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Colleen527
Level 1

Unemployment tax relief 2021

My husband was laid off due to Covid in March 2020.  He immediately filed for unemployment.  However, it took 13 months until the state started paying the benefits, so all of the UI payments he received were in 2021.  Will there be tax relief offered again on UI for the 2021 filing year?

3 Replies
DoninGA
Level 15

Unemployment tax relief 2021

The legislation granting an exclusion of up to $10,200 of unemployment compensation from being reported on a tax return was only for tax year 2020.

No legislation has been passed where this same exclusion would be available on a 2021 tax return.

xmasbaby0
Level 15

Unemployment tax relief 2021

No one knows the answer to that.   The tax law that passed in March of 2021 waived federal tax on  the first $10,200 of unemployment received in 2020.   It would take another act of Congress to extend that past 2020 returns.  We do not know what -- if anything-- they will do.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
NateTheGrEAt
Employee Tax Expert

Unemployment tax relief 2021

Hi Colleen527,

 

Sorry to hear that it took such a lengthy time before your husband received unemployment benefits. You ask a great question. Unfortunately, no one knows exactly what Congress may do. I can tell you that at this time there is no law that has passed exempting unemployment benefits received in 2021 from tax. You might want to communicate with your representatives in Congress to let them know that this issue is important to you. With the pandemic still ongoing there are surely many folks still receiving unemployment in 2021 who would benefit from an exemption. 

 

I hope this helps answer your question!

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