Posted on 04/08/2021 3:16:11 PM PDT by catnipman
TurboTax and H&R Block updated their online software to account for a new tax break on unemployment benefits received in 2020.
The American Rescue Plan, a $1.9 trillion Covid relief bill signed this month by President Joe Biden, waived federal tax on up to $10,200 of jobless benefits per person.
State returns may still pose a problem for e-filers.
TurboTax and H&R Block updated their online software to account for a new tax break on unemployment benefits received last year, according to company officials.
However, state tax returns may still be a source of trouble for some taxpayers filing electronically.
(Excerpt) Read more at cnbc.com ...
here's why:
today, i was in the midst of preparing 2020 taxes with H&R Block Desktop Deluxe (i abandoned turbotax years ago and now TT won't run on W7 anyway), and i was close to being done and nearly ready to e-file, when suddenly HRB wanted to do a Fed update. I said fine, but when that update was done, lo and behold, the amount of taxes i owed dropped precipitously from prior to the update, so I'm going WTF!!!
fortunately, i had just saved PDFs before the update and was able to trace the change down to a substantial decrease in the amount of SSA and private pension plans payments that are taxable.
i called HRB to find out if they knew about the issue and whether it was their error or whether the Feds were in disarray ... turns out the biden irs is in complete disarray, and that's why they extended the filing deadline ... SUBSTANTIVE changes are still pouring in from the IRS to TT & HRB & others ...
As a consequence, LARGE numbers of filers have been rejected due to these changes, but they're the lucky ones because hundreds of thousands (perhaps millions) are going to have to refile amended returns, and TT & HRB are stuck in the middle in total nightmare mode as folks think they are to blame ...
turns out the filing extension to May 17th is because biden's irs is in such disarray, and HRB told me they've heard the extension might even be changed to sometime in June.
BTW, two other recent changes: only unemployment payments greater than $10,200 are taxable and there's a special new deal for 2020 called a "covid disaster" that allows "qualified" individuals (those who were negatively affected by covid, either due to illness or income) to declare up to $100,000 of 2020 pension/IRA payments to be "covid disaster payments" such that taxes of that amount are spread out over 2020,2021 & 2022, with 1/3 of the declared amount taxed in each of those three years, which may or may not be of any help to anyone. the form for that is 8915-E.
At any rate, the HRB lady that helped me echoed my thoughts about waiting until the very last day to file, namely given how F-ed up everything is right now, we both are going to wait until the very last day to file, whatever that day may ultimately be.
We are waiting to the new May 15th deadline and will consider filing an extension to see what else develops over the coming months.
Suits me fine then since I usually wait to file until the very last weekend. I rarely get a refund so I’m in no hurry to hand over my money.
I filed electronically back in early February.....nothing back, on-line tracking shows pending.....Tax Act sent me an email stating that my return will be held until mid-May per the IRS due to changes.....😡
I use tax act and E - filed thus week after tax act updated their program to accommodate the change. We went from owing to refund as my wife drew unemployment.
My understanding was that you could borrow from your IRA without paying the tax penalty that is normally in place. I did precisely that! Any addtional intel will be appreciated!
Crap I just did an update to TT and got the 10,200 unemployment deduction. And e-filed and both returns were excepted
.
BKMK
Our accountant told us to wait before taking our IRA Required Minimum Distribution, it was waived last year and might be again.
Even though the fed moved the filing date, many states have not. Here in Wisconsin they just extended theirs a couple weeks back. But in Wisconsin, like many other states, the state taxes are based on the Fed form. Ugh. Glad they extended.
“We are waiting to the new May 15th deadline and will consider filing an extension to see what else develops over the coming months.”
yes, just thinking this too. Thanks catnipman for posting this thread.
I was thinking maybe I have to go to someone this year, kind of hate to do that because I always feel that the taxes shouldn’t be too complicated for me in my situation.
Right now I’m thinking I’ll try in a couple of weeks, but just plan on file an extension.
Ping to self
Same here. We file early every year since the HR Dept. at my prior company released all employee W2s to scammers. We are expecting a very sizeable refund this year and need the funds for a new home build. The IRS is a joke...they should be forced to pay interest to us...you know darn well they’d hit us for it if the shoe were on the other foot. We were told that filers with married filing jointly who are hit by the $10,200 unemployment change will not receive their refunds until June/July at the earliest.
“I use tax act and E - filed thus week after tax act updated their program to accommodate the change. We went from owing to refund as my wife drew unemployment.”
the change to reduction of taxable pension/SSA payments may have come after that ... though those changes would be moot for you if you’re not retired ...
all i can tell you is that the deferred taxes on amounts declared in 8015-E as qualified covid disaster distributions do NOT have to be paid back, whereas a loan does have to be paid back ... interestingly, the deferred covid disaster distributions CAN be optionally paid back if desired ...
i just checked and my state, Colorado, also extended to May 17th ...
That's aggravating, did they indicate if it's something in the returns that's causing the delay or is it affecting all returns?
I e-filed Feb 4, it was accepted on Feb 13, and got my small refund on Feb 23.
Cannot speak about other states but the New York State (NYS) Department of Revenue has sent a blast email to all registered paid tax preparers that NYS has ‘decoupled’ the Unemployment Income (UI) $10,200 from taxable income. So, on the NYS state tax returns, the entire UI is taxed!
I wonder how many thesauruses were checked to chose ‘decoupled’ as the operative word. So prim, so proper, so Cuomo!
” “qualified” individuals (those who were negatively affected by covid, either due to illness or income) to declare up to $100,000 of 2020 pension/IRA payments to be “covid disaster payments” such that taxes of that amount are spread out over 2020,2021 & 2022, with 1/3 of the declared amount taxed in each of those three years,”
That change was in there about a month ago.
It’s a trap, of course, since the democrats are going to raise taxes and tax the deferred amounts at 2021 and 2020 rates instead of at Trump rates.
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