The IRS has not yet issued instructions to software providers so there is no date for the update.
The IRS released guidelines over the weekend. It will likely be 1-2 weeks (or more) for the changes to be programmed into Turbotax, tested, and accepted by the IRS. You can sign up here for an update.
It seems the calculation may not be simple because even though the income is not taxable, it is still counted as "taxable income" for purposes of calculating many other things:
Is a dependent eligible for the unemployment exclusion or is it contingent on the parents' AGI?
@ewilson4 wrote:
Is a dependent eligible for the unemployment exclusion or is it contingent on the parents' AGI?
Any taxpayer whose income is less than $150,000 is eligible for the first $10,200 of unemployment compensation to be excluded from income tax. There is no requirement that the taxpayer be "independent." This should have a major impact on children/dependents who are now being hit with the "Kiddie tax" on the unemployment. If you have not filed yet, I strongly suggest waiting until the forms are updated in Turbotax. You can sign up for email notifications here, https://ttlc.intuit.com/community/tax-topics/help/how-do-i-claim-the-new-unemployment-benefits-in-turbotax/00/2081055
That is amazing news. I have three kids whose summer jobs were impacted and as a result that collected unemployment which the IRS was treating as unearned income and taxing at my rate. I held off filing for them for this reason. I am guessing that there are a lot of very happy parents out there as a result of this.
@ewilson4 wrote:
That is amazing news. I have three kids whose summer jobs were impacted and as a result that collected unemployment which the IRS was treating as unearned income and taxing at my rate. I held off filing for them for this reason. I am guessing that there are a lot of very happy parents out there as a result of this.
I actually haven't seen a lot of news on this at all. The fact that kids unemployment was being taxed at 24% or more (instead of being tax free under $12,400) could have been spun up as a big controversy if one of the news organizations wanted to make a stink about it and blame Congress, but I haven't seen anything on it, nor have I seen any articles telling parents to amend their kids' returns now. (On the other hand, the fact that kids whose hours got cut at McDonalds get enhanced UEC may be something that prominent politicians don't want to call attention to, like prisoners with no taxable income being eligible for full stimulus rebates.). Or maybe I read the wrong things.
Best of luck to you.
I will not pretend that it was not an economic windfall for my kids. They lost income from life guarding and waitressing jobs but the enhanced benefit overcompensated them for that. But if they had been taxed at my rate, they would have ended up losing money.
I just filed (4/18) using TT basic; there was nothing on this at all in the program. What's the current situation?
The $10,200 unemployment exemption/exclusion/deduction was for 2020 only and does not apply to 2021. All unemployment compensation, for 2021, is taxable.