DC married filing separately: help with a bug in turbotax online that allocates deduction to maximize tax rates

[sandroDC]

Hello,

We file married filing jointly on federal tax, married filing separately for DC. I've already paid for turbotax state filing, at which point the system generates a PDF of the return. 

The return is incorrectly prepared, the bug is as follows: 

We have unequal incomes, which turbotax fills correctly in Schedule S, Calculation J, Line E.

Line F is about allocating the deduction between the two people, before calculating income per person and the tax per person by a formula. The total amount is correct, but the DC form explicitly states "Enter each person’s portion of the amount entered on D-40, Line 1. (You may allocate this amount as you wish.)" Turbotax online  is assigning all of the deduction to the person with the lowest income, therefore exposing more of the household income to higher marginal tax rates. 

The correct approach is to allocate all of the deduction to the highest income, as allowed by DC. I don't see how to fix this with the interctions allowed by the turbotax inputs. Please help! Thanks. 

[KeshaH]

If you'd like, we can look at your return and see exactly what you see to  help come to a resolution. The return will be scrubbed and won't include any of your personal details.

If you're using TurboTax Online:

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

If you're using TurboTax Desktop:

• Click on Online in the top menu of TurboTax Desktop for Windows
• Select 'Send Tax File to Agent'
• Write down or send an image of your token number and state then place in this issue.
• We can then review your exact scenario for a solution

Please reply to this message with your token so that we can further assist you. Let us know all other states, if any, that are included on the return.

[sandroDC]

Thank you, that would be greatly appreciated. My token code is 1287479. We file Federal, DC and have had to file Maryland because we had incorrect withholding to Maryland that should have been paid to DC. Thanks!

[KeshaH]

Thank you for sending over your token.

Typically, when filing Married Filing Separately on the same return, the deductions are allocated to each spouse accordingly. Any "joint deductions" are automatically allocated to the primary taxpayer (that is, the spouse that is listed first on the return). This is what's happened here since you're taking the Standard Deduction. It just so happens that your primary taxpayer is also the lowest-earning spouse. 

If you'd like to allocate any or all of these deductions to the secondary taxpayer, you'll need to manually do this allocation on the Allocate DC Deductions screen. 

The amount that you enter on this screen under the secondary taxpayer's column will reduce the amount reported under the primary taxpayer's column on the Schedule S.

Before allocating:

After allocating: