New Individual Update - Unemployment exclusion and Due Dates are now available

 This morning, we released federal form updates relating to both the unemployment exclusion and the 5/17 due date. 

Important: The IRS has stated that there is no need to file an amended return (Form 1040-X) to figure the amount of unemployment compensation to exclude. The IRS will re-calculate and send the difference.

For states who have already declared their intentions on these issues, we are targeting a 3/29 release for those state forms. Please refer to our Wolters Kluwer "Latest Impacts" landing page or to state government websites for individual state impacts.

Direct Debit Payment Dates: Please be aware that the IRS still has not changed their business rule for Direct Debit payment dates, and cannot currently accept Direct Debit payment dates that are after 4/15/21 (even though our software now has been updated to allow dates between 4/15 and 5/17). Until the IRS updates their rule for this, any returns with Direct Debit payment dates after 5/15 will be rejected by the IRS.

Expected 3/29 Individual Update - Unemployment $10,200

 Last week I sent everyone an updated email outlining the expected timeframe for the new calculation changes for the $10,200 Unemployment expenses and have some new information that is extremely important for you to understand and to read.

Many of you have been calling in regarding the IRS Worksheet they mentioned on their website, also been referring to other software manufacturers such as TurboTax implementing the changes based on the worksheet.  I specifically told everyone to hold off on all these types of returns because we have been waiting for the IRS to fix everything at the e-file center.

The IRS has confirmed that the Worksheet and calculation "workarounds" that have been released were for Paper Filing Returns ONLY!!

By March 29, 2021, we will have the software updated to ensure these calculations are based on IRS e-filing guidance and are auto-calculated.

The majority of tax returns filed using our software are e-filed rather than paper filings. We want you to be aware the recently released IRS guidance for handling unemployment compensations due to the American Rescue Plan Act of 2021 changes are for paper filings, not those who choose to e-file.

We have chosen not to provide you with workarounds and manual calculations to input the pertinent data into your tax preparation filing software. These workarounds would be drawn from recently released IRS guidance for paper filings and possibly cause rework at a later date.

On top of all of this, the IRS has still said to not e-file any Amended returns regarding this issue because they are now in the process of just possibly sending out a check to everyone instead of requiring an Amended tax return to be filed.

With all of that being said.. what are your options?

1. We still strongly advise you to be patient and wait until the official updates have been made within our software and at the IRS level for e-filing the returns that haven't been filed yet
2. IF you, or your customer, simply can't wait then you can take the chance and file the return as is, and they will have to deal with whatever decision the IRS makes on how to get the missing money they are hoping to receive based on those tax exclusions.

As a Tax Preparer, it is your job to guide your clients into making the best decisions for them and their needs.  We all know and understand some people simply just need money now.  However, it's up to you to make the best judgment call for your clients and helping them make the correct decisions.

Amendments with Bank Products, $10,200 unemployment changes, and more

This message is going to be short and to the point, but very descriptive and express total industry irritation.  We all know the glorious new law changes that they have pushed out and causing all of us in the tax preparation business to pull our hair out and want to bang our head against the wall.  Not only is it causing you all stress, but it's causing all us technical help providers, and software manufacturers, a great deal of stress knowing that we literally know nothing!

The IRS has said nothing on how exactly they are going to deal with the Child Tax Credit / Unemployment tax changes.  In addition to this fun idea, there are 34 states that actually charge a tax for Unemployment Benefits, and a few states are deciding this week "hey, we should go ahead and waive this also!"

You can imagine the amount of confusion, frustration, and pure stress this is causing everything.  I'm not immune to this either.  This has been one of the most painful years we have had in a long time.  We do typically have the additional stress when a new president enters the white house.  Do you remember back when Obama took office and the incredibly awesome nightmare the IRS shutdown caused in addition to the new law changes with the Affordable Care Act and the nightmare of the IRS getting everything organized to accept those returns?  Form 8962 is very confusing for a lot of tax professionals, even some veterans.

Back to the point at hand - American Rescue Plan Act & Bank Loan / Product Amended Returns...

We, Sure-Fire and the Development Team for the software, have absolutely no idea what to expect with these new law changes that recently happened. American Rescue Plan Act passed 3/10/21and is expected to be signed into law shortly. The most notable change for tax purposes makes the first $10,200 of unemployment relief received in 2020 exempt from tax for households with up to $150,000 of income.  For this, we are all going to strongly encourage that you completely hold off on all amended tax returns regarding the new tax law changes until IRS completely says how they are going to handle everything because right now, no one knows anything.  We don't know if amended returns will be required, or if they will just cut a rebate check to everyone.  We don't know. 

For those with Bank Loans / Regular Bank Product on tax returns and not able to do Amended Tax Returns because of them being 'locked' for a Bank Product, or a Loan on the return, we got word today that it will be a fix implemented in the next 1040 Individual Update.  We haven't been told an exact release date for this update, only that it will be released sometime between tomorrow and Wednesday of next week.

This new update will allow you to submit a 1040X by e-file without having to remove the existing bank product on the return.  This was cleared earlier today with banks and regulatory parties involved with handling this type of situation.

 

We hope you keep your head up during all the panic going around in the industry and from your clients.  Feel free to contact us with any questions you may have and continue to tell your clients "I don't have your stimulus money, don't sue me bro!" (tax preparer meme).