Unemployment Exclusion

[LPTaxServices]

I have about a dozen clients who filed before the unemployment exclusion was put into law. Now when I open the return it shows the change in the tax return.

1. The IRS says we do not need to amend the return, that they will tax care of re-calculating the refund. Since the state return can be affected, do we need to amend the return and just e-file the state return?

2. What are the best steps to handle this?

[Just-Lisa-Now-]

You'll need to amend the state return IF it changed since filing...IRS says they'll fix it on the federal end.

The issue you may have, is when amending for the state, you needit to look like the original before you amend it....if your state only allows paper filed amendments, this is easy, you can just override and fudge in the original figures on their amended return.

If your state allows Efiled amendments, you'll probably need to make an add back of the UI exclusion on the federal (or maybe on the state) to make the return look like the original, then you activate the amendment and remove your add back.

[The-Tax-Lady]

Wouldn't it be nice if there was a pop up that asked 

"Do you want this return to update with new tax changes when unlocked"

Maybe Intuit will update to allow the 2020 1040X to be e-filed with overrides (yes, I'm laughing too)

I'm not sure how I can e-file for the clients whose unemployment corrections caused EIC to generate.

Can I turn off something in the conversion/transmit process that will allow it ?

The IRS will not correct these if I don't submit the 1040X with the 8867 Due Diligence. 

[Savannah]

Hi Lisa! I'm on the same path. How can I override the State original return on paper file amendment? Can you please give me some instructions? Thanks!

[The-Tax-Lady]

Just override with the correct numbers. Paper filed returns will print all copies, even with overrides. It gives you a warning, just ok it and proceed to print.