Question

Unemployment tax relief

Forum|Forum|5 years ago
March 31, 2021
2 replies
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How do I handle a situation where a person gets unemployment and has taxes taken from it. And because of the unemployment tax relief bill the unemployment compensation that was paid (which is less than the 10,200) is no longer treated as income and they don't have any other compensation to cover the taxes they paid on the unemployment. Turbo Tax is not allowing the taxes to be filed as an efile because the taxes paid are more than the income received.

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JamesG1

Unemployment for a Single taxpayer was less than $10,200. The Federal 1040 tax return will report $0 taxable income because there is no other income to report.

There was Federal withholding reported and the Federal 1040 tax return is reporting the full amount as a Federal refund. Do I understand correctly?

You are not allowed to e-file? What error messages are you receiving? Is TurboTax not allowing you to file Federal or the state or both? Please clarify.

Many states have not updated their software to accommodate the change in unemployment income which was made retroactive to January 1, 2020.

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jburkeclanAuthor

It says that "The tax withheld of $xxx as shown on Form 1040 is greater than or equal to $0, the sum of income". She didn't know that she probably would have been better off not having the taxes deducted on the unemployment. In this case she actually listened to her mother (who'd a thunk it). And because she has no income being reported she can't have any taxes paid on her return. Turbo Tax is saying that she can't file efile because of this issue. Should I file a traditional paper return or should we just accept that she paid this amount in taxes and she's not going to get the money back.

ReneeM7122

If you already filed your 2020 taxes, you don't need to do anything. The IRS says that it will refund the taxes paid before the $10.200 exclusion took effect.

See this IRS link about unemployment and this TurboTax article.

@jburkeclan

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JonWinegar

I have the same issue. This is a glitch/error. Mine says my form 1040 has a value that is actually the value of the 1099G from unemployment.

To bad this company doesnt have people to talk to on the phone.