I thought unemployment was not taxable income as of the other day? Is turbo tax not updated yet?

[kristyhess12-gma]

They just signed the bill making unemployment not taxable by the federal government.

[DoninGA]

Unemployment compensation is taxable on a federal tax return.  The legislation just signed excluded up to $10,200 of the compensation from being entered as taxable income.

If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200. If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.

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.

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

[JWBROD]

I don't think TURBO TAX is updated yet to handle these changes yet (at least as of tonight, March 14, 2021).  I have NJ take 10% taxes out of my UI check, so I enter the tax when I enter in the 1099.  What I'm expecting TURBO TAX to do, after an update, is to add the $251 that were already paid to the IRS back to my refund.  That is not happening.  Until I see that happen, I have to assume that there has been no update to deal with not taxing Unemployment Benefits being taxed.  Note:  Our joint income, even before deductions, is $125,000.00 so it is not like we are over the max.  

[JohnB5677]

If you've filed your return, do not do anything yet.  If you haven't filed you should file as usual, and include the full amount of the 1099-g..

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of economic impact payments, including the unemployment benefit will be forthcoming.

The IRS strongly urges taxpayers not to file amended returns related to the new legislative provisions or take other unnecessary steps at this time. The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable.

For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return.

TurboTax is developing the software required to process all of the new conditions.

[nndean]

yes first 10.200 is not taxable, turbo tax has not made these change yet. I am in a same boat.

[DoninGA]

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@nndean wrote:

yes first 10.200 is not taxable, turbo tax has not made these change yet. I am in a same boat.

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See this TurboTax support FAQ for information for the unemployment compensation exclusion - https://ttlc.intuit.com/community/tax-topics/help/how-do-i-claim-the-new-unemployment-benefits-in-tu...

Also see this IRS statement - https://www.irs.gov/newsroom/irs-statement-american-rescue-plan-act-of-2021