Unemployment Compensation Exclusion and Taxable Social Security Income - Update?

[syoung123]

Hello - I know that the adjusted income used to calculate the taxable social security income does not include the $10,200 unemployment compensation exclusion.  The amount on Line 3 of the social security benefits worksheet in TurboTax is calculated correctly by the TT software.  The adjusted income includes the full unemployment compensation amount (not the amount minus the $10,200).

I just want to check to see if IRS has published any new guidance regarding the calculation of taxable social security income and unemployment comp exclusion.

Also, does TT have any new updates that pertains unemployment exclusion, taxable social security income, for Federal and Michigan as of today, 4/8/2021?  I am getting ready to file the federal and state returns, and want to double check to make sure everything is current now.  Thank you.

[DoninGA]

This IRS website for the exclusion - 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.

TurboTax support FAQ for states taxing unemployment - https://ttlc.intuit.com/community/internal-revenue-service/help/how-is-my-state-taxing-unemployment-...

Michigan (MI)

TurboTax calculations are correct and up-to-date for your state. You can go ahead and finish and file your state return.

[syoung123]

Hello, thank you for your reply.  So to confirm:

1.  The full unemployment compensation amount is added to the adjusted income that is used to determine the taxable social security income (there has been no changes to the IRS guidance since last week, and the $10,200 should not be deducted from the adjusted income to determine the taxable SS income.).

2.  The TurboTax Window desktop software version is up to date for the unemployment comp exclusion and the taxable social security calculation.  All the amounts generated by TT are correct, for both Federal and state of Michigan.

[MaryM428 · Accepted solution]

Yes, you are understanding and stating this correctly.  The first 

$10,200 in unemployment is excluded from AGI for taxes, but included for earnings toward social security taxation.

Michigan has been updated and ready to file.