Tuesday, April 20

What are the 13 states that still tax total unemployment insurance benefits and do not apply the IRS exemption


The measure seeks to prevent families from being hit with a surprise tax bill.

Photo: Karolina Grabowska / Pexels

The American Rescue Plan approved in March gave extra help to those who were unemployed in 2020 and collected unemployment aid resources. The law exempts from federal taxes up to $ 10,200 in unemployment compensation per person received in 2020.

The exemption is available to singles and couples who have an adjusted gross income (AGI) of less than $ 150,000. Last week the IRS updated its registry that allows workers to exclude unemployment compensation from AGI calculations.. The tax agency has said that taxpayers who have already filed their taxes must not file an amended return, but wait for new indications.

What States Tax Unemployment Benefits?

See you Monday 13 states continued to tax unemployment payments who had not followed the federal initiative to extend an exemption to the first $ 10,200 in unemployment benefits claimed in 2020, as reported by the tax filing agency H&R Block.

The states are: Colorado, Georgia, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Mississippi, North Carolina, New York, Rhode Island, South Carolina, and West Virginia.

There is also another group of states that have not complied with federal regulations but they will let the taxpayers file their return as if the state did it granting the exemption to the filers.

These states are: Arizona, Ohio, and Vermont.

Also two states are offering partial exclusions of unemployment benefits in accordance with state law, it is Indiana and Wisconsin that adopted the federal exemption.

There are 14 states and the District of Washington that have adopted the federal exemption. In these states the $ 10,200 of benefits have been excluded from tax, but amounts in excess are taxable.

The states are: Connecticut, Iowa, Illinois, Kansas, Louisiana, Maine, Michigan, Missouri, North Dakota, Nebraska, New Mexico, Oklahoma, Oregon, and Utah, as well as Washington DC

What states are not taxing unemployment benefits?

The rest of the states do not tax income or unemployment benefits that are:

Alabama, Arkansas, California, Delaware, Maryland, Montana, Nueva Jersey, Pensilvania y Virginia.

Related: You can deduct masks and hand sanitizer as medical expenses from your IRS tax return

What are the states that do not tax income?

There are nine states that do not have income tax, but two of them still require taxpayers to file an income statement in certain circumstances. In New Hampshire and Tennessee, If an individual taxpayer receives more than $ 2,400 or $ 1,250, respectively, in interest and dividend income, they must report. In the other seven states, taxpayers only have to file a federal income tax return, these are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

In the remaining 42 “taxable” states and the District of Columbia, you will need to file a tax return if you reside there. Some states have already changed their filing deadlines to sync up with the extended federal deadline of May 17, however Oklahoma, Louisiana and Texas have until June 15.

Related: Will the IRS extend the deadline for the 2021 tax filing season again?

Remember that you must file your tax return where you are a resident and where you reside, in addition to the federal income statement. A large number of people have to travel for work and that does not mean that they stop residing in their home state. If, for example, you work in Nevada but are a New York resident, you still have to report your Nevada income to the New York tax agency, in addition to your federal income tax return.

In the same way, if you reside in Florida but work in Georgia, you will have to file a declaration of non-resident in Georgia Even though Florida is a tax-free state.

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