State Not Updated for Unemployment Exclusion Even After Email from TurboTax Saying it Was

[SuzanneG]

Received an email yesterday from Turbo Tax saying my state (Oregon) had been updated for the new unemployment exclusion and that I could now file my state taxes. I logged back into the online version of Turbo Tax and nothing had changed with my state refund. I decided to plug my information into a different company's site and my state credit jumped up significantly. What's going on with Turbo Tax? Why send an email specifically saying my state has been updated and that I can file my state taxes if this is not the case?? When will Turbo Tax actually be updating states, instead of just sending out false emails saying things have been updated when they have not?

[SweetieJean]

Which state?  If you are using TT Desktop, be sure to run a program update.

[SuzanneG]

Oregon. I'm using the online version. 

[ErnieS0]

@SuzanneG The Oregon program has been adjusted for the federal exemption of the first $10,200 of unemployment benefits for taxpayers with income less than $150,000.

There is no subtraction on the Oregon return because line 7 of Form OR-40 picks up federal adjusted gross income which includes the $10,200 subtraction. The exclusion is baked into Oregon income before you start.

The only way you would not get the exclusion on Oregon would be if you were ineligible for federal. Line 8 of Schedule 1 should show a "UCE" subtraction of up to $10,200.

Please take these steps to preview your 1040 in TurboTax Online:

1. Login to TurboTax Online (https://turbotax.intuit.com/)

2. Click on "Pick up where I left off"

3. Select "Tax Tools" from the menu on the left side of the screen

4. Next select "Tools" from the drop-down menu on the left side of the screen

5. Then click "View Tax Summary" from the pop-up menu

6. Lastly, click on "Preview My 1040" from the menu on the left side of the screen. Please take these steps to preview your 1040 in TurboTax Online:

[SuzanneG]

@ErnieS0 Hmm... well... I'm not sure what to think then. I am eligible. My federal refund adjusted a week or so ago when Turbo Tax was updated at the federal level. But my state refund has stayed the same, even though Oregon has now been updated. I had state income tax withheld when I was receiving unemployment payments, so seems like the change at Turbo Tax should increase my refund by the amount withheld, as I did not receive over $10,200 in unemployment benefits. It's extra strange, that when I plug my information into a different company's website my state refund jumps up to a level that would match the unemployment tax exemption. 

I'll guess I'll give it a few days and see what happens at Turbo Tax. I shouldn't need to delete and restart my 2020 taxes should I? 

[ErnieS0]

You can schedule a call with a Tax Expert and they can pull a sanitized version of your tax return and look at it. Tell them to get a diagnostic copy.

When I look at a dummy return, TurboTax is pulling the correct income onto Oregon.

OR-40

[SuzanneG]

@ErnieS0 Thanks! I appreciate your help, especially with the visuals. 🙂  I'll have to look closer into what's going on. I wonder if the problem is coming up because I had taxes withheld on my unemployment payments. If my entire unemployment benefit is less than the $10,200 exemption, it seems like I should be refunded the entire amount of my state income tax that was withheld on my unemployment payments, that's not happening. It happened on the federal level, but not the state level. 

[russ56]

Your answer is correct, but only for people who are completing the Oregon RESIDENT tax return.  Many people who work in Oregon but live in Washington (for example) have to complete the non-resident tax return.  People who work in Oregon, even if they live in another State, receive unemployment insurance from Oregon.

The Oregon non-resident tax return doesn't calculate tax the same way as the resident tax return.  

The Turbotax change made for non-resident Oregon tax returns requires the taxpayer to calculate the percentage of unemployment insurance paid by Oregon, if they happen to have also received unemployment insurance from another State.  Then you have to manually enter the taxable portion of the unemployment insurance into Turbotax.  If you only received unemployment insurance from Oregon then you simply reduce the unemployment insurance amount by $10,200 and if there is a balance enter that amount into Turbotax.