affect Me?
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