New Exclusion of up to $10,200 of Unemployment Compensation
On March 11th, President Biden signed the American Rescue Plan, which will give to recipients of unemployment payments up to $10,200 tax-free. The allotment is only given to those with an adjusted gross income of less than $150,000 in 2020.
For those people who filed before March 11th or close to that date, the IRS will adjust the income of the return to account for this allotment. In order to accommodate this new provision, the IRS released on March 19th new instructions and a worksheet for paper filers, indicating that they can file it with their tax return.
In addition to this change, the IRS will also push back the tax filing date deadline for individual taxpayers from April 15th to May 17th, 2021. This extension does not apply to estimated tax payments.
As of March 13th, the IRS had already received over 66 million tax returns, which is a 13.3% drop from the same time in 2020.