I received a NYS tax refund from 2017. I deducted state & local income taxes and had AMT in 2017.The 2018 TurboTax State and Local Income Tax Refund Worksheet?

[edwkramer]

I received a NYS tax refund from 2017. I deducted state & local income taxes and had AMT in 2017.The 2018 TurboTax State and Local Income Tax Refund Worksheet, Part III Recovery exclusion from alternative minimum tax in 2017 says "if you paid AMT in 2017, enter amount from line 24," but shows $0.00. Where is line 24, and how did it come up with zero?

[rjs · Accepted solution]

"Enter amount from line 24" means line 24 in Part V of the same worksheet. In Part V you can see how line 24 is calculated. (And when line 24 refers to "line 6" it means line 6 in Part II of the same worksheet.)

[edwkramer]

Thanks; but I don’t see line 24; only lines 12-14 in Part 4. That’s the problem. Is there a 2nd page TurboTax isn’t showing me?

[rjs]

Yes, there's a page 2. It looks like there's a bug in the printing. It only prints page 1. I'll report the bug, but it might not get fixed for 2018 returns.

[edwkramer]

Wow; finally someone who knows how TurboTax works!! Thank you so much. Unfortunately, the 4 TurboTax people I spoke to had no idea! Now I’m frustrated not know how TurboTax calculated this and whether they did it right?

[edwkramer]

I may have found the answer after I downloaded my full return along with all attachments - schedules, worksheets, etc. There is a SMART WORKSHEET FOR: State and Local Income Tax Refund Worksheet that enables the "Recomputation of 2017 Federal Income Tax -- Note: Parts V and VI require recomputation of your 2017 federal income tax return. If recomputation is not available, check here and do not complete Parts V and VI." the box is checked. I assume Parts V and VI are the page 2 you are referring to. So, it appears TurboTax did not recompute my 2017 return factoring in the refund and adjusting AMT to see if the refund is taxable in 2018. Does that sound correct? And if so, why did TurboTax check that box?

[rjs]

Yes, that's all correct. TurboTax for 2018 cannot recompute your 2017 tax. You would have to do it yourself using 2017 TurboTax, or whatever software you used for 2017. There was a screen in the interview about your state refund that asked you whether you wanted to recalculate your 2017 tax return. You must have answered that you did not want to do it, and that's why TurboTax checked the box in the smart worksheet.

(The screens in TurboTax say that you could recalculate your 2017 tax manually on paper forms instead of using software. I don't think that's realistic, especially with AMT involved. And when you get into the details of the recalculation you find that in some cases you might have to do it multiple times.)

If you want to be able to check your tax return in this much depth, I think you would be happier with the CD/Download TurboTax software instead of TurboTax Online. The CD/Download software has a forms mode that lets you look at the actual forms and worksheets while you are working on your return, and even make entries directly on the forms. It also has features to trace where an amount on a form comes from. (These features are more limited on the Mac than in Windows.) You can switch back and forth between the interview and forms mode. The 2017 CD/Download software has a worksheet specifically for recomputing your 2017 tax to compute the recovery exclusion for 2018, and the 2018 CD/Download software has the same worksheet to do the computation for 2019. That worksheet is only available in forms mode. You should consider switching to the CD/Download software next year, even if you don't have AMT, itemized deductions, and a state refund in 2018. If you do switch, keep in mind that if you don't use TurboTax Online for 2019 you will lose access to any saved online returns from prior years. So you should download the PDFs and .tax20xx files of any prior-year returns and save them on your computer before October 15 this year.

[edwkramer]

Please forgive my delay, but I put this aside for a while. My question is, can I fix this by filing an amended ("corrected") 2018 tax return? Will Turbo-tax ask me again if I want to recalculate my 2017 tax return so when I answer yes it will NOT check the box in the smart worksheet? My guess is somehow I have to manually recalculate my 2017 taxes to see if taking out the 2017 refund from my state & local income taxes I received in 2018 would change the refund I received. Does that sound right?