Taxable Social Security benefits still includes 2020 unemployment income (but it shouldn't)

The program has been updated and the subtraction should be included on Schedule 1 line 9.

Does your Schedule 1 show the subtraction for the non-taxable unemployment? 

Yes, my Schedule 1 line 9 shows 0. However my Social Security Benefits Worksheet line 3 which says to add "Schedule 1, line 9" the amount being added is not 0, but the full amount on Schedule 1, line 7.

This appears to be an error in the program.

The unemployment amount for the worksheet is not reduced for the non-taxable portion of the unemployment. 

We don't think this was changed with the exclusion of 10,200 under the CARES Act. 

According to the IRS: 

“Unemployment Compensation

You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you in 2020. Report this amount on line 7.

Caution. If the amount reported in box 1 of your Form(s) 1099-G is incorrect, report on line 7 only the actual amount of unemployment compensation paid to you in 2020.

Caution. When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount):”

IRS Source

So the IRS needs to release a new revised Social Security Benefits Worksheet for 2020?

https://www.irs.gov/pub/irs-pdf/p915.pdf

"3. Combine the amounts from:

@KrisD15  is correct

from the IRS website

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

When figuring any of the following deductions or exclusions, include the full amount of your unemployment benefits reported on Schedule 1, line 7 (unreduced by any exclusion amount): taxable social security benefits,

but don't blame the IRS they're just following the law that was passed by Congress and signed into law by Biden.  another stupid part - no exclusion for single taxpayers with MAGI over $150,000. no exclusion for married taxpayers filing jointly with MAGI over $150,000 (not doubled). married filing separate  - apparently each gets the MAGI limit of $150,000  

The program is still using unemployment income to calculate taxable social security benefits as of 5/1/21

called and turbo tax representative didn't know?????????

The program does subtract from total income the $10,200 in unemployment benefits  not taxable,  however still uses the entire amount to calculate social security taxable income.  Shouldn't be a hard fix.  Turbo Tax???????

And turbo tax isn’t backing anyone that is in this situation on ssi. I see a HUGE lawsuit coming turbo taxes way and I’ll be on that list! I made )$18911 in wages last year (2020) and because of their software crap, they included all is unemployment as income (ssi states UI is NOT EARNED INCOME) and I was taxed on widows benefits 85%! TY GUARANTEE SUCKS AND THEY DONT BACK IT. they claim the IRS tax law division of the irs is wrong and irs is going after them. Do not ever use Turbo tax! It’s going to cost me $250 to amend my return because of them!!!!!

@Chrys1 Awhile back several of us attempted to help you understand why your Social Security was taxable, and thought our efforts had explained it clearly to you.   But it seems you are still having issues with this.   On August 10 you were still posting that you have not yet received your refund because it is in the errors department.    Sadly, there are millions of refunds that have been delayed.   Any return that requires a human to look at it is being delayed since the IRS is so severely backlogged.

If your return is under review and you have not received your refund yet, do not amend your return.  Putting an amended return into the system while the IRS is still working on your original return could cause even more delays and confusion.  And...you do not say why you think you need to amend, or why you think it would cost you $250 to amend.   TurboTax does not charge you again to amend your tax return.   The only time there is a fee to amend is when amending requires an upgraded version of the software from whichever version you used to prepare the original return---it could not cost you $250 even if you had to upgrade to a different version.   

Do not amend your tax return.  Wait for the IRS to finish processing the return you filed earlier in 2021.  When you have finally received your refund, only then should you try to amend----and only  amend if you truly need to change something that was incorrect or incomplete on the original tax return.

Just know you have things WRONG! There will be a lawsuit and I am first in line. I already have it in the works and have saved EVERY lame communication I’ve had with you and the so called licensed experts. Turbo tax is going down and the irs is behind me!!!!

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@Chrys1 wrote:

Just know you have things WRONG! There will be a lawsuit and I am first in line. I already have it in the works and have saved EVERY lame communication I’ve had with you and the so called licensed experts. Turbo tax is going down and the irs is behind me!!!!

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READ the text of the American rescue plan Section 9042(a) and (b) that specifically say that:

"APPLICATION.—For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined—

“(A) after application of sections 86, 135, 137, 219, 221, 222, and 469"

Which means for that the 7 listed items, the tax must be computed BEFORE applying the unemployment exclusion.   Section 86 of the tax law IS Social Scurrility.        That is the tax law, not TurboTax.

Go ahead and hire a lawyer if you want to throw your money away because no attorney would take such a frivolous case.

Again you are wrong. You refuse to admit turbo tax is using out dated schedule one worksheet calculations in their software. Everyone I know is fed up with TT  and their lame excuses. Get a grip on reality and admit TT IS WRONG! I just had mine corrected and that tax person even said you were WRONG! 

IN ADDITION…UI IS NOT EARNED INCOME!!! Anyone who knows anything knows that! You obviously do not!

Nobody said that is is earned income- it is taxable income.  And your tax advice is wrong.  But do what you want -- goodby.

IN ADDITION…UI IS NOT EARNED INCOME!!! Anyone who knows anything knows that! You obviously do not! Ssi is not taxed on unearned income such as unemployment!

