Unemployment AND PTC

[spanel]

Well all this shouting about amending / waiting / etc because of the $10200 exclusion of unemployment..... I have seen nothing until I read thetaxbook article about Premium tax Credit...

I guess anyone that paid any amounts because their income was higher than they told the marketplace, not will NOT have to pay this back!!

What a mess, two things now to do.

Chris

[Rapid Robert]

Thank you, I was just about to post something like this myself. The waiver of payback of excess APTC is huge for some taxpayers, I have one who will be getting back over $5K because he already filed his return. He will also get a small exclusion for unemployment, but the APTC payback waiver is far more impactful. Plus, this one does not have ripple effects throughout the return or on the state return, so it should be much easier to implement in the software or on a worksheet for paper filers. Let's get our priorities straight!!

[TaxGuyBill]

I don't mean to get into a discussion about rights and wrongs of tax policy, but that provision puzzles me. They are giving a tax benefit/relief for taxpayers whose income was HIGHER than they expected. It just seems weird to me.

[sdarave]

I was checking on this today for a client. On Sch 1 line seven Drake software has added "UEC" and in the amount column (10,200) and reduces the AGI accordingly. So, what now?
I didn't make that adjustment, it just happened. Does that mean IRS will also adjust?
Agree with spanel---what a mess!!

[BOB W]

That's great news. Nothing for Ultra Tax yet.

[BOB W]

I was checking on this today for a client. On Sch 1 line seven Drake software has added "UEC" and in the amount column (10,200) and reduces the AGI accordingly. So, what now?
I didn't make that adjustment, it just happened. Does that mean IRS will also adjust?
Agree with spanel---what a mess!!

Does that mean you are able to file those Unemployment returns?

[Rapid Robert]

I don't mean to get into a discussion about rights and wrongs of tax policy, but that provision puzzles me. They are giving a tax benefit/relief for taxpayers whose income was HIGHER than they expected. It just seems weird to me.

Of course, no one knew this was coming in the middle of last year, so it's not something that could have been "gamed". Yes, it's a little weird, however, it's not the first time.

I would compare it to the move in the first year of TCJA, to waive the underpayment of tax penalty (interest) for a safe harbor of 80%, instead of the usual 90%, which surely benefitted some higher income taxpayers who didn't actually underpay beause of TCJA. Back then, it was justified because taxpayers were just too confused by the new law to adjust their withholding and estimated payments correctly. I think the same thing applies to ATPC payback waiver: signing up for ACA was an unexpected event for many, and it was very hard to accurately estimate income with so much uncertainty as to how the rest of the year was going to play out. My client above with the $5K payback lost his main job early in the year, signed up for ACA while working at a grocery store waiting until employer insurance coverage kicked in, but then in September he got a new job paying about what his old job did. At that point, the APTC had already been paid, so updating his income estimate would have accomplished nothing. He did what he was supposed to do, and through no fault of his own had the payback to deal with.

Rather than make signing up for ACA appear punitive to the newcomers, this is designed to help continue allowing all Americans to have adequate health care, not just the 85% with Medicare or stable, high-paying jobs. What might have been a little better would have been to eliminate the 400% of poverty level "cliff" and instead put in a generous phase-out.

And as you mentioned, there are plenty of "wrongs" in tax policy, with benefits that are far more generous for higher income folks (like the mortgage interest deduction, QCDs, just to name a few). Meanwhile, today's headine from Bloomberg news: "IRS Failed to Collect $2.4 Billion in Taxes From Millionaires".

[Dude]

Rather than make signing up for ACA appear punitive to the newcomers, this is designed to help continue allowing all Americans to have adequate health care, not just the 85% with Medicare or stable, high-paying jobs. What might have been a little better would have been to eliminate the 400% of poverty level "cliff" and instead put in a generous phase-out.

Good point. The first sip of the kool aid should always taste good so as to justify the putrid aftertaste. Now if we could only get rid of those pesky tax preparation fees... is there a waiver in the works?

[Scarecrow]

What might have been a little better would have been to eliminate the 400% of poverty level "cliff" and instead put in a generous phase-out.

The 400% of poverty level cliff has been eliminated for 2021. Plus, anyone who gets unemployment in 2021, regardless of other income gets free health insurance in 2021.

[MAJ]

Great News - Nothing from TaxAct Professional either! Getting irked with them recently. I may look elsewhere, UGH.. HATE THAT THOUGHT.
So my income flow just died by 40% - No concern of theirs - they already cashed my credit card.
I'm an IT guy - so these antiquated DOS wanna be windows packages (TaxSlayer Pro - well 2011-2012, etc).
I want software designed for 2020-2021 - not 1985-1995.

[TaxGuyBill]

Great News - Nothing from TaxAct Professional either! Getting irked with them recently. My look elsewhere, UGH.. HATE THAT THOUGHT.
So my income flow just died by 40% - No concern of theirs - they already cashed my credit card.


I'm an IT guy - so these antiquated DOS wanna be windows packages (TaxSlayer Pro - well 2011-2012, etc).
I want software designed for 2020-2021 - not 1985-1995.

It is really NOT the fault of the software companies. They need to get everything clarified from IRS and the various State tax agencies before they should release things.

I would recommend not be to concerned about how the interface looks, but at how the flow of the data-entry works and how the tax calculations work. I would much rather have software that looks like it was designed 30 years ago but functions well, than to have software that looks nice, spiffy and up-to-date where the company doesn't give a *blank* about its customers and there are continuous problems.

[Rapid Robert]

The first sip of the kool aid should always taste good so as to justify the putrid aftertaste. Now if we could only get rid of those pesky tax preparation fees... is there a waiver in the works?

Yes, too bad they can't afford to drink that champagne that the wealthy get, I'm sure they'd much rather. I don't see anyone who is getting a big refund due to late tax law changes complaining about paying for a return amendment. Unless maybe you are competing with H&R Block (but I bet they will charge).

Tax preparers are only half a step above lawyers in the public esteem anyway, I don't think there is much sympathy out there.

[MAJ]

If you didn't see the official notice.. Reposting..

IRS releases guidance on how to report unemployment compensation.
https://irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemployment-compensation…

In short, Use line #8, schedule 1 to report other income: UCE in the amount of $ -10,200.00 (or proper amount).

[ruthc]

Great News - Nothing from TaxAct Professional either! Getting irked with them recently. I may look elsewhere, UGH.. HATE THAT THOUGHT.
So my income flow just died by 40% - No concern of theirs - they already cashed my credit card.
I'm an IT guy - so these antiquated DOS wanna be windows packages (TaxSlayer Pro - well 2011-2012, etc).
I want software designed for 2020-2021 - not 1985-1995.

Go to TaxAct's website for info on the unemployment issue. The update is scheduled for tomorrow.

[BOB W]

I've started doing my backlog of UI returns. Anyone else?