Taxable Social Security benefits still includes 2020 unemployment income (but it shouldn't)

[ibmaster]

The latest relief bill in March 2021 made up to $10,200 in unemployment income no longer taxed by IRS.

However Turbo Tax's Social Security benefits spreadsheet still is counting the full 2020 unemployment amount as income on AGI, to in turn figure out the federally taxable amount of Social Security benefits.

This appears to be a bug in the UCE update; please fix ASAP!

[KrisD15]

The program has been updated and the subtraction should be included on Schedule 1 line 9.

Does your Schedule 1 show the subtraction for the non-taxable unemployment? 

[ibmaster]

Yes, my Schedule 1 line 9 shows 0. However my Social Security Benefits Worksheet line 3 which says to add "Schedule 1, line 9" the amount being added is not 0, but the full amount on Schedule 1, line 7.

This appears to be an error in the program.

[KrisD15 · Accepted solution]

The unemployment amount for the worksheet is not reduced for the non-taxable portion of the unemployment. 

We don't think this was changed with the exclusion of 10,200 under the CARES Act. 

According to the IRS: 

“Unemployment Compensation

You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you in 2020. Report this amount on line 7.

Caution. If the amount reported in box 1 of your Form(s) 1099-G is incorrect, report on line 7 only the actual amount of unemployment compensation paid to you in 2020.

Caution. When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount):”

IRS Source

[ibmaster]

So the IRS needs to release a new revised Social Security Benefits Worksheet for 2020?

https://www.irs.gov/pub/irs-pdf/p915.pdf

"3. Combine the amounts from:

Form 1040 or 1040-SR, lines 1, 2b, 3b, 4b, 5b, 7; and Schedule 1 (Form 1040), line 9"

[Mike9241]

@KrisD15  is correct

from the IRS website

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

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits,

but don't blame the IRS they're just following the law that was passed by Congress and signed into law by Biden.  another stupid part - no exclusion for single taxpayers with MAGI over $150,000. no exclusion for married taxpayers filing jointly with MAGI over $150,000 (not doubled). married filing separate  - apparently each gets the MAGI limit of $150,000  

[Britain23]

The program is still using unemployment income to calculate taxable social security benefits as of 5/1/21

called and turbo tax representative didn't know?????????

The program does subtract from total income the $10,200 in unemployment benefits  not taxable,  however still uses the entire amount to calculate social security taxable income.  Shouldn't be a hard fix.  Turbo Tax???????

[Chrys1]

And turbo tax isn’t backing anyone that is in this situation on ssi. I see a HUGE lawsuit coming turbo taxes way and I’ll be on that list! I made )$18911 in wages last year (2020) and because of their software crap, they included all is unemployment as income (ssi states UI is NOT EARNED INCOME) and I was taxed on widows benefits 85%! TY GUARANTEE SUCKS AND THEY DONT BACK IT. they claim the IRS tax law division of the irs is wrong and irs is going after them. Do not ever use Turbo tax! It’s going to cost me $250 to amend my return because of them!!!!!

[xmasbaby0]

@Chrys1 Awhile back several of us attempted to help you understand why your Social Security was taxable, and thought our efforts had explained it clearly to you.   But it seems you are still having issues with this.   On August 10 you were still posting that you have not yet received your refund because it is in the errors department.    Sadly, there are millions of refunds that have been delayed.   Any return that requires a human to look at it is being delayed since the IRS is so severely backlogged.

If your return is under review and you have not received your refund yet, do not amend your return.  Putting an amended return into the system while the IRS is still working on your original return could cause even more delays and confusion.  And...you do not say why you think you need to amend, or why you think it would cost you $250 to amend.   TurboTax does not charge you again to amend your tax return.   The only time there is a fee to amend is when amending requires an upgraded version of the software from whichever version you used to prepare the original return---it could not cost you $250 even if you had to upgrade to a different version.   

Do not amend your tax return.  Wait for the IRS to finish processing the return you filed earlier in 2021.  When you have finally received your refund, only then should you try to amend----and only  amend if you truly need to change something that was incorrect or incomplete on the original tax return.

[Chrys1]

Just know you have things WRONG! There will be a lawsuit and I am first in line. I already have it in the works and have saved EVERY lame communication I’ve had with you and the so called licensed experts. Turbo tax is going down and the irs is behind me!!!!

[macuser_22]

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@Chrys1 wrote:

Just know you have things WRONG! There will be a lawsuit and I am first in line. I already have it in the works and have saved EVERY lame communication I’ve had with you and the so called licensed experts. Turbo tax is going down and the irs is behind me!!!!

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READ the text of the American rescue plan Section 9042(a) and (b) that specifically say that:

"APPLICATION.—For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined—

“(A) after application of sections 86, 135, 137, 219, 221, 222, and 469"

Which means for that the 7 listed items, the tax must be computed BEFORE applying the unemployment exclusion.   Section 86 of the tax law IS Social Scurrility.        That is the tax law, not TurboTax.

Go ahead and hire a lawyer if you want to throw your money away because no attorney would take such a frivolous case.

[Chrys1]

Again you are wrong. You refuse to admit turbo tax is using out dated schedule one worksheet calculations in their software. Everyone I know is fed up with TT  and their lame excuses. Get a grip on reality and admit TT IS WRONG! I just had mine corrected and that tax person even said you were WRONG! 

[Chrys1]

IN ADDITION…UI IS NOT EARNED INCOME!!! Anyone who knows anything knows that! You obviously do not!

[macuser_22]

Nobody said that is is earned income- it is taxable income.  And your tax advice is wrong.  But do what you want -- goodby.

[Chrys1]

IN ADDITION…UI IS NOT EARNED INCOME!!! Anyone who knows anything knows that! You obviously do not! Ssi is not taxed on unearned income such as unemployment!