charitable deduction carryover error in North Carolina

[beach0041]

I believe there is an error in the North Carolina Software program. Like I suppose all states, if you donate to charity an amount over your AGI, the excess must be carried over to the next five years (actually, NC limits it to 60% of AGI, I think; but it's immaterial to my finding). Like the huge majority of filers, I came nowhere near giving to charity an amount that large. But, on the D-400 NC Standard/Itemized Deductions Worksheet, on Line 3 under Charitable Contributions, there is a number; it happens to be the exact amount I DID give to various charities, in 2020; but it's certainly not near my AGI. So I don't think it should be there at all. I think I can zero it out, thereby increasing my tax; but better than sending in an erroneous return.

[SteamTrain]

Best track is to Call Customer Support and get a Ticket issued to get that fixed.....they can check it out in detail, and get a diagnostic file too Sounds like it could be a big one.

What is the TurboTax phone number? (intuit.com)

[beach0041]

As suggested, I called them. As I expected, minimal help. I think the lady said she filed a report for me; but I have no confidence she understood what I was reporting, and I doubt if anything will happen. TT is in the business of selling, not responding.  Maybe other folks will file a North Carolina D-400, and see the same thing.

[SteamTrain · Accepted solution]

@DoninGA    Its critical that this one be passed up the line for fast action (Before E-filing NC does start up). 

It has nothing to do with the transmission problems, but an actual critical calculation error for NC.

I spent late night confirming it, and this morning too testing different situations.

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1) Short story: Transferring in last year's 2020 tax file includes ALL charitable deductions form 2020 into a 2021 NC Charitable Carryover page....all $$ already used last year.  And none of those $$ are carryover amounts.

2) Longer story:  I created a 2020 Fed&NC tax file (Premier: 2020.48.50.115). Single age 55 With $100,000 W-2 & AGI.

Itemized deductions ( Fed 21,300) with 13,500 mixed Charitable donations.  Those same Charitable donations were used in the 2020 NC itemized deductions.  No carryover since the 13500 was far below the 60%,50%,30%,etc AGI limits)

3) Transferring that file to 2021 taxes  (Premier: 2021.47.17.75)  just takes those used charity donations and imports them into the Carryover column of the 2021 Deductions worksheet  (picture Below).  (not sure what happens if there was an actual carryover).

4) If an NC resident has enough 2021 deductions to itemize for 2021, then those improper carryover $$ are added in for an improper large total charitable deduction (second picture below.  Similar 100k AGI with Itemized deductions).

5) One can workaround by entering $0 for those carryover amounts in teh NC interview (both Online & Desktop)  or the form itself in desktop....but cannot just blank-out the values, or the $$ refill with the improper values.  Those who realize the $$ are all wrong may fix them...but 10's of thousands will just let it go assuming TTX knows what it's doing.

6) Other:  If the 2021 NC tax file doesn't have enough new deductions to itemize, the carryover $$ are ignored...so those folks may be safe for the moment.  IF the person used the NC Std Ded in 2020, all their 2020 Charitable donations (if entered in 2020) still transfer to the Carryover column for 2021 taxes.

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Diagnostic files if they can be used:

2020 Fed + NC: 923675

2021 Fed + NC: 923683

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[DoninGA]

@SteamTrain Will do...

[beach004]

Steamboat, thanks for verifying my discovery; I’m new to this, and hesitated to accuse TTx of an error.

I assume I’ve done all I can?

[SteamTrain]

Yep...just hope and pray they fix it before tens-of-thousands of others screw up and don't realize they have to zero those numbers.  Those Using NC Std Ded in 2021 don't have to worry, because the improper transfer from 2020 is ignored until they put in enough New 2021 deductions to trigger the 2021 Itemized deductions (The carryover values still need to be fixed though).

Luckily, I don't plan to e-file until mid-March anyhow, even if I've already zero'd those carry-over $$.  But those in a rush may get unpleasant Audit letters from NC if it isn't fixed fast.  Not sure how long it will take the NC software crew to find the proper software code lines and fix it...and troubleshoot it all again.  I pray before 24 Feb when e-filing is supposed to start for NC.

[beach0041]

I have done what I could: I wrote the NC Dept. of Revenue and described what we have observed, so they will be on the lookout for this error--and maybe be lenient towards TTx users who have this error crop up.  Stay tuned.

[beach0041]

Here's a wonder: I heard back from the NC Dept. of Revenue first thing this morning! They are contacting Intuit to address the issue. This might get some action.

[SteamTrain]

That's a WOW !

 I saw nothing in last year's forms that showed that there would be a carryover reported on any particular line...but maybe another form gets added when that happens, and I don't have any test files with an excess contribution in the first place.

Still, the number of folks who exceed the various 60%,50%,30% of AGI contribution levels in any one year would likely be fairly small....maybe 1000 for NC as a pure guess.   I can imagine some "item" donations exceeding the AGI limit for those cleaning out homes (due to Death or downsize), so perhaps some more for that one.

[DougieLeMon]

I noticed an issue when I was getting a rather large refund, when I normally have to pay a few hundred $.  It looked a little fishy, and when I looked through the PDF of the state taxes, sure enough that carryover was there for the full amount of our charitable donations in 2020.  After manually going through the State tax process in TurboTax, I could zero out the values and am now set to get a MUCH smaller return (like $45 instead of $1200)

[SteamTrain]

Yeah, TTX needs to work fast to fix this one.

Those NC taxpayers who decided to mail-file already, who itemized their deductions and didn't catch the screwup to zero it out, are going to get an unpleasant surprise letter from the NCDOR.  Don't know if the NCDOR will issue refunds anyhow, and bill the taxpayers later....or just hold everything up.

[DoninGA]

@SteamTrain Tried posting a Private Message to you but your User ID does not come up.  Did you turn off messaging?

Anyway, finally got an acknowledgment from the Moderators today, 02/17,at 12:04PM that they are investigating.

They also wanted it to be known that they appreciate your support.

[SteamTrain]

@DoninGA 

Yeah, I've had PM turned off forever.  Maybe I should turn it back on....eehhh, maybe.

Thanks for the follow-up as it's going to be a pretty major issued for NC folks.

[mbmarsh76]

Is there a way to get a notification when this issue is fixed?  Or if we go into the forms and $0 out the carryover, will we still be able to e-file correctly?