The Utah State Tax Commission has announced that it will now allow amended 2020 tax returns to be filed due to provisions in the American Rescue Plan Act of 2021. The act exempts up to $10,200 in unemployment compensation income from state income taxes.
Compensation received due to COVID-related job loss can be deducted from the federal adjusted gross income, reducing the taxable income reported on state returns. In the case of married individuals filing a joint Form 1040 or 1040-SR, this exclusion is up to $10,200 per spouse. Any unemployment compensation in excess of $10,200 ($10,200 per spouse if married filing jointly) should still be included on the tax return in adjusted gross income.
Anyone who has already filed a 2020 tax return that includes the full amount of the unemployment compensation and are waiting for the IRS is automatically correct the federal return, can still file a Utah amended return, excluding the employment compensation. Taxpayers should file a paper form TC-40 and use the amended code 06. Utah will refund any overpayment or apply it to other outstanding taxes owed. Refunds may take up to three months to process, the commission said.
