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

[macuser_22]

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@fooksman1 wrote:

So its now March 31.......I should wait to file my son's 2020 return , because Turbo Tax 2020 Deluxe has not changed their software to reflect the new part of Stimulus 3 Package which was passed by both Congress and the Senate and passed into law , and signed by the President ? 

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The 3rd stimulus is being handled 100% by the IRS and will never be in the software.

https://www.irs.gov/newsroom/questions-and-answers-about-the-third-economic-impact-payment

[maestrowork]

it’s been updated on March 26.  I already filed my returns.  What exactly are your errors?

Also the filing date is now May 17.  no need to panic.  

[maestrowork]

i think they are talking about the entire America Rescue Act and not just the stimulus checks.  but yes the checks count towards 2021 so won’t be in the 2020 software.  the changes to the software dealt with the unemployment benefit exclusion.  also it only deals with the federal laws.  many states are still catching up.   

[maestrowork]

it only affects federal returns.  Many states are either catching up or haven’t made decisions/law changes yet.  

[spdev25]

Update your software.  go to forms.  scroll down.  under other income, you should see a negative number equal to the unemployment received or $10,200 whichever is more.  Unless, of course, you made more than the guidelines.  But, there will be a negative number.

Since the State usually starts at the AGI of federal return, there should be no problem with State.

[Kathyd2664]

I have all updates to the 2020 Turbo Tax and the amount for unemployment is still listed as originally entered. There is no negative number  nor was the amount I entered reduced by the $10,200. How do I reflect the correct amount of taxable unemployment ?

[maestrowork]

it is correct, your UE number should be the same. But look at your Schedule 1 line 8 and you should see -10,200 or -20,400 (joint returns) which will flow to your 1040 and reduce your AGI.

[JotikaT2]

Please see the link below to make sure you qualify to exclude the first $10,200 from income.  This exclusion only applies if your Modified Adjusted Gross Income is below $150,000 if you are filing a joint return.

Unemployment income relief updates

@Kathyd2664

[kpinola]

What about folks who already filed and had their federal returns accepted?

[JotikaT2]

If you filed a tax return that had unemployment income reported, you should not file an amended return.  The IRS will be adjusting the amount of tax due on that $10,200 and will be processing refunds from the tax return as originally filed.

Unemployment claimed on returns already filed

@kpinola

[roscojim]

No, it has not been. My son had to pay taxes on his unemployment. 

[JeffreyR77]

Your son should not file an amended return for his unemployment tax refund. 

The IRS has stated they will calculate and issue refunds to taxpayers that have paid taxes on their unemployment. 

We are awaiting guidance from some states that have not yet determined how they will deal with the issue.

Unemployment Stimulus: Am I Eligible for the New Unemployment Income Relief?

[SweetieJean]

Be sure to read the fine print:

However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits, but now are eligible because the [unemployment comp] exclusion changed their income.

https://www.irs.gov/pub/irs-prior/f8962--2019.pdfhttps://www.irs.gov/newsroom/irs-to-recalculate-tax...

[fbmcardl2]

@SweetieJean  Question for TT. Based on IRS' latest statement, if one previously filed and will now still have to file an amended return, what is TT recommending about filing an amended return? Wait until after IRS has done the recalculation? If so, how will the TT software for amending the return work off of recalculated values not on the TT stored return? Or should folks just go ahead and amend it all now in TT before IRS recalculates?

"There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.

For example, the IRS can adjust returns for those taxpayers who claimed the Earned Income Tax Credit (EITC) and, because the exclusion changed the income level, may now be eligible for an increase in the EITC amount which may result in a larger refund. However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits but now are eligible because the exclusion changed their income."

[amt2020]

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@SweetieJean wrote:

Be sure to read the fine print:

However, taxpayers would have to file an amended return if they did not originally claim the EITC or other credits, but now are eligible because the [unemployment comp] exclusion changed their income.

https://www.irs.gov/pub/irs-prior/f8962--2019.pdfhttps://www.irs.gov/newsroom/irs-to-recalculate-tax...

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That link to the IRS doesn't work