Unemployment Compensation Exclusion FAQs
The American Rescue Plan Act of 2021 provides relief to individuals who received unemployment compensation in 2020. It excludes up to $10,200 of their unemployment compensation from their gross income if their modified adjusted gross income is less than $150,000. IRS has posted
unemployment compensation exclusion FAQs on the following topics:
- Amended Return (Form 1040-X)
- Calculating the Exclusion
- Claiming the Exclusion (Before Filing)
- Eligibility
- Finding the Unemployment Compensation Amount
- Impact to Income, Credits, and Deductions
- Post Unemployment Compensation Exclusion Adjustment
- Receiving a Refund, Letter, or Notice
- Victims of Unemployment Fraud
Please
note that Question 4 under Eligibility addresses the
dilemma of how to handle unemployment compensation and the $10,200 income
exclusion for taxpayers who are MFS in a community property state.