When will Turbotax software be updated to exempt the first $10,200 of unemployment income from being taxed????????????????????????

[Kade112233]

Turbotax currently includes ALL unemployment income as part of total income, but the new tax rules just signed exempt the first $10,200 from taxes.  This is NOT being reflected in the software calculations yet.  So wondering when this will get updated in the software.

[DoninGA · Accepted solution]

Instantaneous changing of the tax code and tax preparation software is not possible.

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

[shawn0411]

Saw your response to the question above...."This can take anywhere from several weeks to several months before it becomes available." .....   this being said is turbotax recommending submitting for an extension - Apr 15th is right around the corner.

[DoninGA]

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@shawn0411 wrote:

Saw your response to the question above...."This can take anywhere from several weeks to several months before it becomes available." .....   this being said is turbotax recommending submitting for an extension - Apr 15th is right around the corner.

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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

[Roy H]

So what does a person do that now owes $3500 in taxes but if I deduct $10,200 from my unemployment income I will only owe about $1300. You know the IRS rules I don't see why it will take so long to adjust you software.  You are able to do other updates right away. This is not satisfactory.

[DawnC]

More legislative changes occurred yesterday.   TurboTax is not yet fully updated to reflect the most recent legislative changes to unemployment.  Here are the 2 most recent updates for unemployment - one for those who have already filed and one for those that have not filed yet.  They both pretty much say to wait and to sign up to be notified by email when things have been finalized.

For those that have filed, we are waiting on the IRS to confirm whether or not they will adjust those returns as opposed to having taxpayers amend their returns - they have waffled on this claim, but currently, the guidance is to wait for further instruction.   IRS link is below; see underneath the bullet points; it states taxpayers should NOT amend at this time.  

For those that have NOT filed, some parts of TurboTax are updated, some are not.  Plus, the IRS just made another change (regarding the AGI calculation to determine eligibility for the exclusion), so the program will need to be updated again for that.  So, if you have not filed, the guidance from TurboTax is to wait while we get things finalized - which can't happen until they finalize the legislation.  Yesterday's changes will probably impact filers that have already filed and claimed the EIC or CTC, but no additional guidance has been issued regarding that yet.  But you can still sign up to get the email when we are confident that TurboTax is ready to handle the exclusion as the IRS has prescribed it to be handled.    The tax filing deadline has been extended to 05/17.  

IRS News Release - New Exclusion of up to $10,200 of Unemployment Compensation  This version was released today 03/24 and clarifies the changes in the MAGI calculation and NOT to amend.  All 3 of the links included here will update with any future changes as well.   So, although other software providers may claim to be ''updated'' for all of the changes, that is likely to not be the case.     @Roy H

[DoninGA]

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@Roy H wrote:

So what does a person do that now owes $3500 in taxes but if I deduct $10,200 from my unemployment income I will only owe about $1300. You know the IRS rules I don't see why it will take so long to adjust you software.  You are able to do other updates right away. This is not satisfactory.

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The software is going to be updated...Either tomorrow 03/26 or within a week.  The IRS changed the rules, Again, on 03/23 on how to calculate the UC exclusion.

The IRS changed the due date to May 17, 2021.  You have at least 8 weeks until  the taxes owed have to be paid.

[lingla]

has the software been updated yet?

[DoninGA]

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@lingla wrote:

has the software been updated yet?

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Yes, the software for the unemployment exclusion was updated today, 03/26.

If you have a Windows computer start the TurboTax program.  Click on Online and click on Check for Updates

Verify your version.  Click on Help>About TurboTax>Version.  The current version is 020.000.1688