Technical topics regarding tax preparation.
13-Feb-2021 10:01am
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There's a bit of chatter about a limited amount of UI being exempt from income this year. There was a reference in another thread to the bill that would allow the exemption, but it didn't seem to have gone anywhere and since it wasn't passed, it sounds like that one just died and another one needs to be drafted for this congress. Is there still a plan in the works to do this? I'm not sure what to tell client about filing now or waiting a couple of weeks.
13-Feb-2021 10:20am
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State and federal UI both taxable as of now - who knows as to tomorrow.
13-Feb-2021 10:26am
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I'm going to tell my affected client(s) that there's a possibly legislation may make a portion exempt. There's a bill out there, but the bill hasn't gone anywhere.
I advise waiting on filing until early April. At that point, it's their decision to file or extend. If they elect to file and subsequent legislation changes the tax treatment, I'll have to bill for my time if they want to amend.
Personally, I think that if something isn't passed by early April it's not going to get passed.
13-Feb-2021 10:35am
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In the olden days tax legislation was done early in the year or even before the beginning of the year. This allowed taxpayers the opportunity to do their tax planning for the year.
As the years went by, tax legislation was argued about in Congress later and later into the year before being passed. It got to the point where "extenders" became commonplace and were not settled until late in the year, even late December. Tax planning during the year became a game of speculation as to what Congress would do, if they would do anything.
Then extenders would not get extended until January for the prior year.
Now, tax pros have become complacent to inaction of Congress and partisan delay tactics. We have become accommodating such that we are willing to sit on our hands into the middle of tax season to see what if anything Congress might do with legislation for the prior tax year.
If Congress passes legislation in February, or even March, there's going to be a revolt. IRS will be flooded with amended returns, all of which processing and refunds will be delayed through the rest of the year or longer. Congress will get flooded with letters of protest both from taxpayers and from tax pros.
This must stop.
13-Feb-2021 10:45am
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I understand Sen. Durbin and Rep. Axne introduced legislation Feb 2. When you look at it, it looks like the same bill that was introduced by Durbin in September 2020. Forbes reported it Feb 3. It's on Durbin's webpage dated Feb. 2, 2021.
14-Feb-2021 1:46pm
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Durban may be able to make federal tax exempt, but States were supposed to control that, after all the work was from them.
15-Feb-2021 12:03am
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Many states including California do not tax state unemployment benefits .
22-Feb-2021 10:07pm
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Any thoughts on when this might be voted on?
2-Mar-2021 12:36pm
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I thought someone had posted a link to the actual bill, but I can't find it. Is there any indication as to when it might come to a vote or is it just dead in the water?
2-Mar-2021 12:38pm
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I would think if it's not in the current $1,900,000,000,000 bill, then it's dead
2-Mar-2021 2:29pm
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But it's only another $20 or $40 billion. Immaterial. Pass (the bill).
2-Mar-2021 7:09pm
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Dave
Taxation is the price we pay for failing to build a civilized society. ~ Mark Skousen
2-Mar-2021 7:22pm
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It says 2 actions, but I only see one: Introduced in House.
2-Mar-2021 8:11pm
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Click the radial button on the left pane "All Actions".
Can a yellow dog learn new tricks?
2-Mar-2021 9:09pm
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It's gone nowhere. It has just 8 co-sponsors in the Senate and 32 in the House. In other words, not happening.
As others have said, it would cause chaos and I can guarantee you that the IRS has told Congressional leaders the same.
Steve Kassel, EA
2-Mar-2021 10:14pm
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It sure would. How can you justify making UI, especially the extra UI, non taxable and give no break to the millions of essential employees who are still risking their lives nothing. If anything, part of their pay should be non taxable, like combat pay, as a thank you.
Cathy
CathysTaxes
3-Mar-2021 5:47am
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ManVsTax wrote:Click the radial button on the left pane "All Actions".
Can a yellow dog learn new tricks?
Got it! Thanks. Where's my treat?
5-Mar-2021 11:42am
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This was posted on one of my FB groups this morning. If passed, then $10,200 of UI benefits will be exempt from tax. It's expected to be voted on as part of the bill currently being voted on and discussed. The indication is that it should be done by middle of next week.
https://beta.documentcloud.org/document ... aTXx4PcmTI
5-Mar-2021 12:10pm
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Great. Retroactively? So everyone with UC needs amending now?
5-Mar-2021 12:19pm
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Glad I'm still holding mine! Guess we should know for sure next week!
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