Taxable Portion of SSA when exempt unemployment is on return

[tscott1205]

Did we get an alert that the program is not calculating the taxable portion of social security benefits when exempt unemployment is reported on the return. 

[TaxGuyBill]

No, re-read the alert and the link.

[Just-Lisa-Now-]

its not calculating it at all? or you think what its calculating is wrong?

[tscott1205]

I tried to find it but could not locate it.

[TaxGuyBill]

To look at previous "alerts" you can go to the "Information" menu on the top.

The alert was just pointing out the Unemployment Exclusion does NOT affect the calculation of taxable Social Security.  There have been MANY people who have thought the program was doing it wrong, but it has been doing it correctly (well, at least that aspect of thing).

[qbteachmt]

"I tried to find it but could not locate it."

The programmers need to use the IRS resources, so I go to IRS first.

"When figuring the following deductions or exclusions from income, if you are asked to enter an amount from Schedule 1, line 7 enter the total amount of unemployment compensation reported on line 7 (unreduced by any exclusion amount) and if you are asked to enter an amount from Schedule 1, line 8, enter the amount from line 3 of the Unemployment Compensation Exclusion Worksheet. See the specific form or instructions for more information."

The IRS has this list:

• Taxable social security benefits (Instructions for Form 1040 or 1040-SR, Social Security Benefits Worksheet)
• IRA deduction (Instructions for Form 1040 or 1040-SR, IRA Deduction Worksheet)
• Student loan interest deduction (Instructions for Form 1040 or 1040-SR, Student Loan Interest Deduction Worksheet)
• Nontaxable amount of Olympic or Paralympic medals and USOC prize money (Instructions for Form 1040 or 1040-SR, Schedule 1, line 😎
• The exclusion of interest from Series EE and I U.S. Savings Bonds issued after 1989 (Form 8815)
• The exclusion of employer-provided adoption benefits (Form 8839)
• Tuition and fees deduction (Form 8917)
• The deduction of up to $25,000 for active participation in a passive rental real estate activity (Form 8582)

On their new update page:

https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation

[tscott1205]

So it is safe to say the program is calculating the taxable social security correctly when we have exempt unemployment benefits?

Thanks for your help cyber accountant friends!

[Just-Lisa-Now-]

The SS calculation uses ALL unemployment income when determining how much SS is taxable.   So if thats what you're seeing, its correct.

[tscott1205]

As long as the program is doing it correctly..... I looked at the article and I read the exempt portion was not added back? I don't know if the SSA worksheet reflects the add back

[qbteachmt]

I'm not sure we are reading this the same way.

"and I read the exempt portion was not added back?"

There is no Exempt portion for those credits where they are based on the full unemployment.

"I don't know if the SSA worksheet reflects the add back"

And that's why there also is no Add Back.

[tscott1205]

My simple mind thinks the exempt unemployment is added to modified income or not. If it is then it will increase the taxable portion of your social security.

[qbteachmt]

"My simple mind thinks the exempt unemployment is added to modified income or not."

Yes, that's exactly right: it is or it is not.

It depends.

But not for each type of credit or allowance or adjustment. It won't vary for each one thing. It will vary across different things.

It helps if you go to the Source.