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IRS Updates FAQ on Unemployment Compensation Exclusion

The American Rescue Plan Act of 2021 provided relief to those receiving unemployment compensation in 2020.

The IRS on Friday updated frequently asked questions for the 2020 unemployment compensation exclusion in Fact Sheet 2022-39.

The updates are:

  • Topic D: Amended Return (Form 1040-X): Combined question 1 and 2, removed question 3 and renumbered question 4
  • Topic E: Impact to Income, Credits, and Deductions: Question 2
  • Topic G: Receiving a Refund, Letter, or Notice: Questions 2, 3, 5, 8 and 9
  • Topic H: Finding the Unemployment Compensation Amount: Question 2

The American Rescue Plan Act of 2021, signed into law on March 11, 2021, provided relief to individuals who received unemployment compensation in 2020. It included a provision that makes the first $10,200 of unemployment nontaxable for each taxpayer who made less than $150,000 in 2020. In the case of married individuals filing a joint tax return, this exclusion of up to $10,200 applies to each spouse.

More information about reliance is available.