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cynnietam
New Member

Unemployment

I got unemployment for 5 months in 2021, how will that affect my tax returns?

2 Replies
DoninGA
Level 15

Unemployment

The unemployment compensation you received in 2021 must be included as income on the 2021 tax return you file in 2022.

Your state will send you a Form 1099-G for the compensation received in 2021.  The form is usually mailed in January or February or your state may require you to access the 1099-G on the state unemployment department website.

WendyS
Employee Tax Expert

Unemployment

 

Thank you for reaching out to us today.

 

The American Rescue Plan Act passed into law that the first $10,200 of unemployment compensation was exempt from federal taxes for individuals with household incomes of less than $150,000 for the tax year 2020.  The American Rescue Plan Act unemployment benefit exclusion was only for the 2020 tax year.

 

I understand your question is related to unemployment compensation for 2021. At this time, there is no indication there will be an exemption from federal taxes for unemployment benefits received in 2021.   Current law requires that the income be reported as federal taxable income.  You should receive a 1099-G reporting your 2021 unemployment compensation for the year. This will be reported on your 2021 Individual Tax Return.  States vary whether the unemployment is taxable on a state level.  You will need to refer to your specific state’s tax laws.

 

The IRS newsroom is a great place to stay current with the latest changes as they are announced.   You may consider routinely checking the website to see if there are any announcements that will affect your specific tax situation in the future.

https://www.irs.gov/newsroom/whats-hot 

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