March 15, 2021
The IRS issued the following statement on Friday, March 12, 2021, regarding certain retroactive provisions of the American Rescue Plan Act of 2021 (ARPA) signed into law on March 11:
“The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven’t filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.” (emphasis added)
In addition to the potential for $10,200 of unemployment benefits to be non-taxable, ARPA includes a provision that would eliminate the required repayment of the premium tax credit, which is used to reduce the out-of-pocket cost of health insurance obtained through the government’s healthcare marketplace. Normally, advances are made against that credit to reduce the monthly premiums, and in certain instances repayments of those advances have to be made via an individual’s tax return. ARPA eliminated the requirement to repay excess advances received during the year for 2020, 2021 and 2022.
Read more about these and other provisions of ARPA here.
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Asheville Boone Marion
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