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Your IRA contribution is limited by your Modified Adjusted Gross Income (MAGI), which is your adjusted gross income plus or minus certain adjustments. Although the IRS has recently allowed you to exclude up to $10,200 of unemployment compensation for taxable income purposes, it is not clear that they included in that regulation to also exclude the unemployment income for MAGI purposes.
So for now, it seems the exclusion of the unemployment for taxable income purposes does not extent to income for the limit on IRA contributions.
TurboTax is behaving correctly. Section 9042(b)(5) of The American Rescue Plan Act of 2021 requires the calculation of MAGI for this purpose to add back the exclusion for unemployment benefits.
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