Question

When will the $10,200 of unemployment tax exemption go into effect?

Forum|Forum|5 years ago
March 6, 2021
59 replies
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TurboTax Deluxe Online

Employee

We will find that out IF the proposed tax law change is passed in the Senate and signed into law. So far, it is still part of the things the Senate is debating in regard to the 3rd stimulus bill.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

G

GeorgeHarrisonTaxMan

So, President Biden just signed the Stimulus bill on Thursday, March 11th. Now when will the $10,200 of unemployment tax exemption go into effect and reflex on my Turbo Tax Premier software?

DoninGA

Employee

@GeorgeHarrisonTaxMan wrote:

So, President Biden just signed the Stimulus bill on Thursday, March 11th. Now when will the $10,200 of unemployment tax exemption go into effect and reflex on my Turbo Tax Premier software?

After the legislation has passed Congress and after the President has signed the legislation and after the IRS has written the rules, regulations and procedures. And after the IRS has changed any forms or schedules to accept the tax code changes. And after the IRS has approved the changes in the TurboTax program that apply to the tax code changes, then it will be available for the users of the tax preparation software.

This can take anywhere from several weeks to several months before it becomes available.

See this TurboTax support FAQ for information on the American Rescue Plan - https://ttlc.intuit.com/community/tax-topics/help/how-will-the-stimulus-package-impact-me/00/1393859

DoninGA

Employee

Until the President signs the legislation there has been no changes to the tax code.

The legislation only would affect a federal tax return. The various states that tax unemployment compensation would have to make changes to their own tax codes and only if they so desire.

TurboTax nor any other tax preparation software company can do anything until After the IRS has written the rules and regulations after passage of legislation which changes the tax code.

A

avmess08Author

So, as I understand it -- my options are to do my taxes like I would and then have to file an amended return, or wait until this gets finalized?

X

xmasbaby0

Employee

It will probably have no effect on 2020 returns. More likely it will affect 2021 returns filed next year.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

J

Jmb11

“Proposed legislation introduced this week would remove taxes on up to $10,200 in unemployment aid for the 2020 tax filing year.”

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xmasbaby0

Employee

That tax law has not yet been signed into law by the President. When that happens then the IRS will need to change the tax forms, the programmers have to change the software, and then the IRS has to approve of their software. That will take time---we do not know yet when all of those changes will be accomplished. As soon as more is known, TurboTax will provide information. The software changes will take weeks or even several months.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

D

dtzak

Already done. When does TT get their $hit together?

C

Craig-o

I have been very impressed with IRS automation improvements over the recent years. I'm going with being optimistic and I think that since the IRS has all the data they need for people that filed 2020 already, they will apply the new legislation and send rebate checks accordingly.

Something else not mentioned here is since 2020 AGI is affected by this change, anyone that had Obamacare in 2020 will also have their Premium Tax Credit affected (in a good way). The rebate from this could be even more that the tax break.

macuser_22

Employee

@Craig-o wrote:

I have been very impressed with IRS automation improvements over the recent years. I'm going with being optimistic and I think that since the IRS has all the data they need for people that filed 2020 already, they will apply the new legislation and send rebate checks accordingly.

Something else not mentioned here is since 2020 AGI is affected by this change, anyone that had Obamacare in 2020 will also have their Premium Tax Credit affected (in a good way). The rebate from this could be even more that the tax break.

Yea - it only took the IRS 9 months to release the qualified COVID related retirement distribution rules and forms.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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Craig-o

Good point; I may be too much of an optimist. The main reason I mentioned it was, I received my direct deposit refund 6 days from e-filing my return this year. It was 2 weeks last year and more like 6 weeks the year before. Also, my social security statement was updated with 2020 income reflected in those same 6 days. How about the payouts for the stimulus checks within a few days of legislation passing? I have never seen our government move so fast.

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goodty1

So now that it has passed the senate and will pass the house can we get an update? Should I file immediatley after Joe Biden signs the bill into law?

