Tell us about the bug you think you have found----what is going on? What bug do you think you have found? What version of the software are you using?
This applies to state returns, in my case, NJ.
I have U.S. Treasury Note transactions. I bought them at a discount and then sold them.
The 1099B shows a capital gain as well as accrued market discount. The accrued market discount is correctly added to Federal Schedule B as interest.
However, in most states including NJ, interest from U.S. Treasury transactions is NOT taxable for state income taxes.
Turbotax incorrectly includes this accrued market discount in NJ taxable interest (line 16a) when it should be in NJ non-taxable interest (line 16b).
Thus Turbotax is incorrectly inflating NJ taxable income.
I use the desktop Premier version on Windows.
I have found no workaround.
To be clear, this bug probably affects all state tax returns with U.S. government bond transactions since as far as I know, no state taxes interest from U.S. government bonds.
I just used NJ as an example.
So no way to report this bug without paying for live assistance?
Turbotax's claim of maximum refund is false and deceptive advertising.
When you entered that info in TT, a window pops up that says "requires Special Handling in the states of..." and then lists several states, including NJ. You have to check that box.
@SweetieJean Where is the pop up? On the step by step or on form 8949?
I just started a fresh return with the only transaction being the U.S. Treasury sale. I don't see the pop-up.
Never mind. I see it on the 1099INT. That is NOT the problem.
The interest on the 1099INT was already excluded from NJ taxable income.
The problem arises when you have accrued market discount interest that comes from 1099B from a capital sales. Turbotax adds it to the interest in Schedule B, which is correct. But it is NOT taxable in NJ.
The NJ module takes that accrued market discount from Schedule B and treats it as taxable interest.
That is the bug and why NJ taxable interest is wrongly computed.
@SweetieJean Maybe a numerical example will be easier to understand where the bug lies.
Assume the US Treasury Bonds paid 750 in interest, they were bought at 97,000 and sold at 100,000.
The difference between 100,000 and 97,000 is made up of two components, accrued market discount of 1000 and a capital gain of 2000. All of this is taxable at the Federal level and NONE of it is taxable at the NJ level.
Here are some screenshots of the forms:
The bug is that the 1000 in accrued market discount of the U.S. govt bond transaction shows up as NJ taxable interest on line 16a. It should instead be added to line 16b which is NJ non-taxable interest.
If there is a workaround, I would be grateful.
I tried your accrued market discount example in other tax software and it was handled exactly as in TurboTax.
Do both programs have the same bug?
Unfortunately, yes!
I also run TaxAct and use it to check my results on Turbotax. Fortunately, TaxAct comes with free phone support. I contacted them and was able to get a knowledgeable tax expert. He examined the problem, checked the tax regs and concluded it was a bug in TaxAct. So he opened a developer's ticket to fix it. So TaxAct will fix the bug.
That will leave Turbotax with an unfixed bug.
I will say that this is the first year I've had this situation so it isn't common. But I ended up paying more NJ taxes than I had to.
In addition to the TaxAct expert agreeing that it was a bug, the NJ GIT 5 instructions are quite clear:
"Most investment income is taxable in New Jersey as interest,
dividends, or capital gains.
However, some interest income is exempt from tax, including:
• Interest and gains from debt obligations of the federal government, such as U.S. Savings Bonds and
Treasury Bills; "
NJ allows you to amend your tax return ; NJ-1040X.
You also could have done an override and filed on paper. or here:
That's why I want Turbotax to fix the bug! Hardly speaks well of the program when you have to override and have to file by mail. Turbotax should put that in their advertising! Puts a lie to Turbotax's claim of maximum refund guaranteed.
The point of my posts is also to let people know of the bug.
This could happen again next year.
When TaxAct fixes their program, I may need to file with TaxAct next year.
Received correction notice from IRS re taxable social security benefits as Turbo Tax had miscalulated the amount by over $20000. As a result I received a refund!
TT Form 1040 L6 (SS Benefits WS )L3 showed $46502 instead of $26102.
TT instructions for L3 was adding amounts on Form 1040 lines 1 (wages) =$0, 2a,3b,4b,5b,7 and sched 1 L9. Total of which is $26102 NOT $46502 as calculated by TT.
I tried overiding L3 and the bottom line /refund then agreed with IRS as well as my calculator. How could TT make such a mistake??
There seems to be a bug in HSA earnings. In doing my 2022 tax return, it is indicating that I overpaid my 2021 HSA by 2,070 by referring to line 48 on 2021 return form 5329. I looked at the 2021 document and indeed that number is on line 48. I am over 55 and my total 2021 HSA contribution, including employer part was $4,531.62 which is under the $4,600 limit.
I can view the 2021 documents but I am unable to get into the screens to see if something was entered inadvertently. How do I get in to amend the 2021 return in the event there is a data entry error. I seem to only be able to print the documents.
It is unlikely that there is a bug in "HSA earnings" (actually, the calculation of the penalty for carrying over an excess HSA contribution from 2021 to 2022).
Please answer the following for YOUR 2021 TAX YEAR):
TurboTax thinks Ridgewood NY is in Italy - after filling in personal information
I entered Ridgewood for City and New York for State when entering my mailing address and TurboTax then prints out Ridgewood , Italy for my mailing address.