2020 Unemployment Compensation Exclusion FAQs — Topic C: Claiming the Exclusion (Before Filing)

These updated FAQs were released to the public in Fact Sheet 2022-39 PDF, December 2, 2022.

Q1. How do I report the exclusion if I haven't filed my 2020 tax return? (added April 29, 2021)

A1. If you haven't filed your 2020 tax return and are eligible for an exclusion, report the exclusion separately (on Schedule 1, Line 8) from the full amount of your unemployment compensation that you report on Schedule 1, Line 7.

  • The full amount of your unemployment compensation (and your spouse's unemployment compensation if filing a joint return with your spouse) continues to be reported on Schedule 1, Line 7.
  • The amount of the unemployment compensation exclusion is reported as a negative amount (in parentheses) on Schedule 1, Line 8.
  • Enter "UCE" on the dotted line to the left of your Schedule 1, Line 8, entry and show the amount of unemployment compensation exclusion in parentheses on the dotted line.

Use caution when calculating certain credits and deductions that use your AGI in the calculation. Your unemployment compensation exclusion amount should not be excluded from your AGI when doing many of those calculations.

See the updated instructions and the Unemployment Compensation Exclusion Worksheet in the Instructions for Schedule 1 in the 2020 Form 1040 and 1040-SR instructions to figure your exclusion and the amount to enter on Schedule 1, Line 8.

Alternatively, filing electronically is the easiest way to figure the correct amount as tax return preparation software and tax professionals will ask you to provide the needed information.