Ive entered my information and the turbotax software seems to be missing an exemption I believe I qualify for, is there a way to manually alter forms?

[potatopots]

In California, I am being penalized for not having health insurance for part of the year. However, on the form (3853, part 2) you can claim an exemption for being below the gross income threshold for filing in California. I am below this. I am above the adjusted gross income threshold. The wording of this exemption specifically say only gross income threshold. However this exemption is not checked in my return and I am being penalized.  I think this is mistake and I have no way of correcting it.

[MonikaK1]

If you completed the Health Insurance Penalty section in the California return, on the screen titled "Take a look at California credits and taxes" and selected an option for an exemption from the penalty under "Couldn't afford insurance", the Learn More link next to each choice provides more information:

How do I figure out if individual coverage is unaffordable?

If you're married without children and both you and your spouse were offered health insurance through a job, it's unaffordable if the combined cost of coverage for both of you was more than 8.17% of your household income. But if either of you were offered a family plan that cost less than 8.17% of your household income, coverage was affordable.

If you were only offered coverage for part of the year, it's OK. You can calculate whether it was affordable by multiplying the monthly premium by the 12 months of the year. If that number is more than 8.17% of your annual household income, health insurance was unaffordable.

The Health Insurance Marketplace may follow up to confirm the details of the health insurance plan you or your spouse was offered through work.
 

A follow-up screen provides entry blocks for you to indicate for which months and which household members coverage wasn't affordable. These entries are used to populate California Form 3853.

See this Covered California article for more information about the penalty exemptions.

[potatopots]

Thanks for the response Monica. This doesn't seem to address my issue exactly. I'm not sure market plans were unaffordable during that time. The problem is: I am below the gross income for filing threshold in California. According to the link you shared, as well as the 3853 form, this makes me exempt from this penalty. However turbo tax doesn't list this as a possible exemption , and none of the exemptions they do list apply to me. I am therefor being penalized incorrectly. It seems that the software is just missing the fact that I am below the threshold and I am looking for a way to correct this. Do you know is it possible to alter the tax documents produce by turbotax before you submit them?

[MonikaK1]

In order for us to troubleshoot this issue, you can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Desktop users:

1. From the black bar at the top of your screen, select Online
2. Click Send Tax File to Agent
3. Click Send on the message that pops up
4. TurboTax will create a "sanitized" copy of your return information with no personal info
5. Post the 7-digit token number here in this thread

Here are the instructions for TurboTax Online users: 

Go to the black panel on the left side of your program and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
5. Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to review your file to see what you are seeing, and we can determine what is going on in your return and provide you with a suggested resolution here in this discussion thread.

[potatopots]

Thanks for the reply. I would like to do this but I need some more information. Can you please link to some official turbo tax documentation about this document sharing procedure?

I understand this has created a "clean" version of my documents. I also gather you are an Intuit employee and I appreciate the help. However as a matter of principle I am wary of posting links to my tax returns that I do not fully understand on community message threads.

[MonikaK1]

Yes, I am an Intuit employee. When you follow the steps provided to share your tax file, we can only use the code you provide to generate a "sanitized" TurboTax file. When we upload the sanitized file in TurboTax, we only see X's displayed in place of names, addresses, and SSNs. We are only able to see the numbers and explanations entered and boxes checked and determine which entries were made by the user, in order to diagnose problems.

It is wise to be wary about sharing confidential tax information.  This procedure doesn't divulge anything beyond what is needed to diagnose a problem with the software or with user entries.

[potatopots]

Okay thanks, the code is 1222786.

[MonikaK1]

The return I was provided using the code you sent doesn't appear to fit your situation (it doesn't have California, and has a larger AGI). It is possible that the code was entered incorrectly into the system.

Could you please generate another code using the same steps and post it here?

I apologize for the inconvenience.

[potatopots]

no problem, Here is the second code:

1225550

let me know if that works.

To be clear, my adjusted gross income is above the filing threshold. However my gross income is below the income.

according to page 5 the 2023 instructions for tax form 3853 ( https://www.ftb.ca.gov/forms/2023/2023-3853-instructions.pdf) if either agi or gross income is below, you should check the box in part II

[MonikaK1]

Thank you. I will post here when I've reviewed the file.

I have reviewed the diagnostic file.

The Instructions for Form 3853 state "If your applicable household income or gross income is less than your filing threshold, you can check the box in Part II, Coverage Exemption Claimed on Your Tax Return for Your Household. Other exemptions may be claimed in Part III. Depending on your situation, you may need to complete one or more parts of this form."

The filing threshold is applicable if either your gross income or your adjusted gross income exceeds the table amount. This is what the excerpt is intending to say. I have found that explanation in other tax publications, but unfortunately, the Franchise Tax Board instructions aren't that clear.

On Page 3 of these Instructions, a table appears that explains each exemption. The income exemption is shown as follows:

Income below the filing threshold — Your applicable household income or gross income was less than your applicable minimum threshold for filing a tax return.

Because your taxable income was above the filing threshold,  your return shows tax on that income. The tax was eliminated with credits claimed on the return. Then, your payments were credited, and the Individual Shared Responsibility Penalty was added, which reduced your refund.

If a user's income is below the California AGI threshold, TurboTax automatically uses the income below the filing threshold exemption and the penalty is not applied.

You do have the option of claiming the Affordability exemption if it applies. Go back to the California interview and review the choices on the screen, "Did you have a situation that waives the tax penalty for being uninsured?" under "Couldn't afford insurance". If you can choose one of those alternatives, and then on the next screen choose the months to which it applies, TurboTax will recalculate the penalty. 

 [Edited 04/03/24| 10:33am PST]

@potatopots

[potatopots]

Thanks. I see what you are saying but I believe you are confusing the instructions for filing exemption with the instructions for the part II exemption.

 You have explained the instructions for whether or not i am exempt from having to file my taxes. You are correct that I do have to file my taxes since it true that either my AGI or my gross income is above the threshold. If i said that i was exempt from filing earlier I was incorrect.

However, whether or not i am exempt from this penalty through part II of the document does not wholly overlap with whether i must file my taxes. As the first line of your quote states the part II exemption is actually the inverse of that: If either my AGI or my gross income is below the threshold. The document goes one to explain in further detail on the specific instruction on page 5.

since i am below the gross income threshold but above the agi threshold, it is the case that i must file my taxes but i am exempt from this penalty by part 2 of this document.

below is page 5 of the instructions for form 3853. In bold is the situation which applies to me.

"If you are not required to file a tax return because your applicable
household income or gross income is less than your filing threshold,
and you do not wish to file a tax return, your applicable household is
exempt from the Individual Shared Responsibility Penalty and you do
not need to file a tax return or do anything else to claim the coverage
exemption. If your applicable household income or gross income is less
than your filing threshold but you file a tax return for any reason, see the
instructions for line 1 next.

Line 1 – Applicable Household Income or Gross
Income Below Filing Threshold

To check the box on line 1 based on your applicable household income
or gross income, you must first determine your applicable household
income (see Applicable household income, under Definitions) and your
gross income (see Do I Have to File? on page 18). Then compare your
applicable household income to the California adjusted gross income
filing threshold or your gross income to the California gross income
filing threshold that applies to you based on your filing status. If either
your applicable household income or gross income is less than your
filing threshold, check the box. If you check the box in Part II, line 1, you
do not have to complete Part III"

from what you've explained to me, it sounds like turbotax is overlooking this case. Is there something I or you can do remove this penalty from my tax return?