IRA Basis incorrect in Turbotax Premier 2021

[ga hiker]

In 2021 Turbotax Premier, the value displayed for "Total Basis as of December 31, 2020," $1,792, is incorrect.

My 2019 Form 8606 shows my "...total basis..." on Line 2 = $3,209 and my "...nontaxable portion..." on Line 12 = $132. The remaining basis would be $3,209 - $132 = $3,077.

In 2020, Turbotax did not generate a Form 8606. Since RMDs were not required in 2020, my only IRA distribution, for $1,285, went entirely to charity. Now Turbotax 2021 tells me that my remaining basis is $1,792.

Apparently, Turbotax has subtracted my charitable distribution from my basis!  ($3,077-$1,285=$1,792)

What do I need to do to correct this?

[macuser_22]

Where do you see the total basis displayed?     The 2019 carry forward basis on a 2019 8606 in in box 14, not box 2.    

Are you using the CD/download version or online version?   

[ga hiker]

2019 Form 8606 Line 14 = $3,077. No basis used in 2020. No Form 8606 in 2020. 2021 Turbotax tells me my basis is $1,792 in the interview.

Using CD version, updated today.

[macuser_22]

In the 1099-R interview where it asks for your prior basis if you had a distribution?    If incorrect, simply enter the correct amount.

If you are using the CD/download and you transferred data for the 2020 return you can change to the forms mode and view the "IRA Information Worksheet" part III line 12 to see what was imported and change it if necessary.

[ga hiker]

Thank you so much for your responses.

Yes, I did correct the prior basis amount in the interview. It then asked for an explanation for why my entered amount was different than the Turbotax amount. I entered an explanation. Will this explanation go to the IRS? Should I remove the explanation?

Using the CD version, I did transfer data from my 2020 return.  I just looked at the "IRA Information Worksheet" part III line 12 and it has the correct amount, $3,077. Is this because of my override entry above?

[macuser_22]

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@ga hiker wrote:

Thank you so much for your responses.

Yes, I did correct the prior basis amount in the interview. It then asked for an explanation for why my entered amount was different than the Turbotax amount. I entered an explanation. Will this explanation go to the IRS? Should I remove the explanation?

Using the CD version, I did transfer data from my 2020 return.  I just looked at the "IRA Information Worksheet" part III line 12 and it has the correct amount, $3,077. Is this because of my override entry above?

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If you looked at the worksheet after changing it in the interview then yes, changing in the interview would also change it in the worksheet.

If there is an explanation statement in the forms list (that you will see in the forms mode) then, that will be sent to the IRS.

If you have the 2020 software installed, you can open your 2020 .tax file and see what is in the "IRA Information Worksheet" that would be carried to 2021 to track down when the error occurred.

[ga hiker]

In forms view, there was "Blank Form" which contained my explanation of my IRA Basis Change. Since this is a Turbotax issue and not a real basis change, it should not go to the IRS. Since I could not again get to the explanation in Step-by-Step, I deleted all the fields in the form.  I no longer see the Blank Form.

In Turbotax 2020, My IRA Info Wks contains the following:

Part 1 Line 1, Total basis in traditional IRAs = 3,077

Part 1 Line 3, Basis carryover as of 12/31/2020 = 1,792

Part 3 Line 12, Basis for 2019 and earlier years = 3,077

Part 3 Line 17, Adjusted total basis in Traditional IRAs = 3,077

All other lines are blank. Certainly looks like a bug in TT 2020 reduced my basis by the 1,285 charitable distribution I made from my IRA. Even if the 1,285 were not a charitable contribution, my basis would only have been reduced by a fraction of that amount. 

It is only because I do my taxes both with Turbotax and a personally created spreadsheet that I noticed this discrepancy. Other folks in my same situation may well overpay their taxes.

[macuser_22]

yes.  If you do not need the explanation statement just delete it.  Hard to say when or where the error occurred, could be 2019, the transfer of 2019 to 2020 or in 2020 - no way to tell now.

[ga hiker]

Based on:

In Turbotax 2020, My IRA Info Wks contains the following:

Part 1 Line 1, Total basis in traditional IRAs = 3,077

Part 1 Line 3, Basis carryover as of 12/31/2020 = 1,792

it seems obvious to me that Turbotax 2019 performed correctly (passed basis=3,077 to TT 2020) and that TT 2020 incorrectly reduced the basis by the amount of my charitable distribution (1,285) to 1,792 which was picked up by TT 2021. 

[macuser_22]

On the 2020 1040 line 4 was "QCD" next to the charitable donation?

As I recall there was a bug in 2020 with QCD's that was corrected with an update but if you entered the 1099-R before the fix, it had to be deleted and re-entered.

[ga hiker]

Yes, "QCD" on 2020 1040 line 40 and, as you can see, I get started early with my taxes. Am I correct that it is possible to see the details of updates? If so, I am not in the habit of reading them, assuming that whatever corrections have been made will automatically be applied when I open my return. Would those update details have told me to delete and re-enter my 1099-R? It's also possible that, depending when the update occurred, I had already filed my return (3/14/2021). I guess I will be reading update details going forward. 

[macuser_22]

TurboTax does not provide release notes.

[ga hiker]

So, anyone in my situation who prepared their 2020 return, or at least entered their 1099-R, before the TurboTax fix, will be overpaying their Federal tax this year unless, like me, they are also tracking their IRA basis independently of TurboTax. So much for TurboTax assurances of accuracy!

Although I have not yet received any 1099 forms, I have already entered almost all of my data into TurboTax 2021.  My plan is to just update the already entered forms as necessary. Must I delete and re-enter all those forms later in the cycle to increase my confidence in the accuracy of my return?

When program fixes require the user to take some action to benefit from an update, it is not acceptable that release notes are not provided.  Is there some way for me to register a complaint directly to TurboTax?

[macuser_22]

People have been complaining about the lac of release notes since they were discontinued about 6 years ago.

You can contact Intuit by mail at Consumer Tax Group, Intuit Inc., 2800 E Commerce Center Place, Tucson, AZ 85706 or by calling 888-777-3066 if you have a question or concern about any product or service we sell over the Internet.

[ga hiker]

Thank you so much for your assistance and information. I feel so much more comfortable and confident understanding the situation.