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Federal Unemployment deduction of 10,200.00

Level 2

How is ProSeries handling the new 10,200.00 Federal unemployment deduction?

5 Replies 5
Level 10
Level 10

They can't do anything until the IRS says how they plan on handling it.

Level 3

There is a workaround.  On the "Other" income line of 1040, you can use UCE for the input language and then subtract up to either the amount of the unemployment received by each taxpayer or the allowed limit whichever is less. See Schedule 1 attachment to 1040.  In ProSeries Pro it is Schedule 1, Line 8 and the "Other Income Statement", using Line 24 of that statement. Type in UCE and use a negative or - (minus) in front of the number you input.  I.E.  1099-G for 2020 is $8,250.00.  So, using 1099-G worksheet, input the amount received, then go to Schedule 1, Line 8, open the "Other Income Statement" from Line 8, go to line 24, (which is blank and where you input the UCE and then the amount of the exclusion up to either the amount of unemployment received or the limit)    UCE       $-8,250.00;  and when you revert back to 1040 you will see the deduction show up reducing the unemployment previously entered. This is what has worked so far for me. I initially considered showing the unemployment as being an input as "Amount Repaid" on the Form 1099-G worksheet for entry/input, thereby reducing the taxable amount to ZERO but wasn't comfortable with that "workaround", knowing that the possibility existed into the future of a CP-2000 Notice proposing changes to the original tax return based on my "workaround".  I found the IRS Alert and Instructions and in retrospect this makes the most sense and is the best clarification and way to address the issue until the software can be updated to reflect the changes.  You have a choice to use the workaround or wait and see if the software updates before the filing deadline.  You can still compute and advise of the expected refund, but in the absence of using the workaround you should not file the return hoping the Service will make adjustments when processing.  I pray that saner minds will prevail and give the citizenry and community an extension to allow a more orderly process to insue.  We were 75% through the last season when COVID reared up, and they gave us an automatic 2 months.  Now with the CARES act, the 3rd Stimulus, the 8915-E for 401-K withdrawals, the Unemployment snafu and opening later than ever before, all of us desperately need some relief.  Not to be lazy or grab a mini-vacation, WE just need to be able to take a moment in time to play "catchup".  Hang in, hang on and BTW: "Strong Message Follows". 

tax lady
Level 2

I tried this same work around.  Worked great for the federal return.. Problem with CA who does not tax the unemployment at all.  Trying to find a way to fix the CA return so I can e file both .  Grrrr.

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Level 1

Make an adjustment on the 540 (CA) and add back in the UCE, it will make the CA AGI correct.

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