Unemployment Exclusion

[Martin Colijn CPA]

I am most concerned with the initial faulty logic of Congress creating a fixed threshold of modified AGI.

As Lacerte software makers have it now, for example, taxpayers are being penalized with the inclusion of UI at pushing them above the $150K! I am most certain, this was not the intent of Congress. 

Also, to imagine only a $1 difference gives a taxpayer all or nothing of the $10,200 per individual exclusion is not the original intention of Congress.

Lastly, the $150K fixed threshold applies to both a single filer as well as a married filer does not appear the original intent of Congress.

[IRonMaN]

A lot of folks worked through COVID.  They showed up at work everyday and dealt with people that refused to wear masks.  I'm guessing a large portion of them made less than $150,000.  All of their income is fully taxable.  So what's wrong with someone making over $150,000 actually having to pay tax on all of their income?

[BobKamman]

It was the middle of the night and they had to give Manchin whatever he wanted to get him on board.  Meanwhile, Wyden had always carried the exclusion amendment in his back pocket after months of failing to get it passed.  The only Congressional intent involved was to turn off the lights and go home.  

They'll have a second chance when they enact an exclusion for 2021 unemployment.  Maybe we'll even get a technical correction, explaining what they really meant with the $150K limit (not just for single, but for MFS). 

[qbteachmt]

"Also, to imagine only a $1 difference gives a taxpayer all or nothing of the $10,200 per individual exclusion is not the original intention of Congress."

Yes, that always happens. Imagine the taxpayer all these years with ACA filing at 401% of the poverty line. Imagine the people who made $10,201 of unemployment. Imagine those with an income $1 over the limit for deductible IRA contributions. Can you really imagine the tax tables should be "plus or minus some reasonable margin you get to choose?"

"Lastly, the $150K fixed threshold applies to both a single filer as well as a married filer does not appear the original intent of Congress."

Okay, what about the $300 cash charitable deduction, then?

Yes, they wrote all of this. Then, if they need to, they can do technical corrections. That doesn't make Lacerte wrong.

[TaxGuyBill]

Lacerte is doing it correctly according to the way Congress wrote the law.

If you don't like the way Congress wrote the law, you are free to contact your Congressional representative.  Complaining about it here won't achieve anything.

[BobKamman]

@IRonMaN "So what's wrong with someone making over $150,000 actually having to pay tax on all of their income?"

Remember every dollar of unemployment taxed brings in at least a dime towards forgiving the $150,000 PPP loan to their millionaire boss.

[IRonMaN]

Yeah, it's been the year of free money.  Everybody wants their share of the freebies.

[BobKamman]

What no one wants to talk about is that $150,000 in New York City doesn't go as far as $150,000 in Bemidji.  IRS has different allowances for different places when figuring out how much people can afford to pay on delinquent taxes, but Congress pretends the situation does not exist.  

[rbynaker]

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@BobKamman wrote:

What no one wants to talk about is that $150,000 in New York City doesn't go as far as $150,000 in Bemidji.  IRS has different allowances for different places when figuring out how much people can afford to pay on delinquent taxes, but Congress pretends the situation does not exist.  

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Sounds like a great plan:  No more expensive "free cash for lower income" programs, just free government bus vouchers from anywhere in the U.S. to Bemidji, MN.

[IRonMaN]

Sorry, we are using some of that free money to build a wall. ⚒

[BobKamman]

Sorry, low-income people are already being flown up there.

https://sports.yahoo.com/cbp-asks-fly-migrants-canadian-153942938.html