Great News for Unemployment Benefits!

Great news for 2020 unemployment benefits! The IRS will begin recalculating taxes and start issuing refunds this upcoming May into the summer. This is wonderful because normally any unemployment compensation individuals receive is taxable by the IRS! 

Under the new law, taxpayers who earned less than $150,000 in modified adjusted gross income can exclude some unemployment compensation from their income. This means they don't have to pay tax on some of it. People who are married filing jointly can exclude up to $20,400 – up to $10,200 for each spouse who received unemployment compensation. All other eligible taxpayers can exclude up to $10,200 from their income.

You may be thinking, “what if I already filed my taxes for 2020.” Don’t fret!  For taxpayers who already have filed and figured their 2020 tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation. Any resulting overpayment of tax will be either refunded or applied to other taxes owed.