Stop! If you haven't filed your taxes yet and you got unemployment benefits last year, just stop. The advice is to wait to file your taxes.
The federal government is allowing you to write off the income for up to $10,200 worth of unemployment benefits. That means your AGI, Adjusted Gross Income, will come down.
The problem is, North Carolina is not following that. So when you do your taxes, you'll have to add in your unemployment benefits income, making that Adjusted Gross Income come up. You need a special tax form to do that. And while you can get it on paper, it’s NC D-400 Schedule-S, it's not updated on tax software yet.
“My advice for anyone who has unemployment is to hold off for this week if you're doing it online. I would hold off until Turbo Tax and other major players get their software updated,” said Ryan Dodson of Liberty Tax Services.
Making changes to your Adjusted Gross Income has a ripple effect.
Dodson says the more your income goes down. the more you could take for medical deductions, the more you can claim more stimulus money, expand education credits, it goes on and on.
So, what do you do if you already filed your taxes?
“If you already filed the good news is for NC it's all going to be considered income and the IRS is saying we will correct it and send you back the difference,” said Dodson.
And just in case you're curious what you would have saved IF North Carolina had followed in excluding unemployment taxes, Dodson says if you claimed the max amount of $10,200, you would have saved
$536 in NC taxes.