The Internal Revenue Service has announced preliminary guidance for the exclusion of up to $10,200 of unemployment compensation benefits per individual for the tax year 2020. Phase out limits do apply, but for the majority of taxpayers receiving unemployment compensation benefits this exclusion will greatly reduce their tax burden. Those who have already filed their tax return should wait to file an amended return. IRS believes they will be able to adjust the returns which were filed prior to the exclusion being enacted, meaning that an amended tax return may not be necessary.
States are not bound by the $10,200 exclusion. Governor Justice (WV) has stated that West Virginia will follow the federal exclusion, but that bill has not been passed into law as of this date.
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