ProSeries 2020 Tax Year changes due to American Rescue Plan

[Cherylle]

Has anyone heard from Intuit regarding updating ProSeries for the changes just passed for TY 2020? Also are they planning training videos for ProSeries program/form changes?

Looks like another crazy tax filing season is in the making for all of us. Already will need to file amended returns for some clients who have filed.

[TaxGuyBill]

ProSeries can't update anything until the IRS gives some guidance.

We don't even know if we will need to amend.  It is POSSIBLE the IRS will just automatically fix things.

But we need to wait until the IRS give guidance, and we just need to be patient.  It could be several weeks.

[Just-Lisa-Now-]

This should show up on IRS.gov soon...looks like an adjustment on the Other Income line (Sch 1 Line8  with the UCE description (Unemployment Compensation Exclusion). 

Those that already filed, hold off on amended returns, IRS has not issued any guidance yet for those.

New Exclusion of up to $10,200 of Unemployment Compensation

If your modified adjusted gross 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 in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200. If you are married, each spouse receiving unemployment compensation doesn’t have to pay tax on unemployment compensation of up to $10,200. Amounts over $10,200 for each individual are still taxable. If your modified AGI is $150,000 or more, you can’t exclude any unemployment compensation.

The exclusion should be reported separately from your unemployment compensation. See the updated instructions and the Unemployment Compensation Exclusion Worksheet to figure your exclusion and the amount to enter on Schedule 1, lines 7 and 8.

The instructions for Schedule 1 (Form 1040), line 7, Unemployment Compensation, are updated to read as follows.

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.

[JCTaxAdv]

Have others noticed that the descriptive instructions that the IRS has tentatively printed for the Unemployment Compensation Exclusion Worksheet - Schedule 1, line 8, seems odd (repetitive, duplicate addition) at steps 2 & 3? https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym...

There seems no substitute for an actual UC Exclusion Worksheet for software programmers and tax preparers to properly and actually step through the new process for exclusion. Hope Intuit may be able to offer some kind of visualization/examples once the updates are ready to present. Sitting tight and waiting for now.

[Just-Lisa-Now-]

Im sure Intuit is working on a UCE worksheet, the majority of returns wont need it, we can just make the adjustment ourselves....theres also going to be an APTC payback adjustment needed for that new law, so returns I have that include both UI and APTC payback, Im going to hold onto until we see some software changes or hear that IRS will make the APTC adjustment themselves and issue refunds automatically.

[EDauerman]

Hi,

Any word on whether or not states are following, such as New York for excluding the unemployment?  I haven't been able to find out yet.  Curious. Will it otherwise be a IT 558 form add back?

For Federal, I also agree that the UCE worksheet may not be necessary as the changes will flow to Schedule 1, but will wait for the final guidance from the IRS.

It does help for obtaining estimates for clients to know how to circumvent the worksheet for now.

[dkh]

@Just-Lisa-Now-  If I'm understanding you correctly, you are preparing and efiling returns with the Sched 1 Line 8 adjustment without an update from ProSeries that would include the worksheet ?     

[Just-Lisa-Now-]

Yes, for those that are nowhere near the 150K and dont have any other things that are affected by AGI/MAGI.

[dkh]

Thanks for the reply.   I have several I can get out the door now if I don't have to wait on the worksheet.

[TaxGuyBill]

Personally, I would recommend waiting to file a State return until you hear how your State is going to handle the Federal change.  Unless the State is going to match things exactly with Federal (both before and after this new law), it would need to be added back to State.

[dkh]

Thanks @TaxGuyBill   - yes, I was only going to efile federal.  Most clients don't care about their state bcause the refund is small or have balances due because of the unemployment.   I don't like splitting the efile process but I have a few that are chomping at the bit for that federal refund. I want to get those out of here.  Free the phone lines up for some other annoying question ...lol

[EDauerman]

Hi, sorry for not responding sooner I was actually preparing some returns and picking them up. Here is my advice, although it may or may not be true, I heard the IRS cannot process returns this week until the stimulus payments have been completed. I will try to Provide my clients the estimate, having the sign off on the draft forms, and then I will submit it later. This way at least I know it’s ready to go. I also understand for New York that they probably will be taxing the stimulus, but I am waiting because again things change week to week. So I am advising my clients that we will most likely be filing their federal on time and we will wait and determine if we can file the state or do a extension. This way they are happy because I know that everything is on its way once this whole thing has been resolved. Hope this helps.

[malloytax]

Need to hear from Pro Series; why no guidance at all ? Should we follow IRS instruction issued Friday or wait for a software change ?

[malloytax]

Also need guidance on forgiveness of excess premium tax credit ? What is forthcoming from Pro Series ?

[EDauerman]

Check the IRS site; it is not ProSeries responsibility to give updates to you on tax changes.  They have indicated they are in the process of working with the IRS on their website.

Here's the IRS latest link.

https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemploym...

[malloytax]

I can read, but want to know what programing changes are anticipated.

[TetonTaxService]

I think we all want to know if the Proseries software is going to be updated to accommodate this.  They don't need to educate us on the laws, but when we purchase professional software, a notice from them on how the software will handle the changes and when the changes will be made, would be helpful.

[gparch1]

Drake is releasing their worksheet for the unemployment worksheet today.  Yet another reason to switch from ProSeries Professional next tax season.

[JCTaxAdv]

I have brought in an additional, secondary tax program to run in parallel with ProSeries for my tax practice this year, so that I can be poised to make a switch next year if I deem it necessary. Really, I think it is the IRS more so than ProSeries that is in a bit of turmoil right now – or at least they are in a pickle. In many ways, I could do without another extended filing season like last year, and clearly that is the last thing the IRS wants again. But it is not just regulatory processes and the efficient administration of tax procedures; this also involves broader political pressures and the larger needs of the society as a whole. It is largely the silence from the IRS that has me concerned right now. I think the IRS wants/wanted no part in delaying the filing deadline(s). The Service certainly was not going to extend the deadline for returns having a March 15 filing due date. Maybe the IRS has partially been biding its time. Now that March 15th has passed, I predict an uptick in more and better communication from the IRS, and think it now becomes more likely for the Service to acquiesce on extending the April 15th deadline (unless the IRS higher-ups are really intent on digging their heels in).

[christijoguhn]

I still am in such awe that this is even happening to us...  mid-season...   

[JCTaxAdv]

I am reminded of an old commercial from Chipshot.com. The IRS is the golfer determined to thread the needle in a tricky situation. The rest of us represent the friend in the fairway urging the stubborn golfer to just chip it out (just extend the deadline).

https://www.youtube.com/watch?v=J11XRUPu1T8

[gparch1]

There are many defects in the program.  One for example which I reported over a month ago through the community forum which still remains to be fixed is how ProSeries Professional handles the EIC worksheet and incorrectly does the CT-EITC forms.  No, I don't think it is just the turmoil from the recent legislation.

[OakmontBob]

a word of caution - It was recommended that we make a digital copy of all impacted UC returns that have been filed already - then lock them so no changes would automatically occur when opened - (in case we need to do amendments). Well, low and behold, in the process of "locking" all of our impacted returns - proseries automatically updated the files to correct the UCE issues. So now our returns already have the "corrected figures?" - don't know how we'll handle these if we need to file our own 1040X. 

[Just-Lisa-Now-]

You needed to lock them down prior to the update or it was too late...the IRS says they will be correcting returns for the UI exclusion, you shouldnt need to do any amending for that.