topic Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA in Retirement tax questions

Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

skanthakumar-hot — Fri, 26 Mar 2021 19:42:22 GMT

We received unemployment benefit last year. Before deducting $10,200 our AGI was larger than IRA deduction limit. Now it is below the IRA limit once we subtract the $10,200. However TurboTax is not allowing me to deduct that. What is the issue?

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

ee-ea — Sat, 27 Mar 2021 05:02:54 GMT

The IRS needs to rule on this question," Is AGI with or without the 10,200 UE subtraction ?"

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

flytiger — Sat, 27 Mar 2021 06:38:29 GMT

Your contributions to IRA's must equal or be less than your earned income.

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

dmertz — Sat, 27 Mar 2021 11:50:14 GMT

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.

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

skanthakumar-hot — Sat, 27 Mar 2021 12:52:19 GMT

This makes sense. However, I am unable to find Section 9042(b)(5). There is no (5) in Section 9042(b)

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

dmertz — Sat, 27 Mar 2021 13:07:03 GMT

Section 9042(b):

(b) Conforming Amendments.—

(1) Section 74(d)(2)(B) of the Internal Revenue Code of 1986 is amended by inserting “85(c),” before “86”.

(2) Section 86(b)(2)(A) of such Code is amended by inserting “85(c),” before “135”.

(3) Section 135(c)(4)(A) of such Code is amended by inserting “85(c),” before “137”.

(4) Section 137(b)(3)(A) of such Code is amended by inserting “85(c)” before “221”.

(5) Section 219(g)(3)(A)(ii) of such Code is amended by inserting “85(c),” before “135”.

(6) Section 221(b)(2)(C)(i) of such Code is amended by inserting “85(c)” before “911”.

(7) Section 222(b)(2)(C)(i) of such Code, as in effect before date of enactment of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, is amended by inserting “85(c)” before “911”.

(8) Section 469(i)(3)(E)(ii) of such Code is amended by striking “135 and 137” and inserting “85(c), 135, and 137”

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

fanfare — Sat, 27 Mar 2021 17:47:58 GMT

Does the exclusion get added back for purposes of
EIC and,

Retirement Savings Contribution credit ?

Both are going up on my niece's tax return.

Re: Received unemplyment benefit. Once we subtract the $10200 the AGI is below the IRA limit but program is not allowing to deduct IRA

dmertz — Sun, 28 Mar 2021 00:10:09 GMT

fanfare, no. Changes to sections 25B and 32 are not mentioned.