Will my AGI be changed due to the unemployment tax credit, and will i receive the remainder of the third stimulus check?

[LenaH]

It depends. If your modified adjusted gross income (AGI) is less than $150,000, the IRS will exclude from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200. If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.

If you are qualified for the exclusion and a supplemental third stimulus payment due to a change in AGI, the IRS will likely send a stimulus payment to you once your adjustment is processed. If you do not receive the supplemental payment during 2021, you can claim the Recovery Rebate Credit on your 2021 tax return. 

Questions and Answers about the Third Economic Impact Payment — Topic H: Reconciling on Your 2021 Ta...

[hogiyogi23]

Thank you for the response, so if my a AGI was 156k (married filing jointly) including 8000 in unemployment would that bring my AGI down to 148K making me eligible for the tax credits and for stimulus amount?

[rcea]

I thought the Irs said they would take that amount away from the total AGI.  Example: Our married income was 159k with unemployment.  After the 10,200 it dropped to 148ish my tax return updated. Do we now qualify for a stimulus checks?

[hogiyogi23]

That was my understanding, but now I have no idea.

[fanfare]

as usual the answers from turbotax "experts" are often wrong.

[KathrynG3]

1. Regarding the Unemployment Compensation Exclusion impact on Adjusted Gross Income, yes, you are correct. AGI will be reduced. 

For more information including a worksheet with brief explanations, see: New Exclusion of up to $10,200 of Unemployment Compensation | Internal Revenue Service

2. TurboTax will calculate the correct stimulus payment balance based on what is entered for the Recovery Rebate Credit. To do this in TurboTax, follow these steps:

1. Go to the search box and enter stimulus. Click the Jump to link.
2. Answer Yes.
3. At the next screen, Let's double-check the amount you received, answer No to edit the first-round and second-round amounts.
4. If no stimulus amount was received, enter 0. The amount received must be entered in each box. When finished, click Continue.

Keep in mind that even with the unemployment, the stimulus payments would be reduced but not eliminated for married filing jointly filers with adjusted gross income more than $150,000.

For more information, see:  

First Stimulus Payment Calculation

Second Stimulus Payment Calculation

@rcea

@hogiyogi23

[fanfare]

IRS says:

Caution. 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):

Note. If your modified adjusted income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid to you in 2020

[fanfare]

In other words,

If your AGI was too high before March 11, it is still too high after March 11.

My apologies to @LenaH 

[rcea]

Hello thank you for your reply.  The irs released new guides and will not count 10,200 towards agi as of March 24th. 

[rcea]

Thank you so much for your reply @KathrynG3 

[rcea]

@KathrynG3  My Income reduced significantly therefore I did not get first, second, or third stimulus. I did my taxes before turbo tax updated and did get back the first and second. After the software updated it shows my agi is 149k.  Do you think the irs will give me a 3rd stimulus after they go back and fix mine?  Thank you for your response!  I have not received a 3rd for our household due to last years agi

[KathrynG3]

You're welcome, we are happy to help! 

The IRS may adjust the 3rd stimulus, but if they do not, you can claim the missing 3rd stimulus amount on the 2021 tax return filed in the spring of 2022. 

The rules for calculating the third stimulus payment are different. They are here: Third Stimulus Payment Calculation, the fifth question/answer from the top.

@rcea

[rcea]

Hello thank you for answering. I called the IRS because I received my income from unemployment rebate reduction.  Prior to the adjustment my age was 159,375 after the adjustment it was 144,145.00. The representative said that I do not qualify for a third stimulus based on the rules. We are a married filing joint return and I am confused on why I would not get a third one. The IRS said the income was too high.

[xmasbaby0]

You may have spoken to an IRS employee who does not understand the "plus us" payments that have been going out to people whose AGI was recalculated when the tax laws changed and who are newly eligible for EIP payments.   Sadly, even IRS employees are not always aware of the tax laws, especially the ones that just changed.   With an AGI of under $150K you are eligible on a joint return for the 3rd stimulus---or perhaps a phased out amount depending on just what your new AGI is.

That "plus up" payment would not have been included with your unemployment "extra refund"--- the third stimulus payment is a separate payment.   If somehow you do not get it then you might still be able to get it on your 2021 return if you are eligible then.

https://www.irs.gov/newsroom/irs-treasury-disburse-more-economic-impact-payments-under-the-american-...