When will the $10,200 of unemployment tax exemption go into effect?

[Anonymous]

@Lordpo69  wrote:
Until the law is signed into law no one knows exactly what is being changed and if it will be retroactive to 2020 so you and everyone else will have to wait and see.  

@fanfare wrote:

the new legislation is for 2021. No one has ever mentioned the word "retroactive", including the clerk reading the entire bill.

You clearly didn't read the bill...it includes $10,200 of 2020 unemployment benefits as non-taxable.

https://www.cnbc.com/2021/03/08/covid-bill-provides-tax-waiver-on-up-to-10200-of-unemployment-benefi...

As this article suggests, you should either wait to file or will have to file an amended return. If it takes TurboTax months to solve this once the relief bill is signed, that seems pretty ridiculous IMHO...

[DoninGA]

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@Anonymous wrote:

You clearly didn't read the bill...it includes $10,200 of 2020 unemployment benefits as non-taxable.

https://www.cnbc.com/2021/03/08/covid-bill-provides-tax-waiver-on-up-to-10200-of-unemployment-benefits.html

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The question was based on a hypothetical if Joe filed today.  As of TODAY, NOTHING in the tax code for tax year 2020 has been changed.

[Anonymous]

@DoninGA  I clarified my reply...

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As of TODAY, NOTHING in the tax code for tax year 2020 has been changed.

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We all know this will be signed this week...it's fair to ask [assuming it is signed] when TurboTax would have their software updated.

[DoninGA]

@Anonymous 

After the legislation has passed Congress and after the President has signed the legislation and after the IRS has written the rules, regulations and procedures.  And after the IRS has changed any forms or schedules to accept the tax code changes.  And after the IRS has approved the changes in the TurboTax program that apply to the tax code changes, then it will be available for the users of the tax preparation software.

This can take anywhere from several weeks to several months before it becomes available.

[Anonymous]

@DoninGA  yes, I saw your post earlier.

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@DoninGA wrote:

This can take anywhere from several weeks to several months before it becomes available.

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This is the part that I find unacceptable. Since taxes are still set to be due April 15th...

[DoninGA]

Absolutely nothing can be done in the tax prep software until the IRS has codified the tax code changes and then approved those changes in the software.   And has given guidance on how this should be handled by the taxpayers affected.

So we just do not know how long it is going to take.  But based on prior experience with the IRS when changes happen right in the middle of the tax season, it could be awhile.  Maybe sooner than later but I sure would not hold my breath for the sooner. 

[fanfare]

@Anonymous 

2021 legislation is not going to affect your 2020 tax return, so file before the due date..

[macuser_22]

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@fanfare wrote:

@Anonymous 

2021 legislation is not going to affect your 2020 tax return, so file before the due date..

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The amendment introduced by Schumer IS retroactive to 2020, but it has not been passed by the house or signed into law yet.

[StorminNorman]

After it is signed into law by Biden. It will be retroactive, covering 2020 benefit payments. If you filed already you just do an amended return when Turbo Tax updates with the new information.

[StorminNorman]

Correct

[StorminNorman]

You'll amend

[Jmb11]

“Proposed legislation introduced this week would remove taxes on up to $10,200 in unemployment aid for the 2020 tax filing year.” 

[xmasbaby0]

That tax law has not yet been signed into law by the President.   When that happens then the IRS will need to change the tax forms, the programmers have to change the software, and then the IRS has to approve of their software.   That will take time---we do not know yet when all of those changes will be accomplished.  As soon as more is known, TurboTax will provide information.  The software changes will take weeks or even several months.

[Craig-o]

I have been very impressed with IRS automation improvements over the recent years.  I'm going with being optimistic and I think that since the IRS has all the data they need for people that filed 2020 already, they will apply the new legislation and send rebate checks accordingly.

Something else not mentioned here is since 2020 AGI is affected by this change, anyone that had Obamacare in 2020 will also have their Premium Tax Credit affected (in a good way).  The rebate from this could be even more that the tax break.

[macuser_22]

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@Craig-o wrote:

I have been very impressed with IRS automation improvements over the recent years.  I'm going with being optimistic and I think that since the IRS has all the data they need for people that filed 2020 already, they will apply the new legislation and send rebate checks accordingly.

Something else not mentioned here is since 2020 AGI is affected by this change, anyone that had Obamacare in 2020 will also have their Premium Tax Credit affected (in a good way).  The rebate from this could be even more that the tax break.

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Yea - it only took the IRS 9 months to release the qualified COVID related retirement distribution rules and forms.