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unemployment exclusion and social security

taxinsanity
Level 2

Not real clear on how the calculation is being made but my social security recipients are being hit in the calculation of taxable social security with the amount of their unemployment.  Is that correct or is something wrong in the programs calculation of this.

It does not calculate it the same if it is just removed it or shown as repaid.  Just not sure if Proseries is calculating it correctly and it is an error or is it truly not coming off that calculation of the taxable portion of that social security.

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9 Replies 9
NU
Level 3

 There are  a few other posts on this stating that taxable SS is based on the regular Unemployment amount.    From a prior reply by  @TaxGuyBill :

It is not a bug, it is correct.

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
HillBilly
Level 3

Thank you for posting the clarity for calculating the taxiation of Social Security.  You are right on point!

Have a great day!

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BobKamman
Level 14

I’m beginning to wonder if IRS, trying to read the minds of Congress, screwed that one up also.

The recently-enacted amendment to Section 85 (making unemployment taxable) says:

“-For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined--
(A) after application of sections 86, 135, 137, 219, 221,
222, and 469, . . .”

But paragraph 1 just says,

“if the adjusted gross income of the taxpayer for such taxable year is less than $150,000, the gross income of such taxpayer shall not include so much of the unemployment compensation received by such taxpayer (or, in the case of a joint return, received by each spouse) as does not exceed $10,200.”

So that list of items that need to be “applied” only relates to the computation of whether the $150,000 limit has been exceeded.

It doesn’t say to make that adjustment for any other purpose, like figuring actual AGI.

On the other hand, the law also amended Code Section 86, which tells you how to compute the taxable part of Social Security.  That code section doesn't take into account the deductions for student loan interest and tuition, which also depend on AGI.  Now, it doesn't take into account the adjustment from excluding unemployment.  So maybe the program is right, but the Worksheet in the 1040 instructions has not been changed, so people doing their own return may not get the correct answer.  

taxinsanity
Level 2

and if you follow the instructions of:

Combine the amounts from:
Form 1040 or 1040-SR, lines 1, 2b, 3b, 4b, 5b, 7; and Schedule 1 (Form 1040), line 9

It in theory should not be added....

 

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Taxman19
Level 1

It appears that Sec. 86, in determining the amount of taxable SS benefits, provides that modified AGI is determined without regard to a number of other Code sections, including section 85(c), which is the $10,200 UC exclusion.  Therefore, the simple reference in TT SS benefit worksheet to include in Line 3 the amount from Schedule 1, Line 9 is incorrect, since Schedule 1, Line 9 is after the UC exclusion.  Code Sec. 86 provides that the Sec. 85(c) exclusion should be ignored.

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qbteachmt
Level 15

@Taxman19 

"TT SS?"

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.

 

*******************************
"Level Up" is a gaming function, not a real life function.
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emmat92
Level 1

So I received SS no unemployment.

My husband received unemployment over $10,200.

We file jointly.  Why would his unemployment affect my SS taxable amount?

 

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IRonMaN
Level 15

But that is beauty of being married ---------- what's yours is his and what's his is yours.

ACME Taxes, Tatoos, Tires and Tomatoes (I had to get rid of the turtles - they kept running away)
qbteachmt
Level 15

@emmat92 

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.

 

*******************************
"Level Up" is a gaming function, not a real life function.
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