Federal American Rescue Plan Act payments; Tax return adjustments for 2020 paid in 2021; Rental Assistance received

Forum|Forum|4 years ago
January 26, 2022
5 replies
51 views

Are taxes being assessed for the Federal American Rescue Plan Act weekly payments via unemployment in 2021? If any rental assistance was received, how is this reported? And finally, for the incorrect tax adjustments made (for 2020, but paid out in 2021) in States (MN) that hadn't caught up to revising tax forms not taxing the FARPA payments, how is this interest reported as income? Will a special tax form get mailed to us, or can it be done in TurboTax without the documentation (aside from the check descriptor stating the interest amount added onto the Federal and Tax returns? Thank you!

RobertB4444

Level 15

You will receive documentation from the state that paid you in 2021 on form 1099-G which will show all taxable unemployment payments issued to you.

In some states these are not mailed to you but must be downloaded from the same website where you registered for unemployment.

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AmberSpAuthor

Level 2

Thank you for your response; perhaps I have to clarify the situation a bit further. So when filing 2020 taxes in early 2021, I overpaid both Federal & State taxes as TurboTax had not received updated tax forms to reflect FARPA payments not scheduled to be taxed. By the end of 2021 I had received adjusted refunds from both Federal and State agencies for the error (they auto-corrected, nothing needed to be filed on my end). This included the corrected tax difference, plus interest for the funds being held 7 additional months. The correspondence noted this amount, and stated it is my responsibility to claim the interest as income when filing 2021 taxes in 2022, but it did not indicate what, if any, tax form would be sent for this nominal difference, or how this can be added as income. Just so I'm understanding correctly, the IRS (for the Federal portion) and State of MN will issue 1099Gs for the interest paid on the amended tax returns?

Also, can the other two questions be addressed, or do I need to submit single questions only and make 3 total entries?

Thanks again for your assistance!

RobertB4444

Level 15

1099-Gs are for unemployment payments that you received in 2021.

You will report the interest as interest received just as if from a bank. The IRS will send you a 1099-INT if the amount is large enough. I'm not sure if your state will. The letter you got may be all that you get.

TurboTax will allow you to enter the interest using the letters that you received as the only documentation.

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davidbsprenkle

Level 2

I received two American Rescue Plan direct payments in 2021. How do I enter them in Turbo Tax?

KrisD15

Level 15

You do not need to report Covid relief "Rental Assistance" as income.

Economic Stimulus Payments are also not taxable income on your Federal return, although the payments received need to be entered into the program so that the TurboTax program can compute a credit if applicable.

TurboTax will ask for that information during the interview.

Desktop users may also look at "Recov Rebate Cr" in their list of forms.

According to the IRS:

"No. Emergency Rental Assistance payments made to eligible households are not considered income to members of the household."

IRS LINK

@davidbsprenkle

[Edited 03/07/22 I 12:27pm PST]

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