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When a value is entered in Box 2a, the program assumes the payer has already performed the calculation for you and skips the interview for cost recovery.   Cause the calculation screens for a non-qualified annuity to generate by following these steps: Temporarily Clear the amount in Box 2a, and Check the box for 2b "Taxable amount not determined." Make sure that the distribution code is correct (usually 7D or 1D for nonqualified commercial annuities). After you click "Continue," the program should now recognize that the taxable amount is unknown and will ask, "Do you need to calculate your taxable income?" or "Was this an annuity? Since yours is a nonqualified annuity purchased with after-tax money, you typically must use the General Rule (IRS Pub 939).   In the follow-up interview, look for "Choose a Help Method" (or something similar).  Select the option that mentions the General Rule.   If the "Step-by-Step" interview still doesn't appear, try this "reset": Delete the 1099-R entirely from the "Income Summary" page. Click on Tax Tools (left menu), then Tools, and Delete a form.  Look for any "1099-R Worksheet" or "Pension/Annuity Worksheet" and delete them. Re-enter your 1099-R manually (Do not import it.).  Leave Box 2a blank, and Check Box 2b. This should force the program to ask you how to calculate the taxable portion.

Thanks so much for the help ReneV4, to your questions, No earnings were reported in 2024 from the Roth April 1 2025 withdrawal.  The deposit was made on 12/3124 and the transaction made to the corrected amount (4/1/25) was actually at a loss (no earnings) . I want to make sure that this is the best option.  Am still okay with adding the code to box 7.   When would I be able to do this? "To verify that your request for waiver was successful, go into Forms Mode by clicking the icon at the top right and open Form 5329 to verify that Line 2 shows your earnings. If you see that, then the penalty was successfully waived."   I did find another method before your response.  Though yours I think is simpler. that is submitting a Substitute 1099-R with a short statement explanation. this allows a form 4852 filing. resulting in nontaxable withdrawal.  this also complicates the Pa. state return.    I would rather take the most common path of correction with less flags.  please review the above and comment as needed.   thank you very much. Ron

Here is a breakdown of your scenarios.   1. Scenario 1: Box 1a = Box 1b (All Dividends are Qualified) Your Understanding: Correct. In this case, since every dollar of foreign income is "qualified," TFI must equal FQD. If you try to enter an FQD amount higher than TFI, the software (and the IRS) will flag it because you can't have more qualified income than you have total income.   Even if the IRS requires an adjustment on Line 1k of the Foreign Tax Credit Computation Worksheet (to account for the lower tax rate on qualified dividends), the input screen in TurboTax is asking for the unadjusted amount. TurboTax performs the math behind the scenes to scale that down.   2. Scenario 2: Box 1a > Box 1b (Mixed Income) Your Understanding: Correct. Here, your foreign source income consists of a "pool" of ordinary dividends (TFI), only a portion of which is qualified (FQD). Therefore, TFI > FQD.   Example: If your mutual fund has $1,000 in foreign ordinary dividends (Box 1a) but only $800 of that is qualified (Box 1b), your TFI is $1,000 and your FQD is $800. TurboTax needs both numbers because the $200 difference is taxed at ordinary rates, while the $800 is subject to the adjustment mentioned in the Form 1116 instructions.   3. Crucial Clarification on the "Adjustment   The "Adjustment" you referenced (from the Qualified Dividends and Capital Gain Tax Worksheet) is where most users get tripped up.   When you enter your FQD into TurboTax, you are entering the gross amount from your 1099-DIV. However, because qualified dividends are taxed at a lower rate (e.g., 15%) than standard income (e.g., 22%–37%), the IRS doesn't let you claim the "full" weight of that income when calculating the foreign tax credit limit.   If you look at your actual Form 1116, Line 1a, you will notice the number there might be lower than the TFI you entered. This is the result of that adjustment:  Input: You enter the 100% gross value.  TurboTax Math: It multiplies the FQD portion by a fraction (typically $0.4054$ or $0.3784$ depending on the tax bracket) to "neutralize" the tax rate benefit. Result: This adjusted number is what actually determines your credit limit. 4. Summary for Future Readers TFI (Total Foreign Income): The total amount of foreign money you received (Box 1a equivalent). FQD (Foreign Qualified Dividends): The "special" portion of that money taxed at lower rates (Box 1b equivalent). The Golden Rule: FQD can never be greater than TFI. If they are equal, all your foreign income was qualified. If FQD is lower, you have some ordinary foreign income in the mix. @TaxPlethora 

Open the form by selecting the forms tab, go to line 25, for electric panel and sub panel question and check the box for option ‘No’. Since turbo tax leaves both option blank, the e-filing gets rejected. So update it and file.

