My wife received Alabama unemployment compensation in 2020 (with taxes withheld from payments) due to COVID shutdowns and was overpaid (self-employed independent contractor). Partial repayment made in 2020; we continued to make repayments in 2021 ($600 repaid)... Will probably finish making repayments in 2022. We file jointly.
At the start of 2021 she received a 1099-G showing amounts received and amounts repaid so far. As of today in 2022, we have not yet received a 1099-G showing any amounts repaid in 2021.... Maybe we're not supposed to receive one? Maybe it comes ONLY if we received UC in 2021 (which we did not)? Should we be expecting a 1099-G showing only amounts repaid in 2021? Maybe we missed it or lost it somewhere?
I understand there may have been an exclusion of UC income as taxable income for the 2020 taxes if our AGI was under a certain amount (which it was) and if our received UC income was under a certain amount (which it was) ... So I believe we would have qualified for this exclusion (our 2020 schedule 1 line 7 "Unemployment compensation" shows a positive amount, line 8 shows a negative amount and to "See attachment" where a UC amount is listed as negative.) I'm not sure if this factors in to what or if we report the 2021 repayments?
Do we report any amounts repaid in 2021?
I saw other people ask similar questions and the instructions on how to add the repayment information.... I went through the exercise to see what it looks like and I only had to enter the repayment amount, I did not have to enter any other details (all the "enter information from box 1, box 2, box 3" etc. stuff...) ... I guess what I have done is correct?
Will I need to do a similar exercise for state taxes?
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No. It's quite likely you will not receive a form showing your repayments since the form is required when you receive income from unemployment, not when you repay it. If your household income was less than $150,000, the first $10,200 of unemployment was tax-free, but any amount you receive above that would have been taxed.
The IRS did the adjustment for removing any unemployment income that was on the tax return up to $10,200, if you filed before the change was made during last tax season.
Repayments: What you did is not correct.
No, you will not report any repayments because the amount is below $3,001. And, since your unemployment was not taxed up to the amount shown, there would be no reduction to income allowed. Prior to the Tax Cuts and Jobs Act (TCJA) there was a deduction for amounts repaid that were $3000 or less, on itemized deductions, at this time there is no deduction allowed. If the repayment had been greater than $3,000 then there would have been an adjustment to income or a credit against tax.
State Tax: If your state taxes unemployment (some do not), then you will need to check your state rules.
No. It's quite likely you will not receive a form showing your repayments since the form is required when you receive income from unemployment, not when you repay it. If your household income was less than $150,000, the first $10,200 of unemployment was tax-free, but any amount you receive above that would have been taxed.
The IRS did the adjustment for removing any unemployment income that was on the tax return up to $10,200, if you filed before the change was made during last tax season.
Repayments: What you did is not correct.
No, you will not report any repayments because the amount is below $3,001. And, since your unemployment was not taxed up to the amount shown, there would be no reduction to income allowed. Prior to the Tax Cuts and Jobs Act (TCJA) there was a deduction for amounts repaid that were $3000 or less, on itemized deductions, at this time there is no deduction allowed. If the repayment had been greater than $3,000 then there would have been an adjustment to income or a credit against tax.
State Tax: If your state taxes unemployment (some do not), then you will need to check your state rules.
Thank you so much!
I will remove the 1099-G exercise I went through....
Again. Thank you!
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