The new Stimulus bill includes unemployment tax forgiveness on the first $10,200 of unemployment for 2020. When would TurboTax update to reflect this if the bill passes?

[Anonymous]

@Data13 

do NOT manually adjust the income.  This will cause a matching error that could delay your refund by a very long time, as it then requires human intervention.  They are still working on last year's returns with mismatch errors.  Do not try this method.

The IRS will issue guidance soon.  Just give it a little time.  For the moment, the IRS is advising those who have not filed to wait and those who have to NOT file amended returns just yet. 

[Anonymous]

@warnhammer you can hang up the phone.  TurboTax is not the IRS or the government.  A change in law doesn't immediately update the software.  The law has to be interpreted, the policies and procedures determined. and THEN the programmers can update the software.  It will take some time. 

Give a week, or three. 

[JotikaT2]

The treatment of the unemployment compensation is still being determined at this point by the IRS.  According to the newly passed legislation, the first $10,200 on unemployment earned in 2020 would be considered nontaxable if your household income is less than $150,000.

IRS Statement on American Rescue Plan

Once the IRS issues some guidance, TurboTax will be able to update their software accordingly.  

How will the 3rd stimulus affect me

[Romy90210]

Edited: Double posted by mistake.

[Romy90210]

I spoke to  a TurboTax employee on the phone and they told me that the IRS just released the guidelines for tax software companies to follow and to expect an update of the software by mid-week as the guidelines are easy to implement. People on this forums keep spreading false news left and right. SMH 

[xmasbaby0]

Not sure what TT employee you spoke to or what inside information they had.   TurboTax has not given any information yet to those of us who are spending our time doing our best to answer your questions.   Hope that what you were told was accurate for everyone's sake.   So far all we know about is a complicated workaround that might make your head spin. 

[Romy90210]

One of your employees on the phone. Can’t imagine everyone at TurboTax is not on the same page.  Either way I’m waiting untill the last minute to file my taxes. No going through the headache of having to amend my taxes or having to pay the IRS a few thousands when I shouldn’t lol. 

[Romy90210]

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym...

[aidakaramesic]

You can't.  The earned income credit would get miscalculated.  

[AQAndrew]

Sounds like by using the Unemployment Compensation Exclusion Worksheet – Schedule 1, Line 8 outlined by the IRS, I can just do my taxes by hand now and forgo TurboTax. Going to give it a go rather than wait for software programmers to get up-to-speed. Thanks for the link!

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym...

[davebraley]

not quite that easy for me. i had taxes taken out of my unemployment and I want it back

[xmasbaby0]

@davebraley

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.

  If you have not e-filed yet—-wait.   And if you already e-filed and want to amend for this—WAIT.

Please read this very recent news from the IRS:

https://www.irs.gov/newsroom/irs-statement-american-rescue-plan-act-of-2021

[dmsc33]

don't forget to adjust your state income back up for the $10,200 exclusion on line 8... can impact EIC calculations among other things if you don't

[Aceley]

What if we already filed?? I was taxed on all my unemployment. 

[THofer]

That is a really bad idea. Please don't do that. You'll trip the IRS Cross-matching, and draw needless attention to your return.

If you wish to try it to see what your refund would look like? I guess you could. But don't file with knowingly incorrect amounts on government-issued forms.