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

Everyone keeps saying $150,000.  That is for married filing jointly.  I think it's half or $75,000 for single.

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

Not for unemployment.  It's 150,000 for everyone.  75,000 is the max for Single to get the Stimulus payment and Recovery rebate credit.

https://ttlc.intuit.com/community/unemployment/help/do-i-have-to-pay-taxes-on-unemployment/00/25986 

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

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

How do I amend my 2020 Texas for the 10200

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

I guess you didn't read my answer above.

 

If you already filed and didn't get the 10,200 unemployment exclusion you do not need to amend.  The IRS will be adjusting it for you.  See,

https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-m...

 

You can log back into your return and it should automatically update your return and show you the new refund.  But the updated return won't be sent.  The IRS will adjust it for you.

 

If you have unemployment you can exclude up to 10,200 for each person if your income is under $150,000.  Your unemployment compensation will be on Schedule 1 line 7.  The exclusion will be on Schedule 1 Line 8 as a negative number. The result flows to Form 1040 Line 8.

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

From the page linked just above:

 

If you have already filed your 2020 Form 1040 or 1040-SR, you should not file an amended return. The IRS will automatically refund money to people who already filed their tax return reporting unemployment compensation. See IR-21-71  for more details.

 

Oops someone else responded right before me.

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

Actually IRS says you may need to file an amended return if the reduction in AGI from the unemployment insurance exclusion makes you newly eligible for a tax credit that was not included on the original return based on the original AGI calculation. Here's the exact wording from IRS:

 

"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."

 

Another example might be claiming a retirement savers credit that was not claimed on the original return because of AGI at the time of filing.

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

Atkimark,


There seem to be a number of issues with the downloadable version that I’m not seeing with the disc version. No idea why.


If you are not filling the 1040-NR, then you don’t qualify for the exclusion and this could explain the issue. If you are a citizen and filing a 1040, then you might double check that you haven’t answered any questions that might have you misclassified. This would cause TurboTax to not apply the exclusion.

 

Barring that here are a few things to try regarding the UCE:

1. Under “View” change to See Forms fro Step-by-step. Then try to search for “The Unemployment Compensation Exclusion Worksheet“.  If you made under $150,000 in 2020, then I believe you can just enter 10, 200 on line 3. I don’t have that worksheet in front of me but you will be able to easily tell if it should be entered as a negative (in parentheses) or a positive. I believe it is the latter. Then try going back to Step-by-Step and see if it picks up where you left off and guides you.

 

2. In a similar way you could bypass the worksheet in option 1 and go straight to schedule 1 and enter ($10,200) on line 8. The parentheses will make the number a negative value and will reduce your income on schedule 1 by the UCE.

 

The value of the first option is that it may help you avoid an error message when you finish your return and run the review. Or if you do get an error it may take you to the worksheet and have you fill in additional information so it ultimately calculates your UCE on line 8 of schedule 1.

 

Good luck and let me know how it turns out.

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

While you might expect different income levels for those filing single, Head of household and married jointly that isn’t how the bill is written so is this instance those who are married filing jointly may get the short end of the stick.

 

$150,000 is the income level for filers who are  single or married filing jointly. However, if a married couple does meet this income test then both spouses may take the UEC:


see https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

 

Note that the issue of marriage is only raised with regard to both spouses taking the exclusion.

 

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

I agree 100% with you that this is what the IRS has said will.

 

At the same time I encourage folks to add the exclusion to your existing return, save it under a new file name and let TurboTax calculate your adjusted refund/payment.

 

Then you will know if the IRS made the correction and did so correctly :0). I’m a cautious person in this area and wouldn’t leave it to the IRS to get thing right. BUT if you unfortunately discover an error on the IRS’s part, be patient and don’t rush filing a 1040X. The IRS may offer other solutions later this year.

If you are lower income and/or have kids in college, you are the exception to the rule. If your UCE brings your income low enough to qualify for refundable credits like the Earned Income Credit, American Opportunity Credit or Retirement Contribution Credit then as of now you will need to file an amended return.

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

That was my confusion as well, but that is what the legislation entails and what IRS determines, $150,000 for one or for two (MFJ). It's totally unfair to married couples.   If both incomes exceed the $150,000 limit, you may decide to file separately, but then you will lose a lot of credits, and also you will have to cough up all  your ACA tax credits, plus smaller standard deductions (plus all kinds of other things that is not favorable -- they really WANT married couples to file jointly unless there are special situations).  So yeah, write to your congress persons to discuss why this limit is the same for single as well as MFJ.

 

 

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

@jimliz2Thanks. We will have to file an amended return, no doubt about it. Waiting for IRS and the state to do their fix first and then will amend to get the benefit of the income-related credits. I'm just not sure how the amendment process will work in TT since the stored, filed TT return will differ from what the corrected return will be after IRS does its thing. So not sure how to line up the two.

DMarkM1
Employee Tax Expert

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

TurboTax updates may have already occurred that should match the IRS changes on your federal return.  The state taxing agencies may not be correcting returns so you would want to do that amendment first without amending your federal return.  

  1. You should sign in to your TurboTax account and select the "Add a State" option to first make any necessary changes to your federal interview and state entries to make your state return match your originally filed state return (or if the state made corrections, the corrected return). 
  2. Then click through the state tax interview to near the end to find the "Amend" option for the state return. 
  3. Click "Yes" and follow the prompts to make the state amendments.
  4. Sign out  
  5. Next you will sign back in and use the "Add a state" option again to get your federal return to match the IRS corrected version. 
  6. After that you should be able to sign out and back in to your account and this time select the "Amend" option to complete the amended federal returns. 
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When will the $10,200 of unemployment tax exemption go into effect?

@DMarkM1"TurboTax updates may have already occurred that should match the IRS changes on your federal return. The state taxing agencies may not be correcting returns so you would want to do that amendment first without amending your federal return."

 

Thanks, but in my case, the state is also self correcting for the UCE exclusion without waiting for the feds. So if I wait for both the federal and state to complete their self corrections, do I still have to file the state amendment first? The state amendment in this case would only just be reflecting newly (post UCE exclusion) eligible federal tax credits that would be added to the federal return. So I'm thinking I should start out first with the federal amendment and then proceed to the state amendment to incorporate the federal credit changes. Is that wrong? Thanks again!

DMarkM1
Employee Tax Expert

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

You are correct.  If the state is also correcting then work FED and then state.

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