R. Gary Clark Associates

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UNEMPLOYMENT COMPENSATION TAXATION

A Timeline on the Frustrating Ever Changing Guidance on Preparing Your 2020 Tax Return

On March 11th the Feds passed legislation that would exclude up to $10,200 of unemployment benefits from being taxed on the federal level, among other tax law changes.
We were instructed to wait to receive guidance from each State and from our tax software providers before e-filing any tax return that contained unemployment compensation.

On March 22nd, the IRS provided the new Tax Code and Filing location to report the exclusion.

On March 26th the IRS computers were fixed and software companies notified of changes that would prevent tax returns electronically filed with unemployment benefits from being rejected.

Updates To THIS YEAR'S TAX FILING - STAY TUNED

Unemployment and Premium Tax Credit - ARP Act
The American Rescue Plan Act of 2021 makes a portion of unemployment compensation non-taxable for certain filers and eliminates repayment of excess funds received through the Advance Premium Tax Credit.
We ask for your patience while we work closely with the IRS and state taxing authorities to implement any necessary changes.
We know many of you are holding 2020 returns that have unemployment benefits or the Advance Premium Tax Credit. We expect the IRS to issue official guidance on these items in the near future.
For returns that have been filed with these items, we advise that you hold off on filing amended returns until the IRS provides official guidance.

Thank you to all our clients for another successful tax season! Enjoy your spring and summer!! Finally seeing and feeling some sunshine!!