IRS to Fix unemployment on returns filed before the change

[Bucky]

I just received an email that the IRS plans on fixing the unemployment returns already filed. Wonder how that's going to work? We will still need to amend states that tax unemployment. Sounds like fun. Hope they do the same for Obama care premium credit. I need a week at the beach!

[Burke]

I just received an email that the IRS plans on fixing the unemployment returns already filed. Wonder how that's going to work? We will still need to amend states that tax unemployment. Sounds like fun. Hope they do the same for Obama care premium credit. I need a week at the beach!

Actually, you may need to amend states that don't tax unemployment but use Federal AGI as a starting point (like VA) or taxable income (like GA) if they have been filed prior to this change. IRS will have to notify each of them. And then there are the states who will conform, and those that won't.

[New York Enrolled Agent]

I just received an email that the IRS plans on fixing the unemployment returns already filed. Wonder how that's going to work? We will still need to amend states that tax unemployment. Sounds like fun. Hope they do the same for Obama care premium credit. I need a week at the beach!

That may well be done but it is not yet written in stone. The Commissioner said "I believe" and the word may. Too many headlines make it sound like a done deal but it still is a work in progress.

[ATSMAN]

Perhaps IRS may internally recalculate the 1040 and send the taxpayer a refund BUT the issue is also with state returns. My state is still silent and at this point I have stopped e-filing any state returns with UI.

This has caused a big communication nightmare because some people simply don't get it!

[Uncle Sam]

Is IRS going to send the client a recalculated tax return after changing the UI situation for recordkeeping purposes for future - such as audits or amendment calculations?
That IRS hasn't said anything about yet.

[Rapid Robert]

I just received an email that the IRS plans on fixing the unemployment returns already filed.

Old news, was posted here two days ago with a link to an actual article from Accounting Today (Bloomberg News):

https://forum.thetaxbook.com/forum/discussion-forums/main-forum-tax-discussion/305296-unemployment-adjustment-tax-program-fix?p=305309#post305309

[Gran]

I just checked a return with unemployment and found the IRS did correct the accepted return to exclude unemployment. The problem? This return had an addback for unemployment repaid during the year. My state did not include the repayment on the 1099G. They said they rely on the integrity of the taxpayer to correctly report. So, I made an adjustment on line 10 which caused the IRS to give my client too much refund.
The state return starts with the AGI and I see it too is changed. As of yet my state has not compiled with federal on this issue.
What a mess! How can the IRS make a change like this without thinking through potential scenarios that create chaos.
The implication so of this are frightening.

[BOB W]

Please tell what state?

[Gran]

Indiana has not complied to unemployment change

[TAXNJ]

I just checked a return with unemployment and found the IRS did correct the accepted return to exclude unemployment. The problem? This return had an addback for unemployment repaid during the year. My state did not include the repayment on the 1099G. They said they rely on the integrity of the taxpayer to correctly report. So, I made an adjustment on line 10 which caused the IRS to give my client too much refund.
The state return starts with the AGI and I see it too is changed. As of yet my state has not compiled with federal on this issue.
What a mess! How can the IRS make a change like this without thinking through potential scenarios that create chaos.
The implication so of this are frightening.

Are you saying you manually made the adjustment before the software update given the ok by the IRS?

[New York Enrolled Agent]

I just checked a return with unemployment and found the IRS did correct the accepted return to exclude unemployment.
.

How did you check this? What's the secret?

[Burke]

Is IRS going to send the client a recalculated tax return after changing the UI situation for recordkeeping purposes for future - such as audits or amendment calculations?
That IRS hasn't said anything about yet.

They normally report AGI/TI to states; but this may come much later, maybe not even this year. At that point, state should contact the TP if any discrepancy.

[Burke]

I just checked a return with unemployment and found the IRS did correct the accepted return to exclude unemployment.

What date was it accepted? If it had been reported on 1099G worksheet under Box 1a, it probably would have been okay.

[Rapid Robert]

Apparently the IRS has updated the UCE worksheet they published recently, it now EXCLUDES the UI from the AGI phase out calculation, whereas previously the UI was included in comparing to $150K AGI. So if you were too impatient and used the original version, you now may have even more future amendments to make.

[Gene V]

Also in the updated March 23rd, you don't have to amend your return if you already file with full unemployment.

If you have already filed your 2020 Form 1040 or 1040-SR, there is no need to file an amended return (Form 1040-X) to figure the amount of unemployment compensation to exclude. The IRS will refigure your taxes using the excluded unemployment compensation amount and adjust your account accordingly. The IRS will send any refund amount directly to you.

https://www.irs.gov/forms-pubs/new-e...t-compensation