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My plan is pretty simple.
I have already completed my 2020 return with the software as is- no tax law changes. At this point I owe some money so I am holding off filing until the tax deadline. I have also run my return with the tax law proposed waiver of $10,200 on UI income. I now know I will not owe any money - I get a refund. If they have not updated the software by the tax deadline, I will file an extension until it is updated. Since my return will not include a tax amount due, I won’t have to pay the estimated tax amount with my extension. If you do owe money with the tax waiver, just be sure to pay that amount with the extension so you don’t get penalized.
**not intended to be tax advice. If you need professional tax advice, call the IRS or an accountant.
There is no guidance on that yet. When it takes effect, IRS will receive guidance on how to proceed then we will implement.
Pay special attention to the paragraphs under "A Waiting Game". We literally don't have ANY guidance from the IRS on this yet.
Under the New law (ARPA) the gross income of the taxpayer should not include up to $10,200 of the unemployment compensation received of any tax year beginning in 2020. The limit for the exemption is for an adjusted gross income (AGI) if it is less than $150,000. The same limit applies to returns filed jointly, as head of household, or with single status. However, in the case of a joint return, the $10,200 exclusion applies separately to each spouse. New Code Sec. 85(c) does not provide for a phase-out based on AGI. (Code Sec. 85(c)(1), as amended by ARPA Sec. 9042(a)).
**not intended to be tax advice. If you need professional tax advice, call the IRS or an accountant
@atkinsjam Where on the IRS website does it say that an amended return is required in this situation?
Yes, I'd like to get a definite answer so I know whether I will need to initiate an amended return or if the IRS is going to correct my return. (and anyone else's that had unemployment and were already filed before they even talked about this change)
Actually, Form 1040X is not available for e-file yet from TurboTax. It will be available on March 18, 2021. Currently there is no provision on Form 1040 or Form 1040-X to correct this issue. All income, including unemployment income, will still be reported. The only thing that will change is the taxable portion. The IRS has not yet issued new forms because the President has not yet signed the legislation. Everyone just needs to be patient!!!
Your definite answer will come in time from the IRS. They WILL issue guidance. Patience young grasshoppa.
More importantly, why would anyone file their taxes before the deadline when they owe money to the IRS? (Sorry, @amt2020, you walked into that one).
🤡 LOL - I didn't say that I paid the IRS when I e-filed, but since TurboTax sent me an e-mail saying that their software was all up to date and the IRS was now accepting returns, I figured my taxes and the outcome weren't gonna change if I completed them in February or waited until April, so I went ahead and filed them back in February with my federal payment set up to be withdrawn from the bank on April 1st (since I figured that the president would be sending us another stimulus payment by then) and by doing that I was then able to get my state taxes filed and I received that refund right away.
Your definite answer will come in time from the IRS. They WILL issue guidance. Patience young grasshoppa.
True true, all I can do at this point is wait, especially since there is no "MULLIGAN" option once the return has been e-filed and acepted... I just hope that whichever way it goes, whether they will want an amended return to be filed or if they will correct it on their end, that it won't be months and months without getting back the money that they will be collecting from me on April 1st...
And I thought 2020 sucked? This year isn't starting off much better....
I'm still unemployed, my grandfather just died from COVID last month, my parents and my sister and I have to deal with cleaning out my grandfathers house and keeping his utilities and mortgage paid until the house can be sold while we are all still recovering from COVID... Any chance they could send us some monthly stimulus checks this year???
So, now that the tax exemption of the first $10,200 of unemployment income has passed Congress and Biden has signed it, when will turbo tax update their deduction and exemptions? I only recently got my documents and could not file until now, so I'm curious to see if my information will change as I am ready to submit them. I am thinking I should wait to see before I have to amend my tax filing.
You are among millions who have now been affected by a mid-tax season change in the tax law. Patience will be necessary.
TurboTax will update the software for the unemployment but there is no timeline yet.
It can take weeks to several months or more for the changes to be made to tax software. First the IRS has to change its forms. The tax software has to be changed; the IRS has to test and approve of the software. Do not expect changes in the software to happen quickly. TurboTax may have more information in the near future AFTER the bill is signed into law, and some more details emerge about how Congress and the IRS will implement the changes.
It should not take long now, it's all electronic documents. And it had been signed into law, plus they knew for weeks that this legislation was in the bill, so they should be fairly prepared to get it into effect fairly quickly.
My question too. Considering they know it's likely, they should be preparing it to be like that, so I don't think it will take too long.
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