Has the tax credit for unemployment from the american rescue plan been added yet? I cannot find it in the credits section. How do you claim this credit?

[DoninGA]

It is not a tax credit.  It is an exclusion from income.

See this TurboTax support FAQ for information for the unemployment compensation exclusion - https://ttlc.intuit.com/community/tax-topics/help/how-do-i-claim-the-new-unemployment-benefits-in-tu...

Also see this IRS statement - https://www.irs.gov/newsroom/irs-statement-american-rescue-plan-act-of-2021

[larissa14567845]

Thanks!

[Hal_Al]

TurboTax (TT)  has not yet updated the software to do that.

But, the IRS has issued instructions (see link below), so TT does know what to do, So, far we haven't heard when. There do not appear to be any form changes needed.

Any workaround involves some risk of error  That said, if a user really can't wait, this work arounds appears to put it in the right place, with the right wording:

 In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Other reportable income  

       - On the next screen, click yes

       - On the next screen, you'll get blanks to enter the amount and a description. For the amount enter with a minus sign:  -10200. For description type UCE(10200). It will go on line 8 of Schedule 1 as a deduction (-).

That assumes you meet the income restrictions and you’re entitled to the full $10,200 and your spouse doesn’t also have unemployment.  See, the IRS worksheet at   https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym... for how to calculate the correct amount to enter.

I’ve heard that the American Rescue Plan Act specifically says that the excluded unemployment income is NOT to be subtracted in calculating the following:

• Taxable Social Security
• Savings bond interest exclusion for education
• Employer-provided adoption benefits
• Deductible IRA contributions
• Student Loan Interest Deduction
• Tuition and Fees Deduction
• Passive activity loss limitation for rental real estate

If you're not sure that you are not affected by any of those, you should not use the workaround. 

[Juliefurlong]

Does anyone have an inkling whether this exclusion will be applied to 2021 taxes too??

FROM THE IRS SITE: This If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020

[DoninGA]

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@Juliefurlong wrote:

Does anyone have an inkling whether this exclusion will be applied to 2021 taxes too??

FROM THE IRS SITE: This If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020

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No, there is not an unemployment compensation exclusion for tax year 2021.  All unemployment compensation received in 2021 is taxable income on a 2021 federal tax return.