The IRS has updated its FAQ on the Unemployment Compensation Exclusion.

IRS Advisory Council

The IRS has updated its FAQ on the Unemployment Compensation Exclusion.

The American Rescue Plan Act of 2021 helped those receiving unemployment benefits in 2020.

In Fact Sheet 2022-39, the IRS updated frequently asked questions about the 2020 unemployment compensation exclusion.

The updates are as follows:

  • Topic D: Amended Return (Form 1040-X): Questions 1 and 2 were combined, question 3 was removed, and question 4 was renumbered.
  • Question 2 for Topic E: Impact on Income, Credits, and Deductions.
  • Questions 2, 3, 5, 8, and 9 are from Topic G: Receiving a Refund, Letter, or Notice.
  • Topic H: Calculating Unemployment Compensation: Question 2

Individuals who received unemployment benefits in 2020 were given relief under the American Rescue Plan Act of 2021, which was signed into law on March 11, 2021. It contains a provision that makes the first $10,200 unemployment pay nontaxable for each taxpayer earning less than $150,000 in 2020. This exclusion of up to $10,200 applies to each spouse when married individuals file a joint tax return.

There is additional information on reliance.

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[…] The American Rescue Plan Act of 2021 helped those receiving unemployment benefits in 2020. In Fact Sheet 2022-39, the IRS updated frequently asked questions about the 2020 unemployment compensation exclusion. The updates are as follows: Individuals who received unemploymen  […]

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