12 Responds: Will RI have a tax break for unemployment like the federal government?

12 Responds

PROVIDENCE, R.I. (WPRI) — With the signing of the American Rescue Plan, there are some changes to how unemployment is being taxed.

If you haven’t filed your 2020 tax return yet and you’ve collected unemployment, two tax professionals said to just sit tight.

Rhode Island Tax Administrator Neena Savage said the federal government is extending the deadline for individual tax returns and payments.

“Rhode Island is connected to the federal tax code in a number of ways,” Savage said. “We are extending the due date to those specific filings to May 17.”

Local certified public accountant Erica Guitieri said under the American Rescue Plan Act, people don’t have to pay federal unemployment taxes if they meet certain criteria.

“You’re allowed to exempt up to $10,200 if your adjusted gross income is less than $150,000,” Guitieri explained. “For those who paid estimated payments, that first quarter is still due April 15.”

One viewer wrote to 12 Responds, asking: “Is Rhode Island allowing the $10,200 exclusion for unemployment that the federal government is allowing?”

Savage said the American Rescue Plan Act is a complex bill and it’s unclear whether the state will issue the same unemployment tax exception.

“We’re issuing guidance after careful thought and consideration, because a lot of these issues have financial impacts not only for taxpayers, but for the state from a revenue perspective,” Savage added.

Another viewer wrote to 12 Responds: “On the $10,200 tax break for unemployment. What happens if I’ve already filed my taxes?”

Savage advised waiting for guidance from the IRS.

“We want to be cautious,” she said. “We don’t want to send taxpayers down one path and then have to tell them to do something else.”

Savage said she hopes to have more information about the state unemployment tax exemption by the end of this week.

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