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

[abeachly]

CNBC is not a tax matters authority. Guidance from the IRS should be obtained before any decisions can be made. In the past, the IRS has at times adjusted taxpayers' returns without the need to amend.

[abeachly]

@Craig-o

Unemployment income would still be income for purposes of calculating the Premium Tax Credit. Whether it's taxable or not would not affect that calculation.

[abeachly]

@goodty1  As stated previously, the forms will not be updated the day the legislation is signed. Please read through thread for some good information on this topic.

[Craig-o]

@abeachly

The PTC is calculated from it's own MAGI (calculated using the instruction worksheet).  Since unemployment income is part of 1040 Schedule 1, Part 1., I think it's safe to assume the adjustment to unemployment will be in Part 2., of Schedule 1.  So, AGI includes both.

The question then becomes if the IRS takes the additional step of adding the adjustment back into income as part of the MAGI calculation for the PTC, where they do add back in some adjustments to income but not all (they don't add back the IRA deduction or student interest for example).  So if they're intent is to only reduce taxes but not healthcare costs for 2020, they will have to make the change to the PTC instructions.

[Craig-o]

@Craig-o 

It should be "their intent" not "they're".  My bad!

[Pt58672011]

I will file on my own if turbo isnt up for fixing this issue for weeks or months. 

[soupy]

Ok so the relief bill has passed everything and is on the way to the President's desk. Is Turbotax working on the code for their software to process the EDD 10,200 non-taxed amount?

[DoninGA]

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@soupy wrote:

Ok so the relief bill has passed everything and is on the way to the President's desk. Is Turbotax working on the code for their software to process the EDD 10,200 non-taxed amount?

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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.

[xmasbaby0]

It is not nearly that simple----here is an over simplification for you---- The IRS has to change its forms.   The software programmers for ALL of the tax software have to re-program tax software.  The IRS has to test and approve of the software before users can use the software for the tax law changes.   Everyone will have to be patient until we see see what the guidelines are and how the change is being implemented.  Expect it to take months and be pleasantly surprised if it takes less than a number of months.

[soupy]

So what are you saying? That this is going to take months to implement? I am understanding that the people that filed already will have to amend their return. We have 35 days until everyone has to file... We are all in a holding pattern. Seems like a simple adjustment in programming to not tax the first $10,200 of the 1098 from edd...

[soupy]

No need to be condescending with your OVER simplifying comment.  

So your answer is basically that if you owe, you will have to pay until this is sorted out and go ahead and file your taxes for 2020 by April 15?

(Seems ridiculous to have to add -$10,200 to a tax form for this, but ok..)

[xmasbaby0]

What you may think is simple is NOT simple when it comes to the IRS and tax forms.    You may not like what we are telling you.  We are giving you the best information we have at this time.   Too bad it took Congress until mid-tax- season to make these changes when millions of citizens have already filed their returns, isn't it?

[Pt58672011]

I file the 15th of April.  If turbo hasnt updated codes I will file paper return.  IRS should have it figured out by then. 

[Anonymous]

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@abeachly wrote:

CNBC is not a tax matters authority. Guidance from the IRS should be obtained before any decisions can be made. In the past, the IRS has at times adjusted taxpayers' returns without the need to amend.

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CNBC and most all other news sources are suggesting you wait to file your taxes UNLESS filing now would benefit you for the stimulus payment. CNBC is a credible source and are essentially saying the same thing that you are – wait for an update from the IRS on how to proceed. People will trust CNBC more than you though 🙂

https://www.forbes.com/sites/ambergray-fenner/2021/03/05/unemployment-recipients-may-want-to-wait-to...

[meme2021uc]

i just read it again and yes, my understanding is also its for 2020. I owe many thousands in federal tax so this will make it none. I am so afraid we will never get to change our taxes. i will be forced to pay 3000.00 instead of zero.