Tax Therapy of Dickinson Wright Unemployment Profit

0
88
 Tax Treatment of Dickinson Wright Unemployment Benefit

The Federal American Rescue Plan Act, signed by President Biden in March 2021, stipulates that up to $ 10,200 in federal unemployment benefits that individuals will receive in 2020 are excluded from gross income. Taxpayers can only be excluded if the federal adjusted gross income is less than $ 150,000.

Mid-March legislation created initial confusion about filing tax returns for 2020, especially for those who had previously filed their tax returns. The IRS ultimately advised taxpayers who previously filed a tax return that an amended tax return is not required. Instead, the IRS will process previously filed tax returns and issue tax refunds resulting from exclusion from gross income.

Individuals who have yet to file their 2020 tax return by the extended due date May 17, 2021 should declare their unemployment benefit on Appendix 1, line 7 of Form 1040 and claim exclusive benefits up to $ 10,200 as a deduction on Appendix 1, line 1 8th.

The Michigan Treasury Department recently issued guidelines for individuals filing Michigan tax returns, largely under federal tax law. The department has not yet issued guidance to anyone who has already filed before the new law. Michigan coordinates with the IRS to determine if a Michigan return can be processed and a refund issued without requiring a modified Michigan return.

The laws of other states may vary in how they deal with these issues.