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?

[DeanieO]

Can I still use Turbo Tax to file an amended return and if so how do I navigate for this situation?

[rjs]

You can file an amended return with TurboTax, but it's not clear that you will need to file an amended return. After the law is passed and signed, the IRS will issue guidance about what to do if you already filed and making part of your unemployment tax-free would increase your refund or reduce your tax. Wait until the IRS has issued the instructions before you do anything.

You will not get a new 1099-G. The 1099-G reports the full amount of unemployment benefits that were paid to you, whether or not it is all taxable. The 1099-G does not show how much of it is taxable or not taxable. Any adjustment of the taxable amount will be made on your federal tax return, or on an amended federal tax return, or by the IRS.

[Critter-3 · Accepted solution]

WAIT  until the IRS issues instructions on how this is going to work ... do NOT just amend the return YET until the programs have been updated to include the IRS instructions.   Filing an amended return before the rules and forms are posted will delay the processing of your return for months and months.  

[DeanieO]

Yes, I figured as much. Thanks for posting that though for everybody as anxious as I am😊

[DeanieO]

Super. Thanks for taking the time to contribute this answer. I appreciate it!

[Thelarster]

What if I didn’t file yet? Now that it’s law can we just deduct $10,200? 

[gianmatt]

You can't just "deduct" it -- there is nowhere on the current forms to do this. I don't think I would just subtract 10,200 on my own from the reported income.  I would wait to see what the IRS says to do.  The bill just got passed, so it's not like they are going to issue instructions the next day.   Remember that millions of taxpayers (and accountants) are asking the exact same question.

[JohnB5677]

If you've filed your return, do not do anything yet.  If you haven't filed you should file as usual.

The IRS will issue guidance about what to do if you already filed.  Making part of your unemployment tax-free would increase your refund or reduce your tax. Wait until the IRS has issued the instructions before you do anything.

You will not get a new 1099-G. The 1099-G reports the full amount of unemployment benefits that were paid to you, whether or not it is all taxable. The 1099-G does not show how much of it is taxable or not taxable. Any adjustment of the taxable amount will be made on your federal tax return, or on an amended federal tax return, or by the IRS.

[kch18901]

How long will it take TurboTax to update their software for the new ARP rule that the first $10,200 of unemployment insurance payments for 2020 is now tax-free (after IRS issues the rule about this)?

[PattiF]

Here is the latest update from TurboTax on the bill that was signed today. The IRS will need to determine the best course forward for this large undertaking.

[billy25]

I have the 2020 turbotax disk version.  After IRS issues guidance on unemployment benefit taxable income will I be able to update the installed program through the intuit website?

[Irene2805]

Yes  - you will be able to download updates to TurboTax CD/Download when they become available.

In TurboTax CD/Download, you will be prompted to download any updates available when you open the program.  You can also update the program while you have it open by following these steps:

1. Click on the Online link in the black bar at the top of the page.
2. Click on Check for Updates.
3. TurboTax will download and install any updates available.  If there aren't any updates, you will receive the message "Your software is up to date."

TurboTax Online automatically updates the website when the forms become available.

@billy25

[Mullindw]

Will the 10200 or the lesser of unemployment income be subtracted before the Adjusted income.  It adds it before so would it be subtracted before.  This is important if on the edge of 150K$ for a family.  For example I am over the 150K$ limit with unemployment but below it if it is adjusted out before.

[Critter-3]

NO ONE KNOWS YET ... the IRS still  needs to issue the instructions on how this is to be handled so you will have to wait for your answer.  

[Mullindw]

Thank you Critter-3,  My recommendation to anyone filing where unemployment is involved is to wait for a resolution and update from Turbo Tax which may be in April.  I would hope Turbo Tax would provide some communication that they have the ARP update fully updated.  This will be a good test for Turbo Tax for me.  Here we are, one month from the dead-line and the IRS is looking at a 90 mph slider breaking and does not know how it will be handled since the legislation did not detail the curve and no one thought a slider was coming.