CCH Software News - American Rescue Plan Act of 2021: Unemployment Compensation Relief using CCH Axcess™ Tax.

  • Article Type:
  • Documentation
  • Last Modified:
  • 04/14/2021

Objectives

Document CCH Software News email regarding American Rescue Plan Act of 2021: Unemployment Compensation Relief.

Environment

  • CCH Axcess Tax    
  • 2020.03000
  • 1040
  • Worksheet View

Details

CCH Software News - American Rescue Plan Act of 2021: Unemployment Compensation Relief

Dear CCH Axcess Customer:

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law. It contains a provision allowing taxpayers to subtract up to $10,200 of unemployment compensation received for tax year 2020.

The IRS provided guidance on Monday, March 15, 2021, by adding a new worksheet for Schedule 1, Additional Income and Adjustments to Income “Unemployment Compensation Exclusion Worksheet  - Schedule 1, Line 8.” This new worksheet will be available for release 2020-3.2 on Sunday, March 28, 2021.

IMPORTANT: For taxpayers who received unemployment benefits in tax year 2020 and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return until the IRS issues additional guidance.

In addition to the federal change, there are 34 states that are impacted by this new legislation. At this time, we have heard from several states on their treatment and are waiting on final instructions. Once we have confirmed the changes for each state, we will provide all necessary updates as quickly as possible.

Should you want to file returns before the new IRS Unemployment Exclusion Worksheet is available in Tax, please reference the worksheet on the IRS website to determine the applicable exclusion. The steps below are provided as a workaround until the worksheet is released on March 28, 2021:
  1. Enter Unemployment Compensation located at Income > Other Income (1099-G, 1099-K, 1099-MISC, 1099-NEC, W-2G) > 3 Certain Government Payments (IRS 1099-G).
  2. Enter the corresponding subtraction at Income > Other Income (1099-G, 1099-K, 1099-MISC, 1099-NEC, W-2G) > 1Miscellaneous Income (IRS 1099-MISC).
  3. On the 1099-MISC worksheet, make the following entries:
    1. Select the No 1099-MISC received check box.
    2. In Box 3 Other Income, enter the result from the worksheet on the IRS website as a negative entry representing the subtraction for Unemployment Compensation exclusion.
    3. In the Nature and Source area, enter UCE in the field labeled Payer name and description – override.
    4. In the Income type field, select Non SE Income.
Once again, the above workaround takes into account the federal calculation only. The applicable state return should be reviewed closely for proper treatment until we have fully implemented the state reaction.

Sincerely,

Wolters Kluwer Tax & Accounting, North America If this email was forwarded to you, and you would like to subscribe to CCH Software News announcements, subscribe here.

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