The error in the software is in your step 10:
On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible”
It never asks this question.
It defaults to this statement:
<name> modified adjusted gross income (MAGI) is $xxx,xxx which puts <name> over the limit for IRA deductions. To deduct a contribution, you can't have a MAGI over $125,000 while being covered by a retirement plan at work.
I have talked with TurboTax on the phone and they have took screen shots of my screen and said they would send the information on to someone to resolve the issue. However I never received the promised email with my Case number. The first time I called they said they couldn't help me and sent me a case number set to "resolved".
