American Rescue Plan of 2021 ("ARPA") - Federal Unemployment Compensation Exclusion

  • Article Type:
  • Documentation
  • Last Modified:
  • 04/01/2021

Objectives

On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 ("ARPA") into law. ARPA is a $1.9 trillion economic relief package intended to address the COVID-19 pandemic. ARPA allows for the first $10,200 of unemployment benefits to be untaxable for households with an adjusted gross income of up to $150,000. As expected, states have chosen a variety of reactions to this new legislation.

State and other jurisdictional conformity is listed below.

Environment

CCH Axcess Tax
CCH Prosystem fx

Details

AMERICAN RESCUE PLAN ACT of 2021 ("ARPA")
Federal Unemployment Compensation Exclusion: Jurisdictional Conformity
JurisdictionTaxes
Unemp. 
Comp?
Conforms
with
Federal?
INPUT
   InterviewWorksheet
AL, AR, DE, FL, MO-MKC,
MO-STL, NH, NJ, NV, 
NY-NYC, OH-OHC, OR-MUL,
PA, PA-PHI, TX
NN/AN/AN/A
CANN/AThe California Franchise Tax Board is revising the 2020 Schedule CA (540 & 540NR) instructions to incorporate the necessary adjustment for the federal unemployment compensation exclusion ("UCE"). The following instructions will be added to Schedule CA (540), Part I, Section B, line 8 and Sch CA (540NR), Part II, Section B, line 8 as follows: "If you excluded unemployment compensation ("UC") on federal Schedule 1 (Form 1040), line 8, enter that amount as a positive number of line 8f, column C, and write "UCE" on line 8f" Note: For California purposes, the full amount of UC is already excluded above on line 7, column B. The adjustment on Schedule CA, line 8f, column C (Additions) is needed to avoid double exclusion of UC from California income.
MI-DTW, MI-MICNN/AAdjust exclusion for federal UCE; meaning, UC should not be included in local taxable income, and the UCE from Schedule 1, line 8 should not be deducted from the city return.
MTNN/AMT2, Box 80 - 82 (enter as a negative)Montana > Income/Deductions> MT Additions to Federal Income > Other Additions to Federal Adjusted Gross Income (enter as a negative)
CT, IA, IL, KS, LA, ME,
MI, MO, ND, NM, OH,
OK, OR, RI, UT, WV
YYN/AN/A
AZYNAZ3, Box 65 - 67 (Code 26)Arizona > Income/Deductions > Additions (Code 26)
CO (1)YNCO1, Box 80 - 82 (enter as negative)Colorado > Income/Deductions > Additions > Other Additions (enter as negative)
DCYNDC2, Boxes 30 - 33District of Columbia Individual (Form D-40) > Income/Deductions > 1 - Additions > Other Additions
GAYNGA4, Boxes 60 - 62Georgia > Income/Deductions > 1 - Additions > Other Additions to Income
HIYNHI2, Boxes 40 - 43, or; HI4, Box 51Hawaii > Income/Deductions > 1 - Additions, or; 6 - Nonresident and Part-Year Information > Line 14 "Unemployment compensation insurance (total received)"
IDYNID2, Box 40 - 43Idaho > Income/Deductions > Additions > Other Additions
INYNIN2, Box 58 - 59Indiana > Income/Deductions > Tax Add-Back > Conformity - Positive
KYYNResident:
KY2, Boxes 58 - 60

P/Y and N/R: KY9, Box 69 or KY10, Boxes 30 - 33
Resident:
Kentucky > Income/Deductions > 2 - Additions > Other Additions

P/Y and N/R:
Kentucky > Income/Deductions > 5 - Nonresident and Part-year Information > Line 23 "Unemployment compensation", or; Line 41 "Modifications to Federal Adjusted Gross Income - Additions"
MAYNST-1, enter "MA" on Box 31 and the amount on Box 71Other > Non/PY Resident State Overrides (detail view) > Enter State code "MA" and the amount on Line 26 "Unemployment compensation"
MDYNMaryland has its own UC subtraction reported on Form 502LU, line 4, in addition to the federal one
MNYNThe addback is automatically calculated starting on release .03030/2020-3.3, the following override will also be available on that release.

