TurboTax, H&R Block need time for tweaks to $10,200 jobless tax break

ANASTASIA ZYG


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Online tax preparers like TurboTax and H&R Block haven’t yet updated their software to account for a tax break on unemployment benefits some Americans received last year.

As a result, taxpayers who are eligible for the new break and typically file a return digitally should wait, experts said.

About 138 million individual tax returns last year were filed electronically — almost 98% of the total, according to IRS data as of mid-July.

$10,200 unemployment tax break

The Free File Alliance, a group of nine firms that partner with the IRS to offer free electronic tax filing, didn’t return a request for comment. IRS Free File is available to taxpayers whose adjusted gross income is $72,000 or less.

Companies in the Free File Alliance include 1040NOW Corp., ezTaxReturn.com, FileYourTaxes, Free Tax Returns, Intuit (which owns TurboTax), OnLine Taxes, TaxACT, TaxHawk and TaxSlayer.

The IRS didn’t return a request for comment.

Wait to file

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The $1.9 trillion Covid relief bill offered the unemployment tax break in the middle of filing season, which began Feb. 12 and runs to April 15.

About 40 million people received unemployment benefits last year, according to The Century Foundation. The average person got $14,000 in assistance.

“It’s always challenging in the middle of a tax season when you have a tax law change,” said Nina Olson, executive director and founder of the Center for Taxpayer Rights. “It’s challenging for the IRS to incorporate it, and it’s challenging for the software providers.”

However, some smaller software providers may not make the change this tax season, which is a concern, she added.

After Hurricane Katrina, for example, some firms in the Free File network didn’t incorporate new tax benefits offered to people affected by the natural disaster, Olson said. And those provisions were passed before tax season began, not in the middle as with the American Rescue Plan, she added.

Taxpayers who already filed their taxes and are eligible for the unemployment tax break should not file an amended tax return, the agency said Friday. The IRS may be determining how to provide the benefit without such an action, experts said.



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