Couple points.   You might be confusing ssi with Social Security.   They are not the same thing.  A lot of times people say ssi when they are getting Social Security.  But ssi actually stands for supplemental security income.  It is different than SS.  You don't get a SSA-1099 for ssi and you do not report ssi on your tax return at all.  So do you get ssi or Social Security or SSDI?

Then we all know unemployment is not earned income.  Why does that matter?   But unemployment is taxable income.  You might be confusing your monthly ss payments with how much is taxable.

There are 2 different things to know about social security. People get them mixed up all the time.

1. Your actual SS checks

If you are over full retirement age your actual ss checks won't be reduced. Otherwise they will actually reduce your payments if you make too much other income in the prior year.  See SS FAQ for working after retirement

https://www.ssa.gov/planners/retire/whileworking.html

2. Income Tax

For any age up to 85% of Social Security becomes taxable when ALL your other income plus 1/2 your social security reaches:

Married Filing Jointly: $32,000

Single or head of household: $25,000

Married Filing Separately: 0

Also since you keep mentioning earned income.   Are you thinking of when you are an employee on a W2 the employer deducts 6.2% Social Security from your wages.   But they don't deduct that from unemployment or other income like interest and dividends.   That is not the same as paying tax on the Social Security benefit checks you receive.  

Yes you don't pay SS out of unemployment checks but when you start receiving Social Security benefits then all your income is used to determine how much of SS will be taxable (up to 85%).  

Here is IRS Notice 703 form.  It might help you.

https://www.irs.gov/pub/irs-pdf/n703.pdf

You don't enter the 703 on your return.  The 703 is a worksheet for you to see how much of SS is taxable but it can be tricky to fill out and you might not come up with the right amount.

I filed the incorrect amount of income for my 1099 unemployment . For example I claimed $962.00 with no taxes taken out . The correct income is 1071.00 without taxes taken out.  Will I have to change it or will they do it for me. 

You will likely need to Amend Your Return  to make the changes.  However, it is best to wait until your return has been processed just in case they catch the error.  If they do not send you a letter and your return is processed, then you will need to change it.  If they catch it, then you will not need to do anything. 

ok, so I am referring to Social Security and in particular the 2020 tax return. I appreciate you clarifying the difference between SS and SSI. However, the issue comes into play for those collecting SS widows benefits. More specifically, the federal government in 2020 under the CARESact exempted $10,200 of unemployment from being included in taxable income. The problem/issue comes in when calculating what percentage of tax you would pay on your SS using the "worksheet." The worksheet is not excluding the $10,200. In speaking with several individuals and even a legal tax agent from the IRS, I was told I needed to file an amended tax return for 2020 (1040X) because the software stated to include it on one end but take it off another end, which did not happen and I was taxed 85%. They did process the return a year ago and nothing has been changed as the IRS said it would be. So, in essence, the federal government excluded the $10,200 on the front end but failed to do so on the SS end. Does that make sense? We were not supposed to include the $10,200 when calculating unemployment, we were supposed to record the deducted amount and none of the software allowed for that so I had to manually go into the data section of my 2020 1040 and change it to reflect the correct amount. When I did that, it changed my EITC and several other items I should have been eligible for but wasn't because the worksheet in the software included the entire amount of unemployment. 

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@Chrys1 wrote:

ok, so I am referring to Social Security and in particular the 2020 tax return. I appreciate you clarifying the difference between SS and SSI. However, the issue comes into play for those collecting SS widows benefits. More specifically, the federal government in 2020 under the CARESact exempted $10,200 of unemployment from being included in taxable income. The problem/issue comes in when calculating what percentage of tax you would pay on your SS using the "worksheet." The worksheet is not excluding the $10,200. In speaking with several individuals and even a legal tax agent from the IRS, I was told I needed to file an amended tax return for 2020 (1040X) because the software stated to include it on one end but take it off another end, which did not happen and I was taxed 85%. They did process the return a year ago and nothing has been changed as the IRS said it would be. So, in essence, the federal government excluded the $10,200 on the front end but failed to do so on the SS end. Does that make sense? We were not supposed to include the $10,200 when calculating unemployment, we were supposed to record the deducted amount and none of the software allowed for that so I had to manually go into the data section of my 2020 1040 and change it to reflect the correct amount. When I did that, it changed my EITC and several other items I should have been eligible for but wasn't because the worksheet in the software included the entire amount of unemployment. 

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The CARES act specifically stated that the taxable amount of SS must be calculated *before* excluding the $10,200 unemployment form AGI.   there were 6 other credits that had to be calculated before the exclusion.   Therefore the SS tax is the same whether you had unemployment or not.

Yes, but the software used the line with the full amount of unemployment as opposed to the excluded amount I believe line 14 vs line 7? So the IRS said to file the amended return because it was supposed to be just the amount over the $10,200 and not the full amount. 

@Vanessa A @Ok so just wait . They have accepted my return on the 26th of January. When I check the where's my refund tool it just says that my return is being delayed past the normal time frame. I was hoping I didnt have to amend it. Is it possible they can correct it without me doing it or going through any difficult process.

This was for 2020 taxes not 2021. 
if you have a delay it could be due to the tax credits?