issue with Free File and Schedule B error

[dsbeardsley]

Hello. I am hoping to resolve an issue I had last year with TurboTax before I get started this year. I do not intend to waste my time using TurboTax unless the issue has been resolved.

For tax year 2021, both of my teenage children successfully submitted their taxes using TT Free File. Both had a 1099-DIV and a 1099-INT, but the totals were under the $1500 threshold so a Schedule B was not generated.

For tax year 2022, the exact same situation occurred (two 1099s each, under $1500 total) but for some inexplicable reason, the TT software generated a 1099-B for each of them, which prevented them from using the Free File service. There were no other changes or additions that would have generated a Schedule B.

I tried to reach out to TT for assistance and/or an explanation, but was told I needed to pay $29 for the PLUS program to have a direct consultation. The only way I was able to get direct human interaction was via a Facebook Messenger chat, which went nowhere.

Does anyone know if this has been resolved? I know for sure that the error was with TT, because the software was mistakenly generating a Schedule B when it wasn't necessary.

[BillM223]

"the TT software generated a 1099-B for each of them"

Did you mean "the TT software generated a Schedule B for each of them"?

And just to be sure, your kids did not have a foreign account or received a distribution from, or were a grantor of, or a transferor to, a foreign trust?

Note that the location where TurboTax asked this question has changed; in years' past, it was easier to miss it.

[dsbeardsley]

Yes, sorry, I did mean that it generated a Schedule B for both of them. And when I removed the 1099s (just to try and narrow down the issue) it did *not* generate a Schedule B. So the issue was with the 1099s and how TT was processing them. And no, no foreign trusts or accounts.

[BillM223]

#1.

These are the reasons that you have to have a Schedule (from the IRS website):

Use Schedule B (Form 1040) if any of the following applies:

• You had over $1,500 of taxable interest or ordinary dividends.
• You received interest from a seller-financed mortgage and the buyer used the property as a personal residence.
• You have accrued interest from a bond.
• You are reporting original issue discount (OID) in an amount less than the amount shown on Form 1099-OID.
• You are reducing your interest income on a bond by the amount of amortizable bond premium.
• You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989.
• You received interest or ordinary dividends as a nominee.
• You had a financial interest in, or signature authority over, a financial account in a foreign country or you received a distribution from, or were a grantor of, or transferor to, a foreign trust. Part III of the schedule has questions about foreign accounts and trusts.

May I assume that none of these apply to your dependents?
 

#2

The question about a Foreign Trust does not appear in the 1099-INT or -DIV interviews. (Note: this is in the desktop software - no guarantee that the Online product works the same way); instead it appears  when you run Smart Check. 

The screen that pops up in Smart Check (desktop version) looks like this:

Smart Check is asking for a Yes or No for line 8. Note that The square for 8 (NO)  is pink, which means that it is a required field. Here is the tentative output:

Note that Schedule B has been added to the forms list (Again, this is in the desktop product, not Online), and that both boxes on line 8 to the right are pink (meaning that this is an error, not being filled in).

Think about the prior returns - is it possible that someone saw the first screen and skipped passed it, or (if this is possible) even skipped Smart Check in order to file?