The IRS sent me a refund check last week due to Turbo Tax incorrectly calculating the
$10,200 deduction for unemployment. Turbo Tax correctly deducted that amount for taxable
earnings but did not reduce my taxable Social Security amount. I manually ran the numbers
on the Social Security Benefits Worksheet and it proved that is the difference. I also received my
Tax Record from the IRS, further proving the error by Turbo Tax. Has this error been corrected?
There is no error. The unemployment compensation received is not excluded when calculating the taxable amount of Social Security benefits, as stated by the IRS.
IRS website for unemployment compensation exclusion FAQ's - https://www.irs.gov/newsroom/2020-unemployment-compensation-exclusion-faqs-topic-e-impact-to-income-...
Q1. Will this exclusion affect how I calculate certain income and/or credits on my 2020 tax return? (added April 29, 2021)
A1. Yes. When figuring modified adjusted gross income for any of the following deductions or exclusions, include the full amount of your unemployment compensation reported on Schedule 1, Line 7, unreduced by any exclusion amount:
- Taxable Social Security Benefits (Social Security Benefits Worksheet in the Instructions for Form 1040 and 1040-SR)
- IRA Deduction (IRA Deduction Worksheet in the Instructions for Schedule 1 in the Instructions for Form 1040 and 1040-SR)
- Student Loan Interest Deduction (Student Loan Interest Deduction Worksheet in the Instructions for Schedule 1 in the Instructions for Form 1040 and 1040-SR)
- The exclusion of Interest from Series EE and I U.S. Savings Bonds issued after 1989 (Form 8815)
- The exclusion of Employer-Provided Adoption Benefits (Form 8839)
- Tuition and Fees Deduction (Form 8917)
- The deduction of up to $25,000 for active participation in a Passive Rental Real Estate Activity (Form 8582)
See the specific form or instructions for more information.
There is an error on Turbo Tax's part. I have the IRS transcript and the refund check to prove it.
Use this TurboTax Audit Support Center website and speak with an agent concerning this issue - https://support.turbotax.intuit.com/irs-notice/audit-support/
The correction the TT program made for the unemployment exclusion earlier in the year did not get sent to the IRS ... the IRS made the correction themselves. The TT program did not get updated for the exclusion all at one time since the IRS did not release the corrections all at once so you may have seen the first correction but not the final correction in the program ... you can look again now to see the latest program updates reflecting the current IRS rules. Allowances must be made this year for the unprecedented mid season tax law & program changes that had to be implemented.
Turbo tax REFUSES to admit their system was in error. It has been confirmed through the IRS legal tax department that turbo tax system was a HUGE failure this year and it has been utter hell trying to get this amended. I will NEVER use TT again and I have been loyal for over 20 years. good luck
You are absolutely correct. Turbo tax software was wrong. I have the same proof from when I amended my return for 2020. Turbo tax lost a ton of business this year from their numerous errors starting with screwing everyone’s stimulus refund all the way to this very issue. They are denying it but I spoke to 5 people at the irs regarding this very issue, I even spoke with the tax attorney at the irs who manually did my taxes over the phone. Her results matched my manual results as well. She said to file an amended return for 2020 to correct it. I did and I got my letter stating turbo tax was incorrect as well.
finally someone has the same proof as I do. I’ve been posting about this for over a year and get the same robotic excuse and inaccurate reasoning as was posted as a reply by turbo tax on your initial post as well.
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