Almost the same instructions.  In the Premier product, you will go to:     Federal Taxes (top menu) and then Wages & Income.  Select I'll choose what I work on.   Scroll down to Investment Income and Click Start / Revisit to the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other. Answer Yes on the Did you sell investments? screen. Click on +Add investments. Skip Import Choose Other - 1099-S, then hit Continue. Enter your own reference info for the broker. On the entry screen, choose Collectible for the TYPE of investment, and enter your information.   Where do I enter investment sales?   Capital Gains Info  

If your tax return keeps getting rejected, you can review this information. It contains rejection codes and fixes. What does my rejected return code mean and how do I fix it?   You can contact TurboTax Customer Service using this link: Turbo Tax Customer Service.   Click here for Tax Tips for Avoiding E-file Rejections   Click here for How do I fix e-file reject IND-031-04 or IND-032-04?  

@DianeW777  Thanks a lot for your advice. As per the house sale, we are in middle of the process and hope to close in a month. I haven't yet filed my 2025 returns yet. As per your suggestion, it's ideal to file 2025 returns with correct building cost basis and corrected previous year depreciation to show accumulated depreciation till 2025.  @DianeW777 ,@Turbotax community, could you please advise on any specific item or info from 2024 returns that is relevant to 2025 filing? Just checking to make sure I can complete correct 2025 returns before April 15th without need for amendment later.  Are there any penalties on improper depreciation applied at recapture time during selling? Is the penalty  mainly on the taxes owed on income lowered due to over-depreciation? If an amendment is asked by IRS, will it be only for 2024? provided 2025 returns use correct cost basis. Appreciate your response. Thanks

MarylinG1, thank you for taking the time to write an answer. I see that you made a similar answer in an other almost identical thread. I am just a regular person and not a tax expert. I like doing my own taxes and understanding as much as possible. A plain reading of publication 561 strongly suggests, if not outright says, that the correct way to value a stock is average share price. Comparable sales is specifically mentioned when talking about other kinds of property. I welcome clarifying information showing why average share price is not correct? Perhaps there is an IRS ruling, or it is spelled out more clearly in another publication? Or maybe this is just something that tax professionals know but is not written down anywhere? At the moment I still believe that "Average share price" is the proper way to fill out this form in this circumstance. But I also suspect that it doesnt matter much because no one at the IRS is going to look at it, and it doesn't change the numbers.

If your TurboTax program is not letting you pay for your tax return, please try the following:  Sometimes simply signing out and signing back into your TurboTax account can clear this. Clear your cache and delete your cookies. Click here for How to clear your cache. Click here for How do I delete cookies? Also try a different web browser, such as Google Chrome or Firefox.   And try using incognito mode (private browsing). If you are using TurboTax Desktop, you can try the following:  Run the program as an administrator. Set your display scaling to 100% in Windows Display Settings. Make sure your software is updated by clicking "Online" in the top menu and selecting "Check for Updates." Some other payment issues fixes you can try are as follows: Verify that your Billing Address for your credit card exactly matches your address that your financial instituion has on file. Make sure that your address matches your address in your "My Info" section of TurboTax. Disable any ad blockers or antivirus programs that could be blocking the secure payment screen.  You can contact TurboTax Customer Service using this link: Turbo Tax Customer Service  Please return to Community if you have any additional information or questions and we would be happy to help.

Thanks for the response, Catina!   I wanted to share what worked for me in case it helps others dealing with the same Form 5695 / Enabling Property rejection.   Clicking "Fix Rejection" was not helpful — it would just flag the Enabling Property fields, reference the March 6th fix, and loop back without resolving anything.   What I tried (on March 10): Loaded my tax return progress on a different laptop Cleared Google Chrome cache, cookies, and website data Used Tax Tools → Delete Form to delete Form 5695 Revisited the Home Energy Credits section and re-answered all the questions Went through the full Federal return review, all the way to the e-file screen (just before submitting) — this seems to regenerate/update the forms; note that you can't download the updated PDF unless you go through to the end of the e-file flow One thing I noticed: The rejection error does not go away even after you've made changes — it only clears once you actually go through the e-file process. So don't rely on it as a signal that something is broken or fixed.   After going through all of the above multiple times, I took a chance and submitted — and both my federal and state returns were accepted! 🎉   I'm not entirely sure what made the difference. My Form 5695 PDF didn't visibly change (the Yes/No answers stayed the same), so it's possible something was fixed on the IRS or TurboTax backend. Either way, it's resolved!   Hope this helps someone else in the same situation.