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@MahargFrom Bloomberg: IRS to Automatically Process Refunds on Jobless-Benefit Payments (msn.com)
(Bloomberg) -- The Internal Revenue Service will automatically process refunds for individuals who paid taxes on their unemployment benefits before Congress passed a law making those payments tax-free, Commissioner Chuck Rettig said.
The automatic refund will mean that many recipients of unemployment benefits who have already filed their returns for 2020 won’t have to take extra steps to reclaim the taxes they paid but no longer owe -- on as much as $10,200 of jobless benefits. Taxpayers who have yet to submit their returns also have an additional month, until May 17, to file this year.
“Do not file an amended return at this time,” Rettig told a congressional panel on Thursday. “We believe that we will be able to handle this on our own. We believe that we will be able to automatically issue refunds associated with the $10,200.”
Edit: @claudia174 I was replying to @Maharg who was asking about guidance on amending or not, if someone's already filed.
This info is for those who filed their taxes. The answer I replied was for those who has not filed yet their taxes who received unemployment benefits for 2020.
@Maharg wrote:
Do you have a source for that first part? All I've seen is the IRS saying "don't file an amended return YET"and I've assumed that's because the tax software companies haven't rolled out their revisions yet, so it would just further gum up the works with incorrect filings.
I'm not saying you're wrong, I'm just curious.
https://www.irs.gov/newsroom/irs-statement-american-rescue-plan-act-of-2021
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, the expanded Child Tax Credit, including advance payments of the Child Tax Credit, and other tax provisions will be made available as soon as possible on IRS.gov. The IRS strongly urges taxpayers to not 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. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.
I have not seen any thing official about " The IRS is looking to automatically apply the credit to taxpayers that have already filed without having to amend." part, but several news media is reporting that IRS has said that.
Even if the IRS issues a refund without you having to file an amended return, you still may need to file an amended return because of state taxes.
Received the update, but nothing has changed, I had $9685 in employment from Michigan and paid 10% in Federal tax but no change in my tax bill? What gives?
I filed my taxes Feb13 and added my unemployment so how is it going to be fixed,do I have to do it over again or will the IRS correct it for me.
No need to refile or amended at the moment. IRS is figuring out what to do. For now just wait until IRS gives official instructions for people that have filed already. Refer to this article for more info https://www.nytimes.com/live/2021/03/18/business/stock-market-today
@msaaj @That’s a good question !
My State Missouri did not put any guidelines for the Unemployment Tax Relief
I wonder if we have to amend State Tax only
Two days ago, a TurboTax spokesperson was cited by CNBC (no less) as follows:
TurboTax expects to have updated its software by Thursday evening, according to spokeswoman Ashley McMahon.
“We’re working around the clock to make updates to TurboTax based on the recently enacted American Rescue Plan so our customers can file with confidence and get their maximum refund,” McMahon said.
It's now Friday..... (and I just tried it -- the TurboTax software is NOT yet updated....?)
(link to story, which focused precisely on our nagging question in this thread): TurboTax, H&R Block need time to account for $10,200 unemployment tax break )
As of yesterday the Lacerte professional version of TurboTax was updated to generate the unemployment compensation exclusion. It simply added a checkbox to “apply the American rescue plan act provisions”. It is calculated using form 1040 lines 1-7 and schedule 1 lines 1-7 income and subtract 1040 line10b and schedule 1 lines 10-21. Modified AGI has to be less than $150k MFJ.
Lacerte was updated but not Turbo Tax Premier! This unemployment benefit is a significant change in my tax situation.
Mine too but I’ll wait for the premier update to come through. Already put in the Exclusion to estimate what I’m getting back and I’ll file a return when they update the software. Patience.
Interesting report Phil, that in your professional version of TT, you now have a "checkbox" to "apply.... provisions...." Curious, just where does that checkbox appear? (as part of the interview process, wherein we/you enter UI compensation, or at the outset of the whole interview)
More disconcerting too that TurboTax is putting out such updates first to professional versions. Guessing the folks most likely to benefit most from this exclusion, those using IRS linked freefile version, may get it last. (yes, I'm using that version -- all sorts of bugs in it, as I've already documented with TT help)
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