Unemployment is taxable, so you need to enter it. You can still use the recovery rebate credit if you did not receive both stimulus checks. And you may want to look at whether the 2019 "lookback" helps you.
Unemployment compensation is taxable on your federal return.
You will have to enter a 1099G that is issued by your state.
Some states will mail out the 1099G. Or you might need to go to your state’s unemployment website and use the password, etc. that you have been using to certify for weekly benefits to get your 1099G from the state’s site.
Enter your 1099G in Federal>Wages & Income>Unemployment
Go through the screens very carefully, making sure to enter any federal/state tax you had withheld from the unemployment.
STATES THAT TAX UNEMPLOYMENT BENEFITS
AZ, AR, CO, CT, DE, DC, GA, HI, ID, IL, IN, IA, KS, KY, LA, MA, ME, MD, MI, MN, MS, MO, NB, NM, NY,NC, ND, OH, OK, OR, RI, SC, UT, VT, WV, WI
STATES THAT DO NOT TAX UNEMPLOYMENT BENEFITS on the state return
AK, CA, FL, MT, NH, NJ, NV ,PA, SD, TN, TX, VA, WA, WY
The stimulus check is an advance on a credit you can receive on your 2020 tax return. If something went wrong or you did not get the stimulus check in 2020, you can get it when you file your 2020 return in early 2021
The Recovery Rebate Credit will be found in the FEDERAL REVIEW section. ( you should see "Let's make sure you got the right stimulus amount”) If you are eligible it will end up on line 30 of your 2020 Form 1040.
Make sure that you enter ALL of the stimulus money received for the 1st ad 2nd stimulus for yourself, your spouse and your children.
Click on Tax Tools on the left side of the screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.
Many people had lower incomes during the pandemic in 2020 due to reduced work hours, layoffs, etc. Or they received unemployment benefits. These factors affect how much earned income credit and additional child tax credit you can get on your 2020 tax return and affect your 2020 refund.
There is a “lookback” option that allows you to use your 2019 amounts for earned income credit or child tax credit. You can choose whether to use your 2019 amount or your 2020 amount. Choose whichever amount gives you a better tax refund for your 2020 refund.
You can see this and choose in the earned income credit section in Deductions and Credits.
You still MUST enter all of your 2020 income into your 2020 tax return, including any unemployment you received.
Please follow these steps in TurboTax:
- Login to your TurboTax Account
- Click on the Search box on the top and type "EIC"
- Click on “Jump to EIC”
- Answer the questions until you reach the screen "Do you want to use last year’s earned income?"
- Note your current refund amount using your 2020 earned income at the top of the screen.
- Click "Yes", enter your "2019 Earned Income" if the field is blank and click "continue".
- Compare the new refund amount using your 2019 earned income with the previously noted refund amount using your 2020 earned income.
Maryland RELIEF Act, signed into law by Governor Hogan 2/15/2021, retroactively removes 2020 Maryland unemployment compensation as taxable income at the state level. RELIEF Act also proactively removes 2021 Maryland unemployment compensation as taxable income at the state level. When will TurboTax update 2020 Maryland State software?
We do not know the timetable for an update to include this new state information for MD taxpayers. However, you can complete and file your federal taxes while awaiting the state updates.
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