On Friday, President Biden signed the newest coronavirus relief package, and while there are many different pieces to the bill, we would like to highlight one key aspect regarding unemployment income in 2020. Under the bill, the taxation of unemployment income is changed for those with income under $150,000 in 2020. The first $10,200 of unemployment income for these taxpayers is now considered nontaxable income. If you typically file married filing jointly, the amount of nontaxable unemployment income doubles to $20,400, while the income limit stays constant at $150,000.
At this point, if you have already filed your tax return, we suggest holding off on filing an amended tax return for now. It is possible that the IRS changes your return automatically as it is processed, and filing an amended return would slow down the process. If in the future it makes sense to file an amended return, we will reach out to you, but if you want to ensure you are on our list for this item, send us an email to office@hkaglobal.com. If you haven’t filed your return yet, we suggest waiting a little while longer to ensure the tax filing software has been updated to the new law.
