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jetbarkley
New Member

If I deducted the $10,200 unemployment compensation allowed in 2020, but received a refund anyway, am I liable to pay that back to the IRS?

 
3 Replies
rjs
Level 15
Level 15

If I deducted the $10,200 unemployment compensation allowed in 2020, but received a refund anyway, am I liable to pay that back to the IRS?

I don't understand what you mean by "deducted the $10,200 unemployment compensation." What did you deduct it from? Do you mean that the amount of unemployment compensation that you entered in TurboTax was $10,200 less than you actually received? If that's what you did, you probably did get a refund that you were not entitled to, and will have to pay back some or all of it, and possibly pay more tax in addition. You were supposed to enter the full amount of unemployment compensation that you received, as shown in box 1 of your Form 1099-G. Either TurboTax or the IRS would calculate the $10,200 exclusion.


You said you received a refund. Do you mean the regular refund from your tax return, on Form 1040 line 35a? Or do you mean that you got an additional refund for the unemployment exclusion because the IRS recalculated your tax?

 

  • When did you file your tax return?
  • What is the exact amount in box 1 of your Form 1099-G for unemployment?
  • What are the exact amounts on Schedule 1 lines 7 and 8 of your tax return?
  • What is the exact amount on your Form 1040 line 11?

 

jetbarkley
New Member

If I deducted the $10,200 unemployment compensation allowed in 2020, but received a refund anyway, am I liable to pay that back to the IRS?

Thank you for responding so quickly! I filed April 5, at which point I knew the ARPA was signed into law, allowing the exclusion from income of the first $10,200 of unemployment compensation. We recorded this properly on the Sch 1 by entering all received unemployment compensation on line 7.  As you said, TurboTax calculated the negative 10,200 on line 8.  Consequently, our taxable income was reduced and tax liability went down.  We still owed, and payed what we owed at the time of filing. 

 

Several days ago we received a check, and then a notice, for a refund of tax paid due to a correction by the IRS. This had me concerned that the IRS made a mistake, and that if I accepted the refund I would just be liable to pay it back.  I came to TT looking for answers.  Then I went to IRS looking for answers, and I think I found one.

 

I live in a community property state.  As a result, and because we file married jointly, I learned that I should claim half of my wife's unemployment compensation and she should claim half (and each of us would claim half of my UC if applicable), and so we are allowed to exclude the first $20,400 of UC from our income.

https://www.irs.gov/forms-pubs/unemployment-exclusion-update-for-married-taxpayers-living-in-a-commu...

 

If my read is correct, TT should have excluded all of my wife's UC that was less than the married filing jointly threshold of $20,400.  This guidance may not have been clear at the time I filed.  I think the IRS calculated this nuance and issued a refund to us.  Unless I am mistaken, we are entitled to the "surprise refund" we received because of the application of the ARPA exclusion of UC in a community property state.  If I'm making a mistake, I would love to know!!

Hal_Al
Level 15

If I deducted the $10,200 unemployment compensation allowed in 2020, but received a refund anyway, am I liable to pay that back to the IRS?

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