Syracuse, NY – New York has not yet passed the federal government’s exemption from the first $ 10,200 in unemployment benefits, forcing many New Yorkers, still suffering from the impact of the coronavirus pandemic on their finances, to file their Delay tax returns for 2020.
The American bailout plan exempts the first $ 10,200 in unemployment benefits received in 2020 from federal income tax ($ 20,400 for married couples, though the individual limit of $ 10,200 still applies to each).
The exemption applies to individuals or couples who had an adjusted gross income of less than $ 150,000 in the past year. It could save a person $ 1,000 or more in federal income taxes.
But it is up to states with income taxes to take the same exemption when it comes to state taxes.
Some federal states automatically adopt changes to federal tax legislation. But New York isn’t one of them right now. And state lawmakers haven’t decided whether to change the tax law to introduce the same unemployment benefit exemption.
This could change soon. A bipartisan bill passed in the Senate (Senate Bill S5125A) would exclude the first $ 10,200 in unemployment benefits New Yorkers received last year from state taxes, a federal exemption.
“During this extraordinarily difficult time, New Yorkers deserve our full help,” said Senator Simcha Felder (D-Midwood, Madison, Boro Park), who introduced the bill. “If the government gives help with the right hand, the left hand has nothing to do with taking it back. Unemployment benefits are a lifeline for families who struggle to have a roof over their heads, to have food on the table and to pay for bare minimums. “
A similar bill was introduced to the congregation earlier this month by MP Peter J. Abbatte (D-Bensonhurst, Dyker Heights).
If accepted, the exemption could save the average New York taxpayer around $ 500 in state taxes on their unemployment benefits.
But if state lawmakers don’t accept the exemption, every dollar New Yorkers received as unemployment benefits in the past year will be taxed by the state. (More than $ 59 billion in unemployment was paid to nearly 4 million New Yorkers as of March 2020 when the pandemic started late in the year, averaging $ 15,000 per person, according to the Daily News.)
Felder’s bill is on the Senate Budget and Revenue Committee. Felder said he expected a similar bill to be introduced in the congregation.
However, a faster way would be the 2021 state budget. It is possible that the exemption will simply be included in the budget due Thursday. Governor Andrew Cuomo’s office and the State Department of Taxation and Finance did not respond to requests for comment.
Meanwhile, New Yorkers who received unemployment benefits in 2020 had to withhold their tax returns. Otherwise, they may have to file amended state tax returns later this year to apply for exemption from their state taxes.
Fortunately, this year taxpayers have more time to file their tax returns. The IRS has extended the federal deadline from April 15 to May 17, and New York has followed suit.
Taxpayers who received unemployment benefits and filed their federal returns before the American bailout plan was approved don’t have to do anything. The IRS calculates the exemption for them and simply gives them a larger refund.
Rick Moriarty covers business news and consumer issues. Do you have a tip, a comment or a story idea? Contact him at any time: E-Mail | Twitter | Facebook | 315-470-3148