I figured out where column g is pulling its number from. TT is allocating the refund pro rata against the extension payments and withholding amounts, resulting in only a small portion of the refund being allocated against the extension payment (since my amount withheld is far larger than my extension payments). This appears to match another portion of pub 525 which provides as follows:
"Recovery for 2 or more years. If you receive a refund or other recovery that is for amounts you paid in 2 or more separate years, you must allocate, on a pro rata basis, the recovered amount between the years in which you paid it. This allocation is necessary to determine the amount of recovery from any earlier years and to determine the amount, if any, of your allowable deduction for this item for the current year."
Based on this, my belief has shifted from believing TT is mistaken, to believing the IRS is mistaken.
In any event, it appears the pub 525 guidance is, if you make a large extension payment, resulting in a large refund--even to the extent that the extension payment ended up being totally unnecessary--prepare to nevertheless report some of that refund as additional income (which would not have existed but for the extension payments), since the refund will be treated as not being entirely attributable to the extension payment, but proportionally applied against prior year's withholding as well.
If TT is going to force us to follow the pub 525 rule, I guess I cannot characterize that as unreasonable. Still, it would be nice if TT would include an explanation or supporting calculation for the column g amount so I don't have to post in this forum and do a bunch of research just to figure out where that seemingly arbitrary number is coming from.
Also, a related piece of feedback re the step by step interview on this point--when TT asks you to input the total of all your state payments and withholding, it would be nice to have better guidance there to clarify what that means, and/or a suggested/prefilled calculation if TT has access to the prior year returns.
Thanks for the help!
