Turbo Tax is incorrectly calculating my IRA Roth excess contribution saying the allowed amount is lower than it should be. I've checked multiple other reputable sources.

[saraisacampbell]

Someone needs to look at this please and fix it internally.

[fanfare]

What is your modified AGI for Roth purposes?

if your modified AGI is above a certain amount, your contribution limit may be reduced, as explained in IRS Pub 590A.

TurboTax is most likely correct in this computation.

[saraisacampbell]

Is this information public? If so, I do not what to share AGI on here.

I know that the contribution is being limited, but the calculation is incorrect.

Even my financial advisor agrees.  

[Critter]

Ok ... save the return PDF  with all the worksheets to review how the program is doing the calculation ... post back if something is not making sense. 

You can peek at only  the Federal form 1040 and the summary of the state info by going here:

1) lower- Left side of the screen...click to the left side of the "Tax Tools" text selection.
2)  then select "Tools"
3) then select "View Tax Summary" from the pop-up
4) then back to the left-side and "Preview 1040"

Then hit the "Back" on the left side to get back to your tax entries.

To view your entire return using the online editions (including the state) before you file, you will need to pay for your online account.

To pay the TurboTax online account fees by credit card, without completing the 2019 return at this time, click on Tax Tools >>> Tools  and then Print Center.  Then click on Print, save or preview this year's return.  On the next page, to pay by credit card, click Continue.  On the next screen it will ask if you want Audit Defense, if you do not want this option just click on the Continue button.  The next screen will ask for all your credit card information so you can pay for the account.

[macuser_22]

Exactly why do you think it is incorrect?

TurboTax follows IRS Pub 590A worksheets 2-1 to calculate MAGI and worksheet 2-2 to calculate contribution limits.

If you do not want to give your figures then do the calculations yourself using the IRS worksheets and if you find an error, please let us know exactally which line on the IRS worksheet does TurboTax calculate incorrectly and we can report it as a bug.  AFAIK there has never  been any bug found in this area.

[saraisacampbell]

Thank you.  I did that and see that it is not adding back $181.00 for my portion of Self-employment tax to arrive at MAGI.

[macuser_22]

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@saraisacampbell wrote:

Thank you.  I did that and see that it is not adding back $181.00 for my portion of Self-employment tax to arrive at MAGI.

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What makes you think that it should be?    I see nothing in the IRS worksheet 2-1 that says to add it back in.   Where do you see that it should be?

[dmertz]

IRS Pub 590-A makes it clear that your compensation available from self-employment to contribute to a Roth IRA is your net profit minus the deductible portion of self-employment taxes (and is also reduced by any deductible contributions made from net earnings to retirement plans).

[saraisacampbell]

Says so even on Turbo Tax advice:  What Is the Difference Between AGI and MAGI on Your Taxes?

MAGI calculation

To calculate your modified adjusted gross income, take your AGI and add back certain deductions. Many of these deductions are rare, so it's possible your AGI and MAGI can be identical. According to the IRS, your MAGI is your AGI with the addition of the following deductions, if applicable:

• One-half of self-employment tax

[VolvoGirl]

That is used to determine if you are qualified to make a contribution in the first place.  Not how much you can contribute.  

If you have self-employment income you can only contribute up to your net profit reduced by the deduction allowed for the ER portion of your self-employment taxes. See IRS publication 590A (page 39 for ROTH) https://www.irs.gov/pub/irs-pdf/p590a.pdf

[macuser_22]

Ah-yes - If your contribution is being limited because you do not have enough taxable compensation to qualify for a Roth contribution then your MAGI is immaterial.

[VolvoGirl]

And there isn't just one MAGI.  There are several ways to calculate the MAGI depending on what it is being used for.

[dmertz]

There are dozens of sets of modifications to AGI for different purposes.  I think only one of them, if any, adds back the deductible portion of self-employment taxes, and it's not the MAGI for the purpose of a Roth IRA contribution.  People have been complaining about that terribly misleading TurboTax advice page for years yet no meaningful changes have been made to it.  That TurboTax advice page should be ignored.

[Critter]

As I suggested in the beginning ... save a PDF with the worksheets to see how the IRS MAGI is calculated for this purpose.