Is the $10,200 ARP unemployment benefits deduction subject to Social Security taxes? I did the worksheet, with and without, but TT shows tax on line 6b equal to 30% not 0

[henson-david-lee]

I completed the Social Security Benefits Worksheet for lines 6a and 6b twice, both with and without the deduction (and I do not have an exception, as I understand it and I see nothing in Pub. 590-A that applies). With the deduction I owe 0. Without it I owe $643. TT shows an amount on line 6b equal to 30% of line 6a.
TT sent me the email saying to finish my return because the $10,200 was now included and said I was ready to file. I will hold off until May to file an amended return but I need to know where that figure is coming from.
Thank you experts!

[ColeenD3]

Are you asking if unemployment is subject to Social Security taxes or if it is included in the calculation for taxable social security?

Here is some more information I found. You can compare the Unemployment Exclusion Worksheet to the SS worksheet. I am seeing that it doesn't come into play since the SS worksheet references Schedule 1 lines 10-19.

Exemption worksheet

SS worksheet

[SteamTrain]

IF you are receiving both SS, and also had some unemployment income:

According to one of the CHAMPs  ( @macuser_22   )          ..... the law did not exempt using Unemployment $$ for the purposes of determining the amount of SS that becomes taxable.   The software changes that are needed to deal with this mathematical handwaving....might take a couple weeks to implement in the software.

https://ttlc.intuit.com/community/retirement/discussion/re-based-on-the-new-law-that-was-just-signed...

[macuser_22]

The "American Rescue Plan Act" specifically said that Social Security tax must be calculated using income and AGI before applying the unemployment exemption.     There should be no difference in SS before or after.

https://www.congress.gov/bill/117th-congress/house-bill/1319/text

§9042(c)(2)(A) & (B).

[ColeenD3]

Here is the language of the bill and a screen shot of the worksheet.

“(1) IN GENERAL.—In the case of any taxable year beginning in 2020, if the adjusted gross income of the taxpayer for such taxable year is less than $150,000, the gross income of such taxpayer shall not include so much of the unemployment compensation received by such taxpayer (or, in the case of a joint return, received by each spouse) as does not exceed $10,200. “(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.”.

[SteamTrain]

@ColeenD3 

I really can't tell if you are agreeing or dis-agreeing with @macuser_22 

(most any tax bill language is full of indecipherable mumbo-jumbo for any normal/sane human beings)

[ColeenD3]

@SteamTrain.

I am agreeing with macuser. I was just posting what the bill actually said to dispel OP doubts.

[henson-david-lee]

Thank you @macuser_22 @ColeenD3 @SteamTrain  very much for your help.

This is what got me close to TT's Form 1040SR Line 6b amount:

Ignore the 50% on Line 2 of the worksheet and use the full amount.

Ignore my business loss and use only the income.

Ignore the 10,200 credit and use only the full amount of UEI.

Basically, ignore all adjustments and use all original income. 

That was the only way to get over the $25,000 on Line 8 of the worksheet.

Like I said, I got close to the amount TT used, not exactly, but close enough that I could put this to bed. Now I am just hoping AZ honors the 10,200 or I will owe them $$.

@macuser_22

From my 2017 iMac 21.5 running macOS Big Sur 11.2.3.

😉

[macuser_22 · Accepted solution]

The SS worksheet line 2 is half of line 1,

Business losses and other adjustments are on line 6.    The tax law specifically said in calculating the SS tax that the $10,200 must be ignored, therefor the amounts in the 1040 that do take the !0,200 into account will not match the SS calculations, but that is how the law was written.