@dmertz wrote:
The instructions for Worksheet 1-1 say, "Use only if you made contributions to a traditional IRA for [tax year] that may not be fully deductible and have to figure the taxable part of your [tax year] distributions to determine your modified AGI." I interpret that as saying that if you are electing to make the IRA contribution nondeductible or the IRA contribution will be either entirely nondeductible or entirely deductible no matter the how much of the IRA contribution might be deductible, the worksheet should not be used, but TurboTax uses it under those circumstances anyway. I have no information on what the IRS thinks about TurboTax's extremely liberal use of the worksheet. I haven't heard of the IRS challenging the use of the worksheet, although I have heard about IRS examiners questioning the result because the worksheet is not part of the filed tax return.
I agree. Modified AGI (MAGI) is not the same as "taxable amount". MAGI is only used to determine how much of a contribution is deductible, not how much the tax should be on a distribution. (TurboTax is not the only software company that used the worksheet when it should not but the IRS does not seem to care and it results in a lower tax.)
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
