Keogh/SEP/Simple worksheet

[lrbainbridge]

My husband gets a K-1 from his partnership. They deposit money into a self-employed 401K for his benefit. The partnership doesn't contribute anything, they just do this out of his earnings. The K-1 has code Z and "STMT" on line 20. The supporting statement has his ordinary income (loss), self-employment income (loss), which are the same amount and Health insurance payments listed in the description. I entered the info into TT as directed and when I completed and ran the error check it keeps popping up that I need to put something in the box 6a on the worksheet.  It won't let me enter zero, but the correct amount is already listed in line 6b from his K-1. I don't know what to do to correct the error.

Thank you!

[JamesG1]

I think that you are referring to boxes 6a and 6b of the partnership K-1.

Partnership K-1 box 6a is ordinary dividends and box 6b is qualified dividends.

Qualified dividends are never less than ordinary dividends and many times they are the same number.

Are you able to receive guidance from the preparer of the K-1 since the attached statement is not helpful?

[lrbainbridge]

It's not the K-1 that I'm having trouble with, It's the worksheet in TurboTax.  I don't even know if the worksheet is necessary but TurboTax keeps telling me there's an error in that there's nothing in the 6a box on the worksheet. The 6b amount is what came directly from the K-1. 

[ThomasM125]

The problem is you can't have qualified dividends without having ordinary dividends. Qualified dividends are a component of ordinary dividends. So, you may $100 in ordinary dividends, of which $50 are qualified.

I suggest you enter the same number in both boxes.

[Cdelone]

The original question is the right one and you are responding to the wrong question. I have the same exact problem as the original questioner. All of the entries from the K1 are done properly, but TT returns an error saying that Line 6a on the Keough, SEP, Simple Contibution Worksheet is wrong (it shows 0). I am unable to change it to anything - the error persists!  It would be really helpful if someone can answer the correct question correctly. 

[dmertz]

Make sure that you are entering the Schedule K-1 in step-by-step mode, not in forms mode of the CD/download version of TurboTax.  Upon entering the Schedule K-1 (Form 1065)  box 13 code R amount, TurboTax will prompt you to divide the amount between employee elective deferrals, Roth contributions and employer contributions.  Do not enter these amounts separately in the self-employed retirement section of TurboTax.

If the sum of the employee elective deferrals and Roth contributions exceed the statutory limit, TurboTax will flag an error on line 6a even though line 6a is not where these contributions should appear.

[Cdelone]

Thanks!  Unfortunately there are lots of lines I could put it on and I still don’t quite get it. I have both 401k and Roth. If you could tell me which specific line(s) to put it on rather which line not to put it on that would be a great help!

[dmertz]

Cdelone, TurboTax puts it on the correct lines for you when you enter it in step-by step mode.

[Cdelone]

No, it really doesn’t. Or at least it hasn’t for me. There are about 8 blank lines. 

[dmertz]

@Cdelone @ThomasM125  I just did some testing.  If you are over age 50, made catch-up contributions, and split your employee contributions between traditional and Roth, you'll encounter a bug in TurboTax where it indicates that you've made an excess contribution when you enter the breakdown of the box 13 code R amount from the Schedule K-1 (Form1065).  TurboTax does not correctly account for the catch-up limit under these circumstances.  This has been a problem for years and I forgot about it because it crops up only rarely.  I reported this bug in March 2018 with regard to 2017 TurboTax and nothing has been done about it

I think that a viable workaround is instead of entering the entire amount of elective deferrals in the Payments to 401K (non-Roth plan) box, enter in the Payments to SIMPLE box the lesser of the maximum permissible 401(k) catch-up ($6,500 for 2020) and only the remainder of elective deferrals in the Payments to 401K (non-Roth plan) box.  Then enter the entire Roth contribution in the Payments to Roth 401K Plan box.  Even though it should, TurboTax does not limit-check the combined elective deferrals to SIMPLE and 401(k)s.

[dmertz]

@Cdelone , another alternative is to omit the code R entry from box 13 of TurboTax's K-1 form and enter the contributions in the Self-employed retirement section.  Entry in the Self-employed retirement section allows you to break out the catch-up contribution to avoid TurboTax treating it as an excess contribution.

[mctien]

@dmertz  Does your fix of using SIMPLE workaround have an effects on your current or future year tax returns? 

[dmertz]

The only effect of putting the amount in the SIMPLE IRA box is that it allows the amount to be included on Schedule 1 line 16.  It has no other effect on your 2021 tax return and nothing about it carries forward to future tax returns.