Premium Tax Credits excess repayment for 2020 in the American Rescue Plan

[scottrier]

Does anyone know how long it will take TurboTax to implement the new tax provision in the latest stimulus bill that was just passed? Specifically, the fact that 2020 premium tax credit excess will not have to be repaid? I've pasted the language from the bill below.

Premium tax credit

The act expands the Sec. 36B premium tax credit for 2021 and 2022 by changing the applicable percentage amounts in Sec. 36B(b)(3)(A). Taxpayers who received too much in advance premium tax credits in 2020 will not have to repay the excess amount. A special rule is added that treats a taxpayer who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021 as an applicable taxpayer.

[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.

[zacknauth]

I have this same question. I will save about $2000 with this provision, so I am very excited about it.

[zacknauth]

This notice is now posted in TT Desktop when you run a Smart Check:

[ReneeM7122]

As customers continue to have questions regarding the Economic Impact Payments (EIP), we’re continuing to work with the IRS for guidance. We’re updating our customer and expert-facing articles with information as soon as we get it!  The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of economic impact payments, including the unemployment benefit will be forthcoming.  

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.

TurboTax is developing the software required to process all of the new conditions.

@zacknauth

[bw269]

Since it looks like I will not need to pay the excess Premium tax credit for tax year 2020, should I then not include the Premium tax credit in my return.  Thereby avoiding waiting for the IRS to refund me this overpayment if I included it on my 2020 tax return.  IRS is advising those who already filed to not submit an amended return for this issue.

[ReneeM7122]

Correct, the IRS is urging taxpayers to wait until more information is released about issues affecting refunds and stimulus payments with regards to the American Rescue Plan. 

Here is a TurboTax article about the American Rescue Plan

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of economic impact payments, including the unemployment benefit will be forthcoming.

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 excess premium tax credit.

TurboTax is developing the software required to process all of the new conditions.

@bw269

[zacknauth]

TT states in its update that this issue was fixed, but it is not in my download version of Home and Business. My return still shows me paying back $2004.

[ThomasM125]

Your tax return isn't due until May 17, 2021, so it may be best to wait until guidelines on how to report and comply with the regulations are finalized and TurboTax has updated the program.

[jmaggio]

I guess i am confused. TT says they have adjusted the federal tax portion to accommodate the ARP and over payment of premium credit  but my schedule 2 still shows I have to pay back almost $1400. Have they fixed it or not? It doesn't look like it as I review the individual forms. I guess i will wait, but how can we get an answer from TT that they believe it is fixed or not?

[drfill]

jmaggio

 is correct - this has NOT been updated either by the IRS or in TT software, but the Review section of your software says that TT "already updated your federal return to the new tax relief" and that I don't have to wait to file my returns.

This is not correct - the last IRS update to form 8962 is dated 12-Jan-2021, prior to the ARP Act.

[KathrynG3]

Unfortunately, because the IRS has not updated, TurboTax cannot update. The only thing to do right now is wait.

If you file the return as is, the IRS will automatically recalculate the Premium Tax Credit. However, that will cause a processing delay.

Resources to check for updates:

IRS: Premium Tax Credit: Claiming the Credit and Reconciling Advance Credit Payments

TurboTax: How will the third stimulus impact me?

@jmaggio

@ddrfill

[zacknauth]

It's fixed! I have Home and Business desktop download and the premium tax credit repayment has been fixed!

[jimgarrison]

I just download an update and the ACA excess  premium tax credits on Form 8692 that were previously being paid back have now disappeared and my refund has gone up. Is this due to the new law update and is this correct?

[DoninGA]

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@jimgarrison wrote:

I just download an update and the ACA excess  premium tax credits on Form 8692 that were previously being paid back have now disappeared and my refund has gone up. Is this due to the new law update and is this correct?

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Yes, that is due to the American Rescue Plan Act of 2021 and it is correct.