Can anyone explain why TurboTax 2021 gave the Montana Senior Interest Income Exclusion of $800 to both my wife and me, but TurboTax 2022 gives my wife $800 and me $0?

[pkck4321]

As in 2021, my wife and I are both over age 65 and have jointly owned accounts with more than $1600 interest income earned and included in our Montana adjusted gross income. In our 2022 Montana tax return, Married filing Separately, Form 2, page 5, General Subtractions, Line 3, TurboTax enters a $0 exclusion for me and an $800 exclusion for my wife. Can anyone explain this apparent discrepancy in Montana tax reporting between TurboTax 2021 and TurboTax 2022? Thanks!

[JohnW152]

If you're married and filing your Montana return separately, you can only exempt up to $800 of interest that you reported on your state return. 

According to Line 3 -- Partial Interest Exemption for Taxpayers 65 and Older in the Montana Individual Income Tax Return (Form 2) Instructions: 

If you are married and filing your return separately and are age 65 or older at the end of 2022, you can exempt up to $800 of the interest income that you reported in your Montana Adjusted Gross Income. Note, however, that you are not allowed to exclude interest income earned by and reported by your spouse.

[pkck4321]

John, please note that in our 2021 Montana tax return prepared with TurboTax 2021, my wife and I both received the Montana Senior Interest Income Exclusion of $800 (a total of $1600).

This year, TurboTax 2022 gives my wife the $800 exclusion and gives me $0 (no exclusion). Today I visited with a Montana Department of Revenue representative who confirmed that both my wife and I qualify for this $800 interest exemption in our Montana - Married Filing Separately return. The MT DOR representative said that I should report this to TurboTax, which promptly I did this morning in a phone call to TurboTax representative Patricia ____. Also, I am unable to override the error in my TurboTax MT Form 2, Page 5, Line 3. Please explain this discrepancy between TurboTax 2021 and TurboTax 2022 and please fix this error.

[JohnW152]

Two factors that may be producing this result are age and who's listed as the recipient of your interest.

I'm sure you entered your birthdates correctly, but I'll go through the steps, just in case.  In TurboTax Online:

1. If you don’t see 2022 TAXES in the left pane, select the dropdown to the right of Personal Info on the Hi, let’s keep working on your taxes! page and then select Let’s get started, Pick up where you left off, or Review/Edit. 
   • Otherwise, in the left pane, select My Info
2. Scroll down and select Edit to the right of your name
3. Verify that your Date of birth is correct, then select Continue
4. Go through the same process for your spouse

Now, check your Interest information:

1. In the left pane, select the dropdown to the right of Federal, then select Wages & Income
2. On the  Your income and expenses page, scroll down to Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto), and select the Edit/Add button to the right
3. On the Your investments and savings page, scroll down until you see an Interest item.  Select the dropdown for that item, then select Edit
4. See who is listed in the This 1099-INT belongs to box.  You and/or your spouse may be listed, depending on how the payer entered your Form 1099-INT
5. If the entry is correct, select Continue
6. Repeat this process for each of the Interest items on the Your investments and savings screen

If only your wife is listed as recipient on your Forms 1099-INT, this is why you're not receiving the exclusion.

[pkck4321]

John, the optimist in me wants to believe we are making progress: Your 3/27/2023 reply offered an erroneous interpretation of Montana Rule 42.15.215 (4) and was refuted by the Montana Department of Revenue representative who I contacted. You are now suggesting that this TurboTax failure to give an interest exclusion to me (while giving an $800 exclusion to my wife) may reflect an entry error.

Your advice pertains to TurboTax Online, but my 2022 TurboTax is from a CD purchased from Costco. Is there a possibility that the problem that I and another user are encountering is specific to the TurboTax CD product?

In answer to your 3/29/2023 reply: Even before my 3/26/2023 TurboTax Community post, I had verified that the relevant information was correct, and since then I have done multiple rechecks of it. In Easy Step, the entered ages for me and my wife (both over 65) and the joint ownership (“This interest belongs to... Both of us”) of the CDs from which the interest is derived, are correctly entered. These results are also confirmed in TurboTax Forms (1099-INT forms from the relevant banks; and Montana Form 2, Page 1 which lists us as >65).

Here is a summary of the facts as I know them:

1. TurboTax 2021 gave the Montana Senior Interest Income Exclusion of $800 to both my wife and me (total of $1600).
2. TurboTax 2022 gives me zero Montana Senior Interest Income Exclusion while giving my wife an exclusion of $800 (total of $800).
3. In both 2021 and 2022, my wife and I have each qualified for the $800 exclusion, based on our ages (>65), on the interest income correctly reported from 1099-INT forms for our jointly owned CD accounts, and on this interest income exceeding $1600.
4. The apparent discrepancy in Montana tax reporting between TurboTax 2021 and TurboTax 2022 has not been explained by your responses to my TurboTax Community post. The realist in me says that no remedy will be found and that it’s time to file my Montana taxes and put this frustrating experience behind me.

[AmyC]

You have the cd! An answer is in sight.

Switch over to Forms mode and take a look at your Form 2, line 2b, taxable interest. Do you have an amount showing for each of you? Do you have any subtractions from federal interest on line 13?

