ODT offers filing guidance on income tax deduction for unemployment benefits

Written on Apr 08, 2021

OSCPA staff report 

With the Ohio Society of CPAs’ supported tax conformity legislation, Senate Bill 18, being signed into law by Governor DeWine on March 31, the Ohio Department of Taxation has now issued guidance on Ohio tax filings related to the retroactive $10,200 income tax exemption for unemployment benefits. 

The extension to May 17 allows some taxpayers the benefit of filing their 2020 federal and Ohio income tax returns after the enactment of the unemployment benefits deduction, thus they will receive the deduction on their original returns. However, many taxpayers already filed their federal and Ohio income tax returns and reported their unemployment benefits before the enactment of this deduction. 

As such, ODT issued guidance on April 6 related to the unemployment benefits deduction for tax year 2020. The guidance provides several tax filing scenarios, but many OSCPA members have asked about taxpayers who previously filed federal and Ohio tax returns and are waiting for IRS to issue a refund based on the unemployment benefits deduction. 

Under that scenario, ODT said, “All other taxpayers who previously filed their federal and Ohio returns prior to the enactment of this federal deduction and are waiting for the IRS to issue a refund based on the unemployment benefits deduction do not need to take any additional action on their originally filed Ohio IT 1040 return (and/or SD 100) at this time. The Department will provide further guidance when more details are available from the IRS, please continue to monitor our website.” 

An IRS March 31 news release had previously stated that the first federal refunds are expected to be made in May and will continue into the summer. The IRS will determine the correct taxable amount of unemployment compensation, and any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed. There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional income-dependent federal tax credits and deductions (such as the earned income tax credit) not already included on the original tax return. 

In other news, ODT also announced they are now offering a new Guest Payment Service portal that allows taxpayers to make individual and school district income tax payments electronically without having to register for an Online Services account. 

If you have additional questions or need assistance, visit tax.ohio.gov or call 800.282.1780 (800.750.0750 for those who use text telephones (TTYs) or adaptive telephone equipment), to speak with a taxpayer services representative. 

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