With the new covid relief bill in place, how soon before turbotax updates their system for the $10,200 allowance in unemployment income?

[ssorkram]

I do not want to pay more than I have to and wait for the IRS to send a refund.  Currently I owe $4300 if I submit my taxes as is so any relief from this would be great.

[DoninGA]

After the legislation has passed Congress and after the President has signed the legislation and after the IRS has written the rules, regulations and procedures.  And after the IRS has changed any forms or schedules to accept the tax code changes.  And after the IRS has approved the changes in the TurboTax program that apply to the tax code changes, then it will be available for the users of the tax preparation software.

This can take anywhere from several weeks to several months before it becomes available.

See this TurboTax support FAQ for information on the American Rescue Plan - https://ttlc.intuit.com/community/tax-topics/help/how-will-the-stimulus-package-impact-me/00/1393859

[ssorkram]

That does not help taxpayers much then if it will take months.  That would mean I would need to pay the entire amount and cross my fingers that the IRS will refund me the difference.  Would you suggest that I file for an extension in hopes the refund difference outweighs the penalty for not paying by April 15?

[DoninGA]

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@ssorkram wrote:

That does not help taxpayers much then if it will take months.  That would mean I would need to pay the entire amount and cross my fingers that the IRS will refund me the difference.  Would you suggest that I file for an extension in hopes the refund difference outweighs the penalty for not paying by April 15?

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I would wait for a few weeks to see if the IRS gives guidance on how this unemployment compensation exclusion is going to be handled.  You can always file for an extension on or before April 15, 2021.  However, if you have taxes owed on the current 2020 tax return, those taxes still have to be paid on or before 04/15 to avoid a failure to pay penalty and interest on the unpaid taxes.