I believe I have found a programming bug in the 2022 State of Indiana Tax Return regarding tax credits.
Schedule 6 of the IT-40 is the worksheet for the tax credits. I had two (2) tax credits to report for 2022:
(1) Line 4 which a credit given for contributions made to a state university. I maximized the credit amount of $100 (max for filing a single return).
(2) I also received credit for contributions made to a Indiana CollegeChoice 529 Plan. I made a contribution for 2022 in the amount of $2,000, so the credit would be $400 ($2,000 x 20%= $400).
These two (2) credits of $500 exceeded my state adjusted gross income tax (line 8 of IT-40) which was $484.
Schedule 6 of the IT-40 states that the credits of Lines 4 through 7 cannot exceed the the state adjusted gross income tax stated on line 8 of IT-40. Here appears to be the problem that I'm experiencing. My two tax credits (i.e., college contribution credit and the 529 plan contribution credit) slightly exceeded the state adjusted gross income tax amount on Line 8 of IT-40. Since the total credits exceeded the state adjusted gross income tax; TurboTax used the college contribution credit ONLY and completely ignored ALL or any portion of the 529 contribution credit. It appears that the program should have allowed a portion of the 529 contribution credit up to, but not exceeding the amount of tax on line 8 of IT-40 (after subtracting the $100 for the college contribution credit). By ignoring all of the 529 tax credit as opposed to just the necessary portion needed; it amounted to an additional state tax owed of $384 in my given situation. For example, if I showed that I contributed $2,000, TurboTax stated that I still owed $444 in taxes. I found that if I entered a lesser 529 contribution amount of $1,922 ($1,922 x 20% tax credit= $384), TurboTax stated I owed only $60 in additional state income tax. Is this right? Thanks, Steve
