Go to this IRS website for unemployment compensation exclusion FAQ's - https://www.irs.gov/newsroom/2020-unemployment-compensation-exclusion-faqs-topic-e-impact-to-income-...
Will this exclusion affect how I calculate certain income and/or credits on my 2020 tax return? (added April 29, 2021)
A1. Yes. When figuring modified adjusted gross income for any of the following deductions or exclusions, include the full amount of your unemployment compensation reported on Schedule 1, Line 7, unreduced by any exclusion amount:
- Taxable Social Security Benefits (Social Security Benefits Worksheet in the Instructions for Form 1040 and 1040-SR)
- IRA Deduction (IRA Deduction Worksheet in the Instructions for Schedule 1 in the Instructions for Form 1040 and 1040-SR)
- Student Loan Interest Deduction (Student Loan Interest Deduction Worksheet in the Instructions for Schedule 1 in the Instructions for Form 1040 and 1040-SR)
- The exclusion of Interest from Series EE and I U.S. Savings Bonds issued after 1989 (Form 8815)
- The exclusion of Employer-Provided Adoption Benefits (Form 8839)
- Tuition and Fees Deduction (Form 8917)
- The deduction of up to $25,000 for active participation in a Passive Rental Real Estate Activity (Form 8582)
