H&R Block - $10,200 Exclusion for Unemployment & How it affects Social Security
The American Rescue Plan is allowing $10,200 of unemployment as non-taxable income. Sounds pretty straightforward. I took my parent's tax return and backed off $10,200 of unemployment income and produced a DRAFT tax return, reviewed it, and it seemed pretty easy to follow the numbers, then patiently waited. The Adjusted Gross Income went down across the board.
Skip ahead and the software was updated a few days ago. I went in and renamed the file and used the same unemployment number as what the 1099G was indicating, not backing off the $10,200, but using the gross number. I figured now the software would update everything for me.
As I was going through the program, I realized the Federal and State of NJ figures both decreased. Not knowing why, I finished and printed the returns, comparing them side by side. Here is what happened. The software is only discounting the $10,200 of unemployment, therefore line item # 8 (Other Income) is accurate at $6,054 ($16,254 is what was entered into the system) and 1040 is showing the net of $16,254-$10,200 (which is accurate). However, the 6b (Taxable Amount) of Social Security has changed. The 6a amount of $37,045 has not changed. The 6b amount has changed to $12,087.
Prior to the software updated, and manually reducing the figure, the taxable amount was at $4,481, not the $12,087, which changes the adjusted gross income. It appears that the IRS is only discounting the amount for unemployment, and not for taxable amount calculations for social security. There may be other increases for IRA's, Pensions, and Annuities, but I can not tell as they do not have any of these assets.
Can anyone tell me if they have experience with this one? We have to trust the software, but I can not find any information on this through research. Talking to my accountant, the figure of ($10,200) has to be backed off manually. With H&R Block, it is done for you. It would be a shame to file the taxes and the software be incorrect. I feel the next step is to do a social security calculation worksheet manually.
Interesting, we also use H&R software and went into my return yesterday to update the software for the same reason and the message stated that the next update was not scheduled until April 8th.
So as far as I can tell the change for the exclusion of unemployment benefits is not there yet!
Mine was updated. Don't open up any returns, just open the software and check for updates. This is a Federal update, and why wouldn't you have it. I am guessing the software is correct. The adjustment of -$10,200 is in the other income area, not on SS figures. Even though not a tax-preparer, I have become so familiar with the software, taxes have become second nature. Truly the best software, without all these crazy cartoon animations.
Online tax preparers like TurboTax and H&R Block haven’t yet updated their software to account for a tax break on unemployment benefits some Americans received last year.
I just did some googling, the artical from last Wed states the have not revised the programs yet!
They are also saying that there is another update on April 8th, 2021. I will wait until after this date before filing any returns. Something just does not add up.
I'm in Missouri & was attempting to secure my "REAL ID" at the local DMV. Apparently, my employer has begun truncating or blocking out the first 5 digits of my SS# on various documents, an action the IRS began allowing as of December 31, 2020. This has presented a problem with respect to individual verification, as a part of the "REAL ID" process. Do I have the option of requesting that my employer not do this on future documents?
Greetings, I'm doing taxes (last minute as usual). Ordinarily I use the tax computation worksheet in the 1040 booklet. I did so, but then calculated according to the 2020 tax brackets. I have to say, there's quite a difference between the two, nearly 4000 dollars. Why would that be?
The computation worksheet has one multiply total income from line 15 by 22% marginal tax rate and then deduct a standard amount of 8420 (for married persons). Is this simply a "convenient" sum and not necessarily the precisely correct sum?
Calculating by tax brackets, the first sum is 10% of 19250, followed by 12% of the next 61000, followed by 22% of the remaining 50000.
I can file any way I like, I'm sure, as long as I have the necessary forms for a potential audit. I just want to know if calculating using the 2020 brackets is the right way to go instead of trusting the IRS tax computation worksheet.
03-21-21, 06:08 AM
