Since the $10,200 UI exclusion was enacted by the American Rescue Plan Act, the big question has been how to treat the exclusion in community property states. It has been Spidell’s position that the UI benefits are community income that are split equally between the two spouses and each spouse may claim up to the $10,200 exclusion. The IRS has confirmed our position in an FAQ posted on its website (www.irs.gov/newsroom/2020-unemployment-compensation-exclusion-faqs-topic-a-eligibility)."
May 1, 2021; they discuss how MFS vs MFJ and that limit of $150k.
"Advisers who have taxpayers in one of the community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) began speculating that, due to the division that will take place for much of the couple’s income as community income, married couples in such states could have income of up to $300,000 and still get the exclusion if the taxpayers filed separate returns.
As well, even if total unemployment received by one spouse was more than $10,200, filing separate could also serve to increase the amount deductible in total between the spouses if the other spouse did not also have $10,200 of unemployment compensation.
On April 29, 2021, the IRS confirmed this thinking in Q&A 4 in Section A of the FAQ."
May 26, 2021.
