2020 Back Unemployment Benefits received in 2021

[Romeo3]

I received the majority of my 2020 unemployment benefits that were owed to me in a lump sum in January 2021.  Is there any way I can use the $10,200 exemption that was meant for 2020 benefits, or am I stuck with no exemption because they were finally paid out to me in January 2021?

Thanks for any help you can offer!

[Natalie A · Accepted solution]

Hi Romeo! Unfortunately, you would not be able take advantage of the $10,200 exclusion as the income was received in 2021. In order to be eligible for the exclusion the unemployment compensation must be received in 2020 and your modified adjusted gross income (AGI)  must be less than $150,000. The IRS has a Unemployment Compensation Exclusion FAQs page that I'm including for more information. IRS Unemployment Compensation Exclusion FAQs  

[Romeo3]

Thank you for your response ❤️

[Lulu70]

I had a similar question as I had already filed my 2020 taxes before the 10,200 exemption was offered. Can I ago back and amend my 2020 taxes to take advantage of it that way?

[Natalie A]

My pleasure Romeo, glad to help. Hi Lulu, the IRS advised taxpayers who are eligible for the unemployment exclusion that they would NOT need to amend their 2020 return, that the IRS would recalculate the return and any resulting overpayment would be sent as a refund to the taxpayer.   As a side note, there are situations were an amendment would be applicable. If the Unemployment Exclusion of up to $10,200 in unemployment compensation would now make you eligible for a credit or deduction not claimed on your original return, in that case the taxpayer would amend. The IRS has a frequently asked questions page related to this and gives examples of situations where the taxpayer would need to amend. See Question 2 Unemployment Exclusion FAQs, Amended Return 

[Bweeks51]

So in 2020, someone is unemployed and files a claim for 2020. EDD delays payment for the 2020 claim and then finally gets around to paying the 2020 unemployment benefit, but due to know fault of the taxpayer they aren't given the payment until 2021. The person is expected to lose the exclusion benefit and is subject to the full taxable income in 2021, even though it had nothing to do with them and they should have received the money in 2020 and had been able to exclude $10,200 from being taxable. Sure doesn't seem right. 

[ErnieS0]

The IRS taxes you on income in the year received @Bweeks51. Because of this, as awesome Tax Expert @Natalie A said, you will not be able to claim the $10,200 unemployment exclusion for 2020 unemployment received in 2021.

[Rorkie1014]

I provided all of my unemployment paid to me in 2021. Unemployment gave me an itemized payment list showing payments for 2020. Also backed them up with bank statements. And I did get the $10,200 credit 

[LindaS5247]

You are correct, you should have gotten the tax credit for unemployment paid for 2020, on your 2020 tax return.

In general,  unemployment benefits are included along with your other income such as wages, salaries, and bank interest.

For the tax year 2020, the first $10,200 of unemployment income was tax free for taxpayers with an AGI of less than $150,000 regardless of filing status. 

This "credit" was only available for the 2020 tax year. It does not apply to unemployment income for 2021.

This was only available on the 2020 tax return. It looked like this (it was reported on Schedule 1):

Click here for additional information about reporting unemployment benefits.

Click here for information on the 2020 Unemployment Compensation Tax Credit.