Problem with 2023 VT Return re: Form RW171

[MiamiMom33146]

My husband and I sold VT real estate in 2023 and received form RW-171. As we had a loss on the sale, we expect to receive this entire amount back when we file our taxes because we don’t owe any VT income taxes as we aren't residents.

Turbotax instructs me to first enter the amount from RW-171 Line 12 on my Federal return under “Estimates and Other Taxes Paid”. I did that. Then when I answer the questions for VT Form IN-111, I’m also prompted to report this amount. However, Turbotax is then DOUBLE-counting this payment and saying my VT refund will be twice the amount withheld. Clearly this is wrong. Additionally, during the state review Turbotax gives me an error message saying “Vermont real estate withholding should not be greater than total Vermont tax withheld.” When I look at the worksheet, I see that Turbotax is including the withholding from form RW-171 on line 25b of form IN-111. It should not do that — per the instructions for form IN-111 from the state of VT, it says specifically NOT to do this. However, I can’t delete it in Turbotax.

Two questions: 

1. How can I delete the amount that was inaccurately added to line 25b (so that I’m only being refunded the actual amount withheld), and

2. How can I clear the error on my return?

[CMKLEK]

Hi. We're dealing with the same issue. Has anyone helped you?

[MiamiMom33146]

Hi @CMKLEK. Unfortunately, no. And chatting with Turbotax didn't help either. They seem unwilling to accept that there is an error with how they've coded this state return. We verified the accuracy of what we're saying with an accountant, so we know we're correct here. We're giving up with Turbotax and will file a paper state return. Our confidence in Turbotax has dropped over the past couple of years, and this year's errors (we found one with another state return, too) are unfortunately further evidence of a decline in quality.

[KlipBlip]

 I am dealing with the same issue.    Any updates?  Did you delete the VT filing from Turbo Tax?

[Hal_Al · Accepted solution]

Don't enter the withholding as estimates.

In TurboTax (TT), enter at:

Federal Taxes Tab

Deductions & Credits

-Scroll down to:

--Estimates & other taxes paid

   -Other Income taxes

On the next screen, scroll down to

     -Other income taxes paid in 2023 

       -  Withholding not already entered on a W-2 or 2023

         -On the next screen, enter the amount of withholding and the state

You may want to mail your VT return (rather than e-file) so you can attach a copy of the form showing the withholding.

Depending on how the property was used, you may not get a deduction for the capital loss, on the federal return. You may claim a loss on investment property, including vacant land.  You may not claim a loss on the sale of personal use property, like a 2nd home.