Tax Year 2020: TurboTax Updates on Unemployment Tax Relief

[Happygirl1]

Yes I just checked it is on line 7.

[JD2022]

Appears the SS Benefits Worksheet is not calculating the unemployment income exclusion of $10,200.  PER IRS worksheet in 1040 instructions that is not an add back on line 3.  Also the TT form says it is adding back line 9 from Schedule 1 but it is adding back line 7...so seems they know which line but calculation is wrong.

Any thoughts on if/when this will be corrected?

[wfilbra]

@JD2022Hopefully this helps with your concern:

The unemployment exclusion is NOT included on the SS worksheet as noted by the IRS.

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, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.

[wfilbra]

The unemployment exclusion is NOT included on the SS worksheet as noted by the IRS.

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, IRA deduction, student loan interest deduction, nontaxable amount of Olympic or Paralympic medals and USOC prize money, the exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989, the exclusion of employer-provided adoption benefits, the tuition and fees deduction, and the deduction of up to $25,000 for active participation in a passive rental real estate activity.

[JD2022]

Thanks for the reply and the info.

I still think that TT adding back ALL unemployment income and it should only be the net (Line 8 from 1040) per worksheet on page 30 of 1040 instructions

[DoninGA]

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@JD2022 wrote:

Thanks for the reply and the info.

I still think that TT adding back ALL unemployment income and it should only be the net (Line 8 from 1040) per worksheet on page 30 of 1040 instructions

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The exclusion will be on Line 8 of Schedule 1 if your 2020 AGI is less than $150,000

[iwabr]

Hi. Hope this helps anyone concerned about whether the $10,200 unemployment tax credit has been updated in the Turbo Tax software. We purchased the Turbo Tax download/desktop version. Before we e-filed, we wanted to make sure we had received the $10,200 credit. We called Turbo Tax and spoke to a very knowledgeable agent. She remote logged onto my computer and showed me where I could see the credit on our return. Again, this is for the download/desktop version. Click on your Turbo Tax icon on your desktop. When Turbo Tax opens up for you, go to the banner at the top and you'll see File, Edit, View, Format, etc. Click on "View," then click on "Forms" and a list will pop up. Click on "Schedule 1" and look on Line Item #8 of that form, and you'll see the $10,200 credit. It's called "UCE" and it'll show a negative $10,200.  Hope this is helpful to someone!

[steve168]

tried that and it didn't work for me. it also deleted all my 1099's so i had to re-enter my info for them. my state (WV) passed legislation (so i am told by the state tax dept) to exclude the $10.200 unemployment but it hasn't  been reflected yet in the online edition i am using. i'll give it another week or two then just do the return by hand.

[JohnB5677]

 It is taken care of.

It is first recorded on Schedule 1 as Unemployment Compensation on line 7.  Then on line 8 there is a UCE (Unemployment Compensation Exclusion) of -$10,200.

This is then carried over and posted to your tax return (1040) on line 8.

So, it’s already included on the Federal

If you've already filed your return, the IRS will recalculate your taxes, adjust your account accordingly, and send any refund amount directly to you.  States are following a similar process

. 

[steve168]

I saw the Federal UC Exclusion a week or so go included on my Federal return. It's the state I'm waiting on (WV). Tax Act and H & R Block are allowing the WV state exclusion now, TT hasn't yet. Legislation for this has passed in WV  I was told by the Governor's office and is awaiting his signature but they are instructing people to include the exclusion on their state returns. I'll give it another week or two and then if it hasn't changed on TT I'll just do my state taxes manually.

[Irene2805]

TurboTax calculations are correct and up-to-date for WV.  You can go ahead and finish and file your state return.

@steve168

[steve168]

If I file now I would just have to amend my return.  I would hope TT would update in the near future to reflect the change. If not I'll file manually or go to another online preparer that has already updated.

[steve168]

From the WV State Tax Department Website:

West Virginia State Tax Department > Individuals > American Rescue Plan Act (ARP) and Unemployment Compensation

American Rescue Plan Act (ARP) and Unemployment Compensation

ARP exempts the first $10,200 of unemployment compensation from federal adjusted gross income for tax year 2020 for those taxpayers who have a federal adjusted gross income of less than $150,000.

If you already filed your federal and West Virginia return and DID NOT take the $10,200 deduction:

• An amended West Virginia IT-140 return must be filed to claim the deduction. This is true even if you are waiting for the IRS to automatically recalculate and issue a refund based on the unemployment benefits deduction. West Virginia will not automatically deduct the amount from your already filed IT-140.
• The 1099-G indicating the amount of unemployment compensation you received for the year must be included with your return to claim this exclusion. For electronically filed original or amended returns, enter the 1099-G information in the appropriate areas. For paper original or amended returns, the 1099-G must be attached.

If you filed your federal return and West Virginia return and you DID take the $10,200 deduction:

• No further action is necessary, you have already received the benefit of this deduction.

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[MaryM428]

If yuu have not yet filed your taxes, then TurboTax will deduct the first $10,200 of unemployment from your AGI and that AGI will flow to the state return.

If you have already filed and paid on the first $10,200 of unemployment, then the IRS will start issuing federal refunds in May.  For states where you have already paid, contact your state income tax department for guidance on how to get the overpayment refunded to you.

[steve168]

The AGI flows to my state return, however it is added back in on Schedule M of my state return by TT, thus negating the benefit. Federal is not the problem. I will file the state return myself to get it done correctly.  I've already filled it out manually. I'll wait a week or so to see if TT is updated first to remove the unemployment added back in on Schedule M.  No problem. 

[ebjlarsen]

Can someone please advise when software will be updated for Maryland state returns so that I may file?
Thanks!