Does the new unemployment tax credit qualify me for the earned income tax credit?

[trboccuzpmp]

Should I amend my return to obtain the full stimulus amount? The amount of unemployment I received placed me over the $150,000 threshold for the full stimulus amount, but under $160,000 cut-off.  By subtracting the unemployment from my AGI,  I will be under the $150,000 threshold.  Will filing an amended return provide me the difference between what I received and the full stimulus amount?

[PayPerPeddler]

From my understanding, yes you should amend.  I say this because your Modified Adjusted Gross Income needs to be under $150,000 for the exclusion to count in the first place.  Please, somebody correct me if I am wrong.

[Jhedges321]

My question is if I filed my return before we knew about the unemployment becoming not taxable, but I have not received any of my return yet, will ALL of my return be on hold until they release the payment in May? Or will they continue to process the returns and only the portion of the adjustments for unemployment we are supposed to receive come in May when those payments begin issuing?

[djw1234]

For anyone that's been waiting to amend their 2020 return in order to claim credits that are now available due to the unemployment tax breaks in the American Rescue Plan, TurboTax is now allowing those returns to be amended. Just efiled mine a couple minutes ago. 

[AmyC]

@Jhedges321 The IRS has been processing returns and sending refunds based on the original filing. Once the IRS begins going through the forms that contain unemployment, they will adjust the return and send the appropriate refund without changes in the various credits. Here is the original IRS article, IRS to recalculate taxes on unemployment benefits; refunds to start in May.  The IRS is behind on everything so expect this to be pushed back as well. You should wait until the original is finally settled before amending.

[Edited 4/28/2021 | 8:34 pm PST]

[djw1234]

@AmyC 

That part about the credits isn't true. The IRS has said that those of us that have already filed but are now eligible for additional credits due to the tax exemption MUST file an amended return.

"However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits but are now eligible to claim them following the change in the tax law. Taxpayers can use the EITC Assistant to see if they qualify for this credit based upon their new taxable income amount. If they now qualify, they should consider filing an amended return to claim this money."

https://www.irs.gov/newsroom/irs-will-recalculate-taxes-on-2020-unemployment-benefits-and-start-issu...

[Critter-3]

Amending a return should ONLY be done once you have gotten the original refund in hand ... in the case of the changes the IRS will make they may send the original refund first and then the adjusted portion later in MAY  so you must NOT amend anything for any reason until the IRS has fully processed the entire first return.  The column A of the 1040X must start with either the original return's figures  OR  the figures as AS ADJUSTED BY THE IRS  so you must wait for all the IRS adjustments to happen.  Filing an amended return prior to this may delay the processing of the return or have it rejected/sent back.  Patience will be needed by all again this year. 

[candyapl]

I still have not received my Unemployment tax credit refund. What should I do at this point it’s September 1?

[DoninGA]

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@candyapl wrote:

I still have not received my Unemployment tax credit refund. What should I do at this point it’s September 1?

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Go to this IRS website for unemployment compensation exclusion FAQ's - https://www.irs.gov/newsroom/2020-unemployment-compensation-exclusion-faqs

[Critter-3]

You will get a federal income tax refund for the unemployment exclusion if all of the following are true.

• You reported unemployment benefits as income on your 2020 tax return, on Schedule 1 line 7.
• You did not get the unemployment exclusion on the 2020 tax return that you filed. The unemployment exclusion would appear as a negative amount on Schedule 1 line 8, with the abbreviation UCE on the dotted line to the left of the amount.
• Your tax on Form 1040 line 16 is not zero.
• Your Adjusted Gross Income (AGI), not including unemployment, is less than $150,000. In other words, Form 1040 line 11 minus Schedule 1 line 7 is less than $150,000.

If all four of those conditions are true, The IRS will recalculate your tax return and send you the refund. It might be a couple of months before you get it. For more information see the following IRS announcements and FAQ.

IRS to recalculate taxes on unemployment benefits; refunds to start in May

IRS begins correcting tax returns for unemployment compensation income exclusion

IRS continues unemployment compensation adjustments, prepares another 1.5 million refunds

2020 Unemployment Compensation Exclusion FAQs

[yvettebarrow2]

I have not received unemployment benefit yet

[Critter-3]

@yvettebarrow2 

Are you referring to the 2020 return adjustment ?   Did you qualify for more refund ?  Did you use the amendment program to see if you are still entitled to more ... if you are then send in the amendment. 

• How to amend (change or correct) a return you've already filed