Latest round of Covid relief comes with 2020 tax implications.
On March 11, 2021, President Biden signed into law a Covid relief bill called the American Rescue Plan. This bill authorized a third round of stimulus payments in the amount of $1,400 for each taxpayer and their dependents under certain income limits.
What you may not have heard is that the American Rescue Plan could impact your 2020 tax return—if you received unemployment last year. The bill made your first $10,200 of unemployment compensation NOT TAXABLE for 2020 if your household income was less than $150,000.
If you already filed your 2020 taxes and you received unemployment, be prepared—you will likely need an amended return. This may delay your tax return, as it will for many of our clients.
If you received unemployment but you haven’t filed your taxes yet, great—just be sure your tax preparer is aware of your situation and whether this legislation applies to you. When in doubt, ask!
We are still waiting on guidance from the IRS related to this new legislation and how it impacts tax filing. We will continue to monitor changes and updates, and you can count on us to keep you in the loop.