Bug in TurboTax 2024 Foreign Tax Credit and Social Security

[user17704379014]

IRS reported an error in my 2024 return with a large amount due. TurboTax support helped me fix the return (Jan 23 ending at 6:46 pm).  We were not able to identify the underlying problem.

In preparing my amended return I have identified the bug -- actually four problems. The problem reported below and missing checks for an incomplete Form 1116 and $0 for taxable Social Security with no foreign income. TurboTax should always generate a PDF of all forms and worksheets for review.

Steps-to-Repeat on Token number 74757755-10360960

1) Use TurboTax in Forms View

2) Set Box 7a (Foreign Tax Paid) on the first Form 1099-Div

3) Prior to submitting the tax return, switch to Step-by-Step

4) Go to Federal Taxes > Deductions & Credits > I'll Choose > Foreign Taxes 

5) Answer Yes to "Do you now want to try"

6) Click Continue > Take a Credit >  Continue to 'Where did you receive Dividend'

7) The Federal Tax increases, easily missed

😎 Go to Forms View.  An error is flagged for Form 1099-Div 

9) BUG -- visit the Social Sec form.  Line 1b (Benefits exemption from U.S. tax) equals Line 1a.

10) Clear the flagged error by clicking Box 7a (Check to deduct foreign taxes on Schedule A)

11) There is no Form 1116.

12) As expected, the Social Security Worksheet was not included in submitted tax forms.

13) Form 1040 line 6a (Social security benefits) is set and line 6b (Taxable amount) is $0.

14) Fix the bug by answering 'No' at the previous step 5. 

15) Next time I'll print out and review all forms and worksheets.

[VolvoGirl]

Did you have a question?  Social Security was a big problem last year.  

For the Social Security error,  you get 0 on 6b if you didn't answer the Foreign question right.    It is not about having or not having foreign income.   Or if the amount on 6b is too low and you are married you answered it wrong for one spouse.

There was a new question asking if you lived in a foreign country.   People were answering it wrong or skipping it.  Go back through the Social Security entries and check, check for each spouse if married. If the IRS adjusted your return you do not need to amend.

Some Posts
4/26/25 This user missed the question for the spouse
https://ttlc.intuit.com/community/retirement/discussion/re-why-would-tt-miscalculate-and-underreport...

4/23/25
https://ttlc.intuit.com/community/after-you-file/discussion/re-irs-changed-refund/01/3674438#M798051

[user17704379014]

My report was misunderstood.  I did not enter (Social Sec, line 1b); Line 1b was automatically set by TurboTax.  TurboTax assumed that I had lived abroad for the entire year (Social Sec line 1b was the same as Social Sec line 1a).  This is an additional bug by TurboTax.

Social Sec, Line 1b was automatically set during the Step-by-step dialog for

    "Do you now want to try using the foreign tax credit...?"

under 

     Deductions & Credits > Foreign Tax > Start/Update. 

This question is asked when a 1099-DIV includes Foreign tax paid (box 7). 

I answered 'Yes' and the dialog asked for the country. Since 1099-DIV does not list this information, I exited the Step-By-Step dialog and returned to 'Forms View'. The taxable amount for Social security benefits (Form 1040, Line 6b) was automatically set to $0.  There was no warning that Form 1116 (Foreign tax credit) was missing.

[VolvoGirl]

Sorry I'm not following you.  Social Security SSA-1099 does not have lines 1a & 1b.  Is the total Social Security listed on 1040 line 6a?  Sure form 1116  will have 0 for SS but that's because 1040 line 6b was zero.    But form 1116 won't make SS zero to begin with.  The foreign question on 1116 for your dividends won't affect the foreign question when you enter the SSA-1099.  Those are separate questions.  

Did you enter SS in the right spot?  As I said in 2024 there was a new SS question asking if you lived in one of the foreign countries listed.  You must have answered yes instead of no.   A lot of people last year  answered  yes or skipped that question when they entered their SS income.  It had nothing to do with foreign dividends.

[user17704379014]

Misunderstood.  (Social Sec, Line 1b) refers to the 'Social Sec' worksheet in the TurboTax Forms View.  The top of this worksheet (A through H) records the SSA-1099 figures.  I entered these figures from the paper form sent to my home address. All of my earnings occurred in the United States and I live in the United States.

The problem occurred when trying the Foreign Tax credit option under Deductions & Credits in the Step-by-Step View.