Tax Year 2020: TurboTax Updates on Unemployment Tax Relief

[wfilbra]

@gjp  I would go online to the New York Dept. of Revenue and see how they are addressing this. I know my state is still kicking it around.

[Anonymous]

Upon installing today's most recent software update, I discovered that the Social Security Benefits Worksheet 2020 doesn't incorporate the American Rescue Plan's UCE unemployment compensation exclusion for 2020 and its resulting lower amount, even though it still states that the amount comes from Schedule 1 line 9. This error results in a higher taxable SS benefit amount.

[DoninGA]

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@Anonymous wrote:

Upon installing today's most recent software update, I discovered that the Social Security Benefits Worksheet 2020 doesn't incorporate the American Rescue Plan's UCE unemployment compensation exclusion for 2020 and its resulting lower amount, even though it still states that the amount comes from Schedule 1 line 9. This error results in a higher taxable SS benefit amount.

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The unemployment exclusion is NOT included on the SS worksheet as noted by the IRS.

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, 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.

[Taxman19]

Unfortunately, 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, which is what TT does.

[Anonymous]

I concur. Thank you for your prompt reply.

[Anonymous]

Thank you

[Colesp98]

What is the difference between online program and desktop program?

[gonzo14]

YAY!!!  I just updated my TT and whalla!!  the unemployment exclusion of 10200 automatically implemented!!  thanks Turbo Tax!!  everything is honky dory now!!  🙂

[Happygirl1]

How do you run an update. I login via the web i do not have the software saved on my computer. We used self employed online version.

[DoninGA]

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@Happygirl1 wrote:

How do you run an update. I login via the web i do not have the software saved on my computer. We used self employed online version.

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The TurboTax online editions are updated automatically without any user intervention.

[Happygirl1]

Was your homepage updated when you logged in? I clicked on Amend (No i didnt proceed and amend). The refund amount a top of page changed and went up from clicking on that amend tab. I wonder if that new amount is what I will receive (minus what I had received already)? Any direction on this would be so greatly appreciated.

[Happygirl1]

Thank you so much for responding. I guess mine has not updated. I did click amend (didn't not amend though) and showed increase refund amount at top of page.  I truly hope that is the new amount I will receive (minus what I have received already). 

[wfilbra]

@Happygirl1The change should be approximately 10% of the Unemployment you received up to $10,200. So if you received $7000 in Umenployment, your refund should've changed by about $700. If you received $3000, the change should've been about $300.

[wx_lei]

I purchased the software. Every time when I open it from my desktop, it updates automatically. I saved my return in a version earlier with no deduction for any UCE (10,200 tax free). When I turned on the app on 25th, it showed the deduction for one person (10,200) but another one (5,544). I guess it is a bug.

[DoninGA]

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@wx_lei wrote:

I purchased the software. Every time when I open it from my desktop, it updates automatically. I saved my return in a version earlier with no deduction for any UCE (10,200 tax free). When I turned on the app on 25th, it showed the deduction for one person (10,200) but another one (5,544). I guess it is a bug.

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The unemployment exclusion is up to $10,200 or the amount of unemployment compensation received if less than $10,200.