If American Rescue Plan makes $10,200 of UEC in 2020 tax free, and I get a new 1099-G, how do I amend return in TurboTax?

[Critter-3]

Important Tax News

IRS Provides American Rescue Plan Guidance Do not file amended returns The IRS has informed NATP that it's reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of economic impact payments, the expanded child tax credit, including advance payments, and other tax provisions will be made available as soon as possible. The IRS strongly urges taxpayers not to file amended returns related to the new legislative provisions or take other unnecessary steps at this time. The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance. Also, the IRS has released IR-2021-54, which notes that the third economic impact payment will begin to be deposited over the next week. The third round of stimulus payments, those authorized by the 2021 American Rescue Plan Act, differs from the earlier payments in several respects: The third stimulus payment will be larger for most people. Most families will get $1,400 per person, including all dependents claimed on their tax return. Typically, this means a single person with no dependents will get $1,400, while a family of four (married couple with two dependents) will get $5,600. Unlike the first two payments, the third stimulus payment is not restricted to children under 17. Eligible families will get a payment based on all of their qualifying dependents claimed on their return, including older relatives like college students, adults with disabilities, parents and grandparents. NATP is closely monitoring the details of this news and will be in communication with our members with additional guidance and resources as the IRS releases it.

[holl22]

following....great info here so far. guess we just have to wait it out for a bit.

[Mullindw]

Just an update since I have been surfing the IRS sites.  IRS has instructions out there now and essentially the 10200 is listed as a subtraction on line #8 (other income).  Then you take the new total adjustments to the 1040 and the AGI is then calculated.  If below 150K$ the line 8's credit remains for joint filers.  So I will wait on the Turbo Tax software to get updated but for anyone in my situation, this is good news and logical.  See the article "New Exclusion of up to 10200 of unemployment compensation" from the IRS which is an addendum to the instructions for Line 7&8 of the 104 sch 1 instructions.   

[Noleor1st]

Lets hope TurboTax  informs all users via email when this has been added to their software, so we can process or amend our taxes quickly.

[DeanieO]

Can anybody (when Turbotax is updated and ready) walk me through how to file an amended return where that is the solitary change? (I'm always confused when amending if I re-send everything previously filed or just line 8 somehow and the lines that change subsequent to line 😎 And include how free filers do ths as well and IF amended returns are still eligible for the free file versions?

[Mullindw]

I would wait for the Turbotax update for the UEC tax issue to be resolved.  Anyone that filed early as folks were suggested to do for the lower income constraint who collected UEC will have to file an amended return.  I would assume that Turbotax will provide all of these folks with an easy way to ammend the return.  Just imagine everybody doing so in USA using all different products besides Turbotax  which will have the same issue.  The IRS may actually standardize the fix to prevent them from doing double work and not deal with Millions of Amended returns..

[EmilyBUli]

So the best advice is to wait until Turbo Tax updates to allow the subtraction of 10,200 on line 8?  Do we know when Turbo Tax will update?

[Cynthiad66]

IRS is not accepting amended returns until March 25 if the new Form 1040X is ready at that time.  IRS will issue specific procedures for excluding the untaxable portion of the Unemployment Compensation. 

If your e-filed return was rejected (you got a specific reject code), go here instead.

Looking for a prior year return? Go here. 

You can amend e-filed returns if they've been accepted; paper-filed returns may be amended once they've been mailed.

If your e-file is still pending, you won't be able to make changes until the IRS either accepts or rejects it. Don't know your e-file status? Here's how to look it up.

Select your tax year for amending instructions:

• 2020

[Mullindw]

Thanks for the update.  I have not filed yet pending the resultant TurboTax update which will happen in the next week or two I hoe.  There are many that will have to amend and Turbo tax should send them a communication to do that if they do not know.   Please send a reply to the community to this email chain when turbo tax has the software corrected for this change.   Also there is a software glitch when entering 1099-NEC data in sch C where the state income $ box is not there.  35 other folks have mentioned it and it still is not fixed.  TurboTax should fix that also.  After reading the IRS instructions,  I am happy that the credit is added to line 8 as a negative so it is before the adjusted income total.

[Mullindw]

From all of the input I have seen, I am standing pat until I see the update in the program.  In Turbo Tax's defense they have to get the official instructions from the IRS and from what I have read the IRS has to approve their software change.  Thus why I predict the change will not be there until 4/1.  What is disappointing in this whole mater is why TurboTax is not being proactive with information to prevent folks from having to seek information from platforms like these.   Also , they should disable anyone from submitting a tax return with UEC involved for example.  I like TurboTax, but will give them a "E" on this issue and the legislators an "F" for not extending the tax deadline for this mess they created. 

[MichelleLM]

Two questions:

[1] Is there an understanding of what "household" AGI means for this exemption?  My college student children collected unemployment for a period of time.  They had taxes withheld but due to the unearned income / kiddie tax provisions, they each have a tax bill.  If you add my, my spouse's, and their income, as a household we are over $150,000.  So I am not clear on whether they will qualify for the exemption.

[2] I know the IRS has asked people to wait to file amendments (assuming they will qualify).  My kids have already filed and have scheduled the payments for the amounts due to be paid on April 1st.  Does anyone know if we can change the scheduled date in Turbo Tax to closer to 4/15 to give more time for these details to be sorted out?

[rjs]

@MichelleLM 

[1] Where do you see the term "household AGI" in relation to the exclusion of unemployment income? It's not in the information on the IRS web site, or in the law that was passed. They just say "modified adjusted gross income," which clearly means the AGI on the tax return of the person claiming the exclusion.

[2] You can't change the payment date, but it doesn't matter. They have to pay the amount shown on the tax returns that they already filed, no matter when they pay it. If it turns out that they don't owe that much, they'll get a refund by whatever process the IRS comes up with for dealing with returns that were already filed.

[MichelleLM]

@rjs 

I've seen a few articles use that language.  And earlier in this chain there is a link to a turbo tax page that says it as well:

Unemployment FAQs

How will unemployment benefits affect my taxes?

The IRS, and most states, consider unemployment payments as taxable income. This means that you have to pay tax on these payments and report them on your return. With this new law, if your household income is less than $150,000, the first $10,200 of unemployment will be tax free, but any amount you receive above that will be taxed.

Thanks for the note on the payment.

[DawnC]

In that verbiage, household income is the MAGI on your tax return.   From the IRS:   If your modified adjusted gross 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 in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200. If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.

The exclusion should be reported separately from your unemployment compensation.    @MichelleLM

[holl22]

my forms have been updated. turbo tax did the update a couple of hours ago. all set to file now. so glad that's over and done with.