@Happygirl1This is from the IRS and Turbo Tax:
What do I need to do to claim the new unemployment relief?
If you’ve already filed your return, you should not do anything. The IRS will re figure your taxes and send any refund amount directly to you. We will update with more details as they become available.
If you have not filed your 2020 tax return, yet, the Turbo Tax product will guide you on how to claim these additional unemployment benefits.
someone gave me the following link which says the taxable social security calculation excludes the unemployment tax relief.
TurvoTax did update today but I don't think that it addressed all of the provisions of the American Rescue Plan. My daughter works in theater and has been unemployed since last year due to the pandemic. Her tax hit before the update was almost $1900, $1300 of which consisted of repayment of excess tax subsidies she received for her health insurance plan purchased from her state exchange. While the update did deduct the $10,200 from her taxable unemployment benefits, it did not address the health plan tax subsidies. This is from a summary of the bill's provisions: "Recognizing that the pandemic caused greater-than-usual economic disruption and uncertainty in 2020, the ARP waives repayment of any excess premium tax credit received by marketplace participants during that year." TT did not do this and the subsidy overpayment was still included in her return although her tax liability is now under$500. TT needs and additional update to address this.
When I was ready to complete my return (03/24/2021), Turbotax stated the software has not been updated to reflect the Unemployment Tax Relief and I have the option of filing my taxes now or wait until the software is updated. I opted to wait for the software to be updated. When should expect the software to be updated?
I now believe that my earlier post may have been incorrect. This is due to the fact that the computation of taxable SS benefits in Sec 86 of the IRC is based upon a modified AGI amount that is determined without the benefit of the $10,200 exclusion set forth in new Sec. 85(c). It would appear that TT's SS benefit worksheet is incorrect on Line 3 when it states to include amount from Schedule 1, Line 9, which is after the UC exclusion. The IRC provides that the modified AGI is determined without the UC exclusion. Therefore, you would need to add back the exclusion amount to the amount from Schedule 1, Line 9.