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).
Why did you even claim retirement income on a non-resident return? Or did you live in GA when you received those funds?
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!
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?
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?
I own a rental property as a nonresident but I have been having issues completing the GA returns due to an error on schedule 3 as Turbo tax is not correctly populating information from the federal tax returns. I report loss from the property and owe no taxes . I have had no issues with properties I own as nonresident in Alabama and Wisconsin and information from federal tax returns are transferred without requiring any manual adjustments. It's has been a frustrating experience for the past few years and I have been forced to manually override to information on schedule 3 to generate the tax returns. I would like to know if anyone else has been encountering the same issue.