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Since you already received a review letter from the IRS, your best option is to wait until you hear from them. In most cases, reporting income in the wrong place doesn't affect the tax you owe or the refund you will receive. This is mostly an administrative review to match the IRS records with the information on your return.   If you decide to go ahead and file an amended return, follow these instructions: How to File an Amended Tax Return with the IRS.

1) Yes, you can call the IRS to discuss the notice. It may resolve the situation more quickly, if you can get through to a helpful agent. Use the phone number on the letter you received.   2) If you don't have a history of mistakes on your return, it's more than likely that the IRS will waive the penalty since it didn't impact your tax liability.   3) An individual qualifies as a U.S. resident if they 1) have a green card or 2) are physically present in the United States for at least: 31 days during the current year, and 183 days during the current year and the two preceding years, calculated using the following formula: All the days present in the current year, 1/3 of the days present in the previous year, 1/6 of the days present in the year before that.  

 "Other contributions previously taxed by Massachusetts"   this is an interesting way to  cook up a workaround in state of MA. But it is essentially a false statement.   "I'm not sure why this is necessary"   It's not necessary, when the entry is done correctly. Your Traditional IRA contribution should be on Form 8606 Line 1 and that should take care of the issue you were seeing.   @bryonthego  @user17710097333 

I'd like a file that has all records for my tax return.  In past years, there was the option to download just the version of the tax return filed with the IRS in addition to a version that included every applicable form.  It's the latter that I no longer see an option to download.  I have already downloaded the .tax file.

You might try these tips from Expert AmyC:   If you are not using a foreign tax credit for the current year, and you have carryforward, Form 1116 is not required. The IRS holds the information for the 10-year carryforward period.    However, if you have FTC carryovers to report and need to force Form 1116 to file, follow these steps: Go to Federal > Deductions & Credits. Scroll down to Estimates and Other Taxes Paid and click Start/Revisit next to Foreign Taxes. Answer Yes to "Did you pay any foreign taxes?" (Answer yes even if you only have a carryforward from a previous year). When asked if you want the deduction or the credit, select Take a Credit. Continue through the interview screens. Eventually, you will reach a screen titled "Do you have any Foreign Tax Credit Carryovers?" Select Yes. You will then see a grid where you can enter the Foreign Taxes paid in prior years and the Amount Used in previous returns. The difference is what TurboTax will carry forward. Troubleshooting: If the software won't generate it, you can add a "dummy" entry of $1 in foreign interest/tax and then remove it before filing to see if the carryover screen triggers. Usually, simply completing the "Foreign Taxes" section under Deductions & Credits is enough.

Was your average stay less than 7 days? Did you claim material participation (which makes you a real estate professional?)   Does this rental have a net loss or are the expenses offsetting the income with the balance reported as passive losses that are carried forward?    To resolve this, you might return to the Rental Property topic and work through the interview from the beginning. Be sure to read all the questions, including the blue links to learn more.

thank you for your response. I do plan to mail the new form with copies of the letter.  A couple of follow-up questions: 1. The penalty notice has a due date of 5/2. Should I call IRS to explain the situation while getting the forms mailed?  2. With this type of clerical error, what are the chances they will waive or abate the penalty?  3. My partner became a US resident in April 2025, can I claim her to be US resident in my 2025 tax return? 

The material participation question appears at the beginning of the Rental Property interview. When you first begin the topic, look for the page "Let's see if you're a real estate professional." If you check both boxes (more than 750 hours and more than 50% of work-related time), the follow up questions will determine if the material participation box will be checked for each rental property.   Also, for your property to be eligible to offset active income, it must not be defined as a "rental activity" under Section 469. You meet this if: The average guest stay is 7 days or less. Alternatively: The average stay is 30 days or less AND you provide "significant personal services" (like daily cleaning or breakfast, similar to a hotel). If you don't meet the short-term rental criteria above, you might fall back on the "Active Participation" rule, which allows a deduction of up to $25,000. However, this benefit starts to phase out if your Adjusted Gross Income (AGI) is over $100,000 and disappears entirely at $150,000.  

To claim an exclusion that was recently released, you would need to manually complete the relevant form(s) and file your return by mail. The software is not normally updated for new laws after the filing deadline.

You can report Form 1042-S as other reportable income.   Open your return in TurboTax  Click on Wages & Income  Scroll down to Less Common Income  Scroll down to Miscellaneous Income, 1099-A, 1099-C   Scroll down to Other reportable income  Answer yes  Enter description and amount.    To report the US tax paid: With your return open Click on Deductions & Credits Scroll down to Estimates and Other Taxes Paid Click on Other Income Taxes Scroll down Other Income Taxes Click on Withholding not already entered on a W-2 or 1099

Thank you!! This is still a problem in 2026. At first I couldn't find the page you mentioned but after going through the whole state flow again I saw it. This worked!   +1 on Turbotax handling this VERY poorly on both federal and state.

sorry for your loss.   what you probably have is not in accordance with the tax laws because of the daily proration required, There was the period your father owned it, then, depending on how the account was registered, it may have been property of his estate until it was probated and then you became the owner or it could have passed directly to you.    Whether the 1099-B reflects the correct value is unknown. Regardless of whether they went through probate or not the starting point for you is the value on the date of death. Then there is the subsequent activity that may increase or decrease your basis basis. Finally you have to take into account any section 751 adjustment  line 20AB on you k-1  what you should do is go to the tax package website and look up each PTP.  for each, there should be contact info and a phone number to call  https://www.taxpackagesupport.com/      Not sure the period involved between the date of death and your date of sale. The one thing I can almost guarantee is that the 1099-B does not have the correct basis because it's never informed of the partnership activity, so it does not know what your yax basis was.     

Thank you for your reply and for the work-around option. I went ahead and entered zeroes in columns A, B, & C for months that we were not eligible for PTC. That allowed me to complete the return and file it electronically, but I am concerned that - even though it looks like the tax was calculated correctly - because my return doesn't match my actual 1095-A, I will be at a higher risk for audit or delay in my refund being processed.    It is frustrating that TurboTax is supposed to make my tax filing easier but, instead, I had to spend hours researching the issue, trying to figure out why I wasn't able to enter my 1095-A accurately and, in the end, had to use a work-around that increases my likelihood of having my refund delayed.  There are literally tens of questions about this issue in the community going back months.    Why wasn't an update put through to fix this known software issue?