TurboTax 2018 Energy Credit Amended Tax Form Giving Confusing Information

[mkirkwag]

I got the message from TT that the 2018 energy credit was now available. I looked at my pdf of the refund I got and then opened and updated the forms in TT 2018. I could see that I'd filled out the forms to get a credit - let's call it $100 - when I originally filled out my 2018 return. The refund that I actually got (per the pdf) was exactly $100 smaller than the amount showing now in the updated TT 2018. OK, sounds like I filled in the paperwork but it was disallowed, so TT didn't used it as a deduction. Simple enough. I should amend.

As soon as I chose "Amend my 2018 tax return," TT showed my refund as $100. That makes sense. I got to the very end and it said, " We don't detect any differences between your 2018 return and your amended return. If you're sure you need to amend, explain why below." The last thing I want is problem with the IRS! 

• Should I be amending or not?
• How can I tell if that amount was originally deducted?

[SteamTrain · Accepted solution]

This is kind-of a tough one to answer as a "for sure" situation....I'll give you my analysis, but you might need to call TTX Customer Support to be sure....and even then, it might take them some time, and a diagnostic file form you, to figure it out.:

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/00/25632

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But here's my analysis.  I've noticed in the past couple years, that if a person files a tax return, and then a later software update changes the results, using data that is already in the tax return, that the software seems to keep track that the software change itself has changed the original tax file. Such that, if you start an amended tax return and do nothing else, the amended refund (or balance owed) will immediately show in the refund meter. 

Thus an amended tax return with the updated 2018 software would show that refund for you right away, as long as you had already entered the the Form 5695 data into the original tax return at the time you filed the first one  (sounds to me like that is what you did).

The original 2018 software, before the update, did  allow you to enter the energy credits because some states have energy credits too, even though the Feds didn't allow some until much later legislation which back-applied to 2018.  And he original software did allow you to enter all of the various "costs" for Residential Energy Credits, even if there was no credit. 

((I don't recall whether this was something that TTX did, or whether the IRS left the form 5695 entries unchanged (without applying an actual credit), because the IRS may have fully expected Congress to do something...even if horribly later....also, their software already had the full form 5695 programmed ...so why fully redesign it.))

>>>AS far as knowing whether your original tax filing had the credit in there or not, you need the Printout, or Original PDF file from when you actually filed your taxes (not a PDF or printout from after the software was updated).  The TTX software update for those energy credits didn't occur until a couple months into 2020, but I'm not sure of the exact date.   So if you have a copy of that original tax filing...look for an entry on line 53 of the Schedule 3.  That's where the energy credit would show up.  If that line, or the entire Schedule 3 is missing from your original 2018 tax return, but is present in the Amended tax return you just started, then yeah, your amendment should be OK, and the additional refund $$ should be showing on line 21 of the 1040X.

IF the additional refund is showing on that line 21, I have no idea why the software says there is no change, because there is.  But that may be more of subtle software confusion with the update not quite tracking everything since the form 5695 was already in there.  You should probably step thru the Energy Credits interview carefully again to make sure it's all set properly

BUT, you should also enter an explanation for the change in PART III of the 1040X...something like "Added  correct updated Form 5695 Residential Energy Credit" .    Normally, that is asked for as soon as you start an amended tax return, but if you didn't put something like that in , you can add it in by switching to Forms Mode  (desktop software) and opening the form 1040X and scrolling down to Part III, and you can enter it directly in the form.

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Be sure to go thru the full filing process (Mail-file only) so that software prints out only the forms you need to file....and it will display the address you need to mail them to on the filing instructions sheet that prints.

[Critter-3]

Sadly you probably failed to follow the email instructions on how to amend a return to include the new credit and you probably updated the program before you clicked on the amendment process.   If you cannot figure out how to undo the amendment and the new credit  to follow the correct amendment path then contact TT support on the number on the notice for one on one instructions. 

[mkirkwag]

I believe I did follow the directions precisely.

[Critter-3]

Look at the 1040X ... if the amounts in column A & C are the same and column B is blank then you did not amend the return correctly.   Call the phone number in the email for one on one assistance if you cannot figure out how to undo the amendment. 

[mkirkwag]

That was pretty much my analysis of what happened, too. Good point about the forms. The pdf of the return I sent does not have either a Schedule 3 or the Form 5695 included. That, and the difference in refunds showing they exact amount of the energy deduction really confirms that I didn't get the deduction. 

I did fill in the explanation at the beginning for the amendment process; it appeared again with my explanation intact when I got to the error code.

[mkirkwag]

They are correct. I did not make an error in the process, but it's a good thought. TurboTax has been showing the correct refund amount since I started the process and TT did the update. 

[Critter-3]

The real issue is the program updated before you could start the amendment process ... the notice sent about the 2018 change should have given you the directions on how to amend the return correctly and/or a phone number to call for assistance. 

[Critter-3]

If you had entered the credit info when you first filed (even if it was not used)  and then you started the program and it updated before you started the amendment process  then to fix it ...

1) undo amendment process ...  click "Cancel Amendment" on the left side of your screen

2) remove credit info so the return it back to as filed condition

3) start the amendment process

4) put the credit info back in

Review  the form 1040X …

Column A should have the figures from the original return, Column C the corrected figures and Column B the differences between the other 2 which needs an explanation on page 2 of the form 1040X.

If you completed it correctly you will see an entry on either line 16 OR 18:

On line 16 should be the amount you paid with your original return. 

On line 18 should be the amount of your original refund you received.

Then you will see your extra refund on line 22 OR  the new balance due you need to pay on line 20.

[SteamTrain]

@Critter-3 

Sorry, but I really don't agree...I think you are overworking the situation and trying to force him/her to do a bunch of unnecessary steps.

(  Certainly is's almost impossible for us to know exactly what the situation is for @mkirkwag  )

BUT, as near as I can determine

1)  As the user has already indicated, they included the Energy Credits data in their original tax filing, and the original filing copy PDF  they prepared at the time they filed, did not contain either the form 5695, nor any Energy credit on a Schedule 3 because the credit wasn't allowed at that time, even though one could enter the cost data into the software.  So the user did not make the mistake of changing their tax file data after filing...it was already in there, even if not being used.  

2) Using the same file, after the 2018 Update, and starting an amended tax return, the proper new refund did show up in the refund meter, and on line 21 of the 1040X, along with a Schedule 3 and a form 5695 (probably now including the credit on line 58 30 of that form. )

Thus, the amended tax return data is already there....the issue the user was having was that the software "seemed" to indicate there was no change, where the Amended tax return documents they see, clearly show it's all there.   I suspect (yeah, could be wrong) , that the warning was just an inconsistency in the software, brought on by the strange situation where the software programming had to deal with back-applying the credit looooong after the 2018 tax season was already over.

Certainly, if the user is uncomfortable filing their amended tax return as-is... then contacting Customer Support for confirmation may be a good idea.

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Note: I actually did have a test tax file with a Residential Energy Credit entered in a 2018 file before the update was made to to allow them (for $8000 of Energy Efficient Building Property).   I hadn't updated my 2018 software since last ~Nov 2019, so I actually updated my 2018 software just for this question  (where normally I avoid doing so after filing my own taxes)...just to see how the updated software for the Energy Credit. And, in doing so and starting the amendment process, it immediately created the proper amendment forms, even though I did nothing else. 

SO i think TTX software is tracking things properly, as long as the user did not enter new data between their original final filing, and the time the software updated was implemented.   But I agree, that is just what I observe for the Energy Credits, and it may not be applicable in all situations.

[mkirkwag]

Thanks, Critter, but I already see that, exactly as expected.