March 23rd IRS - unemployment not counted towards MAGI for $10,200 unemployment credit

[jtolpin1]

When will Turbotax be updated for this update. This will impact a lot of people that surpassed the $150K <because> of the unemployment they received. This is different than the March 11th or 12th update that occurred already.

[RayW7]

The IRS will issue additional guidance as soon as possible.  TurboTax will update as well.

If you decide to file in advance of the update for 2020 Form 1040 or 1040-SR, there is no need to file an amended return (Form 1040-X) to figure the amount of unemployment compensation to exclude. The IRS will refigure your taxes using the excluded unemployment compensation amount and adjust your account accordingly. The IRS will send any refund amount directly to you.

If you’d like to be updated when the information becomes available, please sign up here.

If you owe tax individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed.

This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

[jtolpin1]

Thank you. I owe about $4000 to the Feds, so I will wait til TT updates and I file appropirately. Im estimating I could break even with this new threshold. thank you.

[RayW7]

@jtolpin1,  The TurboTax online software is updated to reflect the exclusion of up to $10,200.

Make sure your TurboTax is updated and then try to update as follows.

First, you must enter your 1099-G. To do so, please follow the instructions below:

1. Open or continue your tax return in TurboTax.
2. Search for unemployment compensation and select the Jump to link.
3. On the Did you receive unemployment or paid family leave benefits in 2020? screen, answer Yes.
4. Follow the instructions to enter your unemployment.

Then, you can confirm it was removed by following the instructions below:

1. Click on Tax Tools.
2. Click on Tools.
3. Click View Tax Summary.
4. Click on Preview my 1040.
5. Scroll down to Schedule 1, Part 1. You will see your unemployment on Line 7 and the deduction of up to $10,200 on Line 8.

[jtolpin1]

I do not have Software, I use webturbotax, and when I log in, I do not see the reduction to my AGI - it still shows all my unemployment counted for it which puts me over the $150K threashold.

[jtolpin1]

... and this is the <updated> portion I am questioning - which passed yesterday from the IRS, not counting any unemployment for determining AGI.

[RayW7]

@jtolpin1, I am sorry, but as of yesterday the IRS has made additional updates and TurboTax is adjusting.  Give it a few days and hopefully we will all be on the same page. 

[DoninGA]

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@jtolpin1 wrote:

... and this is the <updated> portion I am questioning - which passed yesterday from the IRS, not counting any unemployment for determining AGI.

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This was reported early this morning to the TurboTax Moderators.  When the IRS changed the worksheet on 03/23 by removing unemployment compensation from the 2020 MAGI, it broke the TurboTax online update for the exclusion made on 03/19.  Since that update was based on the original IRS worksheet of 03/12 that included unemployment compensation when calculating 2020 MAGI for the exclusion.

[PaulGM]

Aloha,

When will the TurboTax desktop software be updated for the exclusion of $10,200 of UI from Federal Taxation?

[KrazyDawg]

Is there an estimated timeframe for when the online TurboTax will be updated to reflect the recent IRS change? The COVID-19 401k withdrawal and the unemployment income has raised my AGI limit but with the recent change I will be under and end up owing less federal taxes.

[DoninGA]

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@KrazyDawg wrote:

Is there an estimated timeframe for when the online TurboTax will be updated to reflect the recent IRS change? The COVID-19 401k withdrawal and the unemployment income has raised my AGI limit but with the recent change I will be under and end up owing less federal taxes.

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The program was updated today, 03/26, for the unemployment exclusion as required by the IRS changes on 03/23.

[KrazyDawg]

Thank you. I see the update now when I logged in and saved over 2k.

[Manamok]

I thought that taxable social security benefits would not be included when calculating the MAGI for the new Unemployment Compensation Exclusion yet Turbo Tax includes it when completing the Unemployment Compensation Exclusion Worksheet.  Was I wrong or will TT be updated in the near future?

Thanks for any info provided.

[DoninGA]

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@Manamok wrote:

I thought that taxable social security benefits would not be included when calculating the MAGI for the new Unemployment Compensation Exclusion yet Turbo Tax includes it when completing the Unemployment Compensation Exclusion Worksheet.  Was I wrong or will TT be updated in the near future?

Thanks for any info provided.

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The unemployment compensation exclusion is Not included when calculating the taxable amount of Social Security benefits.  As noted by the IRS.

Go to this IRS website for the statement - https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.

[Manamok]

DoninGA - Thank you for your response.

Did I misread the IRS explanation?  I thought that the listed items - including "taxable social security benefits" were able to be subtracted from the AGI when calculating the MAGI for the Unemployment Compensation Exclusion Worksheet.  No?