Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Unemployment income won't count as income
Originally, any jobless benefits that were collected in 2020 were counted for income purposes. So, if someone earned $140,000 from a job and another $14,000 in unemployment, that person would be over the $150,000 limit and wouldn't get the aforementioned tax exemption. Now, the IRS says that jobless workers don't have to count their unemployment benefits when calculating their 2020 income. And this change could help more people fall below the $150,000 threshold to enjoy tax-free treatment of $10,200 in unemployment benefits.
Of course, some might argue that anyone on the cusp of a $150,000 income doesn't need a tax break. But in some parts of the country, a $150,000 income doesn't go as far as one might expect. As such, this added flexibility on the part of the IRS could help a lot of people -- even those whose earnings fall into the moderate-to-high category.
The IRS also recently announced that filers who submitted their 2020 tax returns without accounting for a tax exemption on $10,200 of unemployment benefits don't need to file an amended return. Instead, the agency will attempt to adjust refunds automatically.
The IRS has also extended the tax-filing deadline from April 15 to May 17 in light of the changes in the relief bill. That extra month lets tax preparers reconcile the new rules and gives filers added flexibility during these continuously uncertain times.
So Im at 173K. I made 29K and wife made 8K in unemployment.
I knock off $10,200, she knocks off $8K and we are at $153K....
How can I knock off 3K?
or... do NONE of the unemployment $ count towards magi, and Im well below, sitting at $137K,.
Edited to Add: I think all unemployment does NOT count towardss AGI for the credit, which means a lot of people that were over $150K because of unemployment payouts, will be able to take advantage of this!
Until today, the IRS signaled that taxpayers had to count unemployment benefits as part of their 2020 income when determining if they qualify for the tax break.
The federal agency said in Tuesday’s guidance that workers can exclude jobless benefits from their calculation of modified adjusted gross income, the official barometer for eligibility.
The rule change means more people will fall below the $150,000 income limit.
“It definitely expands it,†Jeffrey Levine, a certified financial planner, accountant and chief planning officer at Buckingham Wealth Partners in Long Island, New York, said of the pool of eligible taxpayers.
So Im at 173K. I made 29K and wife made 8K in unemployment.
I knock off $10,200, she knocks off $8K and we are at $153K....
How can I knock off 3K?
or... do NONE of the unemployment $ count towards magi, and Im well below, sitting at $137K,.
Edited to Add: I think all unemployment does NOT count towardss AGI for the credit, which means a lot of people that were over $150K because of unemployment payouts, will be able to take advantage of this!
If you are below 150K (excluding all UE), then you meet eligibility. 153K (excluding UE) would not meet eligibility.
Since you are at 137K (excluding UE), you meet the income eligibility.
Yes, it is my understanding that ALL UE is excluded for income eligibility purposes, not just the 10200.00.
Scrapsmith, you are correct in that I don't see anything on the IRS site to confirm that ALL UE is excluded. According to this, only $ 10200.00 is excluded as income for eligibility determination.
Next time I try to help, I need to be sure to go directly to the horses mouth (the horse being the IRS) to confirm. I don't want to provide misinformation, I want to help.
So if excluding that amount puts me in a different income bracket that would change my original federal return amount should I amend my return or still wait for IRS?
Scrapsmith, you are correct in that I don't see anything on the IRS site to confirm that ALL UE is excluded. According to this, only $ 10200.00 is excluded as income for eligibility determination.
Next time I try to help, I need to be sure to go directly to the horses mouth (the horse being the IRS) to confirm. I don't want to provide misinformation, I want to help.
NO worries. Dang I accidentally deleted my post hitting the wrong button to edit something else. I will put it back up in a new comment.
I also saw this which was dated yesterday which if that's truly the case and UI exclusion worksheets weren't correct a week ago, people have another issue to contend with. I happened upon this why looking up the other info. So glad I have sat on son's return until all this stuff gets ironed out. Too many chances for mistakes or problems. I'm also still waiting to hear about guidance for APTC claw back waiver for marketplace subsidies for him. That will change his return from owing to a decent refund. I've seen nothing updated yet from IRS on it.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
