IRS calculates taxable Social Security benefits differently from TurboTax

[SteamTrain]

@TurtleToo 

One thing you might try, other than getting the Desktop program as @rjs suggested?

If you already have a copy of your Full TTX  tax return, with all the worksheets as a PDF file, then you could print out just the TTX  SS worksheet in that PDF.  That worksheet contains all your current values, and you would manually add-in the income you apparently missed (lines 1-thru-4 or other lines) then go thru the calculations in any of the lines that follow to see what changes to see if the final result on line 20 approaches what the IRS thinks it should be.

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If you do not have the TTX SS worksheet, you'd have to get back into your tax return using the "Add a State" selection (you won't have to actually add one)...then go to the Print Center and download a NEW copy of your tax file as a PDF...BUT, you need to make the selection to include all the worksheets so that the TTX SS worksheet is included.  Then get out of there....DO NOT actually change anything in your tax file.  You don't want to mess anything up until such time as you decide you truly want to start an "amended" tax return.  (If you do end up doing that, you have to start the actual amendment process before you make any changes)

[TurtleToo]

You're a genius.  Luckily I did my 2022 taxes with the PC version.  I launched the app and added the income that the IRS found.  I recalculated the tax owed and printed out the PDF of the new return and worksheets.  The taxable portion of SS now matches what the IRS calculated.  Also, the IRS does not require me to file a 1040X.  I just have to pay the additional tax owed within 30 days.  Thanks so much for your advice and help.

[alex 4]

I also received a letter from the IRS for underpayment of my social security taxes.  The glitch in the TT software combined my wife's income as mine and as a result capped the social security taxes and underestimated my tax liability.  The glitch is present in both the 2022 and the 2023 software.  TT's reply is that i made the mistake of not properly identifying my wife income as hers but I've been doing my taxes for the past 40 years and never had that issue and I know for a fact that when I reported my spouse's income as hers and not mine.  TT is trying to avoid this liability by blaming it on the user when in fact it is a software error that should have been admitted and not denied to avoid paying interest and penalties assessed by the IRS.  I will never ever use their software again as they caused me more distress and i'm pretty sure millions of others similar to my situation. 

[VolvoGirl]

@alex 4   I think the IRS is saying you claimed paid excess Social Security tax.  Check 1040 Schedule 3 line 11 which goes to 1040 line 31.  Do you have an amount there?  That will happen if you enter both spouses W2s under the same person.   You only get excess SS back if one person had more than 1 employer and those employers took out more than the max.  For 2023 the max for Social Security is $9,932.40 on $160,200 of wages (160,200 x 6.2%).

THEN when you do 2024 next year, if you transfer over from 2023  you should delete ALL the W2s and re-enter them from scratch making sure to assign them to the right spouse.

[TejasKR]

I believe this is the same bug I noticed that TurboTax has been ignoring for some time, obviously.

When I did the online tax form, I assure you, there was NO checkbox for my spouse where I would state they had *not* lived in one of the half-dozen countries which would exclude the Social Security income from being taxed in the US. Yet, that button was there and checked when I reviewed the form after hearing from the IRS.  Further, in the personal info data collection, TurboTax asked if we lived in our current state and both myself and my spouse were marked as having lived in our current state in the USA for the entire year. Yet the review failed to flag a discrepancy, and so an incorrect return was submitted. This is not a data entry error, IMO, because it was not even asked in the data collection period for 2024 returns or before.

Feeling a little PO'd.

[ASmyth]

I just got this letter also for my 2024 return. The IRS adjusted my return because the taxable portion of my Social Security disability (SSDI) benefits wasn’t calculated correctly. (I don't even receive social Security but that's a whole other issue!)

After looking into it, we realized the issue was tied to the IRS rule that says up to 85% of Social Security benefits can be taxable, depending on your total income and filing status. In my case, my income was high enough that more of my SSDI should have been taxed. The IRS recalculated it using the method outlined in Publication 915, and their numbers actually make sense.

It appears that TurboTax didn’t apply this rule correctly in my return, which led to the discrepancy. That said, this issue likely only affects a specific subset of users — mainly those receiving SSDI and having enough other income to trigger the 85% rule. So while it’s a real issue, it wouldn’t affect millions of people as the OP claimed.

[VolvoGirl]

@ASmyth     Turbo Tax does not have a problem calculating the taxable amount of SS or SSDI.   If it did there would be lots and lots of posts.

Usually when the IRS increases the taxable amount of your social security it's because they increased some other income on your return. Or one of the entries showed up on the wrong line. Especially like any 1099R you got. If a 1099R got on the wrong line like1040 line 5 instead of line 4, the IRS might miss it and say you didn't report it.

Or there is a new question this year asking if you are a US citizen living abroad in one of these countries? People have been answering that wrong or skipping it which makes your ss not taxable.

This user figured out why they answered it wrong
https://ttlc.intuit.com/community/retirement/discussion/re-social-security-taxable-incom

[TejasKR]

I get a page not found with the link.

BUT, I've been using TurboTax for decades and filing with 2 SS incomes for some time. Not thinking I missed something, but even if I did, my point (when I posted) is that the review should have caught this because the personal information collected specifically asks if we resided in just one state for the entire year, and it asks it for both filers of the joint return. Both answers were "yes," just one single state for the entire year. But, then, one of us lived in another country for an entire year?

Since it didn't happen to you, and you're not claiming to be a filer in the category this affects, defending TT may pay well, but it smells funny from my POV.

[VolvoGirl]

Maybe I copied it wrong.  This one works.  

https://ttlc.intuit.com/community/retirement/discussion/social-security-taxable-income-error/00/3599...

They said……

I reran turbotax and found out it was my mistake. While I was entering my social security numbers for both my spouse and myself, there is a list of countries where SS income is not taxable and a question "does this apply to "myself". I checked yes" thinking I was being asked whose taxpayer's 1099-SSA my info was for.

Actually, I was saying I live in one of those countries.