Tax exempt unemployment

[mack277]

The first $10,200 is exempt from tax per the new bill passed. If I haven't filed my taxes yet, will that change be implemented soon? I owe taxes right now, but with the exception I won't owe when I file. 

[DoninGA]

The IRS has not yet issued any guidance since the bill was only signed into law yesterday.

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.

See this TurboTax support FAQ for information on the American Rescue Plan - https://ttlc.intuit.com/community/tax-topics/help/how-will-the-stimulus-package-impact-me/00/1393859

[mack277]

Understandable. But wouldn't that mean I would have to amend my taxes to have that credit applied? Clearly, the changes probably won't take effect before April 15th. So if I owe and pay the irs now, they would have to refund me, right?

[DoninGA]

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@mack277 wrote:

Understandable. But wouldn't that mean I would have to amend my taxes to have that credit applied? Clearly, the changes probably won't take effect before April 15th. So if I owe and pay the irs now, they would have to refund me, right?

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If you filed 2020 federal tax return and paid the taxes owed before the unemployment exclusion processes were finalized for the 2020 tax year, then you would file a 2020 amended return for the federal tax refund.

[bartwilliams]

The IRS website seems to imply that I could just deduct the 10200 from my total unemployment compensation and enter the difference on my return.  Could I do this instead of waiting for the software update?

[DoninGA]

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@bartwilliams wrote:

The IRS website seems to imply that I could just deduct the 10200 from my total unemployment compensation and enter the difference on my return.  Could I do this instead of waiting for the software update?

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For the online editions, the software is schedule to be updated on 03/19 for the unemployment compensation exclusion.

[david8342]

I'm not seeing the unemployment exclusion in TurboTax Home & Business 2020. I've checked repeatedly for any updates, but I'm up to date. I've re-entered unemployment income, but no change. I'm looking for a reduction (10,200) on Schedule 1, line 8, but nothing is there. Are we sure the desktop software has been updated?

[bartwilliams]

It has not been updated yet, I was told I would get an email when the update had been posted.  

[ToddL99]

As @bartwilliams stated, the desktop versions of TurboTax have not been updated yet. We are working on incorporating the changes to TurboTax CD/DOWNLOAD as quickly as we can.  

You can sign up here to receive an email notification when it has been completed. 

[david8342]

The desktop software is updated now. You can see the $10,200 deducted on Schedule 1.

[bartwilliams]

I see where the Fed is updated, but my state (OH) is not included in the updates from this morning.  

[CatinaT1]

This should already be up to date.  You may need to clear your cache and cookies.

State's unemployment updates

[bartwilliams]

I cleared cache and cookies and no change.  The fed changed right away after the update but the state has not and when I go through the "Review" process I still get the message that I'm eligible for additional tax benefits.  Maybe I'll try re-downloading the state software.  

[david8342]

@bartwilliams Cache and cookies? Are you using the desktop software? Not sure what a web browser has to do with it.

As for the UI break extending to the state forms, here's what I noticed: On the federal 1040 Schedule 1, the $10,200 is deducted, and reduces the AGI. That reduced AGI is what's used on my state form. So there's no explicit mention of the new UI deduction, but the benefit is extended to the state return.

Obviously all states differ, and you may be having other issues, but that's my $0.02.

[bartwilliams]

Yes I see it now, thanks.