TurboTax Quality Management need to review and revise their (Deluxe Online) software for the Georgia 2021 income tax return, part-year nonresident Schedule 3 and related smart worksheets.
I filed a Georgia 2021 tax return as a nonresident with Georgia-earned income (W-2, two months) and unearned retirement income (1099-R, 10 months). I am eligible for the Georgia Retirement Income Exclusion.
After e-filing the Georgia return, I received a letter from the Georgia Department of Revenue, Taxpayer Services Division reporting TurboTax's error on Schedule 3 and correcting my return / refund amount.
On Schedule 3, Column A, Line 7; TurboTax calculated and reported the Georgia Retirement Exclusion adjustment as -$4,xxx (based on total Georgia income). Per the Georgia DOR TSD letter, this amount should be -$35,000 (based on all received income, earned and unearned).
This Schedule 3 error resulted in an incorrect Georgia-adjusted gross income (Column A, Line 8), ratio percentage multiplier (Line 9), prorated income deduction (Line 13) and Georgia taxable income (Line 14).
[TurboTax correctly calculated and reported a retirement exclusion of $4,xxx on Schedule 1, Page 1, Line 7a and on Schedule 3, Column C, Line 7.]
On Schedule 1, Page 2; Line 4 is blank. Line 5 is $4,000 (the maximum earned income, retirement exclusion). Line 16 is $35,000 (the maximum unearned income, retirement exclusion). Line 17 is $4,xxx (the calculated total Georgia-income exclusion). The way TurboTax has handled Schedule 1, Page 2 may have contributed to the Schedule 3, Line 7 error.
Due to this error, I am now forced to draft and submit an amended return to the state of residence (with a tax payment and potential penalty and interest).
