New guidance issued from the IRS explains how to accurately compute the new exclusion on a portion of employment income under President Joe Biden’s American Rescue Plan Act.
Taxpayers who received unemployment benefits in 2020, and whose modified adjusted gross income (AGI) was less than $150,000, do not have to pay tax on the first $10,200 in unemployment compensation. Amounts over $10,200 for each individual are still taxable.
Find the new instructions for Schedule 1 (Form 1040), lines 7 and 8, here.