2020 Unemployment Benefits up to $10,200

[Uncle Sam]

We don't even know yet whether there will be a sliding scale of reduction of the $ 10,200 for those whose MFJ incomes are just above the $ 150,000.
I have a case where WITH the SUI it brings them over the $ 150,000 threshold, whereas by reducing the AGI by the $10,200 brings them below it.
I haven't seen any discussion about this like there is with EIPs where there's a 5% haircut for every $ 100 up to a maximum threshold AGI.

[TAXNJ]

It's not your fault either. If your clients don't realize this, you might need better clients. You're also amending to get them a refund so even though it's not their fault, they do get a benefit from the work you are performing for them.

Certainly, do whatever you feel is best but consider a few alternatives:

1) Reduced fee. Bill them whatever your "regular" fee would be for an amended return. Then discount it. This is usually what I do. If it's their fault I charge them my normal fee. If it's my fault, I do it for free. This is in the middle so I usually give a 50% discount.

2) Delayed payment. If cash flow is a problem, tell them they can pay you after the refund comes in.

3) "Fair" pay. Everyone's situation is going to be different. Don't charge them anything but tell them that if they want to, they can pay you whatever they think is fair.

Rick

Now, if you can get other professionals, e.g., Medical, Legal, Accounting & Tax, (even politician with the tax laws) to adopt your alternatives.

[rbynaker]

That is what I was afraid of. Now we will have to amend tax returns already filed for no fault of our clients and we have to eat the cost of preparing the amendment because I am not going to upset a good client by charging them amendment fees when it was not their fault! I am sending an e-mail today to all my clients who have not filed to wait if they have UI.

It's not your fault either. If your clients don't realize this, you might need better clients. You're also amending to get them a refund so even though it's not their fault, they do get a benefit from the work you are performing for them.

Certainly, do whatever you feel is best but consider a few alternatives:

1) Reduced fee. Bill them whatever your "regular" fee would be for an amended return. Then discount it. This is usually what I do. If it's their fault I charge them my normal fee. If it's my fault, I do it for free. This is in the middle so I usually give a 50% discount.

2) Delayed payment. If cash flow is a problem, tell them they can pay you after the refund comes in.

3) "Fair" pay. Everyone's situation is going to be different. Don't charge them anything but tell them that if they want to, they can pay you whatever they think is fair.

Rick

[ATSMAN]

Do you really think that's feasible? Removing an amount of UI up to $10,200 reduces AGI. Do you think the IRS will now be able to zip through various AGI ramifications such as student loan interest deduction, PMI deduction, AOTC eligibility and so on. Be careful what you wish for.

Additionally, is there any authority for the IRS to unilaterally change the taxpayer's return? The Math Error Authority doesn't seem to cover a situation such as this.

That is what I was afraid of. Now we will have to amend tax returns already filed for no fault of our clients and we have to eat the cost of preparing the amendment because I am not going to upset a good client by charging them amendment fees when it was not their fault! I am sending an e-mail today to all my clients who have not filed to wait if they have UI.

[New York Enrolled Agent]

... or will IRS recalculate their tax by deducting $10,200 and send a refund?

Do you really think that's feasible? Removing an amount of UI up to $10,200 reduces AGI. Do you think the IRS will now be able to zip through various AGI ramifications such as student loan interest deduction, PMI deduction, AOTC eligibility and so on. Be careful what you wish for.

Additionally, is there any authority for the IRS to unilaterally change the taxpayer's return? The Math Error Authority doesn't seem to cover a situation such as this.

[ATSMAN]

So taxpayers who have already filed will need to pay to file an amendment or will IRS recalculate their tax by deducting $10,200 and send a refund? What a mess our Govt creates in the middle of a tax season.

[TAXNJ]

Relief Bill:

Looks like - The first $10,200 of the jobless benefits would also be tax-free to households with incomes under $150,000 (2020 Unemployment Benefits up to $10,200)