TurboTax doesn't seem to calculate my Roth IRA Contribution Limit correctly

[navid-saneie]

IRS has the exact formula on how to calculate your Max Roth IRA contribution based on your AGI. TurboTax number doesn't match with that for my AGI. How can I edit or ask TurboTax to fix this?
Token number in comments.

[navid-saneie]

Here is the token number:
1285764

[dmertz]

TurboTax does do the correct calculation (except, perhaps, if you have a distribution from an inherited IRA and you have your own basis in traditional IRA contributions; I'm not sure that the developers ever fixed that obscure bug).

Why do your think that the MAGI calculated by TurboTax is incorrect (rather than thinking that your own calculation might be incorrect)?  What differs?

[navid-saneie]

Saying TurboTax does it correctly doesn't unfortunately help. I am not having a problem with their MAGI calculation. I am saying their max contribution limit is not correct. I am simply putting the same MAGI value TurboTax is giving me, into the formula provided by IRS and the numbers are different. 
If you want, I give you an example, go to IRS provided formula for a MAGI of 158000. Calculate what you get as max contribution. 
TurboTax is giving me around $1000 limit. Which doesn't make sense. 
My main question is mostly how to talk to TurboTax about their calculation! And how to report the mistake. 
They can convince me that they are not wrong or help if they are. 

[dmertz]

What I mean but "performs the calculation correctly" is that 2024 TurboTax accurately performs the calculations on TurboTax's Roth IRA Contribution Limit Worksheet as specified by the IRS on Worksheet 2-2 of the 2024 IRS Pub 590-A.  TurboTax's worksheet will also show on line 1 the MAGI that TurboTax has calculated using the method described by Worksheet 2-1 of IRS Pub 590-A.

If you are filing Single or Head of Household (or Married Filing Separately and you did not live with your spouse at any time during the year), the contribution limit declines from the full annual amount at an MAGI of $146,0000 to zero at $161,000.  $158,000 is $3,000 below $161,000, so that means that the contribution limit at an MAGI of $158,000 would be 3,000/15,000 or 20% of the unlimited amount for your age.  If you are under age 50, that would mean a maximum Roth IRA contribution of $1,400.  This is exactly the result that TurboTax produces.

However, to be eligible to contribute that $1,400 you also need to have at least $1,400 of compensation to support the contribution.  The amount of compensation available to support the contribution will also be shown on the Roth IRA Contribution Limit Worksheet.

[AnnetteB6]

Thank you for providing your token number.

Using the formula provided by the IRS (from Amount of Roth IRA contributions that you can make for 2024:(

MAGI = $158,000

Subtract $146,000 for Single filing status

Result is $12,000

Divide the result by $15,000 gives 12,000/15,000 = 0.8

Multiply the result of 0.8 by the maximum contribution limit of $7000 based on age to get $5600

Subtract $5600 from $7000 to get the maximum contribution allowed, $1400.

Since your actual MAGI is higher than the example of $158,000, the maximum contribution will be lower.  The final value is rounded to the nearest $10 as allowed on the IRS Worksheet, so the math calculation is not exactly the same amount.  In the example above, no rounding was required, but in your real-life example in your token file, the final number is rounded.

Here is a link to the IRS Worksheet used to make the calculation:  

Worksheet 2-2. Determining Your Reduced Roth IRA Contribution Limit

This worksheet is duplicated within TurboTax, titled Roth IRA.  You can print this as part of your return using TurboTax Online after your fees have been paid.  Or if you are using TurboTax Desktop, go to Forms at the upper corner of the screen and look for Roth IRA in the list on the left side.

@navid-saneie 
 

[TimKearney1234]

I am really getting FED UP with TT.  My wife and I each made $8200 in 2024.  Since we are each 69 years old we each can contribute $8000 to our Roth IRA's.  I've tried to tell TT that there is a flaw in the desktop version that I use.  According to others I spoke to, including the IRS, the amount of our contributions is just fine.  But for me to talk to someone at TT abouyt it all they want to do is charge me to talk to an "Expert".  I'm not asking for help filing my taxed, I am telling them about a flaw.

Can't even get someone to call me and discuss.

I've used TT for both my Partnership and Individual taxes and pay LOTS of money.  

Maybe it's time I used some other tax software!!!!!

[dmertz]

@TimKearney1234 , it seems likely that TurboTax is correct and you are either determining MAGI for the purpose of the Roth IRA contribution limit incorrectly or your compensation available to support the contribution is insufficient.  The latter could be the case if your income is from self-employment and you have failed to subtract the deductible portion of self-employment taxes from net profit when determining the amount of net earnings available to support a Roth IRA contribution.

[TK55]

Thank you for that info.  It was due to the fact that I forgot to take into account the self-employment taxes.