For 2020, the ARP Act allows individuals to exclude from income up to $10,200 of unemployment compensation. For married individuals filing a joint return, this exclusion is up to $10,200 per spouse. However, taxpayers who, after the unemployment compensation exclusion is applied to their return, are now eligible for certain income-based tax credits not claimed on their original return (such as couples with qualifying children who, as a result of the exclusion, became eligible to claim the EITC) should file an amended tax return to claim those credits.
IRS will issue refunds when appropriate. After reviewing a return, the IRS will make any corrections related to the unemployment compensation exclusion automatically. The IRS will then issue any refunds resulting from its review of, and corrections to, a taxpayer’s 2020 return.