My wife and I made 529 contributions for four grandchildren and filled out the proper information on my desktop Turbo Tax program. The problem comes when the program fills out Schedule O Section III line 9.
All of the reportable income on our PA-40 form is from jointly held investment assets with the exception of one asset which in my wife's name only and accounts for $1800 out of a total of $245,000 of total income. Your program does not appropriately allocate the amounts listed on line 9. The program allocates all but $19,000 to me and the remainder to my wife. By doing so, my wife's contributions of $60,000 are now capped at $19,000.
This error would cost us over $2000 in addition Pennsylvania taxes. If you read the Pennsylvania instructions regarding the Schedule O line 9 you will see that the amount can be allocated in any way the taxpayers choose as long as the total equals the total amount reported on form PA-40. I over-rode the values generated by your program because your program is dead wrong! Today I tried to e-file both our Federal and State taxes. Your system allowed me to proceed to file, including paying you the $20 fee for filing the State return, before notifying me that I needed to recant the over-ride on Schedule O or you would not e-file my return. I'm not going to give Pennsylvania over $2000 because your program is incorrect in the manner in which it deals with Schedule O. I wonder how many other joint Pennsylvania tax filers have used your program and didn't realize that they were getting fleeced? I did nothing wrong and you are not going to force me to abandon e-filing my PA state return.
