In general, all unemployment compensation is taxable in the tax year it is received. You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you. See How to File for options. For general information about unemployment compensation, see Are Payments I Receive for Being Unemployed Taxable? and Tax Topic No. 418 Unemployment Compensation. Special rule for unemployment compensation received in tax year 2020 only The American Rescue Plan Act of 2021 authorizes individual taxpayers to exclude up to $10,200 of unemployment compensation they received in tax year 2020 only. In the case of married individuals filing a joint Form 1040 or 1040-SR, this exclusion is up to $10,200 per spouse. If you filed married filing joint and live in a community property state, each spouse can exclude up to $10,200 even if only one of you received unemployment income. To qualify for this exclusion, your tax year 2020 adjusted gross income (AGI) must be less than $150,000. This threshold applies to all filing statuses and it doesn't double to $300,000 if you were married and file a joint return. Any unemployment compensation in excess of $10,200 ($10,200 per spouse if married filing jointly) is taxable income that must be included on your 2020 tax return. Already filed a tax year 2020 tax return? The IRS is no longer automatically determining the correct taxable amount of unemployment compensation and the correct tax impacted by the exclusion of this income. See Topic D: Amended return (Form 1040-X) for information on filing an amended return. Preparing your tax year 2020 tax return now? You can still claim the special exclusion for unemployment compensation received in tax year 2020 if you haven't filed your 2020 tax return and your AGI is less than $150,000. Tax year 2020 returns can be filed electronically only by paid or volunteer tax return preparers. If you prepare a prior year tax return yourself, you must print, sign, and mail your return. There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and others who can assist you in filing your return. For more information about these and other return preparers who might be right for you, visit Need someone to prepare your tax return? Instructions and an updated worksheet about the exclusion can be found in the 2020 Form 1040 and 1040-SR Instructions PDF. These instructions can assist taxpayers who have not yet filed to prepare returns correctly. For additional information and scenarios, see the Unemployment compensation exclusion FAQs. Victim of unemployment fraud? Criminals using stolen identities filed claims for unemployment compensation in other people's names. Because unemployment compensation is taxable, state unemployment agencies submit Forms 1099-G to individuals in whose names and Social Security numbers the unemployment compensation was paid and to the IRS. Victims of fraud who receive Forms 1099-G with inaccurate amounts of unemployment compensation in Box 1 should notify the state agencies of the inaccuracies and request corrected Forms 1099-G. The Department of Labor details how to report fraud and protect yourself. Taxpayers should only report on their tax returns unemployment compensation they actually received in that tax year. Do not report unemployment compensation you did not receive. The IRS offers tax guidance to victims at Identity theft and unemployment benefits. More information IR-2021-71, IRS to recalculate taxes on unemployment benefits; refunds to start in May IR-2021-81, IRS reminds U.S. territory residents about U.S. income tax rules relating to pandemic unemployment compensation Exclusion of up to $10,200 of Unemployment Compensation for Tax Year 2020 Only IRS Operations Status
