All Tax law changes posts

Re: How to delete a return from Turbo Tax Desktop?

MamaC1 — Sun, 12 Apr 2026 00:34:12 GMT

Thank you very much!

Re: How to delete a return from Turbo Tax Desktop?

MelindaS1 — Sat, 11 Apr 2026 16:48:41 GMT

The thing to do here is to delete the actual Windows file, the .tax2025 file (TurboTax file type) that contains the test scenario tax return(s) you wish to remove from your system. If you don't already know where these are saved out, the trick is to return to the main window (close the program and reopen or File > New Tax Return), select Find a Tax File, and the Windows folder that opens will be the one where you save out your .tax20XX files for each return you have saved to your local drive. See below for example:

From here, you can right-click and delete the ones you wish to remove permanently (be careful - open each one first to verify its contents before deleting!) OR, you can open the address in Windows File Explorer to see the folder and its contents directly (address is underlined in the pic). From there, you can also delete the files or move them.

How to delete a return from Turbo Tax Desktop?

MamaC1 — Sat, 11 Apr 2026 16:08:49 GMT

Since for the first time under the OBTB we owed federal, I created 2 additional returns in my desktop version to see if it was better for us to file married filing separately. The result was worse. I want to delete those returns from my desktop version but can't find an option. I called Turbo Tax support. The rep told me to try going to forms view in each return and delete forms there. However, the forms reappeared and the return is still there when you go to the main screen in Turbo Tax Desktop as a return to continue.

Is it possible to delete these so I don't accidentally use them? I also tried the old right click over the box to try to pop up a window box. No luck was there. I am using Turbo Tax Desktop Deluxe in Windows.

Thank you!

Form 1040 schedule 1-A part III line 14a flag for values more than 1/3 of W-2 box 1 wages, does not allow e-filing

esunderw — Fri, 10 Apr 2026 22:10:05 GMT

TurboTax Online has an existing issue where the qualified overtime premium in form 1040 schedule 1-A part III line 14a cannot exceed one third of the W-2 Box 1 wages, or the program does not allow e-filing of ALL tax returns, both federal and state. This error does not account for qualified overtime premiums that are not included in W-2 box 1 due to deferral under a qualified retirement plan. For employees like myself who work a significant amount of overtime, and also make significant contributions to their pre-tax 401k (i.e. max it out), this is an issue. I am unable to enter the qualified overtime premium furnished to me in a statement by my employer without TurboTax flagging an error and not allowing me to e-file all of my tax returns as a result. I have seen several other entries in TurboTax's Community where other users are reporting the same issue. In the IRS 2025 1040 (and 1040-SR) Instructions, Part III No Tax on Overtime this is covered as follows: "Line 14a. In most cases, the amount on Form W-2, box 1, includes all of your wages and compensation, including your regular wages plus any qualified overtime compensation. Enter on line 14a only the qualified overtime compensation amount that is included on Form W-2. ...If you received qualified overtime compensation that is not included in box 1 of Form W-2 (for example, overtime amounts that are deferred under a qualified retirement plan), enter that amount here. Keep a copy of any document you relied on to support your calculation of qualified overtime compensation."

Re: IRA Strategy Question: Avoiding Pro Rata Rule for Future Backdoor Roth

bhJogdt — Fri, 10 Apr 2026 19:07:54 GMT

Ok, thanks for the explanation.

When I roll over the $65K pre-tax amount and leave $15K, which I then convert to a Roth, Form 8606 will take care of this — that makes sense.

A few other questions came across:

If I complete this transaction before December 31 and effectively empty my IRA account, do I need to wait until January 2026 to do a backdoor Roth for 2026, or can I do it right after completing this?
For a backdoor Roth, how long do I need to keep the money in the traditional IRA before converting it to Roth?
On the tax return for 2026, do I just report the traditional IRA contribution? If I do a backdoor Roth, will the tax documents essentially net to zero (e.g., $8,600 after tax contribution and $8,600 conversion resulting in no tax)?

Also, I have a SEP IRA. Is it allowed to roll the $65K into the SEP IRA instead of 401k? Is that even possible? And does having a SEP IRA create any issues for doing a backdoor Roth?

Re: How to enter CT PFL 1099G that was for medical leave and exclude from income

TaxNoob9999 — Thu, 09 Apr 2026 14:35:07 GMT

I am going through the same thing and concur with the OP.

