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?
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.
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.
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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