Arizona 2020 returns must be amended to get pandemic unemployment refunds

Your Guide to State, Local, Federal, Estate + International Taxation

Arizona filer,  were you able to get everything to your CPA at the beginning of tax season and file early this year? Good for you! Did you receive any unemployment during 2020? If you filed your tax return prior to or close to March 11th and received unemployment income, it might be time to reach out to your accountant before the 2021 tax filing season begins about any pandemic unemployment refunds you may have coming.

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Many people faced a variety of challenges during the pandemic and unemployment was unfortunately among them. On March 11, 2021 the American Rescue Plan Act of 2021 was enacted. This legislation allowed taxpayers to exclude up to $10,200 of unemployment benefits from federal income tax. To read more about it, check out our earlier blog Community property and tax exempt unemployment compensation.

Arizona conformed to the tax provisions in the American Rescue Plan Act of 2021 and excluded the $10,200 from Arizona income tax as well. Fortunately, the IRS has been processing any federal refunds due to this change automatically. Arizona on the other hand will not be processing these refunds automatically and will require you to amend your 2020 Arizona return.

Once you have received your automatic federal refund you can then move forward with amending your Arizona return. You will also need to request your 2020 income tax transcript, which can be done here: Get Transcript | Internal Revenue Service (irs.gov).

If you believe you may have been affected by this legislation and need to amend your Arizona 2020 tax return, contact your Henry+Horne advisor to help guide you through the process!

Madison Williams