State tax filing
Here's some additional context, using my specific numbers for this tax year, which may be helpful to better understand the issue. Relevant screenshots are attached from the TurboTax Online print preview feature for my VA return.
I have income from both W2 employment and pass through entity (LLC) business income which resulted in a net tax of $30,420 owed to Virginia, which TurboTax has correctly specified in VA Form 760 - Box 18. I have a PTET credit of $17,662 on my Virginia VK-1 form (due to electing Virginia's PTET option and making the estimated quarterly payments as required on the business side for the business income), which TurboTax has correctly reflected in VA Form 760 - Box 25.
My W2 withholding ($12,878) plus the PTET credit ($17,662) for tax paid on the business side results in a total tax payment of $30,540, which is correctly shown in VA Form 760 - Box 26. This means I slightly overpaid by $120, which TurboTax correctly reflects in VA Form 760 - Box 28. This value is what my VA refund should be, were it not for the erroneous penalty issue detailed below.
The problem arises when TurboTax populates VA Form 760C (not to be confused with VA Form 760) to calculate potential underpayment penalties. VA Form 760C - Box 1 clearly states that tax credits should be subtracted out from the tax liability. Intuitively this makes sense because the taxes pertaining to the PTET credit were already paid on the business side, not the individual side (that's the whole point of taking the PTET election). However, for the VA Form 760C - Box 1 value, TurboTax appears to be using the VA Form 760 - Box 18 value ($30,420 in my case) without subtracting out the VA Form 760 - Box 25 PTET credit value ($17,662 in my case). The correct value for VA Form 760C - Box 1 in my case should be $30,420 - $17,662 = $12,758. This error in VA Form 760C - Box 1 massively throws off the rest of the calculations in VA Form 760C, ultimately resulting in an incorrectly calculated penalty of $923 in my case, when in reality it is $0.
Compounding the issue is that there doesn't seem to be any mechanism in TurboTax Online for me to manually override the incorrect VA Form 760C - Box 1 value to use the correct value.
Please let me know if this info is helpful, or if I can provide any additional details or clarity.
