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Cuo-NO MAS! The Phantom Exemption?

  • Cuomo to say “NO” to following federal unemployment exemption?
  • New York State (NYS) Senators call for Governor to take action

As predicted, this past weekend, NYS announced its plan to follow suit on the federal individual tax return deadline, extending NYS individual return filing to May 17th. The news was met with congratulations from the state’s Senators. Yet, concern still looms over the Governor’s stance on waiving tax on jobless benefits.

Earlier this month, Biden signed the final seal of approval on the American Rescue Plan, putting into place a highly valuable tax exemption for unemployment benefits up to $10,200.

Several states already do not tax unemployment. Those that do, like New York, typically follow the federal tax code for unemployment income taxes. However, NYS has not yet indicated whether the state will also follow the federal precedent on Biden’s new unemployment income exemption.

Freeman Klopott of the state Division of the Budget reassured New Yorkers in a statement last week, saying: “Tax consequences for unemployment insurance benefits, which has been the law for 50 years, should be reviewed anew.”

The open promise, however, is not rooted in evidence. NYS Sen. Jim Tedisco reprimanded the Governor for the lack of such guidance in the wake of the newly announced deadline: “I’m disappointed [Cuomo] has given a tax slap to those New Yorkers who collected unemployment by failing to follow the federal government’s lead and exempting the first $10,200 of unemployment benefits from 2020 taxable income.”

New York’s state budget is due April 1, and all eyes are set on Governor Cuomo to see if and when he’ll grant the exemption provisions for New York’s unemployed. Klopott assures New Yorkers that “We will work with the Legislature to review this, and many ideas of merit, ahead of the April 1 deadline to enact a budget that delivers support for New Yorkers and closes a deficit caused entirely by the pandemic’s decimation of state revenue.”

NYS needs to act fast. April 1 is right around the corner and May 17, though not as early as April 15, will be here sooner than we think. Call DSJCPA at 516-541-6549 and visit our website to get started with your 2020 tax returns NOW!

Devin McQuillan
Associate, Creative Solutions

516-541-6549 | Email

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