California BOE Corrected my TurboTax Return because of my Dependent

[DavidD77]

For the second year in a row, I received a letter from the California FTB stating that they changed my return and now owe a balance much larger than I expected.

I attempted to claim my mother as a dependent using Turbo Tax (desktop, 2022 and 2023). I specified her income for 2023 ($31,000, about half from social security and half from a veteran's spouse pension) and TurboTax did its thing and told me what I owe the state. I filed electronically and it was accepted.

About a month later, California FTB said they disallowed my head of household status because her income exceeds what's allowed for a dependent. As a result, I now owe the state an extra $1,900.

I reviewed the California rules and it clearly states that the relative's income must be less than $4,300.

I'm not disputing what I owe California, but this seems like a pretty egregious mistake for TurboTax to make. It knew her income and thought she'd qualify to be my dependent.

I'd like to ask the community here if a) I have a bug to report to Intuit (and how?), or b) if perhaps California is wrong and/or I need to refile a different way to maximize my deduction. 

[VolvoGirl · Accepted solution]

Turbo Tax let you claim her as a dependent?  Even for federal?  You must be answering a question wrong.  Well for next year you know not to claim her and completely delete her from your tax return.

Then is she filing her own return?  She probably has a filing requirement.  

[DavidD77]

Wow, thanks for responding so quickly! I think I see the mistake I made. I went back and looked, and there is a question early on about her income. Indeed, I answered it incorrectly. I believe that, at the time, I thought that her military pension was not taxable (like social security). 

Still, there must have been some other point in which I entered her actual income -- as it clearly shows on the return I sent to California. I'd think that during TurboTax's review phase it would have caught the discrepancy and said something to me before letting me file.

You're right though -- next year I'll know and will file her independently. 

Thanks!

[VolvoGirl]

You'll probably be getting a letter from the IRS too.  You should probably amend the federal returns or just wait to hear from them.  But if you wait the tax due might be accruing interest.  

[MonikaK1]

When you enter the Personal Info in the Federal section of TurboTax 2023 for a parent dependent, TurboTax asks you, "Did (Name) make $4,700 or more last year?" 

There is also a link on the screen, "What counts as income?" or "How do I figure (Name's) income? Click on the link and an explanation appears. You don't enter the dependent's actual income, you just compare it to the limit.

If you answer "Yes", TurboTax says "It turns out (Name) doesn't qualify as your dependent". The income limit applies for the Federal return as well as California. 

See this TurboTax article for more information about claiming dependents.

There are times when you should amend your return and times when you shouldn't. Here are some common situations that call for an amendment:

• You realized you missed out on claiming a tax deduction or credit.
• You accidentally claimed the wrong tax filing status.
• You need to add or remove a dependent.
• You forgot to claim taxable income on your tax return.
• You realize you claimed an expense, deduction, or credit that you weren't eligible to claim.

See this article and this one for more information on filing an amended return with TurboTax. California has already audited your return so you would only need to amend the Federal return.

@DavidD77