Unemployment voting

[BOB W]

I believe today is the day for the House to vote on Senate Bill adjustments. I have a stack of unfiled tax returns ready to take $10,200 off the gross income and all the secondary tax benefits it will cause.

[Rapid Robert]

I'm curious whether tax pros believe we need to wait for updated IRS forms and various software updates. One colleague of mine proposed simply putting a negative income adjustment on Schedule 1 Line 8 (formerly known as "Line 21") and filing now.

I dont' think that's the right thing to do, but I suspect many will do it that way. I say if the taxpayer will still have a balance due after the UI adjustment, then make an extension payment and wait. If on the other hand one is expecting a refund even before the adjustment, then file now with existing law (as of today), get your partial refund, and then take up to 3 years to efile an amended return for the additional refund plus interest.

[TaxGuyBill]

I'm curious whether tax pros believe we need to wait for updated IRS forms and various software updates. One colleague of mine proposed simply putting a negative income adjustment on Schedule 1 Line 8 (formerly known as "Line 21") and filing now.
.

We certainly can't do anything until the IRS says what they are doing. It is possible the IRS will automatically fix/correct/change the previously filed tax returns (or any returns on the non-updated forms). *IF* the IRS were to automatically change things, we can't manually deduct it then have the IRS deduct it again.

[Twin Turbo Z]

We are informing people of the possible passing of this legislation. All are fine with the delay in finishing them up if it saves them money

[Rapid Robert]

Recall that for tax year 2018, an error in the Schedule D worksheet was discovered in May 2019. The IRS was going to review previously filed returns to see if they were affected, and I can't find the info on whether or not the IRS actually fixed the returns automatically, or simply notified taxpayers. Although a new law is not the same as a calculation error, I wonder if the IRS could take the same approach. (echoing what TGB said, we probably need to wait at least for some initial IRS guidance).

While this may be the biggest retroactive change to tax law to come mid-filing season, there have definitely been many cases of last-minute retroactive legislation in late December affecting and delaying the filing season, or at least the filing of various forms that needed changing. And the last minute passage of TCJA in 2017 certainly ruined some tax planning for many people.

As for states, California doesn't tax UI anyway, so no problem there. (nor does CA tax Soc Sec - the reputation for "high state taxes" mostly applies to upper income folks, not the majority).

[BOB W]

If the UI portion is passed by the House do we have to wait until the President signs it on Friday before we can file those backed up returns?

[TaxGuyBill]

If the UI portion is passed by the House do we have to wait until the President signs it on Friday before we can file those backed up returns?

You need to wait until it becomes law AND you need to wait until the IRS gives some sort of guidance for what to do. It could be several weeks.

And I heard it was passed by the House.

[BOB W]

Ouch!!!!!!!!!!!!!!

[TAXNJ]

If the UI portion is passed by the House do we have to wait until the President signs it on Friday before we can file those backed up returns?

Is your software updated already to file the UI adjustment?

[BOB W]

No.. But I can just make a separate negative entry for the whole amount, or if over $10,200. just the $10,200. In the end it should be a no change regardless of any special instructions. This is just for the unfiled returns on my desk, about 30 of them.. Already filed returns will have to wait...

[Lion]

Is the $150,000 threshold with or without the UI benefits? How will the states handle it? I file returns in 13 different states. What to do about Kiddie Tax? Does Kiddie Tax apply on the amounts over $10,200? Or, do you still use $1,100 at 0% and the next $1,100 at 10%? I'm not filing UI returns today! (I'm preparing biz returns with a Monday deadline, anyway.)

[BOB W]

All great questions.... I have no answers.................... yet..

[Twin Turbo Z]

Well it passed. Let the **** begin !!

[TaxGuyBill]

No.. But I can just make a separate negative entry for the whole amount, or if over $10,200. just the $10,200. In the end it should be a no change regardless of any special instructions. ..

What if the IRS automatically changes things themselves? Then you would be entering a deduction (up to $10,200) and then the IRS adjusts it again. So, it definitely CAN change depending on what the IRS instructs us to do.

[BOB W]

What if the IRS automatically changes things themselves? Then you would be entering a deduction (up to $10,200) and then the IRS adjusts it again. So, it definitely CAN change depending on what the IRS instructs us to do.

That may be for already filed returns. Under our voluntary system of filing tax returns, I think any return filed after today would be checked for any offsetting entry.