When will Turbo tax update their system to allow for the first $10,200 of unemployment to be non taxable

[DoninGA]

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.

[macuser_22]

Not until the IRS writes the regulations and forms.

[Bardessono]

What are our options in the mean time? file our tax returns and the later on file a corrected return?

[ThomasM125]

You may have to file an amended return to exclude the unemployment from taxation or the IRS may adjust your return automatically, but no one knows for sure about that now. So, your options are to file your return and accept the fact that you may have to amend it later, or you can wait to file when there is further guidance from the IRS. 

[SweetieJean]

Keeping in mind that amended returns (even if efiled) can take 4 months or longer to process, waiting might be a good idea for now.  

[Judy07]

should we file for an extension if it goes past April 15, if we are waiting for the  changes to unemployment to file?

[DoninGA]

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@Judy07 wrote:

should we file for an extension if it goes past April 15, if we are waiting for the  changes to unemployment to file?

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You can file for an extension but any taxes owed on the 2020 federal tax return have to be paid on or before April 15, 2021.  The extension only gives you an extra six months to file a tax return, it does not extend the time to pay the taxes owed.

[Judy07]

I am working on my daughters return. Without the special tax free benefit on unemployment, she owes both state and federal, but after that goes into effect, she will get a refund on federal and state (I assume), so I don’t want to file now and pay, just to have it refunded later. 

[SamL1]

The IRS has a worksheet available and how to apply it to your taxes.

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym...

[Judy07]

I saw that, but when is Turbo Tax going to be updated to allow the adjustment on Line 8?

[ColeenD3]

We don't have a date, but you can sign up to be notified.

As part of the recently passed American Rescue Plan, the first $10,200 worth of unemployment payments are now tax-free for a person with an annual modified adjusted gross income of less than $150,000. This expanded tax relief begins this year, starting for taxpayers filing returns after January 1, 2020. The IRS will provide additional guidance about what you need to do to take advantage of this relief if you already filed your 2020 tax return. 

If you’d like to be updated when the information becomes available, please sign up here.