Does TurboTax take into account Tax Credits for Paid Leave Under the American Rescue Plan Act of 2021 for Leave After March 31, 2021?

[EA13]

As per https://www.irs.gov/newsroom/tax-credits-for-[product key removed]-the-american-rescue-plan-act-of-2... it seems like employers get tax credits for paid leave between April 1 2021 and October 1, 2021, under the ARP Act of 2021. Does Turbo Tax take this into account when preparing Schedule H when filing 1040? 

[RobertB4444]

Yes.

When you are entering the total wages paid for 2021 to your household employee into TurboTax this year a new box is located directly underneath the one for "Total Wages Subject to Social Security".  The new box says "Qualified Sick and Family Wages Included Above".  Enter any FFCRA wages paid there and the tax break is entered automatically.

[EA13]

Thanks for your reply! That gives me back some credit, but much less than the amount I put in for the "Qualified Sick and Family Wages Included Above" (only about 6.375% of the amount). In the next screen it asks for Qualified Sick and Family Wages made till April 1, 2021, and those lead to a more significant reduction in taxes. FFCRA covered Qualified Sick Wages till April 1, 2021, but the ARP extends it to Oct 1, 2021. If I paid some such wages after April 1 but before Oct 1, they should lead to a similar credit under ARP, as such wages before April 1 did under FFCRA.

When I work through the paper forms, I get the correct larger credit amount, but when I input it into TurboTax, I get a much lower amount.

So, it seems like FFCRA is taken into account by TurboTax, but can you /anyone shed light on if ARP specifically is taken into account? 

Thanks!

[KrisD15]

Yes.

That section in TurboTax is under construction, in fact, the IRS instructions for Form 7202 have not yet been completed. 

TurboTax will support Form 7202. 

As a Self-Employed Taxpayer, you will need to know any Wages paid by your employer for Tax Year 2020 and the first quarter of 2021 as well as any leave you claimed as a self-Employed Taxpayer in 2020 and what you will add (as Self-Employed credits) for Tax Year 2021 Quarter 1. 

Then you will ALSO need to report what you are claiming for Tax Year 2021 Quarters 2 and 3. 

This will be reported on Form 7202 as TWO time periods as well as TWO types of leave. 

When you try to e-file at this time, on review your TurboTax program will tell you that Form 7202 is not ready and you will need to be patient and wait for that update. 

Below is a link to the draft IRS copy of instructions.

IRS Form 7202 Instructions

[EA13]

Thank you for this information. However, I am asking this from the perspective of a household employer. The relevant forms in this case are Schedule 3 (line 13h), Schedule H (Lines 8c, 8k, 8l, 8m, 8n) and Worksheet 4, links below:

1. Schedule 3: https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
2. Schedule H: https://www.irs.gov/pub/irs-pdf/f1040sh.pdf
3. Worksheet 4 for Schedule H: https://www.irs.gov/instructions/i1040sh#en_US_2021_publink100079681

I appreciate the continued help and support from the community.

Thanks,

[KrisD15 · Accepted solution]

Yes,

TurboTax Home and Business and/or Self-Employed include Schedule H to report Household Employee tax and the Family/Sick Leave Credits may be reported there, however that form is also still being updated. 

The program is still not separating the available credits for Quarter 1 versus Quarter 2 & 3. 

[21parkst]

I've been using TTAX every year this century.  There was no record of my 2020 return?  Additionally I'm concerned that I was sent the wrong application.  I paid $100 on November 16th.  I have none of the CA property tax payments. My only choice is quarterly payments for under-payed taxes.  Federal is similar sitch.

Thanks,

RDG

[EA13]

Thank you, @KrisD15 ! This information helps. Just to confirm:

1. This will also be available in TurboTax Premier Online for individuals filing 1040? 
2. Do you have an ETA by when this will be included in Turbo Tax?

Thanks!

[KrisD15]

Yes,

Schedule H is included in Deluxe Premier and Self-Employed/Home & Business. 

Schedule H will be operable March 17th, 2022 in the TurboTax programs.

[2061]

I see from prior replies that information from schedule H worksheet 4 (Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021) can be entered in Turbotax starting today, 3/17/22. However, when I'm in Turbotax I still only see and option to enter amoutns from Worksheet 3 (Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021). 

How do I get the credit for sick/family leave wages taken after March 31, 2021?

Thanks.

[danielw11]

Just adding that I am also very frustrated by this problem and would like to know when a correct form will be available.

[KrisD15]

Schedule H is ready for use. 

If you are using TurboTax Desktop, make sure you update your program. 

TurboTax Online updates automatically. 

Sick and Family leave must be reported separately for Quarter 1 and Quarters 2 & 3 for tax year 2021. 

[danielw11]

Thanks; I've updated.  But there seem to be two significant bugs in the software.

First, although I entered only qualified sick wages for leave taken after March 31, 2021, the software put that amount on line 1b of Schedule H ("Qualified sick and family wages for leave taken BEFORE April 2, 2021") as well as on line 8k where it should have gone.

Second, credits for qualified leave wages must be added to gross income (see question 70 here: https://www.irs.gov/pub/newsroom/fs-2022-15.pdf).  When I did this with H&R Block software last year, the system correctly added the amount of the credit to Schedule 1 as Additional Income, under "other income."  Your software does not.

[danielw11]

Also, I can't even seem to figure out how to manually add the credit amount as income on Schedule 1, through the Forms view.  Is there a way to do that?  Thanks

[KrisD15]

No

The way the credit is computed and reported has changed from tax year 2020.

It will not be on Schedule 1

It will not be additional income.

It will be subtracted from any household ax you owe and be included on your 1040 line 31 as a refundable credit.

The Sick and/or Family leave amounts paid are first listed on Schedule H. 

Leave needs to be reported for

Q1 of 2021 (January through March 2021) 

Q2 and Q3 (April through September 2021)

On the first screen you report the total leave for Quarter 1 only

On the next screen you split that number (Quarter 1) between sick leave and family leave

THEN

You also enter the sick leave paid for Quarters 2 & 3

You also enter family leave you paid for quarter 2 and 3

(as well as health plan costs if applicable)

If you have the same number on Schedule H lines 1b and 8k, you may not have reported the amounts separately for those two time periods 

The credit is computed and applied to your tax.

The refundable portion of the credit is listed on Schedule 3 lines 13b and 13h depending on the time frame.  (Q1 or Q2&3)

The refundable portion is carried to your 1040 line 31 (although first added to any other refundable credit you may have on Schedule 3) 

The refundable credit is in leu of "Income".

The reporting is different for ax year 2021. 

A refundable credit is similar to additional income as far as increasing your refund if not used to lower your tax bill. 

According to the IRS:

"How you report qualified sick and family leave wages and the credit for qualified sick and family leave wages has changed. Taxable qualified sick and family leave wages for leave taken after March 31, 2021, and before October 1, 2021, are included on line 1a and taxed at 12.4% for social security tax purposes. However, if you’re reporting any qualified sick and family leave wages for leave taken before April 1, 2021, these wages are reported on line 1b, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 8b (nonrefundable portion) and, if applicable, line 8e (refundable portion). For leave taken after March 31, 2021, and before October 1, 2021, the credit for qualified sick and family leave wages is reported on line 8c (nonrefundable portion) and, if applicable, line 8f (refundable portion); and the nonrefundable portion of the credit is against the employer share of Medicare tax. For more information, see the instructions for line 8b, line 8c, line 8e, and line 8f, later."

Schedule H instructions