2020 Unemployment Benefits up to $10,200

[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)

[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.

[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]

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.

[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

[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.

[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.

[ATSMAN]

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

At the risk of offending lawyers on this forum, I will say that the few times I had interaction with them they billed me for every minute they were on the phone with me. When my son got sued the lawyer told him boldly either pay my hourly rate and a retainer to boot or go find yourself PD or pro bono lawyer. Don't call and waste his time! This was a 18 year old kid working min. wage jobs getting a dose of legal reality!

Anyways, I have decided to do the 1040X if required free of charge UNLESS there are other issues that crop up that requires additional work. I still have to understand the final law of what is required, what the cutoffs are etc. But my main goal is not to act like a "jerk" like the lawyer I unfortunately encountered.

---

[mrbill]

What a Nightmare. How about State Taxes ?????

[ATSMAN]

What a Nightmare. How about State Taxes ?????

Up. It depends on if the state goes along with the Federal law changes. In my state they have a history of not following many last minute Federal tax law changes until sometime in the future.

Needless to say it is more work for us. I can almost feel that they will extend the filing deadline by a month or so??

[TaxGuyBill]

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.

Maybe I'm wrong here, but I would THINK the IRS computers already calculate if the amount we enter for the student loan interest deduction, PMI deduction, AOTC eligibility and so on are correct (based on AGI). That would just be the computers calculating if our math is correct. If that is the case, a changed AGI should similarly result in the IRS computers calculating those things. And if for some reason we did not agree with their calculation, we could presumable respond to the notice of the change (or maybe amend).

[Anarchrist]

It's not your fault either.

That depends. The proposal has been on the table for over a month. If he's just been preparing those returns this past month without telling the clients the option to hold off on filing in case the legislation passes, he has some fault.

Otherwise, no reason to discount the amended fee.

[TAX4US]

On 2 of mine take out the unemployment and the the refundable ctc and the eic both kick in.

[ATSMAN]

That depends. The proposal has been on the table for over a month. If he's just been preparing those returns this past month without telling the clients the option to hold off on filing in case the legislation passes, he has some fault.

Otherwise, no reason to discount the amended fee.

Give me a break! You think I have a crystal ball to see when legislation will pass and what will be signed into law! I am not going to tell a client to hold up unless it is a sure thing.

[Anarchrist]

Don't need a crystal ball to know what legislation has been proposed. And certainly don't need a crystal ball to know about proposed legislation that has been actively discussed for the past 3 weeks on this and most every other tax bulletin board on the internet. It's not difficult to take 20 seconds to inform clients of their options.