TurboTax, H&R Block Update Software for $ 10,200 Unemployment Tax Break
An H&R block office in San Francisco, California.
David Paul Morris / Bloomberg via Getty Images
TurboTax and H&R Block have updated their online software to reflect a new unemployment benefit tax break received last year.
However, government tax returns can still be a problem for some taxpayers filing electronically.
The American bailout plan excludes up to $ 10,200 per person in unemployment benefits from federal taxes through 2020. President Joe Biden signed the $ 1.9 trillion Covid relief effort on March 11.
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According to the Century Foundation, around 40 million Americans received unemployment benefits last year. The average person received $ 14,000.
Individuals with an income of $ 150,000 or more in the previous year are not eligible for a tax cut. This threshold is the same regardless of the login status such as single or married.
Tax advisors like H&R Block and TurboTax needed time to optimize their systems appropriately and to adopt the law. They also had to wait for the IRS to issue guidelines on how workers can apply for the tax break. TurboTax processed nearly 40 million tax returns in the past year.
More than 7 million people used the H&R Block software to file their taxes last year.
As of Friday, company spokeswoman Lisa Patterson said H&R Block was able to process tax returns for people eligible for federal tax exemption.
“Whether you use our DIY products or work with a tax advisor, our services will be updated to address this tax change on federal returns,” said Patterson.
A spokesman for the Free File Alliance, a group of nine companies working with the IRS to offer a free electronic tax return, did not immediately return a request for comment. (IRS Free File is available to taxpayers with an adjusted gross income of $ 72,000 or less.)
The IRS advised taxpayers who have already filed their 2020 tax returns but are eligible for an unemployment income reduction not to file an amended tax return in order to receive the benefit.
The agency is working on a fix and plans to automatically process refunds for eligible people.
“As soon as the IRS gives more instructions, we will help our customers get the refund they are due,” Patterson said.
State tax returns
Government tax returns still seem to be a problem for some people filing tax returns online.
Bob Loiacono, 60, a do-it-yourself tax advisor, prepares taxes for a number of family members each year.
A resident of Whitefield, New Hampshire, last week filed a joint tax return using H&R Block software for a cousin and husband who received unemployment income.
The federal return was accepted, but its return from the state of Massachusetts was denied. A phone rep from H&R Block found that a negative number (-10,200) on the tax return was causing the problem, Loiacono said of the conversation.
Thirty-five states and the District of Columbia typically tax unemployment benefits as income. (Three states – Arkansas, Delaware, and Maryland – usually do this, but waive the 2020 tax.)
Many federal states have not specified how to deal with the new tax exemption, which applies at the federal level, but not at the state level.
“It’s still a question of how I can file the government return,” Loiacono said of the situation.
“We’ll wait a week and see what happens,” he added. “But someday [my cousin] must submit a return whether it is paper or not. “
The IRS extended the tax deadline to May 17th. Massachusetts passed the same deadline.
“Many states are still making decisions about whether and how to adjust to the federal unemployment income exclusion. In the meantime, H&R Block is updating its services,” Patterson said.
The Massachusetts Department of the Treasury did not immediately respond to a request for comment.