Get your taxes done using TurboTax

MRoles · ‎March 24, 2021

March 25th ***UPDATE**** This was brought to my attention!

While this will exclude the unemployment from the AGI, the Rescue Act specified 8 other tax and credit calculations that depend on the AGI were NOT to be affected by the Act.

In other words, simply entering this way can make 8 other calculations inaccurate. That is why it must be done in the software so those other calculations will use the AGI without regard to the change of the Unemployment Compensation Exclusion.

(The IRS worksheet was for paper returns and entering the change in a piece of paper will not change other calculations, but entering as misc income will change anything that depends on the AGI.)

Per the Act (and 1-8 below are sections NOT to be changed by the exclusion)

“(2) APPLICATION.—For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined—

“(A) after application of sections 86, 135, 137, 219, 221, 222, and 469, and

“(B) without regard to this section.”.

(b) Conforming amendments.—

(1) Section 74(d)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting “85(c),” before “86”.

(2) Section 86(b)(2)(A) of such Code is amended by inserting “85(c),” before “135”.

(3) Section 135(c)(4)(A) of such Code is amended by inserting “85(c),” before “137”.

(4) Section 137(b)(3)(A) of such Code is amended by inserting “85(c)” before “221”.

(5) Section 219(g)(3)(A)(ii) of such Code is amended by inserting “85(c),” before “135”.

(6) Section 221(b)(2)(C)(i) of such Code is amended by inserting “85(c)” before “911”.

(7) Section 222(b)(2)(C)(i) of such Code, as in effect before date of enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, is amended by inserting “85(c)” before “911”.

(8) Section 469(i)(3)(E)(ii) of such Code is amended by striking “135 and 137” and inserting “85(c), 135, and 137”.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

The following 8 areas are NOT to exclude the Unemployment Income from the AGI and therefore, the below direct input instructions into the TT software is NOT advised:

Social Security

Savings Bonds

Adoption

Retirement Savings

Interest Education Loans

Tuition Expenses

Passive Activity Losses & credit limits

Certain State Returns

Instructions on how to enter your calculation from the

"Unemployment Compensation Exclusion Worksheet" provided by the IRS,

into TT desktop software ONLY! and NOT tax advice!

This works!

First, go the the link below and print the Instructions and the "Unemployment Compensation Exclusion Worksheet" from IRS.gov

https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

You MUST complete the "Unemployment Compensation Exclusion Worksheet" to correctly calculate the exclusion, if any! Keep for your records!

I am using TT Home & Business but this should work with all TT-

Below I have instructions for "Step-by-Step" AND "Forms" view:

Using "Step-by-Step" view

"Personal Income"

"Unemployment Income" -Enter Form(s) 1099G (this is line 7 of Schedule 1)

Scroll down to

"Miscellaneous Income 1099-A, 1099-C"

Scroll down to

"Other Reportable Income" (this is line 8 of Schedule 1)

Description box enter "UCE"

Next to the appropriate tax payer, enter the result from line 10 of the

"Unemployment Compensation Exclusion Worksheet" provided from IRS.gov

If the result is less than zero, input as a negative (EXAMPLE: $-6,412.00)

Or if you wish, you can input directly on the supporting documents:

Switch over to "Forms" View

Select "Schedule 1" from the list of Forms located on the left

"Part 1 Additional Income"

(you should see an amount on line 7 entered from Unemployment 1099-G input )

Go to line 8 and hit the magnifying glass...this takes you to "Part 1 of Additional Income" on form 1040/1040SRwks

Select line 8 and hit the magnifying glass....this takes you to

"Other Income Statement line 8"

Scroll down to line 22....place the answer from line 10 of the "Unemployment Compensation Exclusion Worksheet" (provided by the IRS) and note "UCE" on the line description.

If the result is less than zero, input as a negative (EXAMPLE: $-6,412.00)

(Hint: This is the same area you would report a NOL deduction. You MUST complete the "Unemployment Compensation Exclusion Worksheet" (provided by the IRS) to calculate the deduction amount, if any)

This is instructions on how to enter your calculation from the IRS provided "Unemployment Compensation Exclusion Worksheet" into TT desktop software ONLY! It is NOT tax advice!