IRS has fixed incorrect UI exclusion worksheet - Spidell

IRS has fixed incorrect UI exclusion worksheet


The IRS quietly issued a revised unemployment insurance (UI) exclusion worksheet today. This version of the worksheet does not include UI compensation received by a taxpayer in the modified AGI calculation used to determine whether a taxpayer falls below the $150,000 threshold to qualify for the exclusion of up to $10,200 of UI from taxable income.

Unfortunately, the IRS has not stated what taxpayers who calculated their UI exclusion using the worksheet released on March 12, 2021, should do. It is also unclear how soon your tax software will incorporate this updated worksheet.

For 2020 returns filed prior to the enactment of the UI exclusion, the IRS is directing taxpayers to hold off on filing amended returns, stating that they will be able to automatically refund taxes related to the exclusion. However, it is unclear if they will also automatically adjust other items on the tax return affected by the decreases in taxpayers’ AGI (such as Recovery Rebate Credits).

The new worksheet is available at:

www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

Attend Spidell’s American Rescue Plan: Tax Implications webinar today or tomorrow and get more information on this change. Click here and register now.