How is the 10,200 Unemployment Tax Waiver handled in Proseries 1040?

[Dave Kropp]

Is their going to be an update to incorporate the new tax waiver?

[Just-Lisa-Now-]

Of course, once IRS has decided how it will be dealt with and the software companies are given instructions for what needs to be changed in the program.

https://proconnect.intuit.com/community/proseries-tax-news-updates/discussion/american-rescue-plan-u...

[wallacedk]

Do we have to wait for IRS guidance on the non taxable unemployment benefits?  Or program updates.  Or can we do the adjustment manually on the 1099-G form?

[Just-Lisa-Now-]

we need to wait for guidance, its going to affect AGI and MAGI and have a domino affect on some returns.

[wallacedk]

But if a client has $15000 in unemployment, but I enter $4800 on the 1099G form won't proseries calculate the AGI and MAGI correctly?

[Just-Lisa-Now-]

IRS will still be looking for the 15k on the return and you'll have a CP2000 notice to deal with next year.

[IRonMaN]

Isn't that kinda like just adding income sources and subtracting deductions and then putting one net number on the line for taxable income?  Hopefully you aren't doing that and if you aren't doing that, you shouldn't be netting unemployment.

[wallacedk]

But can you attach a PDF of the actual 1099G showing the full unemployment amount, and send preparer notes with the return?  Guidance and software updates are not going to happen quickly.  

[IRonMaN]

Do you think someone at the IRS is going to read 50 million pdf attachments?

[wallacedk]

I believe that adding a PDF of the actual unemployment and sending preparer notes explaining the Other Income amount satisfies the IRS reporting requirement.  Congress has created a huge mess for my tax clients.  I am looking for work arounds to get my clients returns filed.  And all the returns that need to be amended is another huge mess.

[IRonMaN]

"Congress has created a huge mess for my tax clients"

Luckily for us, evidently only your clients have been affected. 😯

[Just-Lisa-Now-]

a workaround to create another mess for yourself...you do you!

[Dave Kropp]

That shouldl work. In 2009 the program just subtracted $2,400 and put the net amount on the 1040.

[garman22]

I, personally will not risk notices from IRS because we weren't patient letting IRS and the software companies do their thing. My clients are aware of the situation and have been told to sit tight. 

[garman22]

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@Dave Kropp wrote:

That shouldl work. In 2009 the program just subtracted $2,400 and put the net amount on the 1040.

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It could be something as simple as that.....but what if it isnt? Are you willing to risk that? 

[IRonMaN]

Just a disaster waiting to happen 💣

[dkh]

OMG @wallacedk  are you kidding!    If you want to get your clients returns filed - and who of us doesn't want that -  file the returns with all of the unemployment taxed and then do amendments after IRS has issued guidance.