Tax Commissioner Shares Guidance for Individual Income Taxpayers who Received Unemployment Benefits in 2020
Bismarck, N.D. — Tax Commissioner Ryan Rauschenberger today released guidance for North Dakota individual income taxpayers who received unemployment benefits in 2020, which may not be subject to income tax because of the American Rescue Plan Act.
The American Rescue Plan Act, enacted on March 11, 2021, is a federal law which provides that the first $10,200 of unemployment benefits received in 2020 are not subject to income tax for taxpayers with an adjusted gross income of less than $150,000.
“North Dakota taxable income is based on federal taxable income, so the exclusion affects North Dakota filers,” Rauschenberger stated. “Our records indicate that this provision impacts over 88,000 North Dakotans and tens of thousands of these taxpayers filed their North Dakota returns before the law changed and filers and tax preparers were aware of the change.”
The Office of State Tax Commissioner is taking action to correct these returns. For full-year North Dakota residents with an individual income tax return that was filed or postmarked before April 1, 2021, the Office of State Tax Commissioner will recalculate the return and issue a refund. If the balance of the tax due has not been paid or scheduled, the balance due will be adjusted. Taxpayers will receive a mailed notice reflecting the recalculation prior to receiving the refund.
The Office of State Tax Commissioner advises nonresident and part-year resident taxpayers to amend their individual income return if North Dakota taxable income is affected. More information regarding filing an amendment is available on the Office of State Tax Commissioner's website at www.nd.gov/tax (https://www.nd.gov/tax/faqs/topics/4/).
“This is an unprecedented impact from the federal law change during the peak of filing season,” Rauschenberger added. “Our office is committed to serving North Dakota taxpayers by sparing tens of thousands of taxpayers' time and expense by correcting as many returns as possible with the information that is available to our office.”
Taxpayers who qualify for the provision in the American Rescue Plan Act and who filed as full-year North Dakota residents with an individual income tax return that was filed or postmarked before April 1, 2021 do not need to take any additional steps. The Office of State Tax Commissioner plans to begin correcting these returns around April 20, 2021, with a completion target date of June 30, 2021.
For federal returns previously filed with the IRS, taxpayers should follow guidance from the IRS on the IRS website at www.irs.gov (https://www.irs.gov/newsroom/irs-will-recalculate-taxes-on-2020-unemployment-benefits-and-start-issuing-refunds-in-may).
Taxpayers can stay up-to-date on North Dakota tax-related matters by visiting the Office of State Tax Commissioner's website at www.nd.gov/tax (http://www.nd.gov/tax) or by connecting on Facebook (http://www.facebook.com/ndtaxdepartment), Twitter (http://www.twitter.com/ndtaxdepartment), or LinkedIn (http://www.linkedin.com/company/ndtaxdepartment).