Eligible residents of the U.S. territories who receive unemployment benefits may be eligible to exclude a portion of unemployment compensation from U.S. income tax for 2020, the Internal Revenue Service announced.
Citing legislation that was passed on March 11, IRS said taxpayers with modified adjusted income of less than $150,000 may exclude the first $10,200 of unemployment compensation from their 2020 federal income tax return.
In the case of taxpayers that are married filing jointly, the maximum exclusion would be $10,200 for each spouse for a maximum of $20,400. Taxpayers who filed before the law was passed should not file an amended return.
The Pandemic Unemployment Assistance and the Federal Pandemic Unemployment Compensation are both subject to the same U.S. tax rules that apply to other unemployment compensation under the CARES Act that was enacted last year.
The $10,200 exclusion applies to these new types of unemployment compensation for U.S. income tax purposes.