TurboTax will update the software for the unemployment but there is no timeline yet.

It can take weeks to several months or more for the changes to be made to tax software.   First the IRS has to change its forms.   The tax software has to be changed; the IRS has to test and approve of the software.   Do not expect changes in the software to happen quickly.   TurboTax may have more information in the near future AFTER the bill is signed into law, and some more details emerge about how Congress and the IRS will implement the changes.

As soon as the IRS issues procedures for doing so.  Once it does, TT must program and test them, and then get the IRS's approval.

So should I wait to file my 2020 taxes since the TT update for non taxable unemployment benefits isn't loaded yet? Should I file for an extension?

WAIT. 

Please read this very recent news from the IRS:

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

THANK YOU! I've been searching online everywhere for an answer to this question!

Cheers 

There is guidance:  https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym... 

How do you apply this to TT? Can we do manually or do we have to wait for TT to update the software?

https://ttlc.intuit.com/community/tax-topics/help/how-will-the-stimulus-package-impact-me/01/1393859...

You are among millions who have now been affected by a mid-tax season change in the tax law.  Patience will be necessary.

TurboTax will update the software for the unemployment but there is no timeline yet.

  If you have not e-filed yet—-wait.   And if you already e-filed and want to amend for this—WAIT.

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-statement-american-rescue-plan-act-of-2021

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@kmnapoli1 wrote:

How do you apply this to TT? Can we do manually or do we have to wait for TT to update the software?

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Please wait.  The software will be updated.

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

When do you think that will be update? I need to file my taxes as soon as possible because I was not qualified for the stimulus check last year but for 2020 I am qualified. I don't know what to do!