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 The IRS has issued a correction to the 2025 Instructions on their end. We  are looking into it to see if this is related to the IRS correction or if it is something else.  We have corrected the calculation for joint occupants of a home who are claiming the energy efficient home improvement credit in Part II of the 2025 Form 5669. Please refer to the instructions below with respect to the joint occupancy section on page 3 of the 2025 Instructions for Form 5695. If you downloaded or printed the 2025 Instructions for Form 5695 prior to Jan. 26, 2026, please note the correction. Although, the IRS is saying March 6, if this is the date that they will have the forms corrected, TurboTax software will take a little bit to then make the changes.  You can attempt to refile on the 6th or wait for several days after that.    

It depends. Roth contributions are handled differently than 401(k)s or Traditional IRAs.  Qualified Roth IRA distributions are those made after age 59½ and a 5-year holding period. They are not taxed by Virginia (VA), because VA bases its income tax on federal adjusted gross income (AGI) and qualified Roth withdrawals are tax-free federally, they are also exempt at the state level.    The simple reason the question is asked is because if you lived in a state that taxed all contributions to a Traditional IRA or 401(k), for example, as they were being contributed, then VA does not make you pay tax on that portion when distributed if at the time of distribution you are now a resident. An example is that New Jersey (NJ) does not allow a deduction from income and does tax these contributions as they are being made.

Is accrued interest included in cost basis when purchasing a bond between interest payment dates?   Gemini said The short answer is no. When you buy a bond on the secondary market between interest payment dates, the accrued interest you pay to the seller is not included in your cost basis. Instead, that payment is treated as a "return of capital" or an adjustment to your future interest income. Here is the breakdown of how the math and the taxes actually work. Why It’s Excluded When a bond is traded between coupon dates, the buyer pays the seller the clean price (the actual price of the bond) plus accrued interest (the interest earned by the seller since the last payment). Cost Basis: Only includes the clean price plus any commissions or transaction fees. Accrued Interest: This is considered a temporary outlay. You are essentially "pre-paying" the seller for the portion of the next coupon they earned while they still owned the bond. How it Works at Tax Time Because you paid that interest upfront, the IRS (and most international tax authorities) doesn't want you to pay taxes on it twice. The Full Payment: When the next scheduled interest date arrives, the bond issuer will send you the full interest payment for the entire period. The Offset: Since you already paid a portion of that money to the seller, you are entitled to subtract that amount from your reportable interest income for that year. The Result: You only pay taxes on the "net" interest—the portion you actually earned while holding the bond. A Quick Example Imagine you buy a bond for $1,000 plus $20 in accrued interest. Component Amount Tax Treatment Purchase Price $1,000 Your Cost Basis. Used to calculate gain/loss when sold. Accrued Interest Paid $20 Income Offset. Subtracted from your first interest check. Total Out-of-Pocket $1,020 Also known as the "Dirty Price."   Note: If you use a brokerage, your Form 1099-INT usually shows the full interest received in one box and the accrued interest paid in another, allowing you to net them out on your tax return (Schedule B in the U.S.).

Unfortunately, TurboTax Desktop does not yet have the Tips included in box 1 of my W-2, but not in boxes 7 or 14 after entering your W-2 in the special circumstances but they updated TurboTax Online a month ago.  3 Desktop updates over the weekend but not a fix yet.  Any idea when Desktop will be updated for this function?  Very frustrating.  

At this time, tax year 2025 Michigan Schedule 1 Line A and MI-1040 Line 30 are unsupported in TurboTax.    You can enter MI tax withheld from a flow-through entity that was reported to you following these steps: Open your return and navigate to Wages & Income >> Deductions & Credits >> Estimates and Other Taxes Paid >> Estimates >> State estimated taxes for 20XX. Add another payment. Choose Michigan from the drop-down, enter the date paid, and the amount. Continue to view the confirmation page, then click Done. This entry will be reported on the MI Tax Payments Worksheet under Tax Payments for the Current Year and flow to Form MI-1040 Line 32.   Although this work-around omits the K-1 reporting, you will report the state tax paid on your behalf to reduce your state tax liability (if any).

