DO NOT FILE AMENDMENTS

[Lee B]

The IRS has announced that no one should file amendments claiming the Unemployment Benefits Exclusion or Recovery Rebate Credits for any children for which the taxpayer did not receive the $ 500 or $ 600 from EIP 3.

The IRS will use the data from filed 2020 tax returns and send out payments mid summer this year.

I am sure they were having nightmarish visions of being inundated with amendments. Oh the horror

Edited March 19, 2021 by jklcpa
edited per request

[Abby Normal]

https://www.accountingtoday.com/articles/irs-to-automatically-process-refunds-on-jobless-benefit-payments

[Catherine]

We had one client who filed early and owed tax because of the unemployment income.  We've told him NOT to make his payment (by check), as without that UI he's due a refund.  We've told everyone in general to sit tight and wait.  There's no way to send in amendments anyway; there has been insufficient time to process returns sent in.

[Lee B]

Copied from IRS eNews:

"3.  American Rescue Plan Act of 2021 – Don’t file related amended returns yet

The IRS urges taxpayers not to file amended returns related to the new legislative provisions or take other unnecessary steps at this time.

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021.

Additional information will be made available as soon as possible about:

Unemployment (IRS emphasizes not filing amended returns, until it issues additional guidance)

New round of Economic Impact Payments

Child Tax Credit, including advance payments"

[Max W]

There is no need to amend those returns with unemployment income that were filed prior to the exclusion update. The IRS will amend those returns and send any refund directly to the taxpayer.

(Announced by Drake this AM) 

[Pacun]

19 minutes ago, Max W said:

There is no need to amend those returns with unemployment income that were filed prior to the exclusion update. The IRS will amend those returns and send any refund directly to the taxpayer.

(Announced by Drake this AM) 

I think we will have to amend those who now qualify for EIC, especially if they didn't qualify before.  I have a couple that will now qualify and a few that their refund will be increased by a couple of thousand dollars or more.

[Max W]

5 hours ago, Pacun said:

I think we will have to amend those who now qualify for EIC, especially if they didn't qualify before.  I have a couple that will now qualify and a few that their refund will be increased by a couple of thousand dollars or more.

Yes, amend, but only after the IRS has amended the unemployment, first, and the client has received a letter stating so.

[GLJEANNE]

And I don't think they've addressed the APTC issue yet, but that seems like an extremely easy thing for the IRS to do themselves, so hopefully no amendments there either!

[Pacun]

 For the APTC, the IRS should allow us to do the calculation and override the penalty to 0. No programing needed.

[jklcpa]

Right now we are also still awaiting guidance regarding the PTC and whether or not the MAGI should include the unemployment income or not.  This is one of the items that the IRS has to make a decision on, so there is more involved with this area than just allowing an override of a penalty.

[Pacun]

The reason I say that is because the other numbers don't matter, the only number that matters on the APTC is the amount people will return which is 0. That penalty doesn't any bearing on any other part of the return and how you got to it doesn't matter because a repayment will be reduced to zero.

As GLJEANNE said "an extremely easy thing" thing to do.

Of course the IRS can easily program Form 8962 Line 28 "RepaymentLimitation=0" and we all be happy. 

[jklcpa]

1 hour ago, Pacun said:

the other numbers don't matter, the only number that matters on the APTC is the amount people will return which is 0

 

Not true. I have clients that didn't take the max APTC during 2020 and will have an additional credit on the return if the IRS determines that UI is excluded from MAGI for this purpose.

[Pacun]

Credits are NOT affected by the new legislation. ONLY repayment. That's why it will be as easy as  Form 8962 Line 28 "RepaymentLimitation=0"

[Lee B]

If you just mean "directly affected" then you are correct ,

however the resulting change in a taxpayer's AGI or MAGI potentially affects other credits phase outs etc etc

[jklcpa]

51 minutes ago, Pacun said:

Credits are NOT affected by the new legislation. ONLY repayment. That's why it will be as easy as  Form 8962 Line 28 "RepaymentLimitation=0"

I see where H.R. 1319 has changed PTC to no repayment of excess APTC for 2020 and made changes for 2021 and 2022, but I don't see a change anywhere in the bill that modifies the definition for "household income" used in sec 36(b) for calculating the PTC allowed on a 2020 return.  That calc starts with AGI and makes modifications only for: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.  If you have a cite that adds the nontaxable portion of unemployment to this list, please share it so that I can finish the affected returns.

I think this is one of the clarifications we are waiting for because the bill didn't address this as an add-back of the non-taxable portion of UI like it does for the other 3 items to arrive at MAGI for the PTC. 

[Pacun]

I am talking about PTC, not other credits. I just taking about the portion that deals with PTC as mentioned by GLJEANNE.

There are two changes for 2020, correct?

1.- Unemployment exclusion of 10,200 per tax payer. 
2.- No returning back money when the government paid too much for your health insurance in 2020. 

Part 2 is the one I am talking about. Part 2 can easily be solved by making line 28 of form 8962 equals to 0. 

As I have mentioned on other post, reducing your unemployment by $10,200 will change EIC, child tax credit, additional child tax credit, savers credit, educational credits, stimulus, etc.

[Sara EA]

Even if the IRS automatically adjusts returns for UI, what about the states?  Not all states will conform to federal.  Even for those who will, after the IRS adjusts AGI are they going to notify states?  Hardly likely.  I think we will all be amending state returns this summer.  We should send them all to congress and let them do the amendments.  Maybe then they'll think twice about changing the rules in the middle of tax season.  They could have made this change with the December stimulus bill but they were too busy making faces at one another.

[Rmm]

Do we have to wait until ATX creates the exclusion worksheet? Do we have any dates?

[Slippery Pencil]

50 minutes ago, Rmm said:

Do we have any dates?

Yes, by the 29th.