Unemployment Compensation Exclusion Worksheet – Schedule 1, Line 8

[Bob_NC]

TurboTax Deluxe has been updated today and now includes the exemption.  Schedule 1, Line 8 is filled in based on your unemployment income.  Federal and state taxes are recalculated.

[Kim-C]

Yay!!!!  This is awesome news.  Thanks for the update!

[WT090351]

great job thanks for the update !

[JEFFCT]

Sometime on March 26th, TT updated its software (Home / Biz desktop ver) for the Unemployment Compensation Exclusion, however, the print outs do not include the new IRS Exclusion Worksheet.  Furthermore, the Taxable Social Security Worksheet, which uses the Modified Adjusted Gross Income is not taking into consideration the reduction in income due to the exclusion thereby taxing my Social Security for the full unemployment contrary to the act.  IRS instructions are very clear and TT is not following them, most likely by not following the instructions for the Unemployment Compensation Exclusion Worksheet.

[bradenleg100]

I filed my taxes on 3/2 and qualified for an $11,300 Premium Tax Credit for 2020 and my total refund was $14,600.   On 3/25, i went into my Turbo Tax account and my refund was reduced to $3300 and my Premium Tax Credit was removed.  This happened because our income was within the range to be eligible for the Premium Tax Credit, however, when the $10,200 Unemployment Exclusion was updated in the system, it dropped our MAGI below the threshold and put us ineliegible for the Premium Tax Credit.  This was not the intent of of the Unemployment provision and because it only affects a small population of taxpayers , i.e., those that had unemployment, had income that was $10,200 or less above the FPL and chose to take the Premium Tax Credit at the end of the year instead of monthly subsidies, this unintended consequence was likely not discussed.  From my conversation with the IRS, the Unemployment tax break is not a mandatory deduction, therefore there should be an option for those to not take the deduction if it doesn't benefit them.  Turbo Tax does not let you exclude the Unemployment deduction, so you would be forced to file a paper return and not take the $10,200 Unemployment exclusion.

[Cynthiad66]

No.  You are not required to file an amended return or a paper return.  Since you have filed already the IRS will automatically make the changes necessary to adjust your refund amount.  It may come separately from your original refund.

If you have already filed your 2020 Form 1040 or 1040-SR, you should not file an amended return at this time. The IRS will issue additional guidance as soon as possible.

Use this link for more information from the IRS:  Unemployment Compensation Exclusion

[bradenleg100]

My point is that Turbo Tax needs to update the program so that there is an option to either take the exclusion or not take the exclusion.  This is not only about amended returns as this affects not only those that need to make changes to an already filed return but those that have not filed yet as well.  There needs to be functionality within the system that allows the taxpayer to not take the tax "break" if it does not benefit him/her.  Until this is fixed within Turbo Tax, the taxpayer that has not filed yet would need to complete their return in paper form where they have the option of not accepting the tax break/deduction. 

[joefriday6]

I'm doing it the same way on 1040 Schedule 1 line 8 and in the caption writing Unemployment Income from 1099G  _____ less exclusion of $10,200. I can't find the appropriate worksheet either. If they make one I will change my entry. I hope Turbotax can find the worksheet.

[bradenleg100]

Joe, I think you misunderstood my comments. I DO NOT want to take the unemployment tax break, however, Turbo Tax is forcing everyone to take the tax break (if they qualify), whether it helps them or not. In my case, excluding the $10,200 from Unemployment reduced my MAGI below the Premium Tax Credit threshold, which then would show that I was ineligible for the credit. I spoke with the IRS about this already and they confirmed that the unemployment tax break is not a required deduction/adjustment, i.e., if the tax break does not help, you are not required to take it. The tax break 'ALLOWS' you to exclude up to $10,200 in unemployment income, but does not REQUIRE that you accept the deduction.

[SamS1]

This should be an automatic entry in TurboTax if you qualify for the unemployment exclusion.  You can review your 1040 in the following steps:

1. While in your TurboTax account, select Tax Tools in the left margin
2. Select Tools
3. Select View a Tax Summary
4. In the left margin, select Preview my 1040
5. Scroll down the screen then find Schedule 1
6. Review line 8,  You should see "UCE" then a negative amount equal to your exclusion.

If you are using TurboTax Desktop, make sure your have all updates installed.

• In the top menu select "Online"
• Then "Check for Updates"

You can review your Schedule 1 in "Forms" Mode by selecting Forms in the upper right had corner of the screen.

[bradenleg100]

Please read my comments. I am specifically stating that I DO NOT want to take the Unemployment tax break, but the Turbo Tax program is automatically forcing me to take the tax break. IRS has confirmed that I am not required to take the tax break.  

[DawnC]

Where did the IRS say that you can choose not to exclude the income?    The only way not to take the exclusion in TurboTax is to report your unemployment as ''Other Reportable Income'' instead of unemployment.   However, the IRS may adjust your return later.   And the processing of your return may be delayed as they have the copy of the 1099-G and if you report the income on a different line item, that may cause some confusion.   But if you enter your unemployment income as Other Reportable Income, the exclusion will not be applied.   @bradenleg100

[katiebeck]

I'm using deluxe online and it is not showing up at all. I went through all federal and state and it is not auto reflecting. Do I have to search for something specific and add it in? I am eligible.  The chat help is useless and none of the articles turbo has posted give a step by step of what it should look like.  

[Irene2805]

You should just enter the unemployment benefits reported to you on Form 1099-G and TurboTax will automatically enter the reduction.   It is entered in the Unemployment section of the Wages & Income screen in TurboTax Deluxe.

You can preview your return and see the subtraction by following these steps:

1. While in your return, click Tax Tools > Tools (in the black bar on the left of your screen).
2. In the Tools Center window, click View Tax Summary.
3. In the black bar select Preview my 1040.

The adjustment will appear as "UCE" on line 8 of Schedule 1.  [See screenshot below.]

@katiebeck

[bradenleg100]

Hi Katie. Please re-read my comment.