- House expected to release new tax code exempting unemployment benefits from federal taxes
Today, the House of Representatives holds the final seal of approval on a new tax legislation that has the potential to save thousands of dollars for millions of unemployed Americans. The newly proposed bill, Coronavirus Unemployment Benefits Tax Relief Act, would exempt unemployment benefits up to $10,200 from the federal income tax.
Unemployment benefits have been taxed for over forty years, since the 1980s. But after a historical, unprecedented 2020 fiscal year, with millions of households now facing unemployment, a new tax code may be on the way.
Under the proposed legislation, households earning under $150,000 would be exempt from paying taxes on the first $10,200 of their unemployment payments. This includes benefits that come from both state and federal unemployment insurance programs. It would be retroactive for those who have already filed returns.
The new Act has the potential to help financially struggling households, but will certainly be at the expense of tax preparers and an already crippled and backlogged IRS. The change will require the IRS to reprogram the new ruling into its computing systems and to implement a way to account for retroactive filers.
As such, some accountants are pushing for the IRS to delay tax season for the second year in a row to account for the myriad of new and last-minute changes that have come down the pike in the short month since tax season officially started.
DSJ does not want an extended tax season, so we are ready to get ahead of any of these new changes together with our clients. Call us now at 516-541-6549 and visit our website to stay up to date on all new changes in tax code this filing season.
Devin McQuillan
Associate, Creative Solutions
Contact:
516-541-6549 | Email