Lion EA Posted March 15, 2021 Report Share Posted March 15, 2021 I'm not sure the IRS has released that yet. 2 1 Quote Link to comment Share on other sites More sharing options...
TRIPLEMMM Posted March 15, 2021 Report Share Posted March 15, 2021 How can i properly do the new unemployment 10k law? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 15, 2021 Report Share Posted March 15, 2021 Use the procedures in this thread or wait for your software to update. 1 Quote Link to comment Share on other sites More sharing options...
Possi Posted March 15, 2021 Report Share Posted March 15, 2021 Here's an issue with reducing "other income" by the unemployment reduction... Many states, mine included, already do not tax unemployment. If I reduce my AGI by any other means than negating it as unemployment, (on the unemployment LINE), I will create a double-dip on the state requiring me to adjust the state to add it back to my AGI. I need to call the WAAAAAmbulence 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 15, 2021 Report Share Posted March 15, 2021 Drake is updating their program tomorrow with a supporting worksheet to calculate the exclusion etc Quote Link to comment Share on other sites More sharing options...
Possi Posted March 15, 2021 Report Share Posted March 15, 2021 1 minute ago, cbslee said: Drake is updating their program tomorrow with a supporting worksheet to calculate the exclusion etc We better watch these states, everybody. Don't double dip! VA is very slow to act on anything. 2 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 15, 2021 Report Share Posted March 15, 2021 I agree with Possi. Let's wait for the update to be properly added to the software. 2 Quote Link to comment Share on other sites More sharing options...
Possi Posted March 15, 2021 Report Share Posted March 15, 2021 Just now, Pacun said: I thought VA was ahead of everybody and not taxing unemployment from the very beginning. They will never figure out this rat's nest. Like I said just the other day, "Hold my beer and watch THIS!" LOL 4 Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 15, 2021 Report Share Posted March 15, 2021 You are too fast... lol. I didn't read your previous post before posting... then I corrected it but you drew faster. 3 Quote Link to comment Share on other sites More sharing options...
Randall Posted March 15, 2021 Report Share Posted March 15, 2021 I will wait for the software update. But my state Ky does tax it. And Ohio too (I do a few of them since I'm close to the border). So I guess I'll have to wait on the states. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted March 15, 2021 Report Share Posted March 15, 2021 6 hours ago, M7047 said: Where is the "Unemployment Compensation Exclusion Worksheet – Schedule 1, Line 8" my software is up to date, but I don't see this anywhere? Has not been created yet. I think the IRS just released the form and instructions to the software community on Friday. Tom Modesto, CA 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 15, 2021 Report Share Posted March 15, 2021 I can't find the worksheet, but here are the instructions: "Line 7 Unemployment Compensation You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you in 2020. Report this amount on line 7. Caution. If the amount reported in box 1 of your Form(s) 1099-G is incorrect, report on line 7 only the actual amount of unemployment compensation paid to you in 2020. Note. If your modified adjusted income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021 excludes from income up to $10,200 of unemployment compensation paid to you in 2020. For married taxpayers, you and your spouse can each exclude up to $10,200 of unemployment compensation. For example, if you were paid $20,000 of unemployment compensation and your spouse was paid $5,000, report $25,000 on line 7 and report $15,200 on line 8 as a negative amount (in parentheses). The $15,200 excluded from income is $10,200 for you and all of the $5,000 paid to your spouse. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation. Use the Unemployment Compensation Exclusion Worksheet to figure your modified AGI and the amount you can exclude. If you made contributions to a governmental unemployment compensation program or to a governmental paid family leave program and you aren't itemizing deductions, reduce the amount you report on line 7 by those contributions. If you are itemizing deductions, see the instructions on Form 1099-G. Caution. Your state may issue separate Forms 1099-G for unemployment compensation received from the state and the additional $600 a week federal unemployment compensation related to coronavirus relief. Include all unemployment compensation received on line 7. If you received an overpayment of unemployment compensation in 2020 and you repaid any of it in 2020, subtract the amount you repaid from the total amount you received. Enter the result on line 7. Also enter “Repaid” and the amount you repaid on the dotted line next to line 7. If, in 2020, you repaid more than $3,000 of unemployment compensation that you included in gross income in an earlier year, see Repayments in Pub. 525 for details on how to report the payment. Tip. If you received unemployment compensation in 2020, your state may issue an electronic Form 1099-G instead of it being mailed to you. Check your state's unemployment compensation website for more information. "Unemployment Compensation Exclusion Worksheet – Schedule 1, Line 8 Enter the total of lines 1 through 7 of Form 1040 and Schedule 1, lines 1 through 7. Include the full amount of unemployment compensation you received in 2020 on Schedule 1, line 7. Use the line 8 instructions to determine the amount to include on Schedule 1, line 8 and enter here. Do not reduce this amount by the amount of unemployment compensation you may be able to exclude. Add lines 1 and 2. Enter the total of line 10b of Form 1040 and Schedule 1, lines 10 through 21. Subtract line 4 from line 3. This is your modified adjusted gross income. Is the amount on line 5 $150,000 or more? [ ]Yes. Stop You can’t exclude any of your employment compensation [ ]No. Go to line 7 Enter the amount of unemployment compensation paid to you in 2020. Don’t enter more than $10,200 If married filing jointly, enter the amount of unemployment compensation paid to your spouse in 2020. Don’t enter more than $10,200 Add lines 7 and 8 and enter the amount here. This is the amount of unemployment compensation excluded from your income. Subtract line 9 from line 2 and enter the amount on Schedule 1, line 8. If the result is less than zero, enter it in parentheses. On the dotted line next to Schedule 1, line 8, enter “UCE” and show the amount of unemployment compensation exclusion in parentheses on the dotted line. Complete the rest of Schedule 1 and Form 1040, 1040-SR, or 1040-NR." Quote Link to comment Share on other sites More sharing options...
