Recipients of unemployment benefits in 2020 were relieved to learn that the recently enacted American Rescue Plan retroactively exempts the first $10,200 in benefits from income taxes. But what about those who already filed their 2020 tax returns? Should they file an amended return to reflect the new provision?
Not yet, says the Internal Revenue Service (IRS). The IRS is asking taxpayers who received unemployment compensation and have filed their tax returns to wait for additional guidance before filing an amended return. The agency needs more time to prepare guidance on this and several other provisions of the American Rescue Plan that impact taxes.
Have questions about this or other tax issues? Contact Gray, Gray & Gray at (781) 407-0300.