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@rbynaker wrote:
@Shark wrote:
Spoke with Sen. Wyden's office and they indicated that the 10.2k is deducted from total agi and if the amount of the remaining agi is less than 150k, you will qualify. If 150k or over, not eligible. So to answer your question, if 10k in UI is deducted from AGI and that number if below 150k, you are eligible for the tax break.
With Bob's original caveat still in play here (so this is based solely on the copy/paste above which may or may not be the actual legislation when/if it's signed):
Section 85(c)(2)(B) reads:
"(B) without regard to this section"
A "section" is a reference to the entire IRC 85, including 85(a) which states:
"(a) In the case of an individual, gross income includes unemployment compensation."
So I'll disagree with whomever you spoke to at Wyden's office. The entire amount of UI would be subtracted from AGI when making the determination of whether or not you fall off of the $150K cliff. If they had only wanted the excluded UI to count (up to $10.2K) they would have referenced sub-section (c) instead of the entirety of section 85. Maybe there's a Committee report that has a clarifying example buried in a footnote that will give us the "sense of Congress" on this.
That said, SCOTUS has a recent history of ignoring the things that Congress actually writes into the laws and instead using its own interpretation of what Congress meant to write (or at least what they think Congress probably meant to write . . . )
Just my random ramblings on the subject.
Looks like the IRS interpretation is that you include the entire amount of unemployment received as part of AGI when applying the $150K limitation. Here's the worksheet:
Wks Line 1 instructions: "Include the full amount of unemployment compensation you received in 2020 on Schedule 1, line 7."
Wks Line 2 instructions: "Do not reduce this amount by the amount of unemployment compensation you may be able to exclude."
I disagree with them but at this point I have no dog in the race (no clients just over the $150K bubble where my disagreeing with the IRS would lead to my signature on a return that follows the law instead of following the instructions.)
@Shark you might try contacting Wyden's office and pointing out that what they told you should happen is not what the IRS is doing.
Rick
