Federal Unemployment Insurance

[jacdy19]

The Senate version of the American Rescue Plan is expected to be the final version, and it includes a brand-new break that will allow you to treat up to $10,200 of 2020 unemployment compensation as federal-income-tax-free. TurboTax should include in its updates

[DoninGA]

In the coming weeks and months after this legislation passes and is signed by the President the IRS will have to provide regulations, rules, calculations and procedure to codify the legislation.  Once completed by the IRS then the TurboTax software incorporating these changes has to be approved by the IRS.  After that happens the update will be available for the TurboTax editions.

[jacdy19]

If you haven't filed taxes yet, here's how to account for the change: On the standard federal 1040 form, you will fill out Schedule 1 and list the full amount of unemployment benefits you received on line 7 titled "Unemployment compensation," the IRS advises.This total is listed on a 1099-G form you received. Because of fraud surrounding unemployment, you should check that that number matches what you actually got.

Then, you list the amount you can exclude on line 8 titled "other income" as a negative amount (in parentheses.) For example, if you received $12,000 in unemployment, you would list ($10,200) here, because that is the maximum amount you can exclude from income taxes.

TURBOTAX  should update 

[CatinaT1]

The unemployment exclusion is automatic in TurboTax.  This was updated last week.