The 3rd cover-19 stimulus bill would make $10200 of 2020 unemployment benefit tax free. should i wait to file my tax until turbotax adjust their calculation system?

[DoninGA · Accepted solution]

---

@knuckles1742 wrote:

For those who have not yet filed and will benefit from the tax free $10200 in unemployment, is there any reason why they should not make the adjustments manually if turbotax is not updated before the April 15 deadline?

---

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

[struggling_artis]

this information helps a lot!

thank you so much.

[Chung11358]

I did not file income tax yet. Can I take total unemployment  amount number and deduct $10,200 manually and that different will be a taxable and input to Turbo Tax software.

[DawnC]

The total amount should be reported (on Line 7 of Schedule 1) and then TurboTax will exclude the amount eligible on Line 8.   If you manually adjust the numbers, the outcome will not report the numbers on the correct lines of the tax return.   If you do not want to risk having to adjust your return, it is suggested that you wait until TurboTax is updated.  You can sign up here to be notified when it is ready.    @Chung11358

[knuckles1742]

Thanks for the responses.

The IRS has also provided instructions on how to report the exclusion on Schedule 1 line 8 (link below).  I gave it a try, but Turbotax does not allow that line to be manually updated.   Can you advise on this?

The filing deadline has been extended to May 17 2020.  Is that correct?   Hopefully, Turbotax will be updated by then.  Seems silly to file a incorrect return only to file an amended return later.

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym... 

[LenaH]

Yes, the filing deadline has been extended to May 17, 2021. The extension only applies to the federal returns; individuals looking for state deadlines should check with their state agency. 

Lastly, all TurboTax software (online and desktop) should be updated soon to reflect changes in the tax law regarding unemployment. If you would like to receive progress status updates, please sign up here. It is advisable not to manually deduct unemployment until the forms have been updated. Doing so could significantly delay your refund. 

@knuckles1742

[coachalan1941]

Hi - As the $10,200 reduction affects Other Income on Line 8 of the 1040, it reduces the AGI by the same amount so shouldn't it also reduce the percentage of Social Security taxable as the percent taxable is a factor of AGI?  The IRS calculation doesn't seem to do this.  Thanks, Alan Hartman

[DoninGA]

---

@coachalan1941 wrote:

Hi - As the $10,200 reduction affects Other Income on Line 8 of the 1040, it reduces the AGI by the same amount so shouldn't it also reduce the percentage of Social Security taxable as the percent taxable is a factor of AGI?  The IRS calculation doesn't seem to do this.  Thanks, Alan Hartman

---

The unemployment exclusion is Not included to calculate taxable Social Security benefits as noted by the IRS.

Go to this IRS website for the exclusion statement - 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, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.

[Joanbechtol]

I clicked on amend, and it said unable to ament.  However, the federal refund is substantially higher than what I received.  Is this the amended amount as calculated by turbotax?

[KathrynG3]

If the original return was filed when taxes were charged against the first $10,200 of unemployment, and nothing else changed for this amended return, then yes, you will receive a refund due to the change in the tax law.

However, the IRS will automatically calculate the adjustment for you. The IRS has requested people to not ament in this case. 

For more information, see: New Exclusion of up to $10,200 of Unemployment Compensation | Internal Revenue Service

@Joanbechtol

[JRS7]

That also happened to me. I filed through TurboTax in February, then the unemployment $10,200 tax free exclusion became law. IRS said not to file an amended return so I haven't. The IRS still hasn't "processed" my return even though it was accepted 2 months ago. Then I updated TurboTax and the refund amount went up more than $2000. That's just in the software that recalculated my refund with this exclusion. So when the IRS does "process" my tax return my refund should be this higher amount. Hopefully sometime in May.

[LenaH]

Yes. The first refunds are expected to be made in May and will continue into the summer. An adjustment will be calculated and your refund will be issued to you automatically. You do not need to take any further action at this time. 

IRS to recalculate taxes on unemployment benefits; refunds to start in May

@JRS7

[Carlab49]

so how can i find out how much i am getting back on unemployment after the bill was passed?

[JRS7]

The IRS said to not amend your tax return, they would figure out the difference of your refund with the $10,200 UI exclusion. Well they didn't do that with me. They did not adjust the difference which would have been more than $2000 additional refund and just sent me the refund from my original tax return. So I amended my return through TurbTax and sent it in. You have to print and send via US mail an amended return. It will take up to 4 months. Don't trust the IRS. Amend you return yourself.

[DMarkM1]

TurboTax updates should show you the new refund amount with the unemployment exclusion.  Just sign in to your account and select the print/download option to get a copy of the updated version.

@Carlab49