All Posts

This can refer to property such as business property, like cars or equipment you use in your small business, or can more commonly refer to what we would think of as investment property, such as stock or bond transactions, or cryptocurrency.    Did you have any gain or loss income from transactions involving assets like those listed above? Or did you dispose of assets used in your business this year? That can help us troubleshoot the federal-state differences in reporting. 

thanks for all your advise. I did figure out that the problem was as stated. There was no value in the state distribution box 16 which was why the software flagged it. Once i added the gross distribution amount to box 16 i was able to transmit the return. The 1099-R from both last year and this year do not have the amount in box 16, but i don't remember having to manually add it when doing last years return. Thanks again    

The MI-1040 instructions explicitly allow a dependent to claim a $1,500 exemption, so the adjustment is likely just a computer error.    Michigan law allows for this: you get the full child exemption on your taxes, and he gets the smaller $1,500 credit on his.    To fix this, you should respond to the notice via the Michigan Treasury eServices portal, providing a copy of his return and yours to prove he is a qualifying dependent; they typically reverse these adjustments once a human reviews the manual entry.

The numbers you're seeing, especially the $40,540 figure, are the result of the Capital Gain Rate Differential Adjustment. This is likely the issue you are faced with.   The IRS uses the .4054 multiplier because you are paying a lower tax rate (15%) on that $100k than you are on your ordinary income (24%).   If the IRS let you report the full $100k on Form 1116, you’d end up using foreign taxes paid on income taxed at 15% in the US to offset taxes in your 24% bracket. To avoid this, the IRS reduces the amount of foreign income you can claim, so it matches the lower US tax rate.   You mentioned you did not tick the box for "Unrecaptured Section 1250 gain." This may be a potential red flag.   In the US, when you sell a rental property, the depreciation you took (or should have taken) over the years is "recaptured." This portion of the gain is taxed at a maximum of 25%, not 15%. If you had $20k of depreciation over the life of the property, $20k of your $100k gain should be taxed at 25%, and $80k at 15%. The Net Investment Income Tax (NIIT) of 3.8% is a separate issue..   Standard Foreign Tax Credits (Form 1116) cannot be used to offset NIIT.  While there is a complex workaround using the US-Australia Tax Treaty (Section 59(a)(2)), most standard tax software won't calculate this. You effectively have to claim a "Treaty-Based Return Position" (Form 8833). Without this, the $3,800 is a flat cost regardless of how much you paid in Australia. Keep in mind, the $24k of taxes you didn't get to use ($32k paid minus $8k used) isn't gone. It carries back 1 year and forward 10 years to offset future foreign passive income.    Please reach back if you have additional questions.          

@willoughbym274    In the Federal Taxes section ...in the Other Tax Situations subsection. There is a menu item for W-4 and Estimated taxes. ....you'll be able to skip the W-4 stuff after you enter that area, and be able to then go thru the preparation of the Estimated tax forms for 2026.   Of course, that doesn't guarantee the data you enter will force the prep of the Estimated tax forms, as it really depends on the data you enter.    IF it doesn't generate the 1040-ES forms to your liking....yeah, just get the PDF 1040-ES forms from the IRS website and fill them out manually........OR...just use the IRS Direct-Pay website arrange the direct debits and avoid the forms entirely. Direct Pay with bank account | Internal Revenue Service

Both ways are correct and put the excess deferral on line 1h. The way without entering a 1099-R might be easier if you are missing information for the 1099-R.     Current steps for 2025: Open your return and go to "Wages & Income" Scroll down "Less common income" and click "Start" next to "Miscellaneous Income, 1099-A, 1099-C" Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start" On the "Types of wages you received" screen select “Other earned income” and click "Continue" On the "Other earned income summary" screen click  “Add” On the "Any other earned income" screen enter "2025 Excess 401(k) Deferrals" for the description, enter the amount and click "Continue". @mus423 

First, to change the rental information on your K-1 you can get back to it using the steps below. TurboTax Online or TurboTax Desktop: Search > Type k1 > click the Jump to... link > Continue to update your information When you enter the rental income you will answer 'Yes' you actively participated. Box 14 select I for Section 199A information -5538 On the screen 'We see you have Section 199A income' answer 'Yes' Business Name and EIN come from the K1 (not your name) On the screen 'We need some information about your 199A income' check the boxes for  Business Income UBIA of Qualified Property Other categories you have information for provided with the K1 (other deductions as example)  Continue until you are finished with this section This should help you move forward with your K-1 entry and complete this section of your return.    @3523189638 

For the 1099-NEC form in TurboTax, boxes 5 and 6 require state information, including the State ID number. TurboTax typically expects the State ID as shown on your 1099-NEC form for these boxes. Try using the payer's Taxpayer Identification Number (TIN) in Box 5 and type 0 in Box 6.  This should let you continue. 

I spoke with a Turbo Tax rep. This is a Turbo Tax calculation error, and they are aware of it. They recommend to go to File tab and choose "Remove State Return" and then redo the state return. If that does not work, they suggest to manually adjust the PA Fed/State depreciation adjustment worksheet.

Other things for Desktop:   1) try rebooting your computer first.  Partially-installed OS updates are know to cause TTX startup problems. ...,,,still doesn't work? 2) If on Windows PC, try downloading and installing the Manual Update.  It takes a longer time than usual, so be patient. Manually Update TurboTax for Windows Software