CA 540 - Unemployment exclusion

Forum|Forum|5 years ago
March 14, 2021
12 replies
52 views

Having challenges applying the unemployment exclusion in CA Form 540 and hope you can shed some light.

The Federal Adjusted Gross Income already excludes $10,200 in unemployment benefits. This federal AGI carries over to Line 13 of CA Form 540. Line 14 of 540 excludes the entire unemployment amount. So line 17 CA Adjusted Gross Income reflects the unemployment benefits deducted twice ----- once from Schedule 1 of form 1040 and again Line 14 California Adjustments of Form 540.

How can I reflect Line 17 CA Adjusted Gross Income to only reduce the unemployment benefits once?

ProSeries Basic

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Best answer by athaureaux6

so.... if we did this, we don't have to wait on a software update on the federal returns????

I believe that is what the update it is going to do. Just make sure and remember a couple of things if you decide it to do it manually, it is up to 10200 per taxpayer, make sure you do not deduct manually 10200 if the unemployment amount is less than that, (a couple of people already did it in Turbo tax) and asked me to check it) and make sure for people making more than 150k it could cause a problem. That is why I would prefer to wait until next week to see what the programmers do. For now, do not send any amended yet although I believe an amended will have to be done. It is too much calculations in some cases for the IRS to fix this alone. Just my opinion. Thank you everybody.

George4Tacks

Level 15

Just wait for the software update.

You need to make a Schedule CA adjustment for the adjustment you made on the federal to adjust the UI. In other words, why not wait for the software to do it for you in a much easier and better manner.

Answers are easy. Questions are hard!

J

Jacque1

Level 2

Do you have any idea how long it will take for Lacerte to update program--has IRS even issued guidance yet?

George4Tacks

Level 15

IRS has issued guidance and my guess is that @Cookie2021 followed it to get to this problem. I am very hopeful that Lacerte will update on Thursday, but I am not holding my breath. I think the clients that are affected will just be happy to see their total tax go down and should be willing to wait a week or two for the software to update.

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemployment-compensation but don't try this without training wheels.

Answers are easy. Questions are hard!