Unemployment Exemption Refund Question

[ChrisGA]

In a previous question I asked about the refund that I will be receiving after the IRS recalculates my return. According to my  calculations on paper, my refund should be much higher than what is showing on my updated tax summary in TurboTax. It seems that my EITC is not being adjusted to a higher amount due to the drop in my income.

According to the reports that I am seeing, I should not be required to file an amended return to get the increase in the EITC due to my income dropping from the unemployment exemption. But I'm also seeing reports that changes in EITC due to the unemployment will require an amended return in order to get it.

I filed my return using TT and claimed the EITC prior to the unemployment exemption taking effect. Will the IRS recalculate the EITC prior to sending out the updated refunds, or will an amended return be necessary to get the difference in EITC?

[rjs]

If you claimed the EITC on the tax return that you filed, the IRS says they will recalculate the EITC when they recalculate the unemployment exclusion. You should not file an amended return. See the following IRS announcement for details.

IRS to recalculate taxes on unemployment benefits; refunds to start in May

(An amended return is needed when someone did not claim the EITC on his filed return, but becomes eligible for it because of the unemployment exclusion. In that case the IRS will not automatically determine that the person is eligible for the EITC.)

[ChrisGA]

The tax summary that was updated on my TT account shows that TT has recalculated the amount of my refund, but the tax summary does not list the EITC amount. The only difference I see, is that TT deducted the amount of unemployment(that I received in 2020) from my AGI, which changed my tax liability, and the amount of additional refund due would be correct if only my tax liability had changed. But the amount of EITC I have earned, due to the new reduction in my income, would reduce my tax liability by a substantial amount.

[rjs · Accepted solution]

1. Don't rely on the summaries in TurboTax. Look at the actual forms.

2. You might have to go through the EITC questions in TurboTax again to get it to recalculate.

3. There is a certain range of income in which the EITC hits a plateau. In that range, a decrease in income does not change the EITC amount. The exact range depends on filing status and the number of children.

4. It doesn't really matter what TurboTax does. The IRS is not using TurboTax to do the recalculation. Wait and see what the result of the IRS recalculation is. The refund that you actually get depends on what the IRS does, not what TurboTax does.

5. There's nothing you can do now, anyway, except wait to hear from the IRS. It might take several months, because you are one of the people with a "more complex" return.

[ChrisGA]

I will wait and see what the IRS actually does.

It's just confusing to see that TT has changed my tax summary and listed an actual amount of additional refund, which looks incorrect when considering the EITC amount will be different by over $1200 in itself.

[Critter-3]

This is SOP ... when the program is updated  any returns in progress or completed will be also updated if you opened it up. 

To get the additional EIC you must open the return and  review the EIC section again to update that information since it was not a program change.  

[vhlokup7]

i filed single with turbo tax.when can i expect my refund.thought it was suppose to start at begging of may with single filers.thanks

[DoninGA]

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@vhlokup7 wrote:

i filed single with turbo tax.when can i expect my refund.thought it was suppose to start at begging of may with single filers.thanks

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TurboTax receives no information from the IRS concerning tax refunds of any kind.

Go to this IRS website for information - https://www.irs.gov/newsroom/irs-begins-correcting-tax-returns-for-unemployment-compensation-income-...

[June23]

how  much and when

[xmasbaby0]

@June23 We cannot answer how much you will get for the extra unemployment refund or when you will get it.

If you are eligible for the extra refund for federal tax that was withheld from your unemployment the IRS will be sending you an additional refund sometime during the next several months.  TurboTax cannot track or predict when it will be sent.

https://ttlc.intuit.com/community/tax-topics/help/how-do-i-get-the-new-unemployment-benefits-if-i-ve...

Please read this very recent news from the IRS:

https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-m...

https://www.irs.gov/newsroom/irs-begins-correcting-tax-returns-for-unemployment-compensation-income-...

https://ttlc.intuit.com/community/tax-credits-and-deductions/help/am-i-eligible-for-a-new-credit-or-...

[LauraC1]

What about the payment I sent to the IRS with the initial tax return?  Will their recalculation also include refunding me that amount? 

[xmasbaby0]

One of the reasons the IRS is recalculating refunds is to give back money to people who paid tax on unemployment they do not need to pay tax on.    So---wait for the IRS to sort it out.

If you are eligible for the extra refund for federal tax that was withheld from your unemployment the IRS will be sending you an additional refund sometime during the next several months.  TurboTax cannot track or predict when it will be sent.  The IRS has not provided a way for you to track it, so all you can do is wait for the refund to arrive.

https://ttlc.intuit.com/community/tax-topics/help/how-do-i-get-the-new-unemployment-benefits-if-i-ve...

Please read this very recent news from the IRS:

https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-m...

https://www.irs.gov/newsroom/irs-begins-correcting-tax-returns-for-unemployment-compensation-income-...

https://ttlc.intuit.com/community/tax-credits-and-deductions/help/am-i-eligible-for-a-new-credit-or-...

https://www.irs.gov/newsroom/2020-unemployment-compensation-exclusion-faqs

You *might* need to amend your state return for unemployment that was taxed by your state.

https://www.kiplinger.com/taxes/state-tax/602307/taxes-on-unemployment-benefits-a-state-by-state-gui...

[rjs]

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@LauraC1 wrote:

What about the payment I sent to the IRS with the initial tax return?  Will their recalculation also include refunding me that amount? 

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@LauraC1  You don't necessarily get back the full amount that you paid with your return. You will get a refund of the tax on up to $10,200 of your unemployment. The amount of the refund depends on what tax bracket you are in, and other factors. The $300 that you paid with your tax return (according to your other posts) is not something separate. It's part of the total tax that you paid. If the refund for your unemployment is less than the $300 that you paid with your return, you will only get back part of the $300. If the refund for your unemployment is more than $300, you will get back the $300 and more. The IRS knows that you paid the $300, and will take it into consideration. What you see now in TurboTax doesn't matter. The IRS is looking at the tax return that you filed and the total amount of tax that you paid, including the $300. They are not looking at TurboTax when they recalculate your tax return.

[Critter-3]

YES ... the amount paid with the original return will be taken into consideration ... trust me they know what you paid already.  

[June23]

YES what do i have to do