unemployment Compensation

Did you receive a check from the IRS and not know why?

The IRS is sending out checks to tax payers who included up to $10,200 of unemployment compensation on their 2020 returns. 

For eligible taxpayers, the amount lowers your income, which may make you eligible for other benefits including an additional Recovery Rebate Credit. The IRS includes interest income on the refund. 

Eligibility

The refunds will only apply to the returns prepared early in the 2021 tax season (for 2020 tax returns), before the $10,200 unemployment benefit exclusion became law on March 11, 2021. Under federal legislation, if a taxpayer received unemployment benefits in 2020 and the taxpayer’s federal adjusted gross income (AGI) was less than $150,000, the first $10,200 of the taxpayer’s unemployment benefits is excluded from income for federal tax purposes.

Rhode Island

For Rhode Island tax purposes, in contrast to the federal law, unemployment benefits are taxable. Taxpayers that filed their tax returns excluding the unemployment benefits from income may need to file an amended return to report the unemployment benefit.  The Rhode Island Department of Revenue Tax Advisory states that returns electronically filed excluding the unemployment benefits were changed automatically. Taxpayers will receive a notice from Rhode Island reducing the refund originally claimed or requesting a payment due to an increase in the tax liability.

For more information visit the RI Department of Revenue ADV 2021-13  and RI Department of Revenue ADV 2021-28 or contact us at 401-831-0200.

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