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$10,200 Unemployment Benefits Tax Relief Bill

Connecto
Level 2

Proposed legislation in Congress would exclude up to $10,200 of unemployment benefits from Federal income tax for 2020.  Curious if other preparers are holding returns that they would otherwise file to wait and see if this becomes law.  Thanks!

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64 Comments 64
IRonMaN
Level 15

Nope, I'm putting them on the bus and waiving goodbye.


Ukraine - hang in there
TAXOH
Level 11
Level 11

I'm not holding them.

Just-Lisa-Now-
Level 15
Level 15

Im holding them for awhile, most people with UI owe so they have no issue waiting to see if may they'll owe less or even get a refund.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
dascpa
Level 10

Yesterday Maryland has a new law that says for 2020 and 2021 unemployment benefits are not taxed in Maryland (all? some? conflicting info). Within a few hours I had over 30 phone calls and emails from clients. We haven't even seen the law, no idea when the Comptroller will adjust tax returns and when ProSeries will ever adjust their software.

In the old days major tax law changed every 10-15 years and minor ones every 5. Now it changes daily and clients can't give ten seconds to figure it all out.

This job used to be fun.

garman22
Level 12
Level 12

Im holding unless otherwise directed by client. Most will wait they say. 

IRonMaN
Level 15

My office isn't big enough.  Hold pile for this.  Hold pile for that.  Hold pile for this and that.  So far my unemployment people haven't dug themselves into a hole and created balance dues.  I'm keeping track of those folks and if by some strange chance that the brain trusts in Washington want to do something retroactive, I'll go back and amend the returns.  And no Bob, it isn't to generate extra fees or screw my clients.  I rarely charge to prepare an amended return.   


Ukraine - hang in there
TAXOH
Level 11
Level 11

Most of my clients that had unemployment also had taxes withheld so most are getting refunds.  I will do like Jeff and amend if necessary also.  I too very rarely charge for an amendment unless it was for a return I didn't originally prepare.

Just-Lisa-Now-
Level 15
Level 15
CA didnt withhold for the weekly $600 federal portion here....so the majority are under withheld that I see.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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garman22
Level 12
Level 12

Wow, thats good of you @TAXOH @IRonMaN. I dont charge to amend if its my error (I know, shocking I make them). 😂 Otherwise its to discourage people from filing early and not having all their paperwork. 

sjrcpa
Level 15

unemployment benefits are not taxed in Maryland (all? some? conflicting info).

The press release said all unemployment is not taxed. The version of the bill I saw (not final, not signed off by proofreader, plenty of lines drawn through) seems to say there is an income phaseout


Ex-AllStar
awol1950
Level 1

The cutoff for the taxability of the unemployment is $150k.  I have not seen anything that talks about how that works.  Is it a cliff cutoff at $150k?  or phased out at some ratio?  no mention of single/married/hoh?

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qbteachmt
Level 15

"I have not seen anything that talks about how that works."

Did you click on the links I provided in this topic previously?

 

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SanBrunoTaxGuy
Level 3

Gotta wait for IRS guidance.  Put these projects aside and work on something else next few weeks.

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qbteachmt
Level 15

Bob posted the text here:

https://proconnect.intuit.com/community/tax-talk/discussion/here-is-text-of-unemployment-exclusion-a...

 

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SanBrunoTaxGuy
Level 3

Yes.  I am holding onto them.  Worth the wait.  I let my clients know they understand and appreciate it.  Makes me sound smart too.  ha.

DBlake
Level 2

So glad you waited. I had mine withheld upfront. I hope I can get it back?

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TheShyTaxLady
Level 2

Leaving it up to the client to make the decision to file now or hold. Most are saying they will wait a few weeks to avoid amending later.

DBlake
Level 2

Please help.

Single mom, my temp job just ended. I already filed my taxes & I had the Fed Withholding withheld in advance & I already filed my taxes. This is an additional $1,200 I can really use, my son's father passed away in 2019 & the struggle is real.

Will we be able to amend our 2020 taxes? I already got my refund.

Thank you kindly & God Bless

 

 

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qbteachmt
Level 15

@DBlake 

You seem to be lost on the internet.

You’ve come to a Peer User community for Intuit Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte , and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

Thanks.

 

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Just-Lisa-Now-
Level 15
Level 15

This is a group for tax professionals, not taxpayers preparing their own returns.

But once it does pass (its not a done deal yet), you would need to amend your return to exclude the unemployment income.   


Please visit the TurboTax Help site for DIY support, they may be able give you more details of how this will work for you..


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
DBlake
Level 2

thank you.

It did just pass. also, Im in FL.

Thank you for the quick response.

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SanBrunoTaxGuy
Level 3

If the bill passes, then amend it, you 'might' be able to get a Fed refund.  If you live in CA it also changes the bottom line which might qualify you for the CA EITC and the new $600 California Golden State Stimulus Payments.

 

Just-Lisa-Now-
Level 15
Level 15
CA already excludes UI, so will it really change CA?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
qbteachmt
Level 15

"CA already excludes UI, so will it really change CA?"

What about the small business grants? @sjrcpa posted this: "Their retroactive law also exempted assorted state and local COVID relief grants from MD tax."

That would affect a majority of my clients.

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SanBrunoTaxGuy
Level 3

Yes. CA EITC calculation will change.  Excluding the $10,200 EDD income on the federal side will change the CA EITC.

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Jdela80
Level 1

So will this help out people who barely went over the amount to quilify for the california stimulus 

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qbteachmt
Level 15

@Jdela80 

You seem to be lost on the internet.

You’ve come to a Peer User community for Intuit Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte Tax Preparation programs, and you may be looking for support as an individual taxpayer. Please visit the TurboTax Help site for support.

