As part of the recently passed American Rescue Plan, the first $10,200 worth of unemployment payments is now tax-free for a person with an annual modified adjusted gross income of less than $150,000. This expanded tax relief begins this year, starting for taxpayers filing returns after January 1, 2020. The IRS will provide additional guidance about what you need to do to take advantage of this relief if you already filed your 2020 tax return.
If you’d like to be updated when the information becomes available, please sign up here. Per the IRS: There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.
IRS to recalculate taxes on unemployment benefits; refunds to start in May.
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