Level 6

Question

$10,200 Stimulus 3 Unemployment Exclusion

Forum|Forum|5 years ago
March 11, 2021
18 replies
35 views

How would we report this on a client's tax return? Where would it be entered?

ProSeries Professional

This topic has been closed for replies.

TAXOH

Level 10

Nobody knows yet how it will be handled.

P

parvitstaxAuthor

Level 6

So should we just wait to file clients with unemployment or just file it and perform amendments later? I would like to not charge my clients unnecessary fees

TAXOH

Level 10

Some people are waiting and some people are filing now and if necessary will amend later. It's up to you how you want to handle it with your clients.

L

Linc

Level 2

need to know how to treat the 10200 unemployment deduction on unemployment

U

UNINTENDEDACTOR

Level 3

yesterday, I read once the bill is signed then the IRS and software companies make their system changes for tax preparers. Following our current events I believe tax preparers understand the options they can offer their clients at this time either wait for the changes or file an amendment.

D

DezTaxHooks

Level 2

Waiting on the IRS.

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parvitstaxAuthor

Level 6

Hopefully they have a rebate form for people whose 2019 prevents them from getting $1400 but their 2020 would qualify them. Because of the $10,200 exclusion I have a few clients waiting to qualify. Their 2019s are above the AGI limit but 2020 is not 😞

M

mm1

Level 5

I love how the White House person said "well you may have to amend your tax return". Most all of my clients with unemployment filed early trying to get the recovery rebate credit, and we already billed their returns. Congress has no idea of the nightmare they have created for tax preparers. They don't care that we have to deal with the mess - during the most critical part of filing season. I am glad I am closing in on retirement. The last several years have made me question why I continue to do tax returns at all!

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parvitstaxAuthor

Level 6

IRS Just posted instructions

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

** Basically you can report up to -$10,200 (negative) on 1040 Line 8 **

If you made $5,000 in unemployment you can only deduct $5,000 not $10,200.

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parvitstaxAuthor

Level 6

I unmarked this as the solution because IRS will be releasing an actual worksheet that will be incorporated into software soon. The only thing we can do is wait for these companies to update the forms.

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