Unemployment income exemption Stimulus

[Njdre80]

Under the new stimulus bill that is due to come out, they approved the exemption of taxable unemployment benefit income for $10,200. 

I have my taxes completed but not filed because I have been waiting for this legislation. When/How will Turbotax handle this? Or will the state provide an amended 1099 form? 

[DoninGA]

Nothing has passed Congress so there has been no changes to the tax code.

The legislation only would affect a federal tax return.  The various states that tax unemployment compensation would have to make changes to their own tax codes and only if they so desire.

TurboTax nor any other tax preparation software company can do anything until After the IRS has written the rules and regulations after passage of legislation which changes the tax code.

[Njdre80]

You clearly didn't understand my question. I KNOW nothing can be done NOW, as the tax laws haven't changed. That is why I said I am waiting to file until this legislation goes into law. My question is AT THAT TIME what happens? Does the turbo tax software algorithm get updated instantly to reflect the unemployment income exemption? Or perhaps does the state issue a different 1099 for the unemployment income. I'd like to file asap and get it over with and pay what I owe but I know this legislation will lessen what I owe. 

[DoninGA]

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@Njdre80 wrote:

You clearly didn't understand my question. I KNOW nothing can be done NOW, as the tax laws haven't changed. That is why I said I am waiting to file until this legislation goes into law. My question is AT THAT TIME what happens? Does the turbo tax software algorithm get updated instantly to reflect the unemployment income exemption? Or perhaps does the state issue a different 1099 for the unemployment income. I'd like to file asap and get it over with and pay what I owe but I know this legislation will lessen what I owe. 

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Once the legislation passes nothing changes instantly for any tax preparation software.  TurboTax cannot change anything in their software until the IRS issues the rules and regulations which can take weeks or months.  Then the IRS must approve any type of changes that is needed to comply with the new regulations.  Then and only then would the software changes be released to the public.

[cuznskunk3]

I already have filed my taxes. Looks like in the future I will now need to amend them on the first 10,200 untaxable unemployment income. I understand it has to become law and the implications after that.  Will Turbotax email us and let us know when this becomes available as an option? Will it be free of charge? Thank You.

[AlanHarrison]

I think I understand your question. The state will likely not issue a new 1099 because the information will not be any different. The same amount of gross money minus whatever deductions you may have opted for with the state occurs. The difference will come when the IRS writes the code and Turbotax implements it. As the other fellow said, that could take weeks - there's no deadline. I'm hoping that TurboTax sends a notice, but who knows? It's causing a lot of us to wait until the last minute. I'd rather file for an extension than file an amended return, but I understand your feelings. I At least there will be some temporary relief for those of us dealing with closed industries when it's all said and done.

[joepsca]

Actually, state tax for CA will also adjust as the $10,200 federal deduction for unemployment affects AGI.  So now that it is virtually certain that the bill will be signed by Biden, when will/how will Turbo tax make the adjustments and what will be the options for users?

[KathrynG3]

Until the IRS issues official guidance, it is not our position to speculate.

For the most recent updates at TurboTax, check: American Rescue Plan: What Does it Mean for You and a Third Stimulus Check | The TurboTax Blog

@joepsca

[valsvet]

I am sure Turbo Tax will include $10,200 exemption in one of their updates as soon as IRS passes the new guidance to them. I am pretty sure this will not take months as someone here speculated. Why? This ruling is straightforward. It does not exclude any group of people,  has no special situations attached. Could be just one sentence - "exclude first $10,200 from taxation of unemployment compensation" . No way something that simple would take weeks or months.  I have my taxes ready to file but will wait till Intuit updates the software.

[DawnC]

The bill has not been signed into law yet, but once it is, TurboTax will be updated to reflect the changes in tax law.   And it won't take months 😉  @valsvet

[jennylamon03]

It has been nearly a month since Governor Hogan signed the bill to make MD unemployment non-taxable and nothing has changed in TurboTax. It seems likely that MANY people will need to file for an extension or file an amended return. Why is there such a delay in updating this within the software? If it has been nearly a month for MD, isn't it likely that it could take that long, or longer to make the changes for federal, meaning it is unlikely to be done in time for timely tax return filings?

[AlanHarrison]

The delay is about federal taxes, not state taxes. So unless you want to file state taxes without filing federal taxes first (not recommended), you'll want to wait until Turbotax updates its program to include that. The federal bill was just signed this morning 3/11, so give it some time.

[CJB86]

Thank you for your response. I did not think that it would take turbo tax weeks to months to update either and I appreciate your clarification.

[gloriah5200]

POTUS signed the American Rescue Plan today.

Some of the changes are for 2021 tax year, but some may be retroactive.

Unfortunately, now that it is law, the IRS has to get busy and put it into the IRC tax code.  Once they get it into the tax code, then they will let the public know what has to be done to get the benefits.

The IRS will provide guidance on how you can claim these additional benefits as soon as they are able.

For more information, please refer to the following link on the new stimulus package:

How will the new stimulus package impact me

[Stingwcw1999]

will I still get stimulus