Bug in California Form 5805 Underpayment of Estimated Tax, Part III, line 6

[dav321]

Using TurboTax Premier 2025 on Windows 11. All updates installed as of 4/17/2026.

Using "step-by-step," State Taxes, Other situations, Underpayment Penalty.

For question "Do you want to let the Franchise Tax Board calculate the penalty and send you a bill?", answer "No."

I entered values for last year's state taxes that don't qualify for an exception.

For question "Did you earn your income unevenly during the year?", I answered "Yes."

Eventually, get to page where you press button "Include on Return" instead of "Let FTB Bill Me." That causes TurboTax to do calculations for California Form 5805.

(BTW, prior to getting to this, there is a page that shows "Federal and California AGI Adjustments". However, these are really just California adjustments (bug).)

After giving the above answers in the step-by-step, go to Form 5805, and there is a problem in the entries for Part III, line 6.
According to FTB 5805 instructions, these deductions should be limited if,
"in any quarter federal annualized income ... is greater than:
- $504,411 (married/RDP filing jointly or qualifying surviving spouse/RDP).
- $252,203 (single or married/RDP filing separately).
- $378,310 (head of household)."
The instructions provide a worksheet for how to reduce the deductions for income greater than these values.

I found that if I entered an income above these values, the deductions were NOT reduced.
It appears that TurboTax is not using the worksheet for Part III line 6 entries.

[LenaH]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number  (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

[dav321]

Hi Lena,

I generated the diagnostic file, and the token number is 9059977971978971-82689688 .

I want to let you know that this file reflects that in TurboTax, I went to Forms, California Form 5805, and in Part III (Annualized Income Installment Method), line 6, I overrode the entry in column (d), with what I calculated to be the correct value. Before my override, that entry was the same as line 4, column (d), which I believe to be a bug.

[mesquitebean]

@ dav321 

You'll need to use a creative way to post the token number so it gets by the forum filter, which thinks it's a phone number.

[dav321]

Trying again to post the token number:
9_0_5_9_9_7_7_9_7_1_9_7_8_9_7_1_dash_8_2_6_8_9_6_8_8

[SharonD007]

We received and reviewed your diagnostic file. I reviewed this return and you do not exceed the AGI threshold.  TurboTax is calculating the amount correctly with your AGI.

[dav321]

In FTB Form 5805, Part III, line 1, the California AGI is entered, and yes, my CA AGI 212,933 is less than the limit 252,203 used for line 6 calculations.

However, the instructions for line 6 say:

"Your annualized itemized deductions are limited if, in any quarter, FEDERAL ANNUALIZED INCOME (use Federal Annualized Income Worksheet below) is greater than:

$504,411 (married/RDP filing jointly or qualifying surviving spouse/RDP).
$252,203 (single or married/RDP filing separately).
$378,310 (head of household)."

My federal AGI was 257,454, which is more than the 252,203 limit.

See FTB Form 5805 instructions at:
https://www.ftb.ca.gov/forms/2025/2025-5805-instructions.html

[dav321]

Just to be clear, my posting saying that my fed agi is greater than the 252,212 limit, implies that TurboTax is not calculating the amounts on line 6 correctly. TurboTax has a bug.
@SharonD007, did you close this issue?

[dav321]

Hi @SharonD007,

I posted some more information after your last response. You replied that I did not exceed the AGI threshold.

However, the thresholds for line 6 are for Federal AGI, not the state AGI which is entered on line 1, column d. Yes, my state AGI was under the threshold, but my federal AGI was over the threshold limit.

Quoting from the FTB instructions for 5808, Part III, line 6: "Your annualized itemized deductions are limited if, in any quarter, FEDERAL ANNUALIZED INCOME is greater than ...." The 5805 instructions (which contain a worksheet for calculating line 6) can be found at:
https://www.ftb.ca.gov/forms/2025/2025-5805-instructions.html

Will you (or another agent) be able to look into this more?

[LenaH]

Since your Schedule A Lines 4, 9, and 15 are all zero, the limitation does not apply. 

Following the instructions for California Form 5805:

1. Line 4 itemized deductions: 8,084
2. Schedule A lines 4 + 9 + 15 + gambling losses: 0
3. Line 1 minus line 2: 8,084
4. Annualization factor: 1
5. Line 1 × line 4: 8,084
6. Line 2 × line 4: 0
7. Line 6 × 80%: 0
8. Annualized federal income: 257,454
9. Threshold for Single: 252,203
10. Line 8 minus line 9: 5,251
11. Line 10 × 6%: 315
12. Smaller of line 7 or line 11: 0
13. Line 5 minus line 12: 8,084

The result is no reduction. Line 6 column (d) remain at 8,084. 

@dav321 

[dav321]

Lena, thanks for your response.

However, in your worksheet steps 1 - 13, you have:
6. Line 2 × line 4: 0

But when I look at the instructions, I see:
"6. Multiply the amount on line 3 by the number on line 4 ... "
(Note "line 3", not "line 2.")

Line 3 is 8,8084.
If you multiply line 3 (8,084) by line 4 (1), you get 8,084, not 0, for worksheet step 6. Isn't that correct?