We have seen so many clients that collected unemployment in 2020. More than we have seen in our over 35 years of tax preparation experience. This led to many people owing money because not enough taxes were withheld from their unemployment checks. I know, it doesn’t seem fair, but we don’t make the laws.
Fortunately, the latest stimulus law singed by President Biden provide some relief. If you made less than $150,000 in adjusted gross income in 2020, then taxes on the first $10,200 of unemployment are waived.
(Don’t ask me where they came up with the number $10,200.)
So, while we still don’t know how this is going to be enacted by the IRS, we are not filing any more returns where this could be a factor. We are holding for additional guidance from the IRS. Likewise, if you fall into this category, and already filed, we are seeking guidance from the IRS on how to proceed. You may need to file an amended return. If you do, we can help!
Stay tuned for more information as it becomes available.