Good Afternoon, The president is expected to sign a bill this week which will provide relief for the continued impact of COVID-19. The American Rescue Plan Act of 2021 extends unemployment benefits, provides funding for state and local governments, supports vaccine rollouts, expands the child tax credit, makes a portion of unemployment compensation nontaxable for certain filers, and gives many Americans an additional Economic Impact Payment. There are a couple of items in the bill that will affect 2020 tax returns, including the tax waiver for unemployment compensation up to $10,200 for many taxpayers and elimination of repayment of the Advance Premium Tax Credit. We realize you may have a lot of questions regarding the execution of the provisions and we want to assure you that we are working closely with the IRS and state taxing authorities as they update their forms, instructions and systems to accommodate the changes. As we learn more, we will keep you informed on related updates. Best Regards, Technical Support
IRS to Handle Unemployment Returns, You should not Amend Returns filed with unemployment benefits prior to the $10,200 exclusion should not be amended. The IRS has indicated it will refigure taxes on these returns and adjust the taxpayer's account accordingly. The IRS will then send any refund amount directly to the taxpayer. The IRS has not yet communicated a timeline for making adjustments and sending refunds. Look for an official news release in the coming days: https://www.irs.gov/newsroom If you file state returns in states that conform to the federal unemployment exclusion, you may still need to file amended state returns.
I will be on standby for all new changes.