Because that is the way the law says to do it:
(courtesy of TGB, Jensen, Bob and whoever else I missed).
The calculation for taxable Social Security (and about 6 other things) still use the FULL amount of unemployment. The $10,200 exclusion does NOT apply to those calculations.
These are the items that still use the full amount (thanks to "Judy" on another forum that I'm copy-and-pasting this):
- Taxable amount of social security
- Exclusion for US savings bond interest used for higher education
- Exclusion for employer-provided adoption assistance
- Limit on deductible IRA contributions by plan participants
- Limit on student loan interest deduction
- Limit on deduction for tuition and fees
- Limit on rental real estate exception to passive activity loss rules
For code-heads, these are Conformity Amendments for MAGI under Sec. 9042(b) of the ARP Act.
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