Issue in Traditional IRA deduction calculation when filed jointly and both spouses not covered by Retirement Plan at Work

Forum|Forum|3 years ago
April 17, 2023
1 reply
1 view

Hi,

We filed our joint return today and TurboTax Online keep giving wrong calculation whenever I reopened my account after last save. But when I was going through the IRA contribution section again it changes the calculation again.

Just before e-filing our taxes there were different amount due and after e-filing the amount changed. We believe TurboTax changed our IRA contribution to non-contribution even we both spouse were not covered by retirement plan at work. Since we both spouses are not covered by retirement plan at work so there should not be any MAGI limit. After filing I see form 8606 - Nondeductible IRAs in my return, which should not be there as our contribution of IRA should be fully deductible.

TurboTax claims 100% Accurate Calculations Guarantee. Please suggest what are our options and how to fix as we have to pay more now because of less deductible.

Thanks

Sunil Gupta

TurboTax Self Employed Online

DanaB27

Level 15

Please be aware if you had an entry on Schedule 1 line 16 Self-employed SEP, SIMPLE, and qualified plan then you are covered by a retirement plan at work and your traditional IRA deductions will be limited.

If this doesn't apply to you then you will have to file an amended tax return after your original return has been processed. Please see How to amend a tax return for instructions.

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sunilg1975Author

Level 2

We did NOT have any entry on Schedule 1 line 16 Self-employed SEP, SIMPLE and did NOT have any qualified plan.

It seems like there is bug in the system. As I mentioned before system was showing different amount due just before e-filing and it changed after e-filing. It appears in the backend the system is not updating properly if both spouses are NOT covered by retirement plan at work and calculating wrong deductions for Traditional IRA contribution.

Because of this error we have to pay $5,500 more in taxes right now. I understand we can file the amendment later but it takes for than 16 weeks for the IRS to process it. Even we file for amendment through TurboTax, I believe it will still calculate wrong as how it is doing right now.

Thanks

Sunil Gupta