Colorado DOR Issues Updated Information on 2020 Unemployment Compensation Exclusion for Income Taxpayers

The Colorado Department of Revenue (DOR) March 1 issued information on the federal 2020 Unemployment Compensation Exclusion, for individual income taxpayers. When the American Rescue Plan Act was enacted, the DOR provided that retroactive changes in federal law didn’t affect taxpayers’ Colorado income tax liability. A recent court decision determined that the rule was incorrect. Accordingly, the DOR now provides: 1) taxpayers who didn’t exclude up to $10,200 of unemployment compensation from the federal taxable income reported to Colorado, or who added back the excluded unemployment compensation, may amend their 2020 income tax return to claim the exclusion; 2) amended ...