Unemployment AND PTC

[TaxGuyBill]

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).

That may be how to handle it, BUT you also need to watch out for the calculations that use MAGI that are NOT affected by that (they use the FULL amount of Unemployment).

[BOB W]

That is correct... I'm only doing returns that will have no conflict with 150,000.

[TaxGuyBill]

It's not just the $150,000. It is Social Security, IRA phase out, Passive income, and more.

I hope this other person doesn't mind me copy-and-pasting her text, but these are the things that still use the FULL amount of unemployment, so you can't just enter $10,200 on Line 8 unless you override how these things are calculated.

• Taxable amount of social security
• Exclusion for US savings bond interest used for higher education
• Exclusion for employer-provided adoption assistance
• Limit on deductible IRA contributions by plan participants
• Limit on student loan interest deduction
• Limit on deduction for tuition and fees
• Limit on rental real estate exception to passive activity loss rules

[BOB W]

Are you saying these are items will be reduced because of a lower AGI or are they used to develop MAGI toward the $150,000?

[TaxGuyBill]

Nothing to do with $150,000.


Perhaps it is easier to explain by an example:

W-2 wages $30,000
Unemployment $20,200 - $10,200 is not taxable, $10,000 is taxable.
Social Security $20,000

The calculation to determine how much Social Security is taxable looks at how much 'other' income you have. You need to use $50,200 of income, NOT $40,000. The Social Security calculation uses the FULL amount of Unemployment. If you just randomly enter $10,200 on Line 8, the Social Security calculation will incorrectly use $40,000.

[BOB W]

Ouch!!! Luckily I'm just doing Kids so far.

[TaxGuyBill]

Just keep an eye out for all of those other items, not just Social Security.

[BOB W]

WOW... Thanks for the heads-up... The big question is WHY THIS MESS!!!!

[Gene V]

WOW... Thanks for the heads-up... The big question is WHY THIS MESS!!!!

The IRS is going to give you until May 17 to clean it up

[spanel]

The IRS is going to give you until May 17 to clean it up

And you got this where? You have 3 years to amend to return and ask for more money generally....

Chris

[Gene V]

https://www.irs.gov/newsroom/news-releases-for-current-month

[BOB W]

The IRS web site also warns that some states may not go along with the extended date of May 17th... Although they did last time...???

[Snaggletooth]

I just had a return that exempted over $15,000 in unemployment benefits. $7000 paid to husband $7800 paid to wife.

I wish they would stop tampering with this stuff. Especially in the middle of the year. More govt giveaways.

[Scarecrow]

There should be a Constitutional Amendment that prohibits Congress from messing with tax laws during tax season.

[BOB W]

I just had a return that exempted over $15,000 in unemployment benefits. $7000 paid to husband $7800 paid to wife.

I wish they would stop tampering with this stuff. Especially in the middle of the year. More govt giveaways.

Well somebody doesn't like these giveaways at the IRS. AGI is no longer AGI for this simple Giveaway( Unemployment reduction). Now addbacks are the rule of law known as MAGI. MAGI has been around but not for "simple give the taxpayer a break". When will it stop?