Unemployment
Unemployment
My wife received 9600 in unemployment last year . I already filed my taxes reporting the unemployment as income . The IRS sent out a statement after the Covid deal that unemployment will not be taxed in 2020 don’t send an amended return and they will adjust on their end . We only made about 90000 so we should have the unemployment income excluded . I see they deposited my return without any adjustments. Do you think they will send a separate check . It’s impossible to talk to anyone there
Re: Unemployment
They are still figuring it out right now. We just have to wait until they give a clear answer.
Re: Unemployment
It doesn't matter what I think because it just will not mean a darn thing. In your shoes, I would wait until August or so before I spent another second on this issue. I would put a spot in the calendar in my cell phone for August 2: "Check on outcome of unemployment taxes' and I would stop spending another second of my time on this until then.
Re: Unemployment
Give it time... the IRS has to program something to go in and adjust these and then issue refunds. Will probably happen by May/June timeframe.
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- Posts: 1488
- Joined: Wed Mar 23, 2016 9:28 am
- Location: SE Michigan
Re: Unemployment
The answer is simple - the IRS will eventually process a refund for taxes on the excluded amount for you. At least that is their formal word as of today. We just don't know exactly when.
Specifically, they say this:
"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."
Link to this statement on IRS.gov (my quote is from 4th paragraph):
https://www.irs.gov/forms-pubs/new-excl ... mpensation
So they have not yet announced timing. We got extremely lucky and didn't file yet (wife has unemployment comp), but the exclusion will happen in both of our cases anyway.
This affects more than just the tax on unemployment for some people, and it can be very material on both counts. For those on ACA, this exclusion can have a material effect on the 2020 premium tax credit too. Lower adjusted gross income (up to $10,200) means lower MAGI for premium tax credit. That guidance for those who have already filed, at least as far as I've seen, has not been specifically issued (but any premium tax credit repayment is also going to be waived, a second piece of the issue).
Specifically, they say this:
"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."
Link to this statement on IRS.gov (my quote is from 4th paragraph):
https://www.irs.gov/forms-pubs/new-excl ... mpensation
So they have not yet announced timing. We got extremely lucky and didn't file yet (wife has unemployment comp), but the exclusion will happen in both of our cases anyway.
This affects more than just the tax on unemployment for some people, and it can be very material on both counts. For those on ACA, this exclusion can have a material effect on the 2020 premium tax credit too. Lower adjusted gross income (up to $10,200) means lower MAGI for premium tax credit. That guidance for those who have already filed, at least as far as I've seen, has not been specifically issued (but any premium tax credit repayment is also going to be waived, a second piece of the issue).
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- Posts: 1488
- Joined: Wed Mar 23, 2016 9:28 am
- Location: SE Michigan
Re: Unemployment
One more thing to look at - how your state will handle this for state income tax. My state is conforming - they pick up Federal adjusted gross income and only adjust it for certain specific items (and not this one). They otherwise fully tax unemployment benefits. So, for us, this exclusion reduces (just up to the exclusion max or unemployment received, whichever is less times our tax rate) our state (Michigan) tax bill.
But each state is quite different and I don't know your NC rules. Might be worth looking at along the way too. Good luck. I'm sure it will all get worked out shortly.
But each state is quite different and I don't know your NC rules. Might be worth looking at along the way too. Good luck. I'm sure it will all get worked out shortly.
- Cheez-It Guy
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Re: Unemployment
livesoft probably has the right idea. It's not August yet, but curious whether anyone has heard or read anything regarding timing of the refund adjustment tied to unemployment. Also, would there likely be any interest paid on the additional refund amount? Certainly not counting on that.