Just a quick question. If the Covid relief bill passes, federal taxes on the first $10,200 of unemployment benefits will be waived. How would I adjust this income?

[MinhT1]

The new proposed bill is expected to exempt from taxation up to $10,200 of unemployment benefits received in 2020.

However, the bill is not enacted into law yet. Please be patient. When it becomes law, the IRS will provide guidance on what taxpayers need to do. And TurboTax will always timely assist their customers.

[naymontoya67]

When will this be updated on Turbo Tax.

[DoninGA]

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@naymontoya67 wrote:

When will this be updated on Turbo Tax.

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After the legislation has passed Congress and after the President has signed the legislation and after the IRS has written the rules, regulations and procedures.  And after the IRS has changed any forms or schedules to accept the tax code changes.  And after the IRS has approved the changes in the TurboTax program that apply to the tax code changes, then it will be available for the users of the tax preparation software.

This can take anywhere from several weeks to several months before it becomes available.

See this TurboTax support FAQ for information on the American Rescue Plan - https://ttlc.intuit.com/community/tax-topics/help/how-will-the-stimulus-package-impact-me/00/1393859

[Jeff9911]

Apparently TT has not updated the forms yet but  in order to get an idea how my taxes would be affected by Congress waiving the first $10,200 in unemployment income, I adjusted form 1099-G "Certain Government Payments" box 1, Unemployment Compensation by subtracting out $10,200. In my case, box 1 worked out to

16,600 - 10,200 = 6,400. My tax liability went from $4,022 down to just $502. You can also adjust this in the step-by-step method under Federal Taxes/Wages & Income/Unemployment. I will correct 1099-G box 1 when TT updates the forms before filing.

This is just a method to ESTIMATE my own tax situation considering the Covid Relief bill implications; I am not offering this as tax advice.

[MaryM428]

The tax waiver for those who were unemployed in 2020 has been passed. We are currently obtaining information from the IRS on how this situation will be handled for our customers and in our software.

Since the bill has been passed and signed into law, We are working diligently on updating our program and working with the IRS to ensure our customers have their maximum refund guaranteed.  Please do not attempt to amend or change your return until we have the correct guidance and steps from the IRS,

New Exclusion for Unemployment