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Treasury: Additional Guidance Available on Treatment of Unemployment Compensation for Tax Year 2020

LANSING, MI--   The Michigan Department of Treasury has posted a notice for taxpayersrelated to the treatment of unemployment compensation for tax year 2020.

The federal American Rescue Plan Act excludes unemployment benefits up to $10,200 from income for tax year 2020 for those within certain income brackets, providing tax relief on both federal and state income taxes. Taxpayers who may have anticipated owing taxes may now be entitled to a refund.

"If you have already filed your tax return, please wait to file an amended return to receive the American Rescue Plan Act benefits," State Treasurer Rachael Eubanks said. "The IRS will be adjusting received returns and begin processing them in May without the need for taxpayers to file an amended federal return. States are awaiting guidance from the IRS as to whether they can provide us with the information we would need to do a similar calculation at the state level. This would alleviate the need to file an amended state return. We appreciate taxpayers’ patience as we work through this."

There is no need for taxpayers to file an amended federal return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.

The notice also includes information related to total household resources and household income for the purposes of various tax credits.

Additional information will be posted as it becomes available.

Nicole was born near Detroit but has lived in the U.P. most of her life. She graduated from Marquette Senior High School and attended Michigan State and Northern Michigan Universities, graduating from NMU in 1993 with a degree in English.