global Tax American Rescue Plan Extends Unemployment Benefits March 23, 2021 The recently passed American Rescue Plan includes several changes to unemployment benefits. Here’s what you need to be aware of. Did you read our blog, Biden Signs the American Rescue Plan: What’s Inside? You will want to check it out for financial relief measures for individuals, families and businesses. One of the most notable changes introduced in the bill is the extension of unemployment benefits. Federal unemployment benefits of $300 per week are extended through September 6, 2021. Here is what you need to know. What’s inside the American Rescue Plan Act? Check out our blog for the details, but in a nutshell the bill provides: $1,400 stimulus checksAdditional funding for EIDL program, PPP loans and other business grantsEmployee Retention Credit extended through 12/31/2021Unemployment benefits extended and exemption from taxExpanded child tax credit, child and dependent care credit and earned income tax creditExtended unemployment benefits The Act extends several unemployment benefits. This includes: Extends unemployment benefits for previously employed workers through September 6, 2021Maintains weekly unemployment supplement benefits of $300 for an additional 25 weeks through September 6, 2021Exempts $10,200 of unemployment compensation for taxpayers with modified adjusted gross income below $150,000. For married couples, a total of $20,400 of unemployment compensation is exempt if both spouses are entitled to such benefits. This is a retroactive exclusion, so it applies to unemployment insurance benefits received in 2020 (meant to reduce the issue of surprise tax bills).Reporting on your tax return Total Unemployment Compensation (as reported on Form 1099-G) is reported in full on your 2020 tax return, but up to $10,200 per person is subsequently backed out.Already filed? The IRS has advised not to amend as they expect to be able to automatically issue refunds associated with the $10,200.When is the tax filing deadline? Read our blog, IRS Pushes Individual Tax Deadline to May 17th. Note that at this point the extension only applies to federal and many state individual returns as of now, stay tuned for more news on the state tax front. Questions? Contact us.
