Do i need to file an amended California return to get the difference?

[Mrule3024]

I filed my taxes on 2/25. I received my state return already but my federal is still pending. The problem is after the new tax breaks turbotax says my state return should have been about $1000 more. I know the irs is handling the difference for federal but do I need to file an amended state return?

If it helps I believe my state return changed due to the fact of having 2 kids and unemployment but I'm not 100% why it shot up so much.

[JotikaT2]

The unemployment compensation was already not taxable in California and would have already been reflected as such on your state return. 

The best thing to do at this point is to compare your 2020 tax return as filed to what you are seeing within TurboTax when trying to amend to determine exactly what the difference is related to.  Once you are able to determine what the difference relates to, please comment and we can assist you accordingly.

Instructions to download tax returns

[Mrule3024]

So I reviewed what was filed and what turbotax now shows with the updated tax breaks. It is a difference of $1,028. $1000 comes from the young child tax credit and $28 comes from the earned income tax credit.

My federal adjusted gross income on line 13 of my California state form also dropped by the 10,200 from the tax break. Which also caused line 15 to change to a negative amount. After the adjustments were made on line 16 to account for the 10,200 it made the rest stay the same other than the credits I mentioned and the refund amount on line 78.

[JotikaT2]

Perfect!  Thank you for doing that as it helps determine what your next steps should be.

Since the overall changes in the tax treatment of your unemployment resulted in the credits you are entitled to on your state return, you may need to amend your state return. 

However, I suggest waiting just a bit longer until the IRS provides concrete details on how taxpayers should proceed with the returns filed before the American Rescue Act was enacted.  Currently the IRS is saying do not amend your federal return for unemployment compensation if you have already filed.  However, they are still updating their website and until they issue concrete information, waiting may be better to ensure you do not have to file an amended return for state twice should they change their guidance.  

Please see the link below for updates from the IRS as they periodically update their site with more information in regards to the unemployment income treatment.

Unemployment claimed on returns already filed

State updates to unemployment

Should you decide to prepare your state amended returns anyways, you can do that using the instructions in the link below.  Just be aware you may have to amend again if the IRS changes their treatment of the unemployment income.

How to amend my return?

[Mrule3024]

Thank you. Ok. I will just wait a little bit longer to see what is decided before trying to amend my state return.