![]() The federal unemployment exclusion is reported on line 8 of the federal Form 1040 Schedule 1. For the federal income tax return, total unemployment compensation is reported on Line 7 of federal Form 1040 Schedule 1: Additional Income and Adjustments to Income. Taxpayers who have not yet filed their 2020 income tax returns do not need to wait to file. Taxpayers who have not yet filed their federal or Michigan income tax return do not need to wait to file. Taxpayers Should Consider Filing an Amended State Return for Unemployment Benefit Tax Relief Since the exclusion is taken during the calculation of AGI, no additional adjustment is necessary to receive the benefit of the exclusion on a Michigan income tax return.įor information about how to calculate the unemployment compensation exclusion for your federal return, go to: This is a federal exclusion that reduced AGI at the federal level. The federal law provides a gross income exclusion of up to $10,200 per person for unemployment compensation reported on a 2020 federal income tax return for individuals under certain income thresholds. The federal American Rescue Plan Act was signed into law on March 11, 2021. ![]() Įffect of the American Rescue Plan Act on the taxation of unemployment compensation. Unemployment compensation is generally included in adjusted gross (AGI) income under the IRC therefore, unemployment compensation is also included in Michigan taxable income. Under the Michigan Income Tax Act, "taxable income" means "adjusted gross income" under the Internal Revenue Code (IRC), subject to certain statutory adjustments. General rule: Unemployment compensation is taxable. This Notice addresses the unemployment compensation exclusion in the federal American Rescue Plan Act and its effect on the taxable income and total household resources of Michigan resident taxpayers and claimants under the Michigan Income Tax Act.
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