A few basics:

Link to the IRS Revenue Ruling 2025-4
CT Paid Leave Trust Fund seems to be entirely funded from employee wages, with no employer contribution. The funding structure entails: the employer withholds 0.5% of employee income (up to the Social Security cap of the year in question); which for 2025 would be a maximum withholding of $880.50 (=$176,100 cap x 0.005).
The amount withheld (i.e. employee contribution) to fund the CT Paid Leave Trust Fund is counted as part of employee wages (Box 1) on the W2 and therefore is taxable (this is consistent with the IRS Ruling 2025-4, Table 1). The amount withheld should be listed explicitly in W2 Box 14, in order to provide clarity.
If an employer wishes to contribute to the CT Paid Leave Trust Fund, the CT Paid Leave program FAQ page says they cannot do this directly:

Under Connecticut law, employees are obligated to pay the contributions into the Paid Leave Trust Fund. If an employer wishes to ensure the new obligation on the employee does not change the employee's current take-home wages, the employer may increase the employee's wages to cover both the one-half of one percent (0.5%) contribution obligation as well as the tax implications of increasing the employee's wages. An employer that chooses to do this is giving the employee a taxable benefit — effectively a bonus — which will have an impact on the employee and employer's obligations under state and federal tax laws as well as wage and hour laws. Employers should consult their own tax advisors and employment attorneys to determine the consequences of such a plan.

Benefits paid (i.e. income) from medical leave taken (based on taxable employee-funded premiums mentioned above) is nontaxable, per Table 2 of the IRS 2025-4 guidance document linked above. Specifically, under column "Amount attributable to employee contribution", it says:

The amount attributable to the employee contribution, as well as to any employer pick-up of the employee contribution, are excluded from employee’s Federal gross income.

- The effective date of IRS 2025-4 guide is Jan 1, 2025, subject to the following section: TRANSITION PERIOD FOR ENFORCEMENT AND ADMINISTRATION WITH RESPECT TO CALENDAR YEAR 2025. However, the bullet points under this section seem to deal with cases involving employer contributions, which seems inapplicable to the exclusively employee-funded CT Paid Leave program.

As such, it seems that paid benefits (income) for medical leave taken under CT Paid Leave should be non-taxable. I believe @AmyC 's post above regarding how to correct for this in TurboTax is the only way to do it.

Since I already filed my federal return by mail for 2025, I began an amended return process in TurboTax and followed @AmyC 's instructions, and it seemed to work. I will likely mail the amended return soon, and then use the corrected amounts to file my CT return (which I have not mailed yet).

Re: No tax on tips

DianeW777 — Wed, 08 Apr 2026 18:52:58 GMT

When you are entering your income for self employment, TurboTax will ask if any of that income will includes tips. The tips must be included in a Form 1099-k, 1099-MISC, or 1099-NEC. You have to keep logs that show the date, the customer, and tip received.

Guidance for Individual Taxpayers who received Qualified Tips or Qualified Overtime Compensation in 2025
How do I enter tips in TurboTax Online?
- Scroll to the bottom for self employment.

@user17756737525

Re: No tax on tips

user17756737525 — Wed, 08 Apr 2026 18:46:56 GMT

Dave

I can not access this thru the guide me unless I enter the amount of money made then I can check how much tips but this then puts the amount 1x as 1099 and another time in this business self employment area. It literally says not to enter it there. There is nowhere under the 1099 to do this and in this area it adds the income 2x. This is why I am stuck

Re: Border Patrol overtime supplemental Pay

JamesG1 — Tue, 07 Apr 2026 15:57:53 GMT

Not necessarily.

The Qualified Overtime Deduction is defined as the “half” portion of “time-and-a-half” compensation that is required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.

As an example, if the employee’s regular rate of pay is $20 per hour and the employee worked one hour of overtime, the employee’s full overtime pay would be $30 ($20 x 1.5). The Qualified Overtime Deduction would be $10.

Even if your union contract negotiated overtime pay of $40 per hour, the Qualified Overtime Deduction would remain $10 because the deduction is defined by what is required by the Fair Labor Standards Act.

Other Qualified Overtime Deduction information:

Maximum annual deduction is $12,500 ($25,000 for joint filers).
Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
The deduction reduces federal income tax liability, it does not exempt overtime pay from Social Security and Medicare taxes. Employees will still owe these taxes on their overtime earnings.
Taxpayers filing as married filing separately are not eligible for the deduction.
The deduction is available for both itemizing and non-itemizing taxpayers.

