Based on the IRS Instructions here the exclusion should appear as a negative amount on Schedule 1 Line 8 with a description of UCE (see item 10 below). Based on the changes you made it doesn't display correctly on the Schedule 1 Form. Turbo Tax correctly calculates the tax, however, the IRS wants to see the exclusion on Line 8 of Schedule 1.
Unemployment Compensation Exclusion Worksheet – Schedule 1, Line 8
- Enter the total of lines 1 through 7 of Form 1040 and Schedule 1, lines 1 through 7. Include the full amount of unemployment compensation you received in 2020 on Schedule 1, line 7.
- Use the line 8 instructions to determine the amount to include on Schedule 1, line 8 and enter here. Do not reduce this amount by the amount of unemployment compensation you may be able to exclude.
- Add lines 1 and 2.
- Enter the total of line 10b of Form 1040 and Schedule 1, lines 10 through 21.
- Subtract line 4 from line 3. This is your modified adjusted gross income.
- Is the amount on line 5 $150,000 or more?
- [ ]Yes. Stop You can’t exclude any of your employment compensation
- [ ]No. Go to line 7
- Enter the amount of unemployment compensation paid to you in 2020. Don’t enter more than $10,200
- If married filing jointly, enter the amount of unemployment compensation paid to your spouse in 2020. Don’t enter more than $10,200
- Add lines 7 and 8 and enter the amount here. This is the amount of unemployment compensation excluded from your income.
- Subtract line 9 from line 2 and enter the amount on Schedule 1, line 8. If the result is less than zero, enter it in parentheses. On the dotted line next to Schedule 1, line 8, enter “UCE” and show the amount of unemployment compensation exclusion in parentheses on the dotted line. Complete the rest of Schedule 1 and Form 1040, 1040-SR, or 1040-NR.
