Massachusetts Unemployment compensation received during the Covid-19 pandemic

[Wdtax20]

Should a married couple with Mass AGI of $$21,625 (Mass U/E  compensation $23,481) be entitled to a $10,200 deduction from unemployment compensation?

[LenaH]

It depends on your total family size, including dependents. Per the State of Massachusetts, taxpayers with household income not more than 200% of the federal poverty level may deduct up to $10,200 of unemployment benefits from their taxable income on their 2020 and 2021 tax returns for each eligible individual. I have attached the income limits below. 

Tax Filing Season Frequently Asked Questions

[Wdtax20]

Family size is only two.  Husband and wife.  Combined AGI $21,695.  Unemployment compensation was $23,481 and a small business loss of $-1,786.  Why doesn't turbo tax take the deduction on Schedule Y , Line 9?

[ThomasM125]

You are under the limit so your unemployment should not be taxable to the extent it is under $10,200 for each of you. Does the unemployment income appear on line 8 of Form 1 but there is no adjustment for it on line 15?

[Wdtax20]

The unemployment compensation is for only one person who received $23,481.  Turbo Tax is not allowing for the $10,200 deduction which should be deducted on Schedule Y, Line 9.  Can you confirm if this is correct.

[Wdtax20]

The unemployment compensation is for only one person who received $23,481.  Turbo Tax is not allowing for the $10,200 deduction which should be deducted on Schedule Y, Line 9.  and subsequently deducted on Line 15 Form 1.

[gloriah5200]

Are you referring to the handling on the MA return Schedule Y and not the federal return?

From the MA Department of Revenue site:

As a result of a recent state law change, taxpayers with household income not more than 200% of the federal poverty level may deduct up to $10,200 of unemployment benefits from their taxable income on their 2020 and 2021 tax returns for each eligible individual.

Federal law allows a deduction of up to $10,200 if the taxpayer’s federal adjusted gross income is less than $150,000.

Since the Massachusetts income threshold is different from the federal income threshold, some taxpayers may be eligible for a deduction on their federal tax return but not on their Massachusetts tax return.  

See chart below for income limits based on 200% of the federal poverty level.

# Persons in the Family/Household   200% of the Federal Poverty Level

1                                                             $25,520

2                                                             $34, 480

3                                                             $43,440

4                                                             $52,400

5                                                             $61,360

6                                                             $70,320

7                                                             $79,280

8                                                             $88,240

If I have not filed my 2020 income tax return, how can I claim the new unemployment deduction?

If you have not filed a 2020 tax return yet, you should report all of your unemployment income on your Massachusetts return as usual using line 8a on Form 1 (for resident taxpayers) or line 10a on Form NR/PY (for nonresidents or part-year residents).  

If you are eligible for a deduction, you should report the deduction amount on Schedule Y, line 9. 

Note that you may be eligible for a deduction on your federal return but not eligible for a deduction on your Massachusetts return. 

More information about how to calculate household income and the deduction amount will be added to this page soon. Please check back.

MA Department of Revenue regarding fed unemploy exempt

[kjackson53]

I have the same issue. AGI of $22k. There's no way for me to enter the $10,200 deduction on Schedule Y, Line 9. And therefore it's not filled in on Form 1, Line 15.

[jlrpiano]

Same here.  I meet the threshold to allow me to deduct, and I would expect TurboTax to see that and offer me Schedule Y.  But nope.  I was able to get someone on the phone about this and they were confused as well.  but since I am not a premium customer, they can't have someone get back to me.

I'm looking at two courses of action:

1) They fix it because MA just decided this recently and they have to make the programming change

or

2) I e-file with TurboTax Federal which does the deduction correctly, and paper file for MA and do the schedule Y by hand.

Hopefully #1 happens.  Would love to hear something formal from Intuit.

[CatinaT1]

Make sure you have the most up-to-date version.  This should happen automatically.  Unemployment update by state

[jlrpiano]

Thanks for the quick answer, but "make sure you have the up to date version"?   I'm using it online at  turbotaxonline so by definition it is the latest you've published.

I just looked again, and no Schedule Y offered.

Specifically, the AGI is $24,043, and I am single, and the "200% Federal poverty level" is $25,520, so I am under the level, and I should be offered a Schedule Y.  But I am not.  And TTax is telling me my taxable is my $24k PLUS my unemployment, minus my std deduction, taxing me on about $27k.  Which is wrong.

No schedule Y, and it is not in any way deducting, and is adding my unemployment.  So either I'm not reading the instructions right,  or TTax is erroneously not offering me a schedule Y.

[Wdtax20]

To Kjackson53:

Go to Schedule Y

Enter 10,200 on Line D under Schedule Y Deductions Smart Worksheet.  This will also enter 10,200 on Line 9 Schedule Y which will then transfer over to Line 15 on Form 1.

I am holding off making this entry until May 1st to give Turbo Tax the opportunity to update their program, since I currently showing an amount due.   After I make this entry the tax liability is now zero "0".

I hope this helps you.

[JohnW152]

@Wdtax20 and @jlrpiano

Just to avoid any misunderstanding, Massachusetts taxpayers may be eligible for the deduction if their household income is not more than 200% of the poverty level. 

However, there's no indication yet on how that will be calculated.  You'll need to check the link below for updates.

According to If I have not filed my 2020 income tax return, how can I claim the new unemployment deduction? on the Massachusetts Department of Revenue's Tax Filing Season Frequently Asked Questions page:

If you have not filed a 2020 tax return yet, you should report all of your unemployment income on your Massachusetts return as usual using line 8a on Form 1 (for resident taxpayers) or line 10a on Form NR/PY (for nonresidents or part-year residents).   If you are eligible for a deduction, you should report the deduction amount on Schedule Y, line 9.  Note that you may be eligible for a deduction on your federal return but not eligible for a deduction on your Massachusetts return. More information about how to calculate household income and the deduction amount will be added to this page soon. Please check back.

[jlrpiano]

Thank you for taking the time to respond, but this is the same answer someone else gave above, to which I responded that I am under the 200% Federal guideline, and the reference says that AGI is under that level, an mine indeed is.

And you say "just go do schedule Y" but (especially because I make so little) I am on a free version of TurboTax online, and it is not offering me access to schedule Y, so I can't "just go there".  And a TurboTax support rep on the phone could not figure it out either.

See, when they updated TTax online for the Fedeal change, it all just worked.  For MA state, not so much.  Or if someone from Intuit can tell me that either

1) We've not done it yet.

2) We have a bug and we'll fix it

3) No idea why you're not seeing schedule Y so file on paper

[DGHIX]

How can you determine if you're under the 200% FPL when MA has not yet given guidance on the calculation?  Is the unemployment included in full?  Only the non exempt portion?  Not at all?