Treasury offers guidance on treatment of unemployment compensation for tax year 2020

The Michigan Department of Treasury has posted a notice for taxpayers related to the treatment of unemployment compensation for tax year 2020.

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.

“If you have already filed your tax return, please wait to file an amended return to receive the American Rescue Plan Act benefits,” State Treasurer Rachael Eubanks said. “The IRS will be adjusting received returns and begin processing them in May without the need for taxpayers to file an amended federal return. States are awaiting guidance from the IRS as to whether they can provide us with the information we would need to do a similar calculation at the state level. This would alleviate the need to file an amended state return. We appreciate taxpayers’ patience as we work through this.”

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.

The notice also includes information related to total household resources and household income for the purposes of various tax credits.

Additional information will be posted as it becomes available.

—How to File a State Tax Return

Choosing electronic filing and direct deposit is convenient, safe and secure. Last year, more than 4.4 million Michigan taxpayers e-filed, which is 86 percent of state income tax filers.

For more information about e-filing, go to www.mifastfile.org.

Printed tax forms were distributed and are available in limited quantities at public libraries, some northern Michigan post offices, Michigan Department of Health and Human Services county offices and Treasury Field Offices.

All individual income tax returns must be received by 11:59 p.m. on May 17, 2021.

For the benefit and convenience of taxpayers, both the beginning and end of the individual income tax filing season are the same as the Internal Revenue Service.

—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 waiting for a state Treasury Department customer service representative to answer your call.

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

To learn more about the state Treasury Department, go to www.Michigan.gov/Treasury or follow @MiTreasury on Twitter.