I have heard from others that their refund due to the changes in the unemployment tax break are showing up on their TurboTax account. Is this true?

[jojocox01]

I was told that if it hasn’t shown up in your TurboTax total refund yet, you will not be getting any benefits from the tax break. But I’m pretty sure I should get something back and I’m not seeing anything.

[DavidD66]

Yes.  TurboTax Online has been updated for the changes to how Unemployment Insurance Benefits are treated.  TurboTax Deluxe has NOT, but the update is coming soon..

[Opus 17]

I’m not sure what you mean by “not seeing anything.“

If you have already filed your tax return, the IRS is not yet issuing secondary tax refunds. The IRS commissioner testified to Congress that the IRS might be able to adjust peoples tax returns without requiring them to mail an amended return. However, this has not been announced as the official IRS policy, and if you have already filed your tax return, the best advice is to wait and see what the IRS instructs.

If you have not yet filed your tax return, TurboTax online has been updated to include the exclusion for the first $10,200 of unemployment compensation. The desktop version of TurboTax installed on your own Mac or PC has not been updated yet.

[VolvoGirl]

@DavidD66   David meant to say Turbo Tax DESKTOP has not been updated yet.  Online Deluxe has been updated.  Desktop might be updated on Thursday March 25.

[jojocox01]

Sorry, I will clarify. I have seen some TurboTax users, that have already filed and been processed, say that their refund amounts have changed since the law was passed to reflect the new tax break. I should see benefits from this, but my refund amount has not changed since I first filed in February. I was unsure if I was receiving false information from other tax filers, or if I will not be getting any additional refund from the tax break. 

[Opus 17 · Accepted solution]

That seems unlikely for two reasons. First, the IRS has not announced a procedure. Second, it takes a long time for the IRS to reprogram their computers for annual tax law changes much less a last minute change like this, and then to rerun tax returns that have already been processed.  It’s not impossible, but I have not seen anything official.

You haven’t “lost” anything by filing early. The question is not if you will get your money, but how and when.  At worst, you would have to file an amended tax return which will probably take around five or six months to be processed, and will result in getting a check in the mail (because the IRS always pays refunds on amended returns by check).   For now, I would wait a couple of weeks and see if the IRS makes an official announcement about automatic adjustments.  

[Opus 17]

Good news.  

Today (March 23, 2021) the IRS updated their page on unemployment compensation to confirm that if you have already filed your return, the IRS will adjust your return for you and send you an additional refund, if owed.

https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

If you have already filed your 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.

[davidaf]

But if the IRS takes and adjust our already completed and filed returns to reflect the Unemployment tax break, how do we complete/adjust our state return using Turbo Tax deluxe if we were going to owe and were just holding off till deadline time to send?

[Opus 17]

---

@davidaf wrote:

But if the IRS takes and adjust our already completed and filed returns to reflect the Unemployment tax break, how do we complete/adjust our state return using Turbo Tax deluxe if we were going to owe and were just holding off till deadline time to send?

---

Good question.  Unless your state posts a different procedure, then probably you will have to use Turbotax to prepare an amended federal and state return and only file the state return by mail.

However, many states already don't tax unemployment compensation, so you may not have to do anything depending on your state.  Here's an article you can look up your state.

https://www.kiplinger.com/taxes/state-tax/602307/taxes-on-unemployment-benefits-a-state-by-state-gui...

[davidaf]

Live in Missouri, which taxes unemployment fully, so I understand the idea to do the amended Fed and State but just send in the Missouri.  Is the Turbo Tax Deluxe updated yet to do the amended returns?

[Opus 17]

---

@davidaf wrote:

Live in Missouri, which taxes unemployment fully, so I understand the idea to do the amended Fed and State but just send in the Missouri.  Is the Turbo Tax Deluxe updated yet to do the amended returns?

---

TT Online is updated but the desktop versions installed on your own Mac or PC are not yet.  I don't think general amending is turned on yet either.

I would also be cautious.  If Missouri "fully taxes" unemployment, there might be a requirement to "add-back" any income that was excluded at the Federal level.  (For example, New Jersey does not recognize the exclusion of health savings account contributions and they must be added back to NJ income.).   If the law requires an add-back, but the add-back is not in the forms because the exclusion is brand new, you might find your amended return is declined, or held up, or you might get a bill later for any refund you claim now, once the MO tax department sorts it all out.

On the other hand, if Missouri is simply a "conforming state" that means they adopt the same definition of taxable income as the federal government, and the idea that UEC is "fully taxable" just means they follow federal law in which UEC is also (normally) fully taxable.

I could not advise you on what to do either way, I am simply pointing out the possibilities.  You're talking about $500 or so, so not chicken feed, but maybe something you don't need to be in a hurry to get sorted out.  It might be wise to see if MO offers any specific guidance, now that the IRS has announced they will not require taxpayers to file amended federal returns to make the adjustment. 

[jkarapetian]

what is the plan of updating the software and how fast will it be completed?

[NashayLO]

The Online Software has been updated, however, the Desktop Software has not yet been updated. Please check back for updates, How will the third stimulus impact me? - TurboTax

If you have already filed your 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.

[jkarapetian]

I have not filed since I owe. I'm waiting for the software to be updated so I don't have to pay.  What would you recommend? 

[VolvoGirl]

Keep waiting.  The IRS changed the due date to May 17.