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$10,200 Stimulus 3 Unemployment Exclusion

parvitstax
Level 3

How would we report this on a client's tax return? Where would it be entered?

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18 Replies 18
TAXOH
Level 10
Level 10

Nobody knows yet how it will be handled. 

parvitstax
Level 3

So should we just wait to file clients with unemployment or just file it and perform amendments later? I would like to not charge my clients unnecessary fees

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TAXOH
Level 10
Level 10

Some people are waiting and some people are filing now and if necessary will amend later.  It's up to you how you want to handle it with your clients. 

jr33
Level 2

typical government screw up.  Change tax rules in the middle of filing season without and relief for the tax preparers.  Returns previously filed need to be amended which will take years for the IRS to process and authorize and pay refunds yet as the preparer we will face the increase questions and phone calls from taxpayers wanting us to amend the returns and asking when their refund will be issued.

BobKamman
Level 13

I agree.  The world revolves around us.  If we're not the center of the universe, who the heck is?  

I mean, it's not my fault those people were unemployed.  100 years from now, it won't make any difference whether they had to give up some bucks this year.  Why should democracy infringe on my life, anyway?

They knew months ago that these people would be getting 1099-G's with little or no tax withheld.  They should have solved the problem then.  Well, OK, they couldn't solve it until after January 5, and then  those two guys weren't sworn in for a week or two after that.  Still, 30 working days to make the change is inconsiderate and outrageous.  

UNINTENDEDACTOR
Level 2

Absolutely that a nice way of telling him...lol..smh...

Linc
Level 1

ok thanks

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Linc
Level 1

need to know how to treat the 10200 unemployment deduction on unemployment

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UNINTENDEDACTOR
Level 2

yesterday, I read once the bill is signed then the IRS and software companies make their system changes for tax preparers. Following our current events I believe tax preparers understand the options they can offer their clients at this time either wait for the changes or file an amendment. 

DezTaxHooks
Level 1

Waiting on the IRS.

parvitstax
Level 3

Hopefully they have a rebate form for people whose 2019 prevents them from getting $1400 but their 2020 would qualify them. Because of the $10,200 exclusion I have a few clients waiting to qualify. Their 2019s are above the AGI limit but 2020 is not  😞

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mm1
Level 4

I love how the White House person said "well you may have to amend your tax return". Most all of my  clients with unemployment filed early trying to get the recovery rebate credit, and we already billed their returns. Congress has no idea of the nightmare they have created for tax preparers. They don't care that we have to deal with the mess - during the most critical part of filing season. I am glad I am closing in on retirement. The last several years have made me question why I continue to do tax returns at all!

BobKamman
Level 13

That's right.  They don't care about tax preparers.  They care about relief for 40 million Americans.  When the NHTSA issues a recall to repair a car that might injure or kill someone, they don't care about the mechanics.  They figure that's what they get paid to do.  

BobKamman
Level 13

The law requires IRS to recalculate the payment if it was based on 2019, once the 2020 return is processed and send a second payment if that amount is higher.  No paperwork needed.  Just reliance on IRS, which is known to make mistakes.  

parvitstax
Level 3

IRS Just posted instructions

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. For married taxpayers, you and your spouse can each exclude up to $10,200 of unemployment compensation. For example, if you were paid $20,000 of unemployment compensation and your spouse was paid $5,000, report $25,000 on line 7 and report $15,200 on line 8 as a negative amount (in parentheses).  The $15,200 excluded from income is $10,200 for you and all of the $5,000 paid to your spouse. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation. Use the Unemployment Compensation Exclusion Worksheet to figure your modified AGI and the amount you can exclude.

If you made contributions to a governmental unemployment compensation program or to a governmental paid family leave program and you aren't itemizing deductions, reduce the amount you report on line 7 by those contributions. If you are itemizing deductions, see the instructions on Form 1099-G.

Caution. Your state may issue separate Forms 1099-G for unemployment compensation received from the state and the additional $600 a week federal unemployment compensation related to coronavirus relief. Include all unemployment compensation received on line 7.

If you received an overpayment of unemployment compensation in 2020 and you repaid any of it in 2020, subtract the amount you repaid from the total amount you received. Enter the result on line 7. Also enter “Repaid” and the amount you repaid on the dotted line next to line 7. If, in 2020, you repaid more than $3,000 of unemployment compensation that you included in gross income in an earlier year, see Repayments in Pub. 525 for details on how to report the payment

 

** Basically you can report up to -$10,200 (negative) on 1040 Line 8 **

If you made $5,000 in unemployment you can only deduct $5,000 not $10,200.

parvitstax
Level 3

I unmarked this as the solution because IRS will be releasing an actual worksheet that will be incorporated into software soon. The only thing we can do is wait for these companies to update the forms. 

mc1966
Level 1

My client has total income of 150,300 which includes 11,600 of unemployment.  Why is proseries excluding10,200 of unemployment at income above 150k?

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qbteachmt
Level 15

"Why is proseries excluding10,200 of unemployment at income above 150k?"

Because the IRS just announced that change earlier this week, and Intuit just announced they are working on the updates.

https://proconnect.intuit.com/community/proseries-tax-news-updates/discussion/state-unemployment-rel...

 

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