NY Taxes on Unemployment

[KATHERINE]

Hi team!  Good morning.  I was a little confused on NY Unemployment benefit.  From sources online, NY is not excluding the first $10,200 unemployment benefit from taxable income.  But when I use ATX to prepare NY tax return, I saw the recomputed the fed AGI is the same as Fed AGI (NY IT 201 box 19 &19a), and the state adjustment start from there.  To me, it seems like the return took the $10,200 exclusion as the Fed.  Is my software or I should do some other manual work to fix it?  

[Lion EA]

Add back on Form IT-558 using code A-011.

NY has been too busy legalizing marijuana to vote on any tax de-decoupling.

[KATHERINE]

Thank you!  :).   I checked the most recent 558 instruction, and it was not updated for the new code yet.  Thank you for your suggestion, I think I will hold the returns till the software updated.   

[Lion EA]

I haven't heard of NY approving any software yet for this issue. (Too busy sampling re their new law?!)

[KATHERINE]

But ATX allow to efile without adding it back now, that made me confused.  IRS will adjust by themselves for early filed returns which had reported as income, NYS may do the same.   For whom doesn't want to wait, is it practical that I may file it as it and let the state decide how much refund to give?  Thank you

[Lion EA]

Two bills in committee:

https://www.nysenate.gov/legislation/bills/2021/a6584

https://www.nysenate.gov/legislation/bills/2021/s4819

Explain the options to your clients, and let them decide.

[Carolbeck]

Just a Heads up if you are using ATX and open a early return already filed without the Unemployment

Exclusion to see if corrected. The Federal is fine, but the NYS is not. When you include the IT-558 for

the code A-011, the IT-201 is doubling adding back the excluded UCE. The only way to correct is to

delete all the NYS forms but not the e-file form for NYS, (IT-201, IT-196, and the IT-558) and add the forms

back in. This is just for the early ones that will have already filed before the American Rescue Plan became

law.  This is not an issue if you have not filed yet, but double check Lines 18 and 19.  Also, NYS really has

not made a definative decision yet. What a fun tax season!

[B. Jani]

ATX already fixed NY 558 worksheet with code 011 to add back Unemployment and flows to 201 to modified AGI. You can file until NY make any decision.

[FDNY]

On 3/31/2021 at 5:33 PM, Carolbeck said:

 The Federal is fine, but the NYS is not. When you include the IT-558 for

the code A-011, the IT-201 is doubling adding back the excluded UCE. 

This only happens if on an earlier return, before being automatic, you manually subtracted the UCE on Sch 1 L 8, so it's there twice.  It will double the amount on NY.  

What a crazy year, one for the books.