topic When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill? in Get your taxes done using TurboTax

When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

zippoman6799 — Mon, 15 Mar 2021 17:33:42 GMT

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

Bsch4477 — Mon, 15 Mar 2021 17:39:42 GMT

The IRS has not yet issued instructions to software providers so there is no date for the update.

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

Opus 17 — Mon, 15 Mar 2021 17:45:52 GMT

The IRS released guidelines over the weekend. It will likely be 1-2 weeks (or more) for the changes to be programmed into Turbotax, tested, and accepted by the IRS. You can sign up here for an update.

https://ttlc.intuit.com/community/tax-topics/help/how-do-i-claim-the-new-unemployment-benefits-in-turbotax/00/2081055

It seems the calculation may not be simple because even though the income is not taxable, it is still counted as "taxable income" for purposes of calculating many other things:

Taxable Social Security
Savings bond interest exclusion for education
Employer-provided adoption benefits
Deductible IRA contributions
Student Loan Interest Deduction
Tuition and Fees Deduction
Passive activity loss limitation for rental real estate

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

ewilson4 — Wed, 17 Mar 2021 18:00:38 GMT

Is a dependent eligible for the unemployment exclusion or is it contingent on the parents' AGI?

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

Opus 17 — Wed, 17 Mar 2021 18:10:38 GMT

@ewilson4 wrote:

Is a dependent eligible for the unemployment exclusion or is it contingent on the parents' AGI?

Any taxpayer whose income is less than $150,000 is eligible for the first $10,200 of unemployment compensation to be excluded from income tax. There is no requirement that the taxpayer be "independent." This should have a major impact on children/dependents who are now being hit with the "Kiddie tax" on the unemployment. If you have not filed yet, I strongly suggest waiting until the forms are updated in Turbotax. You can sign up for email notifications here, https://ttlc.intuit.com/community/tax-topics/help/how-do-i-claim-the-new-unemployment-benefits-in-turbotax/00/2081055

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

ewilson4 — Wed, 17 Mar 2021 18:15:06 GMT

That is amazing news. I have three kids whose summer jobs were impacted and as a result that collected unemployment which the IRS was treating as unearned income and taxing at my rate. I held off filing for them for this reason. I am guessing that there are a lot of very happy parents out there as a result of this.

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

Opus 17 — Wed, 17 Mar 2021 18:27:08 GMT

@ewilson4 wrote:

That is amazing news. I have three kids whose summer jobs were impacted and as a result that collected unemployment which the IRS was treating as unearned income and taxing at my rate. I held off filing for them for this reason. I am guessing that there are a lot of very happy parents out there as a result of this.

I actually haven't seen a lot of news on this at all. The fact that kids unemployment was being taxed at 24% or more (instead of being tax free under $12,400) could have been spun up as a big controversy if one of the news organizations wanted to make a stink about it and blame Congress, but I haven't seen anything on it, nor have I seen any articles telling parents to amend their kids' returns now. (On the other hand, the fact that kids whose hours got cut at McDonalds get enhanced UEC may be something that prominent politicians don't want to call attention to, like prisoners with no taxable income being eligible for full stimulus rebates.). Or maybe I read the wrong things.

Best of luck to you.

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

ewilson4 — Wed, 17 Mar 2021 18:34:09 GMT

I will not pretend that it was not an economic windfall for my kids. They lost income from life guarding and waitressing jobs but the enhanced benefit overcompensated them for that. But if they had been taxed at my rate, they would have ended up losing money.

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

Bfp1430 — Wed, 17 Mar 2021 19:19:50 GMT

What happens if we already filed in February ?

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

jps_phd — Mon, 25 Apr 2022 16:46:28 GMT

I just filed (4/18) using TT basic; there was nothing on this at all in the program. What's the current situation?

Re: When is TurboTax going to update to include the 10,000 unemployment pay tax exemption defined under the covid relief bill?

Hal_Al — Mon, 25 Apr 2022 16:56:10 GMT

@jps_phd

The $10,200 unemployment exemption/exclusion/deduction was for 2020 only and does not apply to 2021. All unemployment compensation, for 2021, is taxable.

Reference: https://www.cnbc.com/2022/01/03/no-a-tax-break-on-2021-unemployment-benefits-isnt-available.html#:~:text=The%20American%20Rescue%20Plan%20Act,tax%20break%20on%202021%20benefits.