How do I enter unemployment compensation so the first $10,200 is exempt in a 1040 return using worksheet view?

  • Article Type:
  • How To
  • Last Modified:
  • 04/21/2021

Objectives

Per the IRS on tax treatment of unemployment benefits (link below in Additional Information):
"Unemployment compensation benefits are considered taxable income. However, the American Rescue Plan Act of 2021 contained a one-time exclusion of $10,200 ($20,400 for married couple) for individuals and families with modified adjusted gross income of $150,000 or less. Amounts above $10,200 ($20,400 for a married couple) should still be included as taxable income."

Environment

  • CCH ProSystem fx Tax
  • CCH Axcess Tax    
  • 1040
  • Unemployment Compensation
  • American Rescue Plan Act
  • Worksheet

Procedure

This video shows how to enter unemployment compensation and where to view the unemployment compensation exclusion worksheet statement from on the American Rescue Plan Act in CCH Axcess™ Tax.
  • Disclaimer: This video and information should not be considered as, or a substitute for, accounting, tax or financial advice.

To enter Unemployment Compensation, do the following:
  1. Go to the Income > Other Income (1099-G, 1099-K, 1099-MISC, 1099-NEC, W-2G) worksheet. 
    • Select Section 3 - Certain Government Payments (IRS 1099-G).
    • Click Detail located in the upper left corner of the grid.
      • In Section 1 - IRS 1099-G, enter applicable information as shown on the taxpayers Form IRS 1099-G.
  2. Calculate the return.

Note: With release version 2020-3.2 (2020.03020, available on Sunday, March 28, 2021), the unemployment exclusion is automatically calculated on a worksheet in the statements behind the Form 1040, Schedule 1.  If you have already updated to this release version for CCH ProSystem fx Tax or if you are using CCH Axcess™ Tax, the steps below are not necessary.

For CCH ProSystem fx Tax users on release versions prior to 2020.03020, the $10,200 exclusion will not calculate automatically, however, it can be manually entered into the return. 

To enter the Unemployment Compensation Exclusion prior to the release version 2020.03020, do the following:
  1. Go to the Income > Other Income (1099-G, 1099-K, 1099-MISC, 1099-NEC, W-2G) worksheet.
    • Expand Section 1 - Miscellaneous Income (IRS 1099-MISC).
    • Click Detail located in the upper left corner of the grid.
      • In Section 1 - IRS 1099-MISC (Other Income), enter the following.
        • In Line 5 - No 1099-MISC received, select the checkbox.
        • In Line 10 (3 - Other Income), enter the result from the worksheet on the IRS website as a negative entry.
      • Select Section 2 - Other.
        • In Line 15 - Payer name description - override, type "UCE" for Unemployment Compensation Exclusion.
        • In Line 16 - Income type, use the drop-down to select Non SE income.
  2. Calculate the return.
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