Workers Who Lost Jobs In 2020 Get Unexpected $10,200 Tax Break From Federal COVID Relief Plan
CHICAGO (CBS) -- A record number of folks received unemployment benefits in 2020. If you're one of them, there's important information you need to know for filing your taxes.
The new stimulus bill signed on March 11 allows eligible taxpayers to waive thousands of dollars in unemployment benefits.
CBS 2 Morning Insider Tim McNicholas breaks down what you need to know.
The $1.9 trillion American Rescue Plan waives federal income taxes on up to $10,200 in unemployment insurance benefits for people who earn under $150,000 a year, potentially saving workers thousands of dollars.
"So obviously that comes as a huge relief for folks," said Andy Phillips, director at the Tax Institute at H&R Block.
He's got more good news.
"Thankfully, Illinois has issued guidance that they will allow this exclusion on the state return as well," he said.
But hold up. What if you filed your taxes before this new provision? Phillips said sit tight.
"The IRS and the state of Illinois will issue more guidance as they determine next steps," he said.
That means you should not file an amended tax return. The IRS is trying to make administrative changes on their end first.
"It's not clear yet how exactly the IRS is going to communicate these changes, and if they'll issue a notice to impacted filers," Phillips said.
Until this becomes clear, Phillips recommends to stay in contact with your tax professional, or your do-it-yourself software provider if you self-file.
For more information on what you need to know before submitting your 20-21 taxes, H&R Block offers a few resources to help you prepare:
- Here's an H&R Block blog that outlines some of the top 5 things that may be different this year
- H&R Block also has a tax calculator to help people estimate what to expect with their tax situation
- Here's a Tax Prep Checklist