TexTaxToo Posted March 15, 2021 Report Share Posted March 15, 2021 This worksheet was provided by the IRS for paper returns. If you are using software, you should wait: Quote The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance. Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 15, 2021 Report Share Posted March 15, 2021 It's really interesting, if you analyze these instructions the calculation of MAGI excludes other income which means that lines 1 thru 8 of Part I Schedule 1 are not included, i.e., pass thru income and Schedule C, E & F income and notably Unemployment Benefits from Box 1, then that subtotal is reduced by all of the adjustments lines 10 thru 21 on PartII of Schedule ! It's a very generous calculation. Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted March 16, 2021 Report Share Posted March 16, 2021 Just off the top of my head does anyone know where they will make us put it back in calculation of MAGI? I saw a list somewhere but can't find it now. Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted March 16, 2021 Report Share Posted March 16, 2021 Va only subtracts out what is taxable unemployment not the whole thing, at least thats what they told me. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 16, 2021 Report Share Posted March 16, 2021 11 minutes ago, TAXMAN said: Just off the top of my head does anyone know where they will make us put it back in calculation of MAGI? I saw a list somewhere but can't find it now. Maybe the post by TexTaxToo on pg 1 in this topic is what you remember? I think it's the 5th post down? Quote Link to comment Share on other sites More sharing options...
Tony Vicale Posted March 16, 2021 Report Share Posted March 16, 2021 Any idea when ATX will roll out the update to capture the UI exclusion? If we were to file a paper return you insert the excluded amount as a negative number on line 8 of Sch 1? Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 16, 2021 Report Share Posted March 16, 2021 I wouldn't think about paper filing even if it takes a month for the update. 1 Quote Link to comment Share on other sites More sharing options...
TaxCPANY Posted March 16, 2021 Report Share Posted March 16, 2021 E-file treatment of UI is the subject of this (Tuesday) afternoon's "production call" conference of IRS MeF software developers, transmitters AND states; so I'd anticipate ATX and others' rollouts to ensue shortly afterwards. Note too that this topic was announced a week ago; its treatment has been in the works a good while since the legislation emerged. 3 1 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 16, 2021 Report Share Posted March 16, 2021 17 hours ago, cbslee said: It's really interesting, if you analyze these instructions the calculation of MAGI excludes other income which means that lines 1 thru 8 of Part I Schedule 1 are not included, i.e., pass thru income and Schedule C, E & F income and notably Unemployment Benefits from Box 1, then that subtotal is reduced by all of the adjustments lines 10 thru 21 on PartII of Schedule ! It's a very generous calculation. Drake has updated their software with the UCE worksheet and my understanding is kaput! 1 Quote Link to comment Share on other sites More sharing options...
TaxCPANY Posted March 16, 2021 Report Share Posted March 16, 2021 So the IRS wants the FULL amount of UI paid on Line 7 of Schedule 1, matching the 1099-G, and the exclusion amount showing with "UCE" on Line 8. As for the effects on AGI and how to adjust that -- e.g. Forms 8962, 8917, whether the taxpayer's AGI is 150K -- which, by the way, is a CLIFF and not a phase-in -- IRS is scrambling to provide guidance "in the next day or two, give or take two days." Today's conferees also heard the IRS request us not to amend as it was considering adjusting already-filed returns itself -- to which proposal voices were raised: how would DIYers, states, and even we preparers know what the revised AGI had become? These and other hot, current issues receive postings on one of IRS' sub-pages which I cannot find and copied the wrong address for, which it sounds like we should be paying very close attention to, something about "form changes/post-release" which informally was referred to among the conferees as the IRS' "product pages." Quote Link to comment Share on other sites More sharing options...
Possi Posted March 16, 2021 Report Share Posted March 16, 2021 20 hours ago, TAXMAN said: Va only subtracts out what is taxable unemployment not the whole thing, at least thats what they told me. Yes, but it has its own line. It is specifically subtracted as Unemployment. So, unless the federal adjustment is specifically "unemployment" which has already been deducted from VA.... in other words, if the new adjustment comes off the taxable income as any other kind of adjustment, VA and states like it, may not identify that federal adjustment as unemployment... which was already adjusted off the state. Maybe I'm over-thinking this. 1 Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted March 16, 2021 Report Share Posted March 16, 2021 I see the light in what you are saying. I guess we will all be watching to see what various states handle this rats' nest. I also do not think federal should be adjusting returns since most states start with either FAGI or FTI and have a time frame in which to make adjustments. I looked at one of mine, what amess it makes out of EIC when you reduce the income and then the state follows that. oh darn forgot to look at my child care credit now that AGI went down. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted March 16, 2021 Report Share Posted March 16, 2021 54 minutes ago, Possi said: Yes, but it has its own line. It is specifically subtracted as Unemployment. So, unless the federal adjustment is specifically "unemployment" which has already been deducted from VA.... in other words, if the new adjustment comes off the taxable income as any other kind of adjustment, VA and states like it, may not identify that federal adjustment as unemployment... which was already adjusted off the state. Maybe I'm over-thinking this. You aren't overthinking it. That is exactly what is currently happening on the DE returns in Drake at the moment. DE starts with Fed AGI and makes modifications, so since DE decided to make UI N/T for 2020 I'm having to override the DE subtraction to be -0- if UI is N/T in its entirety on the Federal, or to override so that the DE subtraction is the amount over $10,200 that is still taxed on the Federal return. 1 Quote Link to comment Share on other sites More sharing options...
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