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Federal Unemployment adjustment not handled correctly on Montana Form 2

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Federal Unemployment adjustment not handled correctly on Montana Form 2

Sydni

Unemployment is not taxable in Montana.  There is an automatic subtraction on Montana Form 2 for any Unemployment entered in Screen 14.2.  With the recent tax law change for Federal returns exempting $10,200 of Unemployment from being taxed, the Montana return is still subtracting the entire Unemployment, rather than the net amount after the subtraction.  I have tried to enter an "other addition" on the Montana return, but the e-file was rejected.  

Please fix this error for the Montana returns.  There are a LOT of Montana taxpayers that have Unemployment in 2020 and we need to be able to prepare and e-file a correct tax return for them.

Status: New
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2 Comments
PKCPAMST
Level 4

For tax returns filed after March 12, 2021, the Montana Department of Revenue is requiring these steps to account for the Federal unemployment exclusion:

MT Schedule 1, line 8 – Other Income

Enter the amount from Form 1040, Schedule 1, line 8, including the federal exclusion of unemployment compensation.

MT Additions Schedule, line 14 – Other Additions.

In addition to other Montana additions reported on this line, enter the total amount of the federal exclusion of your unemployment compensation reported on Schedule 1, line 8. Enter “UCE” in the specification box.

MT Subtractions Schedule, line 7 – Unemployment Compensation

Enter the unemployment compensation from Schedule 1, line 7. Do not subtract the federal exclusion of unemployment compensation from this line.

 

See if this works.

sjrcpa
Level 15

None of the states are fixed yet for the new nontaxable unemployment at the federal level.

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