TurboTax Home & Business (Windows) is incorrectly reporting the share of income from a partner's K-1. But there is a workaround.
The Bug: Schedule E misstates non-passive income reported on a partners' K-1. On line 28, column (k), it should be reporting the partner's share of business income from line 1 from the partner's K-1. (See IRS' 2020 Partner's Instructions Schedule K-1 i1065sk1.pdf, p21.) Instead, it is reporting the self-employment earnings from K-1 line 14A.
For many partners, the amount of the share of income (line 1) and the amount of self-employment earnings (line 14A) will be the same. But not for all partners. In this case, the partnership makes a guaranteed payment to the partner. Self-employed earnings for this partner are greater than the partners' share of income. This error caused an overstatement of the partner's share of income and increased the partner's tax liability.
There is a workaround. Over-riding the incorrect amount in Schedule E would work, but is not preferred. TurboTax reports the override as an "error" on review and then prohibits e-filing, which is unacceptable.
Yet correcting the amount at the "Data source" works (right-click the data field for a pull-down menu). The source of the data is found on the K-1 Worksheet TurboTax creates for the partner, Section C, "Income and Loss Reported on Schedule E, Supplemental Income or Loss." Correcting the amount there with an override does not create an error. It will then report the correct amount to Schedule E.
Before I found the workaround, I had four different support calls with TurboTax representatives. I have been escalated to a "certified professional" at least once in those calls. In each call, using screenshare, the representative could see and acknowledge the error. Each one said they would report the bug and promised that someone would be in contact with me regarding the error, and if it was confirmed, providing me with an estimate on when it would be fixed. I was never contacted.
TurboTax support has been no help in resolving this error. I don't know why I didn't find the workaround before (though it is possible it wasn't possible in earlier versions and was introduced in an update).