DoninGA

Employee

@goodty1 wrote:

So now that it has passed the senate and will pass the house can we get an update? Should I file immediatley after Joe Biden signs the bill into law?

After the legislation has passed Congress and after the President has signed the legislation and after the IRS has written the rules, regulations and procedures. And after the IRS has changed any forms or schedules to accept the tax code changes. And after the IRS has approved the changes in the TurboTax program that apply to the tax code changes, then it will be available for the users of the tax preparation software.

This can take anywhere from several weeks to several months before it becomes available.

S

Suebf

The relief bill will apply to up to 10,200 unemployment benefits received in 2020

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npierson777

There is official information about that yet.

macuser_22

Employee

@npierson777 wrote:

There is official information about that yet.

The "official information" is the amendment offerd by Senator Schumer to the COVID relieve bill that passed the US Senate and had been sent to the House. The House has not yet agreed to it.

It will not become law until the House passes it and the President signs it. Then the IRS will have to write the new regulations and develop the forms and procedures to implement it. Probably months away.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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Pt58672011

I will file on my own if turbo isnt up for fixing this issue for weeks or months.

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irunlikeataxgurl

And where will find updated forms? Literally no one has them printed nor their software updated. Are you going to handwrite your return?

S

soupy

Ok so the relief bill has passed everything and is on the way to the President's desk. Is Turbotax working on the code for their software to process the EDD 10,200 non-taxed amount?

DoninGA

Employee

@soupy wrote:

Ok so the relief bill has passed everything and is on the way to the President's desk. Is Turbotax working on the code for their software to process the EDD 10,200 non-taxed amount?

After the legislation has passed Congress and after the President has signed the legislation and after the IRS has written the rules, regulations and procedures. And after the IRS has changed any forms or schedules to accept the tax code changes. And after the IRS has approved the changes in the TurboTax program that apply to the tax code changes, then it will be available for the users of the tax preparation software.

This can take anywhere from several weeks to several months before it becomes available.

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soupy

So what are you saying? That this is going to take months to implement? I am understanding that the people that filed already will have to amend their return. We have 35 days until everyone has to file... We are all in a holding pattern. Seems like a simple adjustment in programming to not tax the first $10,200 of the 1098 from edd...

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BillGinCT

The American Rescue Package of 2021 was approved by Congress and is expected to be signed by President Biden on March 12, 2021.

This package makes the first $10,200 of unemployment benefits received in 2020 non-taxable. The IRS has not yet provided any instructions on how to calculate this.

The IRS will have no choice but to extend the filing deadline from April 15 to at least June 15 in order to provide time for tax preparation services like Turbotax to make changes to their software programming.

If you have NOT filed your 2020 tax return, my advice is to wait to file at a later date.

If you ALREADY filed your return, wait for instructions from the IRS in a letter that you will most likely receive with instructions. You will most likely have to amend your 2020 tax return, as the tax credit will only apply on your 2020 federaltax return.

Any unemployment benefits received in 2021 will NOT be affected by this law change, unless it is once again approved by Congress at a later date.

If you normally file a Married Joint return, and both you and your spouse received unemployment benefits, it may be advisable to file Married Seperate returns so that both of you can claim the credit.

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Taxie

THANK YOU for mentioning what so many others failed to mention in this thread....that the IRS can issue an extension to file taxes (they have in the past, and will likely do so in this situation.) So if you owe thousands and this bill would drop that tax bill to zero, just wait. No need to float Uncle Sam a huge payment that will take them months to give back to you. Have patience.

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Bentb82710

Actually it does take effect on the 2020 tax returns yes I would amend the return president bidan sign it Thursday or Friday the 11th or 12th of march

Critter-3

Everyone needs to stop and WAIT for the IRS to put out instructions on how the IRS will be handling this situation. The details are still very vague ... all we know is $10,200 of unemployment will not be taxable but is that per person ??? Would a married couple get a max of $20,400? Will the IRS amend the returns for those who have already filed ? Will the filing deadline be extended ???