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?

[Mullindw]

Thank you Dawn.  When TT gets all of the updates done and into the software and approved by the IRS, will it automatically go through an update for those with the Windows CD version not the on-line version or do we have to remove and reinstall since it does go through an update at that time?  I still think TT should have pushed out a quick revision that would prevent filing if you have unemployment$ with a message.   I am signed up for the email communication.  This information should be on your main web page as well so folks would not have to rely on a forum for information.  Please pass my concerns up to your leadership since I am very close to buying a Tax Act product to compare outputs and I may not be alone.

[NewYorkTaxpayer]

Every time TurboTax is started, it checks for program updates and updates automatically. Additionally if you are in the program you can manually check for updates under the “Online” item on the menu bar. You don’t uninstall/reinstall. 

[holl22]

Just read an article that sounds like NY may follow the ARP tax free unemployment up to $10,200. The article is from 6 days ago-not sure if it's finalized yet, but if it is, should be announced by 4/1. Guess those that are affected will have to wait for another update on TT to cover that. Glad I have not filed yet.

https://www.nysenate.gov/newsroom/press-releases/james-tedisco/tedisco-move-nys-tax-deadline-may-17t...

[Mullindw]

Thank you on how to manual update for Windows CD users.  I have been hammering TT and in their defense I did not appreciate the huge impact on different state tax returns.  The Federal changes are very straight forward but each state treats the income they tax differently.  For example SC where I live, just starts with the income that the Federal income tax is figured from after all std deductions.  So for SC residences there is zero impact on the program.  But for other states which are more complicated duplicating the federal calculations with their own twists, it means that TT may have to update more than 40 programs including the federal one.  I still believe that TT should freeze all filing involving ARP potential changes since they say it is accurate but it is not.  Communications need to be more proactive on this subject.   

[DawnC]

Unfortunately, we can't freeze all filings.   All we can do is to encourage people to wait to file.   I do spend much of my time preaching this, not just this year, but every year.   But it is more important than ever this year.   There are changes daily it seems.   And you are absolutely correct about the number of updates due to states all having their own tax code.   Of course, we deal with the federal changes first as these affect ALL taxpayers and we are tackling state changes along the way.  

Large updates usually occur on Wednesday and Thursday evenings, but there are other smaller updates that occur throughout the week.  I don't have my program set to update automatically (only because I have a lot of state programs installed)  but I do the manual update often.   

We are including all newly issued IRS guidance as a part of this document - whenever any changes are announced, they will be updated there.  You can save this link to refer to in the future as it will always have the latest info.   It was updated less than 5 minutes ago when I attached it.   Hope this helps and thank you for understanding what is involved here!   @Mullindw

[Cbbutler07]

Is there updated guidance?  I noticed my friends turbo tax automatically updated and changed the IRS from a payment to a refund due to the UI deduction.  Does he need to refile his Federal return or will it be corrected automatically? (He filed the return back in February).

[garpgump]

Yes, I'd like to know this answer, too.  Is there a need to "do" anything if we've ALREADY filed and gotten our return?  Is the IRS going to self-correct, or do we need to do something proactively?

[NewYorkTaxpayer]

I believe this has been answered several times already.  If you ALREADY filed, the IRS guidance is to DO NOTHING as they will automatically recalculate the return.  The IRS is discouraging users to file an amended return, as it will likely take longer to process than waiting for the IRS to make the corrections.

If you have NOT YET filed, the guidance is to WAIT to file until your software manufacturer has incorporated the necessary changes into the program.

[Cynthiad66]

@garpgump the current guidance is to wait to allow the IRS to determine if they will automatically make the adjustment for you or provide guidance to make the adjustments on your own.  

It is not expected that you will receive a new Form 1099G.

[rjs]

@Cbbutler07  @garpgump @NewYorkTaxpayer 

The only current guidance from the IRS is the following.

"If you have already filed your 2020 Form 1040 or 1040-SR, you should not file an amended return at this time. The IRS will issue additional guidance as soon as possible."

At the following link on the IRS web site, this is the paragraph after the bulleted list (as of March 26).

New Exclusion of up to $10,200 of Unemployment Compensation

It does not say that they will automatically recalculate the tax return. All it says is that they will issue additional guidance as soon as possible. That's all we know right now.

[julielastinger]

So, I just checked my CD/Windows program, and the Federal has been updated, and my state amount changed as well.

Does that mean that the Kentucky state return has been updated already, and I can go ahead an efile both? Or are there more changes afoot for Kentucky's state software?  Please let me know asap. I really need this money asap, but I don't want to jump the gun and file too soon, only to have to amend the state return later if needed.

Thanks.

[NewYorkTaxpayer]

Yeah I have no confidence in the state numbers. As far as I know, NY had to make legislative changes to not tax unemployment — and the program is now showing a higher refund for the NY portion, based on the changes made to federal. One of the issues is that the NY return does not pull 1099-G info directly into its return — it’s derived from the line on the federal 1040 for income. In theory, if NY wanted to tax it, the NY return would require an adjustment to federal income to add the 1099G back. 

as of now though this is what NY says:

”For tax years beginning before January 1, 2022, the 2020-2021 New York State budget (Part WWW of Chapter 58 of the Laws of 2020) decoupled personal income tax from any amendments made to the Internal Revenue Code (IRC) after March 1, 2020. This includes changes made by the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act and any other federal changes to the IRC. Therefore, any amendments made to the IRC after March 1, 2020, will not apply to New York State or New York City personal income tax. See Form IT-558, New York State Adjustments due to Decoupling from the IRC, and its instructions.”

[Mullindw]

Hey New York tax payer,  not that I am trying to move more folks from the NE and Ohio to SC.  But SC tax basis is so easy.  It simply takes the final Federal taxable income at the end and uses that for the 7% state tax rate.  Big dedication over 65 from that number.  Extremely simple and we have no snow.  We also do not have a bad governor.  I'll bet NY state taxes will tax that unemployment $.  They really are in a pinch.  Thanks for the info on how to manually get updates.  I feel very stupid about that.

[NewYorkTaxpayer]

We’re good, thanks. Opinions on where a better place to live weren’t asked for.. Just posting procedures for filing taxes in light of last minute changes. 

[Mullindw]

New York tax payer I have to eat some crow here.  First,  I did get the update and it appears that TT has updated the programs for Fed and State for CD users.   I had signed up for the email update alert but it never was emailed.  When I accessed the program,  it when through it's updates.  Now the crow to eat.  SC went ahead and added it back in to the federal taxable number and independently via the TAX Slayer web site (which was very good)  detailed every states handling of the tax change verified that SC was decoupling the ARP advantage.  Unfortunately NY is also as well as most states have decoupled from the fed break so it appears to be a federal only tax break.  Most states like SC add it back in so you will not see a change in the state tax calcs.  So for me, I feel good filing and that it is accurate.  I do think I will look harder at Tax Slayer next year since it appears that they communicate better and may not rely on these forums for questions/answers and essentially help.  I appreciate the TT tax experts that provided good advice on being patient.   So for the New York tax payer,- Snow has melted and now you will be more comfortable with the temps than us in SC with the humidity through out the Summer - Plusses and Minuses of every location.