Will Unemployment Compensation Exclusion Worksheet affect on taxable social security. Does the $10,200 reduce my taxable Social Security on line 6b ?

[scaffrey]

Turbotax has updated their desktop versions.  Unfortunately they have an error, either in their instructions or in their calculations.  And their phone support on this is not very good.  

1.  On schedule 1 where they calculate the amount of unemployment that is taxable,  things are good.  As an example consider that the the unemployment amount (LINE 7) is $15,200.  LINE 9 then is the taxable unemployment:  $15,200 - $10,200 = $5,000.  

2.  The form called Social Sec is where the error occurs.  This form calculates amount of Social Security benefit that is taxable.  Line 3 is the sum of lines 2a, 2b, 3b, 4b, 5b, line 7 from your 1040.  AND LINE 9 FROM SCHEDULE 1.  From above LINE 9 is $5,000.   What turbotax is using is LINE 9 from Schedule 1, which is the entire unemployment about ($15,200).

Either turbotax is referencing the wrong line from Schedule 1 in their instructions for line 3 in Social Sec or they are adding in line 7 when they should be adding in line 9.

The net result is that the calculations they are using do NOT exclude the $10,200 from determining how much social security is taxed.  This is consistent with answers I've seen in this blog (unfortunately!).  Turbotax needs to clean this up.

But as I said I'm not sure they have phone folks that are able to follow what's going on.

[Kenny4187]

Any update?

[DoninGA]

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@Kenny4187 wrote:

Any update?

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Update for what?

The unemployment compensation exclusion was updated across all TurboTax platforms, online and desktop, on 03/26/2021.

The exclusion is reported on Schedule 1 Line 8 as a negative number.  The unemployment compensation received is on Line 7 of Schedule 1.  The result flows to Form 1040 Line 8.

Click on Tax Tools on the left side of the screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

[Kenny4187]

Sorry I should have been more clear. I was asking about the update to Scaffrey's concern approx 2 weeks ago. I had understood what you replied, but the concern is not being answered. The concern isn't about lines 7 or 8 of schedule 1 themselves. The question is about the social security worksheet # 3 which asks for the amount of line 9 in schedule 1. So to put it short, if the final computation of lines 7 and 8 of schedule 1 are to be placed in line 9 of the same schedule, than that same number should be used in the social security work sheet #3. But the problem is turbotax is not using the amount in line 9 of schedule 1. Its using the amount of line 7. I hope I was a bit clearer now. Refer to Scaffey's post for the original concern.

[dfschmagel]

I believe your response to be incorrect. On the SS Benefits worksheet, line 3, it specifically ask to add the income amounts from lines1, 2b, 4b, 5b, 7 and Sched 1 (Form 1040), line 9. Line 9 is AFTER the 10,200 exclusion for Unemployment Benefits under ARPA, which shows up on line 8 as a negative amount (-10,200 if the total unemployment benefits were over that amount) 

In TurboTax Home and Business 2020, there is an anomaly regarding this. While the figure calculated on line 3 uses all the above lines from the 1040, when it comes to the amount for Sched. 1, line 9, the exclusion amount of $10,200 is added back to the total. Here is the anomaly: When you click on the figure in the forms view and select Data Source, the breakdown includes the correct amount for what shows on Sched 1, line9. I had to override the figure in Forms view to delete the $10,200 which was erroneously included in the line 3 total.

[dfschmagel]

The UCE Worksheet is not even included in the IRS publication 915 nor in the update they issued on 3/25/21.

Such confusion. I am assessing penalty and interest against both the IRS and TurboTax! Failure to issue clear instructions!

[DoninGA]

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@dfschmagel wrote:

The UCE Worksheet is not even included in the IRS publication 915 nor in the update they issued on 3/25/21.

Such confusion. I am assessing penalty and interest against both the IRS and TurboTax! Failure to issue clear instructions!

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The unemployment compensation exclusion is Not used to calculate the taxable amount of Social Security benefits.

IRS website - https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.

