IRS just published this but I guess we have to wait for them to update the forms and wait for more guidelines :
Yes, you are correct. The way to exclude the Unemployment Compensation income is on a new Unemployment compensation Exclusion Worksheet. The IRS is working with software companies to implement this worksheet as soon as possible.
To read more about eligibility and this worksheet see: IRS: New Exclusion of up to $10,200 of Unemployment Compensation
There is currently no information on when the IRS will issue instructions on exempting 2020 unemployment compensation from federal tax.
As soon as the IRS issues instructions on how to report newly-exempt 2020 unemployment payments, TurboTax will make the necessary updates to its programs. Until those changes are made, you have two options:
1. File now and amend your return later, after updates have been made.
2. File after IRS instructions are released and the programs have been updated.
"We’re working hard to keep TurboTax up to date with the latest tax changes based on instructions we receive from the IRS. Check back soon to add your unemployment income and file your return."
The IRS has already provided guidance. How will we know when Turbo Tax is updated to reflect it?
It is still being determined at this point by the IRS. According to the newly passed legislation, the first $10,200 on unemployment earned in 2020 would be considered nontaxable if your household income is less than $150,000.
Once the IRS issues some guidance, TurboTax will be able to update their software accordingly.
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The IRS HAS provided the guidance as noted in the link I sent above. WHEN WILL TURBO TAX BE UPDATED TO REFLECT IT AND HOW WILL WE KNOW IT'S BEEN DONE SO WE DON'T HAVE TO KEEP CHECKING BACK???
DO NOT : File now and amend your return later...the IRS already has 5 million pieces of unopened mail, and your return may not be processed any time soon. I believe the IRS put that in their original directive.
I use the Lacerte (professional version of turbotax) at work and an email we got yesterday indicated that a software update should be implemented by 3/15/21. Even if it's a little later, I would suggest waiting as long as possible....
"Just hang on loosely.....but don't let go."
Will the software update be available to customers that purchased Turbo Tax Deluxe? When is the projected date of the software update that allows for the $10,200.00 exclusion of Unemployment benefits for 2020?
With this new law, if your household income is less than $150,000, the first $10,200 of unemployment will be tax-free, but any amount you receive above that will be taxed. We must wait on the IRS for the way they want this to be handled. Please continue to use the links below to know the most up to date information. If you already filed your tax return do NOT amend at this time per IRS.
The $10,200 unemployment retroactive to 2020 was just signed into law. Now the IRS is responsible for writing regulations and rules for claiming it.
Software changes do not happen overnight - it takes time to test, package as an update and fit into the existing update schedule. Probably a few weeks.
It also must be submitted to the IRS for approval before it can be released.
It already published the rules on how to claim it
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