Resident/Non-resident:
MN10A, Box 58
The addback is automatically calculated starting on release .03030/2020-3.3, the following override will also be available on that release.

Resident/Non-resident:
Minnesota > Income/Deductions > Schedule M1NC > Unemployment compensation excluded from income
MSYNResident:
MS1, Boxes 55 - 58, using Code "1", enter the amount of federal UCE

P/Y and N/R:
ST-1, enter "MS" on Box 31 and the amount on Box 71
Resident:
Mississippi > Income/Deductions > 1 - Income > Line 4 "Other Income"

P/Y and N/R:
Other > Non/PY Resident State Overrides (detail view) > Enter State code "MS" and the amount on Line 26 "Unemployment compensation"
NCYNThe addback is automatically calculated starting on release .03030/2020-3.3, however, for prior releases, the following override is available:

Resident:
NC2, Box 70

P/Y or N/R:
Enter the full amount of UC taxable to North Carolina on NC13, Box 55. Currently, the amount of federal UCE is flowing to NC Schedule PN, line 15, Column A, which is contrary to the form instructions. This can be overridden by entering zero on NC13, Box 58.
The addback is automatically calculated starting on release .03030/2020-3.3, however, for prior releases, the following override is available:

Resident:
North Carolina > Income/Deductions > Line 3 "Unemployment compensation exemption - override", enter the federal UCE

P/Y or N/R:
North Carolina > Income/Deductions > 5 - Nonresident and Part-year Information > Line 13 "Unemployment compensation - override" enter total UC in the "Amount Subject to N.C. Tax" column. On Line 15 "Other income - override", enter zero (0) in the "Total Income from All Sources" column
NEYNo
guidance
  
NY (2)YNThe following will not be available until release 2020.03030/2020-3.3

NY2, Box 80, enter code "011', then enter an amount in Box 82 or 83, depending on whether the return is a resident or Part-year or Nonresident
The following will not be available until release 2020.03030/2020-3.3

New York > Income/Deductions > Income and Adjustments > Form IT-558, Schedule A - New York Addition Adjustments > Enter Code Number "011" and the Total Amount and/or NYS Allocated Amount
RIYNPursuant to R.I. Gen. Laws 44-30-12(b)(6), the federal UCE is to be added back to federal AGI as a "Modification increasing federal adjusted gross income" on the newly updated RI Schedule M, line 2g.

** The updated form has not been installed yet **
SCYNo
guidance
SC1, Box 75 - 77 (Box 77, Code 2)South Carolina > Income/Deductions > Subtractions > Other Subtractions
TN No guidance  
VA (3)YNVA2, Box 50 - 53. (Box 51, Code 37)Virginia > Income/Deductions > Subtractions > Other Subtractions (Code 37)
VTYNTBDTBD
WI (4)YNWI13, Box 40 - 43 (Enter as a negative)Wisconsin > Income/Deductions > IRC Adjustment > Other Adjustments (Enter as a negative)
(1) Addback to Form DR 0140, Line 6 "Other additions"
(2) The UCE addback should be included on Form IT-558 New York State Adjustments due to Decoupling from the IRC, using the addition code "A-011"
(3) Virginia returns should utilize the VA Fixed Date Conformity addition for the amount of UCE for federal purposes and then allow taxpayers to claim the 
VA subtraction (Code 37) for the full amount of the UC (which would be equal to or greater than the amount excluded for federal purposes, depending on the amount of unemployment received by the individual). This ensure the "math" is transparent on the return. 
(4) If the return has already been filed, do not amend. If the return has not been filed, then add the federal UCE amount to Wisconsin Schedule I, lines 2h, 2i, or 2j. Determine eligibility for Wisconsin subtraction by completing Wisconsin Schedule SB.

Additional Information

N/A

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