See this TurboTax Help.

Re: IRA Strategy Question: Avoiding Pro Rata Rule for Future Backdoor Roth

DaveF1006 — Mon, 06 Apr 2026 20:27:56 GMT

This sounds like a good strategy. Here are some things to consider before you execute your plan.

1. Will this strategy create any tax issues?

If executed correctly, this should not create a major tax bill, but there is a specific order of operations you must follow:

You cannot roll after-tax money into a 401(k). Most 401(k) plans are only allowed to accept pre-tax rollovers. You must ensure that the $65k you move into the 401(k) consists only of your pre-tax contributions and any earnings.
The "Basis" stays behind. Your after-tax contributions (your "basis") must stay in the IRA. When you convert that remaining $15k to a Roth IRA, only the portion that exceeds your basis (any growth on those after-tax funds) will be taxable.
Form 8606 is your best friend. You must have filed Form 8606 for 2023 and 2025 to track those after-tax contributions. When you do the conversion, you’ll use this form again to show the IRS that the $15k you converted was already taxed.

2. Does this approach help avoid the pro-rata rule?

Yes. The pro-rata rule only aggregates "Traditional" IRAs (including SEP and SIMPLE IRAs). It specifically excludes qualified employer plans like 401(k)s.

By moving the $65k of pre-tax money into your 401(k) before December 31, 2026, your "Total IRA Balance" for the pro-rata calculation will only be the $15k remaining in the IRA. Since that $15k is almost entirely after-tax basis, the "taxable ratio" of your conversion drops significantly.

3. Does this setup make sense for 2026 Backdoor Roths?

Yes. This is the "cleanest" way to set yourself up for recurring Backdoor Roth contributions.

Once you convert that $15k and effectively empty your Traditional IRA, your balance at the end of the year will be $0.
In 2026, you can contribute the maximum ($7,500, or $8,500 if you're 50+) as a non-deductible contribution to your Traditional IRA and immediately convert it to Roth. Since there's no pre-tax money left in any IRA to "taint" the conversion, the process becomes a simple, tax-free transfer.

4. Crucial Checklist for Success:

Check with your 401(k) provider: Verify that your specific plan allows "roll-ins" from a Traditional IRA. Not all plans do.
Verify the Basis: Look at your most recent Form 8606 to find your exact "Total Basis." If your after-tax contributions were $13k and the account grew to $15k, you will owe taxes on that $2k difference when you convert.
The Dec 31 Deadline: The 401(k) rollover must be completed and your IRA balance reduced by December 31 of the year you perform the Roth conversion. If the money is still in the IRA on New Year's Eve, the pro-rata rule will catch you.

IRA Strategy Question: Avoiding Pro Rata Rule for Future Backdoor Roth

bhJogdt — Mon, 06 Apr 2026 20:14:35 GMT

Hello, I’m looking for help with my current IRA situation involving both pre-tax and after-tax contributions.

I have about $80k in my IRA. Over the past two years (2023 and 2025), I made after-tax contributions that are now mixed with pre-tax funds. I didn’t realize at the time that the pro rata rule would apply when converting to a Roth IRA.

I also now have a 401(k), so I’m considering rolling about $65k into the 401(k) and leaving $15k in the IRA. Then I would convert that $15k to a Roth IRA to effectively empty the IRA.

My questions:

Will this strategy create any tax issues?
Does this approach help avoid the pro rata rule going forward?
Starting in 2026, I plan to do backdoor Roth contributions—does this setup make sense for that?

I’d appreciate any guidance or concerns. Thank you!

Re: No tax on tips

DaveF1006 — Mon, 06 Apr 2026 18:27:07 GMT

When you enter your income in the self-employed section of your return, there is a check box on the bottom of the form when you make the entry. When you check that, you will be allowed to make an entry on how much of the income is tips.

No tax on tips

marquessa — Mon, 06 Apr 2026 17:39:46 GMT

I have a 1099NEC for a delivery job. It reports all income including tips. Where do I separate out the tips?

Tyia

Border Patrol overtime supplemental Pay

Juany232000 — Fri, 03 Apr 2026 16:03:46 GMT

Will the supplemental and differential pay be considered overtime?

