The 3rd cover-19 stimulus bill would make $10200 of 2020 unemployment benefit tax free. should i wait to file my tax until turbotax adjust their calculation system?

[struggling_artis]

when it becomes the law, turbotax is going to adjust the calculating system, right?

[DoninGA · Accepted solution]

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.

[struggling_artis]

hi, thank you for your quick reply.

so the turbotax adjustment would not make the April 15th tax filing deadline this time, so i should file 2020 tax now anyways, am i correct?

are we going to get the refund for $10,200 of 2020 tax-free unemployment sometime in the future separatedly?

[DoninGA]

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@struggling_artis wrote:

hi, thank you for your quick reply.

so the turbotax adjustment would not make the April 15th tax filing deadline this time, so i should file 2020 tax now anyways, am i correct?

are we going to get the refund for $10,200 of 2020 tax-free unemployment sometime in the future separatedly?

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In my opinion you should go ahead and file now.  The unemployment compensation relief probably will not be finalized any time soon.  You will be able to file an amended tax return once everything has been finalized to get a refund based on unemployment compensation which is not taxable.

[struggling_artis]

i see.

thank you for your help!

[JRS7]

Yes, I filed my 2020 return. Once Turbotax has the approved change in its program I will go back and file an amended return. I'm sure this will result in a substantial additional refund.

[Opus 17]

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@DoninGA wrote:

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@struggling_artis wrote:

hi, thank you for your quick reply.

so the turbotax adjustment would not make the April 15th tax filing deadline this time, so i should file 2020 tax now anyways, am i correct?

are we going to get the refund for $10,200 of 2020 tax-free unemployment sometime in the future separatedly?

---

In my opinion you should go ahead and file now.  The unemployment compensation relief probably will not be finalized any time soon.  You will be able to file an amended tax return once everything has been finalized to get a refund based on unemployment compensation which is not taxable.

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I would actually take the opposite view.  If you are not depending on your refund and can afford to wait, and have not filed yet, I would wait until the law is signed (if it is) and see what the IRS says.  They might change their forms for late filers, in which case getting all your refund 2 months late is probably better than getting half now and half in 9 months.  

It's also possible the IRS might announce a procedure that would allow people to claim an adjustment on their 2021 tax return, or that the IRS would perform the adjustments themselves (although I think this is the least likely option for various reasons.)

If you decided to wait, I would be careful of the April 15 deadline and be prepared to file an extension if needed. 

[struggling_artis]

i see.

i was going to file tax today, but maybe i could wait for a couple of weeks and let's see how things goes.

there's still some time to the April deadline.

thank you for your advice!

[RMH2893]

What would be your recommendation if you owe the IRS money?  I owe about $2,500 due to unemplyment.  With the new stimulus bill having passed that will bring down what I owe substantially.  Should I wait to pay?  What if it's not updated by April 15th?

[Irene2805]

You can wait to file your return until the recent changes are incorporated.  HOWEVER, you should definitely pay what you owe by April 15 (if not sooner).  Otherwise you will be facing interest and late-payment charges (even if the filing deadline is extended)/

To make a payment on the IRS website please click on this link:  Paying Your Taxes

If you make a payment online, be sure to include the payment in your return in the Deductions & Credits screen, under Estimates and Other Taxes Paid.  Enter the payment under Estimated Tax Payments.

[JRS7]

Can you please let us know when the changes ($10200 of 2020 unemployment benefit tax free) have been incorporated on Turbo Tax? Thank you.

[RMH2893]

The problem is that I already filed my taxes online but haven't made the payment yet.  The new stimulus package will reduce what I owe because the first $10,200 won't be taxed.  If I send the IRS the amount I owed before the stimulus was passed,  how will I get back the money.  Am I supposed to trust the IRS to send back my overpayment?

[Opus 17]

@RMH2893 

First, I would wait until closer to April 15 and see what the IRS announces. Assuming that the IRS is going to revise the 2020 tax forms, I would then continue to wait until those revised forms are available in TurboTax so that you can file one original correct tax return.  If that ends up being after April 15, you will need to make at least a partial payment to the IRS before April 15, and you will need to file form 4868 to get an extension. You can make a payment at www.irs.gov/payments. You should pay enough that when you file your tax return you owe less than $1000 more.  If you overpay, you will get the difference back as a tax refund.

I expect that the IRS will tell taxpayers who have already filed their returns that they need to file amended returns. If you file now using the original 2020 forms, you would have to pay the full $2500. When you file your amended return, your tax would go down and you would claim a refund of the overpayment, but it will probably take at least six months to pay. That is why I would suggest waiting so that you can file one correct return instead of having to file an amended return later.

Of course, if the IRS announces some unexpected and different procedure, it be beneficial to have waited until we know what that new procedure is.

[Opus 17]

@RMH2893 

Unless the IRS announces a different procedure, you need to pay the full amount that you owed on the original return you have already filed, no later than April 15.  Assuming that the IRS tells affected taxpayers to file amended returns, your amended return will show a refund and the IRS will send you a check once they process the amended return.

It would be highly unusual and perhaps even unprecedented if the IRS were to announce that they were going to automatically fix all tax returns that included unemployment compensation and issue refunds.  But even if they did, that process would presume that you had already paid what you owed in full.

You can certainly wait until April 14 to see what guidance the IRS issues. But I expect that no matter what procedures they adopt, you will need to first pay what you said you owed on the original return you already filed.

[knuckles1742]

For those who have not yet filed and will benefit from the tax free $10200 in unemployment, is there any reason why they should not make the adjustments manually if turbotax is not updated before the April 15 deadline?