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aarmstrong7726
Level 2

Changing deduction from itemized to standard

We filed before the bill was passed in March and due to our unemployment raising our income by 30k, the program used itemized deductions instead of the standard. Now that I am looking over my return, I see with taking the $20400 off of our AGI that we are eligible for the standard and it would raise our refund by quite a bit. Should I amend our return?

8 Replies
Critter-3
Level 15

Changing deduction from itemized to standard

Your question is confusing and it makes no sense ... do you and your spouse each have more than $10,200 of unemployment ?   The unemployment is an exclusion ( up to 10,200 per person)  on the Sch 1  and reduces your taxable income on the 1040 form ... it is not a standard or itemized deduction at all  so I have no idea why you would need to change your deduction choice.  

aarmstrong7726
Level 2

Changing deduction from itemized to standard

Aren't you just pleasant. I know that it's $10,200 each and both me and my husband had more than $10k in unemployment. Together the bill allows for $10,200 each which equals $20,400. After allowing for the $20,400 our AGI lowered to the point where the TurboTax app suggested we use the standard deduction, which in turn lowered the taxes owed and resulted in over $2000 more that should have been refunded to us. I read that unless things like the earned income credit was affected by the bill, you shouldn't amend, that's why I am asking. If you don't understand, don't reply. Especially if you're going to be rude. Everyone is stressed trying to figure all this out and the last thing any of us need is somebody being rude over a frickin question.

VolvoGirl
Level 15

Changing deduction from itemized to standard

How much was your itemized deductions before?  It seems like if you lowered your AGI then Itemized would be better than the Standard Deduction especially if you had Medical which has to be over 7.5% of your AGI.  You might have changed something else on your return besides the unemployment exemption. like your filing status.   Or maybe it would give you the same lower taxes whichever you take now, itemized or standard.   

Critter-3
Level 15

Changing deduction from itemized to standard

Read the IRS rules and worksheet ... you don't just get 20,400 as a married couple for the exclusion ... it is UP TO 10,200 per person :  

 

Note. If your modified adjusted income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid to you in 2020. For married taxpayers, you and your spouse can each exclude up to $10,200 of unemployment compensation. For example, you file jointly with your spouse and your modified AGI is less than $150,000. You were paid $20,000 of unemployment compensation and your spouse was paid $5,000. Report the $25,000 (the total amount of your unemployment compensation) on line 7 and report $15,200 on line 8 as a negative amount (in parentheses).  The $15,200 excluded from income is all of the $5,000 unemployment compensation paid to your spouse, plus $10,200 of the $20,000 paid to you. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation. Use the Unemployment Compensation Exclusion Worksheet to figure your modified AGI and the amount to exclude. If you file Form 1040-NR, you can’t exclude any unemployment compensation for your spouse.

 

https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

aarmstrong7726
Level 2

Changing deduction from itemized to standard

I have read them and we both have over the $10,200 so we get the full amount. The issue is that once you deduct that from our taxable income, it makes it low enough to use the standard, where it made us use itemized before.. it turns out that using the standard would have increased our return by a significant amount. But I'm not sure whether or not this will be something the IRS changes or if I should.. ugh the one time I wish I had waited to file!!

 

aarmstrong7726
Level 2

Changing deduction from itemized to standard

Our itemized was maybe 3k more than the standard but the additional income from unemployment put us in the next tax bracket. We didn't have medical to deduct, and I double checked after reading your reply and our filing status is the same... MFJ

 

rjs
Level 15
Level 15

Changing deduction from itemized to standard

It makes sense that reducing your income would put you in a lower tax bracket, but it's hard to think of any way that reducing your income would reduce your itemized deductions. If your itemized deductions are still $3,000 more than the standard deduction, how would it be better to use the standard deduction?


The only thing I can think of that might reduce your itemized deductions is if you have a deduction for some type of charitable contributions that is limited by your AGI, but that would be very unusual.


What itemized deductions do you have? Does the amount of any of the itemized deductions change because of the unemployment exclusion?

 

Mike9241
Level 15

Changing deduction from itemized to standard

you didn't read their response. they say each got more than $10K in UC so they would probably get the max exclusion unless their modified AGI was over $150K. however, it makes no sense that the standard deduction would now be higher than itemized since about the only thing affected by AGI is medical so with a lower AGI their medical deduction would go up while other itemized deductions wouldn't change. 

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