Editor’s Note: This story has been updated to clarify that the Unemployment Allowance Deduction is in Appendix 1 of the 1040 Standard Tax Form.
COLUMBUS – Ohioans who received unemployment benefits in 2020 will not have to pay income tax on the first $ 10,200 they received.
The change in a bill signed by Governor Mike DeWine on Wednesday brought Ohio in line with federal tax law. Under the American Rescue Plan, people who received unemployment benefits and earned less than $ 150,000 in adjusted gross income in 2020 can avoid income taxes on benefits up to $ 10,200.
The exclusion is $ 10,200 per person, so spouses filing a joint tax return can avoid paying taxes up to $ 20,400.
Almost every Ohioan who received unemployment benefits, roughly 94%, made less than $ 150,000, according to an analysis by the Ohio Legislative Service Commission. Ohio will lose between $ 81 million and $ 141 million in income tax revenue as a result of the change.
How to file your tax return to receive the benefit
If you haven’t filed taxes yet, here’s how to explain the change: On the federal standard 1040 form, fill out Appendix 1 and list the full amount of Unemployment Benefit you received on line 7 entitled “Unemployment Allowance” IRS advises .
This sum is listed on a 1099-G form that you received. For fraud related to unemployment, you should check that this figure is the same as the one you actually received.
Then list the amount that you can exclude on line 8 titled “Other Income” as a negative amount (in parentheses). For example, if you received $ 12,000 in unemployment you would list ($ 10,200) here as that is the maximum amount you can exempt from income tax.
You do not need to include unemployment benefit on state tax forms as it is included in your federally adjusted gross income.
What to do if you have already submitted
If you’re one of at least 2.65 million Ohioans who have already filed their income taxes, you don’t need to file an amended tax return – the IRS will reimburse any overpayments.
You will need to file an amended state and school district income tax return, available at tax.ohio.gov. Make sure to check the box for a modified rate of return and provide a reason: Your federally adjusted gross income has decreased. The Ohio Department of Taxation plans to release guidelines for filers in the coming weeks.
Rep. Jeff Crossman, D-Parma tried to amend the bill to remove income taxes on all unemployment benefits received during the pandemic, but that idea was rejected.
Going forward, the law will allow Ohioans to withhold income tax on future unemployment benefits – an option currently not offered by the Ohio Department of Job and Family Services. Because of this, many people do not know that they have to pay taxes on their services.
When are taxes due? The deadline for filing income tax has been postponed to May 17 for federal and state taxes due to the pandemic.