Reading your question, I am not sure if you entered this correctly so I will give you complete steps on entering the sale information and for claiming the foreign tax credit so there is no confusion on your part. To report the sale and sales tax, enter in this exact manner.   Go to Federal > Wages & Income. Find Investments and Savings (1099-B, Stocks, etc.) and click Start/Review. Click Add investments and select Enter a different way. Choose Other (for land or second homes). Enter the details of the sale (Sale Price, Date Sold, and your Original Cost). Here, you can deduct the sales tax from the sale price to reduce the capital gain on the sale. Now here is an important distinction on claiming the foreign tax credit. The IRS only allows a Foreign Tax Credit (FTC) for "Income Taxes" or "Taxes in Lieu of Income Taxes." If the foreign country charged you a Sales Tax, Value-Added Tax (VAT), or Stamp Duty (a tax on the transfer of the deed), this not eligible for the Foreign Tax Credit on Form 1116.  Here is how to tell.  Income Tax / Capital Gains Tax: This is a tax calculated on your profit (Sale Price minus your Purchase Price). If the tax was based on the "net gain" from the sale, it is a "creditable" income tax. Sales / Transfer / Stamp Tax: This is a tax calculated on the total sale price or a flat fee for the transaction. If you had owed this tax even if you sold the land at a loss, it is a transaction tax, not an income tax.   If you feel this was an income tax based on the parameters listed above, here is how to claim the foreign tax credit.    Go to Deductions & Credits > Estimates and Other Taxes Paid > Foreign Taxes. Click Continue until you see the screen: "Do you want to take a credit or a deduction?" Select Take a Credit. You will see a summary of your 1099-DIV foreign taxes.  Make sure all income is reported by clicking on the boxes until you are done. Once you are in the summary screen you should get a prompt asking if you have more income to report than the 1099 DIV. Pay attnetion on how that is worded so that addtional income may be added. Click "Add a Country" (do not edit the existing 1099-DIV entry). Select the Country where the land was located. On the screen for "Income Category," select Passive Income (this covers capital gains from land sales). The "Gross Income" Screen: This is where it asks for the source of the income. Enter the Total Sale Amount (in USD) from the land sale. The "Foreign Taxes Paid" Screen: Enter the Sales Tax/Transfer Tax you paid to that country here. Again, I cannot undermine the importance of determining if this is a sales tax or an income tax based on capital gains.  if you determine this is an income tax and you are taking a credit, go back and add back in the tax where you entered the sale of the house. This was in step 6 of the sale information I provided in my first set of steps. You are not allowed to double-dip on your tax benefits.   @VSN7    @rgoutham            

We would like to research this experience further. It would be helpful to have a TurboTax ".tax2025" file that is experiencing this issue.   You can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, please follow these instructions:    In TurboTax Online, open your return, go to the black panel on the left side of your program and select Tax Tools.  Then select Tools below Tax Tools. A window will pop up which says Tools Center. On this screen, select Share my file with Agent. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. You may wish to snap a screenshot to post instead of the actual number. Reply to this thread with your Token number (including the dash) and tag (@) the Expert requesting the token from you. Please include any States that are part of your return - this is VERY important. If you are using TurboTax for Desktop, go to Online in the top menu, then choose "Send Tax File to Agent."   We will then be able to see the same experience you are having. If we are able to determine the cause, we'll reply here and provide you with a resolution. 

@pk, thank you for your note – and, I agree with your analysis.   To explain the issue using your numerical example, TurboTax displays a screen entitled “Any foreign source qualified dividends or long term capital gains?" during the Foreign Tax Credit interview.  On that screen, TurboTax prompts the user to enter “foreign qualified dividends and l.t. capital gains.”  When $800 is entered, TurboTax displays the error “this field should be at least $950” (where $950 = “total foreign income for this category” = Box 1a x 95%).  However, based on the supplemental tax reporting information provided by the mutual fund company, the correct answer to the question is indeed $800 (= Box 1a x 80%) – which, of course, is less than the $950 minimum required by TurboTax.   Any insight on why TurboTax might be reporting this error?  And, more importantly, how do I circumvent this issue and enter the correct amount for “foreign qualified dividends and l.t. capital gains”?   Thank you for your assistance.