What about States?

[TaxGuyBill]

Intuit just released this nifty article about the Unemployment, and says "ProSeries will make an automatic adjustment to federal returns that qualify for the exclusion."

https://proconnect.intuit.com/community/form-1099-g/help/generating-the-unemployment-compensation-ex...

That is great ... but what is going to happen to the State returns?  I wouldn't think all of the States have things sorted out yet.

I don't know about other States, but my State starts with Federal AGI and still taxes unemployment.  As far as I know, the State has not  released an updated form to reflect this add-back.  Is ProSeries just going to let it flow to the State let the State be wrong?

And what about States that start with Federal AGI or Federal "taxable income" that already have a subtraction for Unemployment?  Is ProSeries going to un-do that subtraction?

[IRonMaN]

I've been manually making the federal adjustment and turning around and making a manual adjustment on MN.  I'm guessing the first step is going to now be automatic but the second step is still going to be manual.  But I guess we'll find out in a couple of days.  For the record, the first stab at MN conforming to the feds bombed, but it sounds like they are going to try again.  Maybe after a few special sessions it might pass, but for now I assume MN is going to be nonconforming.  

[TaxGuyBill]

Where have you been making the adjustment on MN?

I'm just worried that Intuit is going to add the "automatic" change to the Federal, but not correctly deal with the State.

If MN does retroactively change it to non-taxable, the Department of Revenue will most likely just auto-fix things.  Well, hopefully, without an add-back on M1NC it may be more difficult for them to do that.

[PATAX]

Thanks for the update Tax Guy Bill

[BobKamman]

And what about territories and possessions?  I assume everyone has been following the "Mirror Code" provisions of the new laws that involve rebates, EIC, and CTC.  Come on, Intuit.  American Samoa wants answers, and they want them now!  Not to mention Puerto Rico and the Marianas.  

[IRonMaN]

Bill - I have been using form M1NC - line 22 - other adjustments.

[TaxGuyBill]

That makes sense.  🙂

I'm waiting until next week to file any returns with unemployment, just to let the dust settle a bit.

[PATAX]

I agree with you tax guy Bill👍

[Dreams]

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@TaxGuyBill wrote:

Intuit just released this nifty article about the Unemployment, and says "ProSeries will make an automatic adjustment to federal returns that qualify for the exclusion."

https://proconnect.intuit.com/community/form-1099-g/help/generating-the-unemployment-compensation-ex...

http://yourbooksontime.com/tax-advisors personal tax advisor near me

That is great ... but what is going to happen to the State returns?  I wouldn't think all of the States have things sorted out yet.

I don't know about other States, but my State starts with Federal AGI and still taxes unemployment.  As far as I know, the State has not  released an updated form to reflect this add-back.  Is ProSeries just going to let it flow to the State let the State be wrong?

And what about States that start with Federal AGI or Federal "taxable income" that already have a subtraction for Unemployment?  Is ProSeries going to un-do that subtraction?

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How did you solve the issue?

[The_AntiTax_Man]

State of Iowa 

IA1040, line 12 instructions:

Enter the amount of unemployment compensation benefits that was taxable on your federal return with the following modification:

• Do not include unemployment compensation and sickness insurance benefits paid by the Railroad Retirement Board.

So, follow the IA1040 instructions?  Or await further IDOR guidance?

[The_AntiTax_Man]

Wisconsin guidance:  DOR Unemployment Compensation on 2020 Wisconsin Income Tax Returns

Unemployment Compensation on 2020 Wisconsin Income Tax Returns

The federal American Rescue Plan Act of 2021 (Public Law 117-2), signed into law on March 11, 2021, allows an exclusion of up to $10,200 of unemployment compensation (UC) on the 2020 federal income tax return. This federal law does not apply for Wisconsin tax purposes. This article will be replaced if Wisconsin law changes.

• If you already filed your 2020 Wisconsin income tax return, and are amending your federal return solely to exclude UC, do NOT amend your 2020 Wisconsin return because there is no change to the amount of taxable income or tax due to Wisconsin.
  
  
• If you have not filed your 2020 Wisconsin return, you must add the amount of UC excluded on your federal return on lines 2h, 2i, or 2j of Wisconsin Schedule I. This schedule determines the federal adjusted gross income using the Internal Revenue Code adopted for Wisconsin.

Wisconsin provides a subtraction from income for UC. After including all of your UC in federal adjusted gross income on your Wisconsin return, determine if you are eligible for the Wisconsin subtraction by completing the worksheet on page 2 of the Wisconsin 2020 Schedule SB instructions.

Applicable Laws and Rules

This document provides statements or interpretations of ch. 71, Wis. Stats. enacted as of March 17, 2021. Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date that is contrary to the information in this document is superseded by this document, pursuant to sec. 73.16(2)(a), Wis. Stats.

[lrhenry04]

COLORADO: Colorado taxes all unemployment benefits.

When filling out their 2020 Colorado income tax return, you must add back the amount of any unemployment compensation excluded from your federal taxable income under the American Rescue Plan Act. This amount should be added to Line 6 (other additions) of your Colorado return, along with any other addbacks required by law. In the explanation field, enter "Unemployment Compensation.

ILLINOIS: From the IDOR website

The Illinois Department of Revenue (IDOR) is currently reviewing the federally enacted American Rescue Plan Act of 2021, that includes a retroactive provision making the first $10,200 per taxpayer of 2020 unemployment benefits nontaxable for individuals with an Adjusted Gross Income of less than $150,000. 

IDOR strongly urges taxpayers who fall in this category to not file returns related to these changes at this time. Additionally, taxpayers who received unemployment benefits last year and have already filed their 2020 tax return should not file an amended return at this time.

MISSOURI: I can't find any information currently.

[TaxGuyBill]

Drake has a nice list, but the main question is what is ProSeries going to do with the adjustments?

https://kb.drakesoftware.com/Site/Browse/17148/State-Conformity-to-ARP-Unemployment-Compensation

[The_AntiTax_Man]

@IntuitCharlene  can you answer this for @TaxGuyBill ?

"I'm only a Level 5, but I did stay at a Holiday Inn Express last night!"

[IRonMaN]

An alert popped up in the software this morning saying "manual adjustments may be required".  So depending on which of the 54 states you live in, you are on your own.

[TaxGuyBill]

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@IRonMaN wrote:

An alert popped up in the software this morning saying "manual adjustments may be required".  So depending on which of the 54 states you live in, you are on your own.

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While that would be fine for us, I wouldn't think that Intuit will make TurboTaxer's do manual adjustments.  I would think they would eventually set it up as automatic, which likely means it would eventually become automatic in ProSeries as well.  Then we would have a double-adjustment.