Married taxpayers could receive the exclusion with respect to benefits paid both spouses.įAFSA applications: The IRS also on Friday added new FAQ 3 to Topic I: Post Unemployment Compensation Exclusion Adjustment, advising that, based on information from the Department of Education, applicants filing a Free Application for Federal Student Aid (FAFSA) should do so according to its instructions and afterward check with their school's financial aid office regarding any financial changes, including an exclusion of unemployment benefits, that may have affected their financial aid.
In either case, the IRS recalculated those returns applying the exclusion of up to $10,200 of unemployment benefits paid in 2020, if the taxpayer's modified adjusted gross income was less than $150,000. By that date, some taxpayers had already filed 2020 tax returns including the unemployment benefits, or did so afterward. 117-2, on March 11, 2021, with respect to the 2020 tax year. The unemployment exclusion was enacted as part of the American Rescue Plan Act, P.L. Taxpayers must reply to the notices to receive the credit or credits (although the notice is not confirmation they are eligible for them) but do not have to file an amended return. FAQs G8 and G9 note that taxpayers might receive a CP08 or CP09 notice from the IRS advising that they did not claim the additional child tax credit or earned income tax credit, respectively, but may now be eligible for one of those credits as a result of the IRS's exclusion of unemployment benefits from their income. Notices CP08 and CP09: The two tax credit FAQs were added to the page's Topic G: Receiving a Refund, Letter, or Notice. The IRS also addressed a possible complication for FAFSA applicants. Taxpayers whose 2020 income tax returns were revised by the IRS to exclude unemployment benefits from gross income may be eligible for the additional child tax credit or earned income tax credit as a result, the IRS advised in two frequently asked questions (FAQs) it added Friday to its 2020 Unemployment Compensation Exclusion FAQs webpage.
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