As a result of the ongoing COVID-19 pandemic, millions of Americans have filed claims for unemployment benefits in 2020 and 2021. Recently, Congress passed the American Rescue Plan Act, a $1.9 trillion rescue package that provides important tax-related relief to unemployed taxpayers.
The new law extends two COVID-19 related unemployment insurance programs:
- the Pandemic Unemployment Assistance program for self-employed individuals (Realtors, Brokers, and Real Estate Professionals), independent contractors (Realtors, Brokers, and Real Estate Professionals), gig workers, and part-time employees who generally do not qualify for state-level unemployment assistance, and
- the Federal Pandemic Unemployment Compensation program. The result of these extensions is that unemployed individuals will receive, or will continue receiving, $300 per week of unemployment insurance payments. These payments, which were scheduled to expire on March 14, 2021, will continue until September 6, 2021, and are in addition to any state unemployment benefits for which an individual may qualify.
In addition, if you received unemployment compensation in 2020, the American Rescue Plan Act provides a limited exclusion from income for some of that unemployment compensation. Generally, unemployment income is taxable. However, under the new law, up to $10,200 (or $20,400 in the case of a joint return where each spouse receives unemployment compensation) of unemployment compensation received in 2020 may be excludible from income. This exclusion applies only to the extent your adjusted gross income is less than $150,000. The adjusted gross income threshold applies to each individual in determining how much of that individual’s unemployment compensation is excludible from income.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 03/12/2021 08:05)