Aloha Clients,
If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200.
If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200 (that's $20,400). Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.
Contact your tax pro if you filed your taxes before 03-11-21 to file an Amendment, to get the rest of your refund. We are waiting for the state to put out information regarding whether the state will follow the IRS and allow the exclusion.
Software programs may not be ready to make this adjustment for you, as this change has occurred in the middle of the tax season. The proper way to adjust is a subtraction on line 8, Schedule 1: American Rescue Plan Exclusion 03/11/21.
Mahalo!!
My Personal CPA Team
