Mistake with Oregon State Software?
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laquan
Level 2

Mistake with Oregon State Software?

I think there may be a mistake w/ the TurboTax Premier Oregon state software.  When preparing my 2020 Federal return, in the Federal “Deductions & Credits” section, I entered $996 of California taxes paid in 2020 for 2019 (I was a part-year resident from 1/1/19-11/30/19) plus $852 of Oregon taxes paid in 2020 for 2019 (I was a part-year resident from 12/1/19-12/31/19).  I was a resident of Oregon for all of 2020.  In the 2020 Oregon “Credit For Tax Paid to Another State” section, TurboTax is stating that “You paid $1,848 of taxes to states other than Oregon.”  The $1,848 amount appears in Oregon's 2020 Schedule OR-A (Oregon Itemized Deductions) Line 5 for State and local income taxes paid.  This is incorrect, as I believe the figure should be $996 to represent only the taxes paid to California.  It appears to be erroneously including the $852 of taxes paid to Oregon ($996 + $852 = $1,848).  The only possible reason I can think of why TT would have counted the tax paid to Oregon is because I completed Form OR-40-P (for part-year residents) for 2019 rather than Form OR-40 (for full-year residents).  Can someone reply to me to confirm whether or not this is a mistake in TurboTax, and if so, correct the program ASAP?  I am unable to manually override the figure.

3 Replies
BillM223
Employee Tax Expert

Mistake with Oregon State Software?

May I assume that you are using the Online product? 

 

I doubt that the problem is the OR-40-P in 2019. Instead, it looks like TurboTax is pulling the entire 2020 taxes paid for 2019 for all states without regard to which states they were for.

 

OK, the way to workaround this is as follows (it won't be pretty):

 

1. If you have finished entering everything into the federal and state return, look at your state return. Can you tell how much difference this $852 made to your Oregon taxable income? It may have decreased it by the full $852, or there may have been some limitation based on Schedule OR-A.

 

2. Once you have determined the impact that this erroneous deduction had on your Oregon return, then restart your Oregon interview.

 

3. You will see the screen "Here's the income that Oregon handles differently"

 

4. Under "Misc adjustments", click Start for "Other Additions".

 

5. The next screen asks "Do you have additions to federal income?". Answer YES

 

6. On the next screen "Your additions to federal income", check the box at the bottom that reads "If you have an addition to Oregon income that you haven't already enter, check this box and click continue."

 

7. The next screen is "Other Additions Statement". Go to the very bottom and on the last line that reads "Enter other additions description below", add code 136, then "Adjustment for OR taxes paid for 2019" and "852" in the Oregon column (right hand column).

 

This will carry the $852 to line 8 of form 40, increasing your Oregon taxable income by $852. It will not change the entry on line 5 of form OR-A, which will still be the wrong $1,848, but at least, your Oregon state income will not be correct.

 

Be sure to document what you did because using code 136 really isn't the right code, but if we don't put in a valid code (there doesn't seem to be one for "other"), then your return won't pass the state review, and you won't be able to e-file.

 

Let me know how this works out.

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laquan
Level 2

Mistake with Oregon State Software?

I'm not sure whether I am using the Online product, but I presume not as I purchased TurboTax Premier from Costco and downloaded it onto my PC.  I then purchased an additional state software directly from Intuit since I need to file both Oregon and California returns.

 

With all due respect, it makes no sense for me to go through the convoluted solution you recommended given that it will not fix what is in line 5 of Oregon's Schedule OR-A.  I think you also made a mistake in your response, as you said "at least, your Oregon state income will not be correct."

 

For me, there is no tax impact of having $1,848 show instead of $996 in line 5 of Oregon's Schedule OR-A since my deduction is capped at $10,000 in line 9 and line 6 is already greater than $10,000.  As a matter of principle though, I do not want to put incorrect information on the form, even if it means hand-filling out the Oregon forms with the correct numbers and mailing my return.  But doesn't Intuit/TurboTax have a responsibility to correct the software program when an error is identified?  I would rather wait for the software program to be corrected than fill out the forms manually.

 

BillM223
Employee Tax Expert

Mistake with Oregon State Software?

"but at least, your Oregon state income will not be correct."

 

Sorry, my typo; it should have read, "but at least, your Oregon state income will be correct."

 

"I'm not sure whether I am using the Online product, but I presume not as I purchased TurboTax Premier from Costco and downloaded it onto my PC."

 

Yes, you are using the CD/download software, not the Online product.

 

"But doesn't Intuit/TurboTax have a responsibility to correct the software program when an error is identified? "

 

Of course, TurboTax wants to offer the highest quality product. However, it is simply impossible to correct every issue in a short timeframe...if for no other reason than Congress, the IRS, and the states have been "moving the goalposts" on nearly a daily basis. 

 

"I would rather wait for the software program to be corrected than fill out the forms manually."

 

Because of the huge amount of work required by all the last minute law changes and because this issue affects relatively few taxpayers - yes, TurboTax has to make value judgments, just like every business - my guess is that this will not be fixed until after tax season. I would love to be wrong, but I have to be realistic.

 

"For me, there is no tax impact of having $1,848 show instead of $996 in line 5 of Oregon's Schedule OR-A since my deduction is capped at $10,000 in line 9 and line 6 is already greater than $10,000. "

 

I went through a lot of effort to figure out a workaround for you. If in fact the workaround would make no difference to you, then I would suggest that you go ahead and file as-is. If the fact is, as you say, that your final numbers would be correct; in this age of pandemic, it is unlikely that any taxing agency will notice or care that some of the intermediate numbers are off.

 

It's your choice, to file as-is or create a paper copy of the return and update it by hand.

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