[Opus 17]

The first $10,200 of UCE is not simply ignored for all tax purposes.  The law that created the exclusion also specifically lists some calculations where the UCE is still included, and taxable social security is one of them. 

[glennk]

TurboTax seems to be ignoring the unemployment exclusion in its calculation as of 4/16/21, however the description in the Social Security Benefits Worksheet, line 3 does not agree.  "Add the amounts on Form 1040, lines 1 (before adoption benefits exclusion), 2a (before U.S. savings bond interest exclusion), 2b, 3b, 4b, 5b, 7,
and Schedule 1, line 9. Also include certain income of bona fide residents of American Samoa or Puerto Rico."

This would take only the unemployment income AFTER exclusion, but the math does not agree.

Further, the data source for this line does not agree with the math used either.....a big problem.

I have a ticket in to have the correct the math or the description and Data Source.

Someone missed something.......and I paid $85 for this.......

[glennk]

TurboTax seems to be ignoring the unemployment exclusion in its calculation as of 4/16/21, however the description in the Social Security Benefits Worksheet, line 3 does not agree.  "Add the amounts on Form 1040, lines 1 (before adoption benefits exclusion), 2a (before U.S. savings bond interest exclusion), 2b, 3b, 4b, 5b, 7,
and Schedule 1, line 9. Also include certain income of bona fide residents of American Samoa or Puerto Rico."

This would take only the unemployment income AFTER exclusion, but the math does not agree.

Further, the data source for this line does not agree with the math used either.....a big problem.

I have a ticket in to have the correct the math or the description and Data Source.

[glennk]

TurboTax seems to be ignoring the unemployment exclusion in its calculation as of 4/16/21, however the description in the Social Security Benefits Worksheet, line 3 does not agree.  "Add the amounts on Form 1040, lines 1 (before adoption benefits exclusion), 2a (before U.S. savings bond interest exclusion), 2b, 3b, 4b, 5b, 7,
and Schedule 1, line 9. Also include certain income of bona fide residents of American Samoa or Puerto Rico."

This would take only the unemployment income AFTER exclusion, but the math does not agree.

Further, the data source for this line does not agree with the math used either.....a big problem.

I have a ticket in to have the correct the math or the description and Data Source in the desktop program.

[glennk]

TurboTax seems to be ignoring the unemployment exclusion in its calculation as of 4/16/21, however the description in the Social Security Benefits Worksheet, line 3 does not agree.  "Add the amounts on Form 1040, lines 1 (before adoption benefits exclusion), 2a (before U.S. savings bond interest exclusion), 2b, 3b, 4b, 5b, 7,
and Schedule 1, line 9. Also include certain income of bona fide residents of American Samoa or Puerto Rico."

This would take only the unemployment income AFTER exclusion, but the math does not agree.

Further, the data source for this line does not agree with the math used either.....a big problem.

I have a ticket in to have the correct the math or the description and Data Source.

Someone missed something.......

[glennk]

We just have to get TurboTax to correct the Home & Business desktop version.

TurboTax seems to be ignoring the unemployment exclusion in its calculation as of 4/16/21, however the description in the Social Security Benefits Worksheet, line 3 does not agree.  "Add the amounts on Form 1040, lines 1 (before adoption benefits exclusion), 2a (before U.S. savings bond interest exclusion), 2b, 3b, 4b, 5b, 7,
and Schedule 1, line 9. Also include certain income of bona fide residents of American Samoa or Puerto Rico."

This would take only the unemployment income AFTER exclusion, but the math does not agree.

Further, the data source for this line does not agree with the math used either.....a big problem.

I have a ticket in to have the correct the math or the description and Data Source.

[DoninGA]

@glennk The unemployment compensation exclusion is NOT included in the calculation for determining the amount of Social Security that is taxable.

IRS website - https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.

[glennk]

I understand, we just have to get Intuit to fix the description on the Social Security Benefits Worksheet and the Data Source for line 3.......as both are wrong and do not agree with the calculation being done, a bad situation.