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Categorized | Tax Time

Taxpayers should consider filing an amended return for unemployment benefit tax relief

Some e-filer providers will not charge a fee for amended returns

LANSING, Mich. Taxpayers who filed their individual income tax returns and collected unemployment benefits in 2020 should consider filing an amended return if they haven’t yet received their entitled tax relief, according to the Michigan Department of Treasury.

The federal American Rescue Plan Act excludes unemployment benefits up to $10,200 from income for tax year 2020 for those within certain income brackets, providing tax relief on both federal and state income taxes. Taxpayers who may have anticipated owing taxes may now be entitled to a refund or a lesser payment.

“We have been waiting for the Internal Revenue Service to provide us guidance so we can determine the best way to provide taxpayers tax relief without requiring additional paperwork,” State Treasurer Rachael Eubanks said. “However, we still do not have clear guidance from the IRS. We don’t want to wait any longer to get refunds in taxpayers’ hands during this extraordinary time. That’s why we’re encouraging individuals to file an amended return.”

On April 1, the state Treasury Department previously asked taxpayers to wait to file an amended return until further guidance was provided by the IRS.

There is no need for taxpayers to file an amended federal return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.

Taxpayers who e-filed their original return should e-file their amended return. Software products have been programmed to accommodate this change.

Some software providers will not charge a fee if the original return was e-filed through their service.

Individuals who desire to file a paper return should do so carefully to avoid mistakes. This includes checking the “Amended Return” box on Form MI-1040 and outlining the reason for the amended return on the Schedule AMD.

Details about properly filing an amended paper return can be found on www.Michigan.gov/IIT.

Further guidance can be found in a Notice: Update to April 1, 2021 Notice Regarding the Treatment of Unemployment Compensation for Tax Year 2020 provided by the state Treasury Department.

Questions?

Taxpayers with questions about their state income taxes are encouraged to use Treasury eServices. The online platform enables taxpayers to ask state income tax-related questions when convenient and avoids the extended wait times for calls this time of year.

To get started with Treasury eServices, go to www.michigan.gov/incometax and click on “eServices Individual Income Tax.”

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