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@NECPA in NEBRASKA Oh no, I'm sorry to read this! I hope you both have mild cases and feel better soon. Do you have any other help in the office, maybe to prepare extensions?

To new members and everyone: #1 - We have a lot of new members this year, so welcome to the forum. We hope you find it helpful. #2 - Lately I am moving many posts to their own topics. If a topic is fairly recent AND the original poster has received sufficient answers to have resolved their issue, feel free to post in that same topic. If your question is not the same issue, please make a post of your own so as not to derail the original topic before the original poster has his or her answer. #3 - Please don't revive posts that are many years old, or even from last year. Again, start a new topic of your own. We've had many law changes and some old topics shouldn't be relied, and also some members in older posts no longer visit the forum or have retired. #4 - A few members pose the same question across multiple forums, and I saw one recently on 3 separate forums and that may have been on more that I don't visit! I can't stop anyone from doing this and don't know how anyone else feels about this, but to me it seems somewhat disrespectful of members here that generously and patiently take time from their own work or family time to provide answers, and those that do answer may be unaware that the poster has already receive sufficient advice elsewhere to solve their problem and has already moved on. #5 - If you are going to take time to answer, please try to be respectful and try to post a helpful answer, a link that leads to the information, etc. rather than some snark about having already answered elsewhere, or suggesting that the poster needs to take a course. Please remember that your answer may also help others that are struggling with the same tax problem, program, or input issue, and there may be others that will learn something new and remember it in future. #6 - If you have a problem with a post or poster, please use the report function and leave the moderating to me. I receive an email directly for each report, and I check in frequently throughout the day as time allows. If you type out some nasty snark, step back from the keyboard for a few minutes, then come back and rethink your reply and whether you would like to be on the receiving end, if that is how you would like to be treated by your peers, and if that is how you would respond in person. I've been guilty of this and have to remind myself too when I'm short on patience, so please know that I'm not picking on anyone or any post in particular. /end of rambling PSA

You aren't overthinking it. That is exactly what is currently happening on the DE returns in Drake at the moment. DE starts with Fed AGI and makes modifications, so since DE decided to make UI N/T for 2020 I'm having to override the DE subtraction to be -0- if UI is N/T in its entirety on the Federal, or to override so that the DE subtraction is the amount over $10,200 that is still taxed on the Federal return.

I got the Drake update and checked on one return. All I'll say is BE CAREFUL WITH THE STATES. DE already decided to make the UI N/T, and DE generally piggybacks the Fed laws and starts with Fed AGI and makes just a few modifications. That would be fine if DE didn't make a special modification in Feb already to exclude all of the UI from state tax for 2020, but now that some or all is excluded from the Fed, Drake is still subtracting the entire amount again because they fixed the Fed but not so that the state calculates correctly.

Maybe the post by TexTaxToo on pg 1 in this topic is what you remember? I think it's the 5th post down?

Yep, announcement came in an email.

Never! I'd be shocked, really shocked!

in her checkbook after she subtracts the checks she just wrote 12/30/20, plus the savings, cash, etc.

There is supposed to be a worksheet created that will start with the amount received that will calculate the nontaxable and taxable portions, so I think we will enter the amounts shown on the 1099G for gross unemployment and tax withheld and let the software go through its calcuations. This is one more reason to wait for the software update besides the fact that the nontaxable portion will be an add-back for other calculations on the return.

Yes, 3/31/21 is correct. The original due date is 15th day of 4th month (10/15/20) and the extension is for 5 1/2 that extends this return to 3/31/21.

Thank you!

I'll second the need for the support worksheet. Also, keep in mind that student loans used to pay college expenses that the student is obligated to repay are considered to be support provided by the student.

My answer was specific to those NOT qualifying for the refundable portion that grandmabee asked about. I edited to add a note in red at the beginning of my post to make that more clear.

American Opportunity Tax Credit - Exception for Under Age 24 Taxpayers Self-supporting taxpayers claiming the AOC for themselves, will not qualify for the credit if they fall under Rule 1, or 2 or 3. Rule 1: Taxpayer is under age 18. Rule 2: Taxpayer is age 18 and earned income (employee or self-employed) is less than one- half of total support. Rule 3: Taxpayer is over age 18 and under age 24 AND is a full-time student AND earned income is less than 50% of total support AND has at least one living parent AND is using a filing status other than a joint return with a spouse.

Sure. There's a checkbox at the bottom of the input screen for 8863 that is labeled "Make the American Opportunity Credit NOT refundable."

Today I feel like giving up. For every 3 returns I work on, it seems that 2 are put on hold. I could have a second career if only SNL would hire me to reprise the role of Debbie Downer.

No, once IRS opens up the MeF system each year, we have the ability to file the current and prior two years returns, so up to the shutdown late this year, we can efile returns for 2020, 2019, and 2018.

This came from Drake, but it seems that Microsoft has pulled the update because of other software being affected.

Please don't confuse home equity loan, HELOC (those are bank products), or second mortgage with deductibility. If the use of home equity loan or HELOC proceeds qualify as home acquisition indebtedness or home equity indebtedness as defined by the tax code, then the interest would be deductible within the limits allowed. Where home equity or HELOC interest isn't deductible (through 2026) is where the proceeds are used for something other than to buy, build, improve. So, for example, interest on a HELOC used to purchase a new car would NOT be deductible under the current law, but interest on a HELOC used to renovate a kitchen or build an addition would be.

Thank you for the update, Possi. @RitaB, I am so very sorry for your loss and will definitely have you and your family in my prayers.

It should all be deductible. The portion of the refinance up to the amount of the original debt will qualify as home acquisition debt and the second home also because it is a qualified home. Below is a quote from Pub 936 as well. Next, note above it says "a qualified home" and under the tax law that is defined as a principal residence AND a second home that taxpayer chooses for that tax year. Pub 936 goes on to say this: The second home is a qualified home at the time of the refinance, but I used the above to make the point that taking the deduction is valid.

Tom, thank you! That section has been updated since I quoted from it earlier in this post and another post! That's why we should wait for the final version to be signed into law and discuss pending legislation with caveats.

Was it a new loan or a refi with cash out? If a refi, what was the date of the original mortgage?

@BulldogTom Here is the direct link to Congress.gov for the entire House bill that went back to the Senate. Look for Title IX, part 4. The unemployment provision is in sec 9042. That entire section is very short, and unless there is some technical correction or somewhere else that references back to the Cares Act and that threshold that I'm not seeing, right now I don't think it's an add-back, but that doesn't mean I'm right or that it won't be in future. I suppose it's possible, just like the n/t portion of social security is an adjustment to arrive at MAGI for the PTC calcs. Sorry I don't have anything more than that at this time, and don't have time to take a course at the moment, and luckily so far I haven't seen anyone close to the limitation like your client's situation. https://www.congress.gov/bill/117th-congress/house-bill/1319/text If you don't want to click the link, google "H.R. 1319" and look for the ones that go to Congress.gov site. That is the official site for the House, and the official site for the U.S. Senate is Senate.gov.

Yes, that is correct. Also exclude from Sch A any amount claimed as SEHI.