Taxpayers who received unemployment compensation last year and who filed their tax return prior to the passage of the American Rescue Plan may not have to file an amended return after all. 

Changes to the recently enacted American Rescue Plan included a provision that allowed taxpayers who earned less than $150,000 in 2020 to exclude the first $10,200 of unemployment compensation ($20,400 if married filing jointly and both spouses received unemployment compensation) from being taxed. But anyone who filed a tax return before the new law took effect would miss out on this tax break unless they filed an amended tax return. 

Now the Internal Revenue Services (IRS) says they will automatically make adjustments to previously filed returns to include the $10,200 exclusion; and will later make similar adjustments to give eligible married taxpayers who filed a joint return the $20,400 exclusion. The automatic adjustments will also recalculate Earned Income Tax Credit (EITC) amounts for those who filed for an EITC. 

Taxpayers who did not originally claim Earned Income Tax Credits but who may now be eligible will need to file an amended return.

If you have questions about your tax return or your eligibility for the partial exclusion of unemployment compensation income, please call Gray, Gray & Gray at (781) 407-0300.