How do I report a software error in the Turbotax Iowa

[Thalweg]

Iowa changed its tax code effective in 2023.  Prior to this change, Iowa allowed federal taxes paid within the given tax year to be deducted when calculating Iowa taxes.  However, if an estimated or final federal tax payment or federal refund occurred in the subsequent calendar year, it would not be included in the Iowa tax calculation until the subsequent year.  For example, if the following payments were made:

Estimated Taxes

4/1/22 - $2000

6/1/22 - $1750

9/1/22 - $1500

1/1/23 - $1250

Final Tax payment – 4/1/23 - $1000

The payments made in calendar 2022 ($5250) were deducted when calculating 2022 taxes, however, adjustments for payments/refunds in calendar 2023 ($2250) could not be made until 2023 taxes.  In prior years, TurboTax Iowa has correctly imported and applied these payments.

For 2023 and beyond, Iowa will no longer allow federal tax payments to be deducted when calculating Iowa taxes.  However, there is a one year (2023) grace period where previous adjustment can be made when calculating 2023 taxes.  To date (2/1/24), TurboTax Iowa 2023 does not appear to be importing previous payments/refunds correctly into Form IA 1040 Schedule 1 Line 18.  It appears that payments made in the prior year (i.e., 2022) should be imported from 2022 into Form IA 1040 Schedule 1 Line 18 at step E (currently reporting $0).  At this time, the software is including all estimated tax payments for 2022 and 2023 on Line 18 and is overstating the deduction.  Using the example above, the software is currently deducting payments totaling $7500 and should only be deducting $2250.  On Form IA 1040 Schedule 1 Line 18, Step A represents the total tax liability imported from last years turbo tax, Step D subtracts federal payments made in 2022 and reported on W-2s, Step E should subtract estimated taxes paid in 2022 – The result will then be any remaining 2022 tax liability (estimated and final) paid in 2023.

EDIT - appears that the software will provide the correct calculation on a fresh import.  However, I have already entered 95% of my w-2s, 1099, etc. and would rather not have to redo all of those entries in to a new return. Would be nice if the software would reimport into an existing file to make the correction rather than having to start over.

[marsgravity142]

I have similar concerns. My issue with line 18 of schedule 1 is that I didn't expect to see a value there at all. I did pay in at tax time last year due to a penalty for cashing out a pension. The amount on the line doesn't match the amount I paid in and there's no worksheet showing how it was calculated or any indication on the Iowa Dept of Revenue instructions - provided below - stating that the value there should be prorated or calculated.

https://tax.iowa.gov/expanded-instructions/schedule-1-2023

Line 18: Federal Tax Paid for Prior Years

Enter the amount of additional federal income tax paid during 2023 for tax year 2022 and any prior tax years. The amount of additional federal income tax paid is deductible only if Iowa income tax returns were required to be filed for the year for which the additional federal income tax was paid. Include only the actual federal income tax payments made in 2023, but do not include penalties and interest. 

I talked to two live agents and I made it very clear that I was concerned there may be a coding error considering that the Iowa tax code was basically completely new for this year. The last one suggested I try getting someone from the IA Dept of Revenue on the phone if I didn't feel comfortable filing. 

I haven't received this large of a refund from Iowa since I was able to claim my kids as dependents. Add this unexplained amount on that line and somethng just doesn't sit right. Granted, this number only increases my state refund by less than $100. On the flip side, if the value should match what I actually paid in, I would be getting an additional $180 refund. Small beans, yes, but I really don't want to mess with having to file an addendum to fix it.

I'm hoping I might be able to get some phone assistance from the Dept of Revenue considering it's so early in the tax season. If I'm able to get anywhere with anyone there, I'll be sure to update.

[Thalweg]

I initially tried calling to report the issue. The first guy I talked to was clueless and in spite of all the evidence I provided refused to acknowledge there was even a remote possibility the software was wrong. I fact he tried to convince me to make changes on the federal side to affect the state side, which was blatantly wrong and would have resulted in filing an incorrect Iowa return and an incorrect federal return. Since it was a lost cause, I ended that call and called back hoping to get someone more knowledgeable and helpful.

The second person I talked to said that there was to be an Iowa software update released on Jan 18th and suggested I wait until that came out to see if it was fixed.

The 18th came and went so I called back to get an update, the person I talked to had no idea how to find out when the software would be released. I ended that call and following a brief Google search I found the website that list the state software status.

I then thought I would post the issue here hoping that someone from TurboTax actually monitored this site and would forward to the appropriate software engineer to get an answer – so far that appears to be wishful thinking.

