topic Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits in Get your taxes done using TurboTax

Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

thommay — Mon, 08 Mar 2021 23:42:00 GMT

In the new stimulus bill likely to go through congress within the next two days, there is a provision that will affect my wife and me, namely that the first $10200 of unemployment assistance in 2020 that an individual receives will not be subject to taxation.

Both my wife and I were made unemployed during the pandemic and claimed around $12000 of unemployment insurance each before we got new jobs. I understand that now we'll receive relief on the first $10200 of that (presumably each) but I have a second conflicting issue to do with the Advanced Premium Tax Credit we were receiving for our healthcare.

Due to the unexpectedly large amount of Pandemic Unemployment relief we got, our income broke the 400% poverty line by the end of the year and in my current calculations on TurboTax, that means we owe a huge amount of money as we're required to pay all of our health insurance advance premium tax credit money back. This credit had been calculated on our assumption we would be making less money than we ultimately received due to the extra unemployment relief.

My question is whether this tax relief on the unemployment benefits will reduce our repayment of the advanced premium tax credit by making us eligible for more of it. The amount of APTC we are required to return frankly dwarfs the amount of tax relief we'll get from paying less taxes on our unemployment, not that it won't be a great relief anyway.

Thanks for any insight, help, or guidance.

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

PattiF — Tue, 09 Mar 2021 00:02:25 GMT

This has not yet become law, so there are no definitive answers. Here is a blog from TurboTax that will be update as new information is released and finalized.

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

thommay — Wed, 10 Mar 2021 23:52:54 GMT

I notice now that it's being reported that no overpayment of advanced premium tax credits will be required for 2020, independent of unemployment tax breaks. I appreciate that it's yet to be signed into law, but is it reasonable to ask when I should expect Turbotax to have updated the system to take account of these new provisions once it has been signed? Thanks for your help.

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

DawnC — Thu, 11 Mar 2021 00:09:51 GMT

Engineers will start updating TurboTax for all tax law changes as soon as it is official. But how long it will take to incorporate all of the necessary changes is unknown. Keep checking back as I am sure there will be much more communication regarding the changes coming soon.

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

mmj654 — Fri, 12 Mar 2021 16:49:26 GMT

Following, as the APC clawback removal greatly affects me as well.

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

jdwhite0101 — Thu, 18 Mar 2021 17:51:27 GMT

Have the adjustments been made to the software in regards to the suspension of advanced premium tax credit for 2020? I started my return in February and went back to check it this month and everything is still the same. Can you please let me know. Thanks

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

ReneeM7122 — Thu, 18 Mar 2021 18:35:11 GMT

No, adjustments have not yet been made in the software. Our engineers are waiting for guidance from the IRS, which is expected expediently. In the meantime please have a look at the following Unemployment FAQs:

How will unemployment benefits affect my taxes?

When will this update be reflected in TurboTax? When can I file my taxes?

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

mmj654 — Tue, 06 Apr 2021 19:29:33 GMT

Is there any progress on this update?

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

mmj654 — Mon, 12 Apr 2021 20:14:23 GMT

It appears the April 8 update provided the correct ACA premium repayment calculations, meaning even though I went over my income limit I don't have to repay.

-Michele

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

mmj654 — Mon, 12 Apr 2021 20:40:33 GMT

But it also appears the software now declares my 1095-A premiums as tax deductible, even though I didn't pay them... It pushes me from standard deduction to itemized deduction, and changes my tax obligations.

Re: Advance Premium Tax Credit and Stimulus Bill Tax Relief on Unemployment Credits

LinaJ2020 — Mon, 12 Apr 2021 22:39:40 GMT

The program has not been completely updated yet. Our engineering team is in the process of fixing it.

@mmj654