By Gregory Bilecki, Senior Accountant

On Wednesday, March 24th, the IRS released guidance centered around the $10,200 unemployment income exemption provision per terms of H.R. 1139, more commonly known as the American Rescue Plan Act.

Federal forms were not updated timely to reflect the provision rendering certain taxpayers ineligible who qualified. For those who have yet to file an amended return and are affected, the IRS is currently implementing an automated solution to be rolled out in May with specific dates currently unknown as of the date of this article. Per updated IRS guidance, there is not a need for taxpayers to file an amended return unless amending substantiates an additional purpose beyond the unemployment income exemption. This process is designed for those only who have already filed for 2020 and otherwise meet the exemption requirements to not have unemployment wages included in taxable income.

For those who have still yet to file, federal forms and most tax software have already been updated, while also allowing the full $10,200 exemption regardless of individual or married filing status if you are under the $150,000 AGI threshold (with the exemption calculated as part of the threshold requirements).

For additional details and up-to-date reporting information, make sure to visit IRS.gov.