I got a letter from Maryland that I owe back tax - the reason being the pension exclusion calculation. I think the problem is Line 1a of the Pension Exclusion Computation Worksheet - it pulled annuity information from my Fed return/1099-Rs, and the amount pulled is higher than the social security amount on line 3 so this resulted in a pension exclusion for my social security benefit that Maryland disputes. From what I read, line 1a should be pensions from an employee retirement system only. I have 3, and they are:
1. From 1099-R Line 7 = 7, IRA/SEP/SIMPLE box is checked (so this is an IRA)
2. From 1099-R, Line 7 - F, IRA/SEP/SIMPLE box is not checked (charitable gift annuity)
3. From 1099-R, Line 7 - F, IRA/SEP/SIMPLE box is not checked (charitable gift annuity)
So to me it appears Turbo Tax should not have pulled these amounts over to the Maryland Computation Worksheet line 1a, right? Isn't this a Turbo Tax bug? It's been doing it for years that way too :(
My suggestion would be to carefully complete MD's own Pension Exclusion Worksheet manually, and see if your results jibe with the TurboTax calculation.
2020 pension exclusion worksheet (marylandtaxes.gov)
If you find that your original MD tax return is incorrect, you can submit an amended return.
A TurboTax bug of this nature would have conceivably affected hundreds, if not thousands, of MD TT users; but judging by the absence of similar questions, that doesn't seem to have happened.
I did that - it's clearly wrong. The problem is what they include in line 1a, that is all. The whole calculation falls apart or not based on 1a. They are taking any kind of pension reported as valid for this calculation, that is incorrect. I didn't learn of the error until now, and the return questioned is 2017. So given it's a state return, some unusual requirements (over 65, non employee pension, 4 years ago before cited by the state), I figure it's just an obscure bug.
If the state's correction is correct, there's nothing you can do except:
Understood, but why isn't this considered a big to be fixed? It's been done the same way sin e 2017, and it's WRONG.
I got the same letter from MD regarding my 2017 return.
I called Comptroller who said all that's eligible for exclusion are actual pensions - NOT a couple of annuities I also receive.
Clearly an error on the part of TurboTax.
I am VERY annoyed.
How do I report this to TurboTax???
This clearly IS affecting a lot of people - letters are just now being sent out.
My parents just received a letter today for their 2018 taxes.
I have a reminder to manually fix this, next year. I can't believe TurboTax/Intuit has not acknowledged it.
@Critter-3 bad links - they both go to https://ttlc.intuit.com/community/home/misc/03/en-us
@Critter-3 I found What is the TurboTax 100% Accurate Calculation Guarantee
Fine print says it must be submitted within 30 days of the assessment. What a joke. Good for nothing
That link is still bad. Do you want this one? 100% Calculation Guarantee
I got a letter today for 2018 as well - after getting letter for 2017 error in July.
WHEN will Turbo Tax fix this - or at the least, let us know there is a problem???
I am VERY disappointed with Turbo Tax right now. :(
Amending my return on Turbo Tax fixes nothing - as they keep including more than should be included for pension exclusion.
FIX THIS!
Just got a letter form the Comptroller saying that my 2018 return had an error in the computation of the pension exclusion. Have used Turbotax for the last 5 years at least so I assume that I will also be dinged for subsequent filings in 2019 and 2020. Goodbye turbotax---you are fired!
I get it! I got a letter from the MD Comptroller’s Office too and now owe back taxes for three years! I followed TurboTaxes prompts -nothing more, nothing less, and now I owe $9,000 in back taxes.
I assume that the annuity from the charity was reported on a 1099-R. Pensions, annuities, and IRA distributions are all reported on the 1099-R. However, there are different types of entities that make distributions, so in the interview after you enter the data for the 1099-R, you will be asked a number of additional questions to clarify what type of instrument this 1099-R came from. For example, we need to ask if this 1099-R comes from a Qualified Plan or a Non-qualified Plan.
I am guessing that you answered "Qualified plan" for the 1099-R(s) for the annuities from the charities. However, as you can see, "private or purchased commercial annuities" are non-qualified plans. TurboTax has no way to differentiate between the types of 1099-Rs that there may be, so we have to ask and we depend on your answers.
As you have seen, the Maryland pension exclusion is for
"You included on your federal return taxable income received as a pension, annuity or endowment from an “employee retirement system” qualified under Sections 401(a), 403 or 457(b) of the Internal Revenue Code. [A traditional IRA, a Roth IRA, a simplified employee plan (SEP), a Keogh plan, an ineligible deferred compensation plan or foreign retirement income does not qualify.]" see Instruction 13 of the Resident booklet.
By checking "Qualified Plan" Turbotax assumed that this distribution came from a retirement plan, so mistakenly thought the distribution was eligible for the exclusion.
Please go back and look at your paperwork and see if this is what happened. If not, come back and tell us.
If you ever see questions in TurboTax (like Qualified versus Non-qualified plans) that you don't understand, please move over to the Forum and ask a question, or look up to the upper right and click on Live Tax Advice (it may ask you to upgrade).