For me, I am fortunate to have spotted the issue and, although I am not happy to have to reenter all of my information, it appears I can end up with a correct return. I am certain there are others out there that are unaware of the issue and will not file correctly. So much for a 100% accuracy guarantee.
In your case, it sounds like a software error and much like my case, there is apparently no good way to get ahold of anyone that actually cares to look into it. Asking you to call the Iowa IRS to figure out how to work around their software issue is amazing.

[anne78]

I also have a concern.  I have talked with Iowa Department of Revenue.  Line 18 is ONLY for prior years.  It should not reflect anything that I paid in 2023 for 2023 taxes.  I called turbo tax.  Lady was not friendly.  Did not believe turbo tax could be wrong.  Said that the line was for any taxes paid in 2023, totaling ignoring that it specifically states paid for PRIOR years. There wasn't any response that we will verify that it is programmed correctly.    Iowa says Turbo tax should give them a call so they can clarify it for them.  

Losing confidence in Turbo Tax since they don't listen.

[AnnetteB6]

To look into this further and try to offer an explanation to your or submit it to the appropriate team for possible correction if it is an issue, it would be beneficial to have a diagnostic copy of the tax return experiencing the issue.  You can help by providing that diagnostic tax file.

The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using and what states you are filing in addition to Iowa in follow-up thread.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen.
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.

@anne78 

@Thalweg 

@marsgravity142 

[RichRinCR]

I also found an error.

On Iowa 1040 Schedule 1, Line 14 (Federal income tax refund received in 2023) should be reduced by any refundable tax credits. Iowa doesn't tax refundable tax credits.

In the TurboTax 2023 interview (Iowa), the American Opportunity Credit—2022 Federal Form 8863 Line 8—is missing from the list of refundable tax credits. Thus, TurboTax 2023 would have me pay tax on that amount, thereby overpaying my 2023 Iowa income tax.

Since the interview has no line on which to enter the American Opportunity Credit, I entered it into one of the other lines.

I only found this error because, in addition to TurboTax Deluxe 2023, I used H&R Block Deluxe 2023 and saw the difference.

[bmg60]

You indicated that you had to do a fresh import to get this to work correctly.  I just today 3/24 opened my Iowa program and it is still not picking up the info correctly.  Are you stating you had to reinstall the program and re-enter everything for this to work appropriately?

Thanks

[Thalweg]

I did not have to reinstall the program.  I had to start a new return from scratch, reimport last years' (2022) data and then reenter all of the data for 2023.  At this point, I do not look for them to actually make a software change to prevent the need to start all over - they have had a couple of months to do so and have not.  It is really sad that they did not find a way to correct this issue without a reimport or at a minimum put up a caution message that tells users they may need to start all over.

[Thalweg]

A diagnostic file from me would not be of any help since I have already started over with a new file to correct the issue.  The software engineers should be able to figure out the issue from what I have already provided.  In summary,

1)  The software only allows one import of previous years data per file.

2) Prior to early February (don't recall the exact release date) there was a software error that imported 2022 estimated taxes (and from other reports here some other data) incorrectly.

3) Since the software does not allow a reimport and the software engineers have not released a solution for those that imported prior to February, it is necessary to start all over from scratch to fix the return.

4) In addition to not providing a fix that would prevent needing to start all over, the engineers have also not provided any kind of pop-up etc. that would warn users that there may be an error and now to figure out if they need to start all over.  I suspect there are many users that are unaware of this issue and how to correct it and will be filing an incorrect Iowa return.

[LeticiaF1]

This is a known issue that should be resolved with the March 29th update. Once the update happens, please follow the steps below depending on the version of TurboTax you are using:

• If using TurboTax Online: Clear your cache and cookies. See this FAQ, for your particular browser.
  • You can also try using a different browser
• If using TurboTax Desktop: Please see this FAQ.
  • Make sure you have ran all the updates

@bmg60 

[marsgravity142]

I believe in my case, the ratio of taxes paid/owed that was imported from 2022 was incorrect between myself and my husband, so I pulled out our 2022 W-2s, did the calculations on my own, and corrected the amounts. After making those adjustments, line 18 made sense, so I went ahead and filed.

I also want to express how disappointed I am in the experience I had this year. I have used TurboTax to file my taxes since I was in high school and have never had a problem. I was especially disappointed in the answers I received from both customer service reps that I spoke with, that there was no better avenue to report a suspected issue, and that it took TurboTax this long to recognize and fix it. There are so many people that probably have mistakes on their taxes that aren't experienced enough to have caught it. Here's to hoping they don't have any trouble getting their returns processed.