Thanks.

 

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DBlake
Level 2

Thanks, I'm in FLORIDA. It did "just" pass.

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qbteachmt
Level 15

@DBlake 

The people here are discussing various State and Fed bills that pass, because they are professional tax preparers, at work today here on the Internet, because they are working on their clients' tax returns for Fed as well as various States, using ProSeries Tax programs. That's what you found: an internet forum for users of ProSeries programs.

No one here can help you with your issue. TurboTax, a completely different set of Programs, has a better self-help community for you.

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garman22
Level 12
Level 12

@qbteachmt wrote:

@DBlake 

The people here are discussing various State and Fed bills that pass, because they are professional tax preparers, at work today here on the Internet, because they are working on their clients' tax returns for Fed as well as various States, using ProSeries Tax programs. That's what you found: an internet forum for users of ProSeries programs.

No one here can help you with your issue. TurboTax, a completely different set of Programs, has a better self-help community for you.


oh, a self preparer.....grrrrrr

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DBlake
Level 2

lol

garman22
Level 12
Level 12

where did you see that the 10200 exclusion pass?

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qbteachmt
Level 15

I understand we are waiting for the House to approve the new changes, then Biden needs to sign.

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qbteachmt
Level 15
SanBrunoTaxGuy
Level 3

It didn't "just pass" it needs House approval, just like how Trump wasn't "impeached twice".  People need to understand how the government works.

https://www.govtrack.us/congress/bills/117/s175

This is a good link to keep track.

LenaCal
Level 2

So, when it does pass, the IRS needs time to issue some guidance and re-design 1040 somehow.  Also, it would take time for Intuit to make changes to ProSeries.  

Anybody heard of IRS extending the deadline?  We should start a petition to extend it for at least one month...

DBlake
Level 2

Thank you for not being rude & I agree.

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Just-Lisa-Now-
Level 15
Level 15
Why couldnt we just make a negative entry on the Other Income line and deduct the excludable UI....no reprogramming needed!

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
SanBrunoTaxGuy
Level 3

Because there is a $150k income cap.  The software needs to factor this in.

https://youtu.be/wg96DkqwL6M

Follow this channel, no one got time to read during tax season.  Listen while you work.  Let the Youtubers do the research, you take credit.  🙂

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Just-Lisa-Now-
Level 15
Level 15

So it would be up to the preparer to recognize the income limit and apply the exclusion accordingly.


♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
SanBrunoTaxGuy
Level 3

I'd just let the software handles it.  With passive loss phase outs, all kinds of different AGI related issues that the $10,200 can trigger, just plugging the negative number in "Other Income" might not be the best way to do it.

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SanBrunoTaxGuy
Level 3

Also, this tax CPA got a lot of time of his hands during tax season to do this channel.  Make sure you follow it'll make your life much easier.  He also mentioned the $10,200 bill.

https://youtu.be/6gW_pHPxXxA

Because none of us got time for politics.

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Just-Lisa-Now-
Level 15
Level 15
a CPA with lots of free time this time of year, may not be the best source of info

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
SanBrunoTaxGuy
Level 3

Oh you don't know who this guy is then.  lol  1.2 million subs there is a chance the channel makes more than his practice.  This guy knows his stuff.

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qbteachmt
Level 15

"House Majority Leader Steny Hoyer said the House will vote Monday night on the rule laying out terms for the bill’s consideration, and the House will vote on Tuesday on the Senate-passed version of the bill."

 

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TAXGUYINMD
Level 1

"ClearValue Tax and affiliates and related parties do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Legal Disclosure: I’m not a financial advisor. The information contained in this video is for entertainment purposes only. Before investing, please consult a licensed professional. Any stock purchases I show on video should not be considered “investment recommendations”. I shall not be held liable for any losses you may incur for investing and trading in the stock market in attempt to mirror what I do. Unless investments are FDIC insured, they may decline in value and/or disappear entirely. Please be careful!"

 

Yeah, so this "CPA" guy you are getting all your advice isn't a cpy

 

SanBrunoTaxGuy
Level 3

Don't be bitter because another CPA knew more than you.  Learn from others and share what you can to help others.

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Very few clients are asking to hold returns, at least in my case... Anyone who is getting a refund wants to file immediately unless the rare case comes up where they made more then 2019 in hopes of qualifying for the stimulus. Unless they extend 4/15 again, I doubt they will have the proper laws and regulations in place prior to tax day for all the programs to catch up.. I'm just hoping we don't get another 3 month extension like last year, that was a nightmare. If not, unless all updates are available by 4/15, people will need to file with full income to meet the deadline overpaying, then amend for a credit which would be an odd situation. 100's of amendments here we come for all returns already filed.

qbteachmt
Level 15

I'm not sure what this means: "wants to file immediately unless the rare case comes up where they made more then 2019 in hopes of qualifying for the stimulus"

Another person on this forum made a similar comment, which reflected a confusion between the Earned Income Credit and the Stimulus, which is Recovery Rebate Credit.

The EITC has the 2019 lookback provision.

 

The Stimulus money does not.

Perhaps it would help to review what is really happening:

The funds were paid out as Advanced payment against a projection. The projection used 2018 or 2019 tax returns. But 2020 is the Actuals. You use the 2020 return to reconcile what a person is entitled to, against what they got.

If the person is not a dependent in 2020, then they would be entitled to the payment/credit as individual filers. That doesn't mean "not being claimed." It means "no longer qualifies as a dependent."

You might want to bookmark these links and read the IRS guidance.

Interactive wizards portal for determining dependency:

https://www.irs.gov/help/ita

And:

https://www.irs.gov/newsroom/economic-impact-payment-information-center-topic-a-eip-eligibility

https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility

One for each EIP.

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