Georgia nonresident state return errors by TurboTax...

[Elec_PE]

TurboTax Quality Management need to review and revise their (Deluxe Online) software for the Georgia 2021 income tax return, part-year nonresident Schedule 3 and related smart worksheets.

I filed a Georgia 2021 tax return as a nonresident with Georgia-earned income (W-2, two months) and unearned retirement income (1099-R, 10 months). I am eligible for the Georgia Retirement Income Exclusion.

After e-filing the Georgia return, I received a letter from the Georgia Department of Revenue, Taxpayer Services Division reporting TurboTax's error on Schedule 3 and correcting my return / refund amount.

On Schedule 3, Column A, Line 7; TurboTax calculated and reported the Georgia Retirement Exclusion adjustment as -$4,xxx (based on total Georgia income).  Per the Georgia DOR TSD letter, this amount should be -$35,000 (based on all received income, earned and unearned).

This Schedule 3 error resulted in an incorrect Georgia-adjusted gross income (Column A, Line 8), ratio percentage multiplier (Line 9), prorated income deduction (Line 13) and Georgia taxable income (Line 14).

[TurboTax correctly calculated and reported a retirement exclusion of $4,xxx on Schedule 1, Page 1, Line 7a and on Schedule 3, Column C, Line 7.]

On Schedule 1, Page 2; Line 4 is blank. Line 5 is $4,000 (the maximum earned income, retirement exclusion).  Line 16 is $35,000 (the maximum unearned income, retirement exclusion).  Line 17 is $4,xxx (the calculated total Georgia-income exclusion).  The way TurboTax has handled Schedule 1, Page 2 may have contributed to the Schedule 3, Line 7 error.

Due to this error, I am now forced to draft and submit an amended return to the state of residence (with a tax payment and potential penalty and interest).

[SweetieJean]

Why did you  even claim retirement income on a non-resident return?  Or did you live in GA when you received those funds?

[Elec_PE]

I didn't claim residency, retirement income or the retirement income exclusion in Georgia - TurboTax determined these items and amounts based on answering a series of questions.

All income is reported as part of the TurboTax dialog for the Federal return.  [in my case, W-2 income was earned in Georgia as a nonresident.  1099-R retirement income was received in the state of residence.]  The Georgia tax return for part-year and nonresident taxpayers (e.g., Schedule 3) starts with the Federal return data, makes Georgia-specific adjustments, and determines what is taxable, deductible and non-taxable in Georgia. 

Georgia uses out-of-state and total income numbers as a basis for prorated part-year / nonresident deductions and exemptions.  TurboTax is supposed to follow Georgia instructions for that process. 

However, TurboTax has errors in the calculation of Georgia adjustments / basis related to retirement income and the retirement income exclusion.

I hope that helps!

[Gufran]

How were you able to resolve these errors?  I've run into similar problems myself with the output from TurboTax on Schedule 3 (page 1).

I'm a California resident and own a rental property in the state of Georgia. This year I also received a lump sum amount from a deceased parent's brokerage account.  These brokerage account numbers appear on Schedule 3, page1, row 4, but column B and C do not add up to the value of column A.

I too received a letter from the Georgia Department of Revenue stating that I owned additional tax. Essentially, I was taxed on the amount received from the brokerage account. This simply doesn't make sense given I'm a non-resident and this income was not earned in Georgia.

I believe there is a technical bug when Schedule 3 is generated.  The calculated values are incorrect. 

Any luck getting this resolved?

[wilcox6993]

I received the exact same letter with he issues of it not calculating the exclusion properly. Lines 4 and 5 in the GA return do not add up properly, so GA Dept of Revenue corrected the math and wiped out my refund. I now need to file an amended return to get my refund back.  Now I'm not sure if I can do this through Turbo Tax or if I need to file it manually to avoid the same error - do we know if this bug has been fixed?