Re: Issue with Federal Income populating in 2 different states

DavidD66 — Mon, 23 Mar 2026 21:30:27 GMT

As you go through the state tax sections for each state there will be a section where you allocate income. You just have to work your way through the state returns until you get to the income allocation page(s). If you were a resident of one state all year and worked in the other as a non-resident you should complete your non-resident return first, and then complete your resident state return.

Issue with Federal Income populating in 2 different states

user17742925803 — Mon, 23 Mar 2026 19:43:53 GMT

I worked part year in MA and part in NC. a When doing my taxes in Turbo tax it transfers the full Federal income to BOTH states. How can I get this fixed?

Re: Overtime Validation Bug (Desktop Version)

JohnB5677 — Mon, 23 Mar 2026 18:23:29 GMT

I don't understand.

If you work for a company that has two different EINs, you essentially work for two different companies.
You confirmed this when you said that you couldn't combine the W-2s.
If that is true you work for one company that pays a fixed wage,
You work for another company that evidently pays you that wage plus 50%
You don't have any overtime.

Re: Overtime Validation Bug (Desktop Version)

HotToddy — Mon, 23 Mar 2026 18:06:17 GMT

Thank you for the response, but combining the W-2s is not a viable solution for several reasons:

Different EINs: These W-2s are from separate divisions within the same corporation and carry different Employer Identification Numbers (EINs). Combining them would cause an IRS mismatch error and is not an option.
Separate Capacities: One role is salaried (Standard Time), while the other is strictly hourly (100% Overtime). This is not a 'dual role' under a single payroll record; they are distinct entries.

The Root Mathematical Error Remains:

The issue isn't how the data is entered; it’s the denominator the validation script uses for the 'Reasonableness' check.

The Box 1 Distortion: Box 1 represents taxable wages after pre-tax contributions (401k/403b). For any employee who saves for retirement, Box 1 is significantly lower than their actual gross earnings.
The Logic Failure: By using Box 1 as the denominator, the software creates a false-positive error.
- Example: Gross Wages (Box 5) = $100,000. Overtime = $33,333 (Exactly 1/3, which is legal).
- The Savings Penalty: If that person contributes $23,000 to a 401k, their Box 1 becomes $77,000.
- The Bug: TurboTax then calculates $33,333 \div 77,000 = 43.2\%.
- The Result: The software blocks the e-file because $43.2\% > 33.3\%, even though the overtime is exactly 1/3 of the earned wages.

The Requested Fix:

This validation script should be updated to compare the Schedule 1-A entry against Box 5 (Medicare Wages), which represents true gross earnings and does not 'shrink' based on retirement contributions.

Please escalate this to the Product Integrity / Calculations Team. This bug effectively prevents any taxpayer with significant overtime and high retirement savings from e-filing.

Re: 4562 (Depreciation and Amortization) UPDATED - claim that accelerated depreciation !!!!!!

PatriciaV — Sun, 22 Mar 2026 19:37:07 GMT

Form 4562 also reports depreciation for certain assets placed into service in tax years before the current year (basically, any assets other than vehicles). If this is the only value on Form 4562, you can trace the amount to the Schedule E Worksheet Line 18a.

It's possible that one property had prior year assets with depreciation and the other did not. You might compare these worksheets from your prior year return.

Re: Regarding Box 13, Code AE on my K-1 from a partnership

PatriciaV — Sun, 22 Mar 2026 19:16:52 GMT

The increase in your federal refund may not be directly influenced by your Schedule K-1 entry. You would need to review the worksheets that flow onto Schedule A.

According to the IRS Instructions for Form 1065 Deductions—portfolio income (code AE):

"Enter amount of deductions related to portfolio income which were formerly deductible by individuals under section 67 subject to the 2% AGI floor. For partners other than individuals, amounts that are clearly and directly allocable to portfolio income (other than investment interest expense and section 212 expenses from a REMIC) can be deducted on those partners’ income tax returns."

Have you checked the Miscellaneous Itemized Deductions Worksheet (a TurboTax form)? When you enter a value for Box 13 Code AE, the amount should appear on Line 16 of this worksheet. Although the deduction is not allowed for federal tax purposes, it may be transferred to your state income tax return.

You can view this worksheet in TurboTax Desktop using Forms Mode. If you're using TurboTax Online, you'll need to print your return, including all forms and worksheets. See How do I get a PDF of my return?