Select the Subs Schedule - view line 2 for federal and line 3 for the $800 deduction you are looking to complete.

You can right click on the box missing the $800 and select data source. This will show you where the number is coming from and follow its path.

I always like to check the About option as well when you right click for additional information.

With the desktop option, you can find the source of the issue and get it corrected. Be sure to change your answer in the actual program. Changing answers in the Forms mode will void the accuracy guarantee.

[pkck4321]

Amy, in answer to your questions:

Our Montana Form 2, Page 1, Line 2 b has correct amounts of taxable interest for both of us.

Our Montana Form 2, Page 1, Line 13 has subtractions for both of us. Mine is $800 lower than it should be.

Our Montana Form 2, Page 5 (Subtractions), Line 2 has correct amounts of federal obligation interest for both of us.

Our Montana Form 2, Page 5 (Subtractions), Line 3 has $0 for me (Column A) and $800 for my wife (Column B).

From many years of using turboTax, I am aware of the right click feature for finding the source information. It works for some of the forms in my 2022 TurboTax product, BUT RIGHT CLICKING THE LINE 3 INTEREST EXCLUSION AMOUNTS DOES NOT ALLOW ME TO SEE THE SOURCE DATA. Yesterday, in an extended phone conversation with TurboTax Tax Expert Yvette, I confirmed these and many other details and was given the impression that my TurboTax CD product may have a defect and that an online update will not correct this. I have wasted a considerable amount of time and mental energy on this and am planning to file my Montana taxes this afternoon and put this frustrating experience behind me.

[BillM223]

I quickly cooked up a Montana test with a married couple and $5,000 in interest in an account owned by both spouses. The federal was married filing joint. As I progressed through the Montana interview, TurboTax (the CD/download software) suggested that I file Montana as Married filing separate, I said YES.

Then later in the MT interview, The program said that Married filing joint in MT would be better (less tax due). I chose to stick with Married filing separate in MT.

The result was that I got the exclusion of $800 for each spouse.

I mention my progress on the off chance that you did not see the same choices as me, and that one of my choices (switching from MFJ to MFS then staying with MFS) caused the difference.

So what was your path?

[pkck4321]

Bill, in answer to your observations:

Montana is a state with a marriage penalty, and the remedy is Married Filing Combined Separately, as recommended by a CPA friend of mine and as proven when I calculate our Montana taxes.

To compare with your Montana test, I again navigated the TurboTax MT interview, which began by confirming our Montana residency status and then suggested that we file as Married Filing Separate.

Late in the Montana interview TurboTax says “Confirming Married Filing Combined Separate ...we’ve determined that there isn’t a tax benefit to filing your Montana return as married filing joint. We recommend keeping your current filing status of married filing combined separate.”

Bill, please note that our Montana tax information is considerably more complicated than your interest income test. When I choose Married Filing Jointly, TurboTax correctly gives me and my wife the $800 interest exclusion ($1600 total), but this is a small benefit compared to our Montana marriage penalty. For my wife and me, Married Filing Jointly yields a MT tax burden $549 greater than if we choose Married Filing Separately; and this marriage penalty would be $603 if TurboTax correctly applied the $800 interest exclusion to both me and my wife when we choose Married Filing Combined Separately.

My wife and I had already looked at both Montana filing status scenarios. For many years, using TurboTax, we have chosen Married Filing Combined Separately for our Montana taxes. In our 2021 return, TurboTax correctly gave me and my wife the $800 interest exclusion ($1600 total).

This afternoon, I e-filed our Montana taxes as Married Filing Combined Separately, so I don’t plan to spend more time or mental energy on this. I respect the time and effort that you and others have devoted to this apparent discrepancy between TurboTax 2021 and TurboTax 2022. Considering the hardships that many other Americans encounter, I consider myself very fortunate and wish the best to you and others at TurboTax.

[BillM223]

I concentrated on the question at hand - why did you not get the $800 deduction while your spouse did.

My experience is that the path through the interview that the user takes (or is forced through) can have big changes on the results. I was hoping that we could get to a resolution in a short timeframe.

However, since you have already filed, "Let's declare victory and go home." Thank you for your kind wishes.

[TaxingDK]

I experienced exactly the same issues as pkck4321 when filing my MT Return using the CD version from Costco.  With extension for filing on October 16, 2023, TurboTax (Intuit) still had not fixed the problem.  TurboTax has never  provided adequate support for Montana state filers -- perhaps understandably based on our relatively low population. Yet a product is a product, no matter how small the client base. I had to file to meet the deadline, so my questions are: 

   CAN I FILE AN AMENDED RETURN TO GET WHAT MONTANA TAX LAW ALLOWS?  IS THAT A BIG HASSLE, OR SHOULD I JUST EAT IT. 

    HOW ABOUT GETTING TURBOTAX TO HONOR THEIR GUARANTEE OF ACCURACY??

[pkck4321]

In answer to TaxingDK's message following my 3/2023 messages:

Rather than filing an amended MT return, you may find success as I did:

I chose to not follow the remedy recommended by a TurboTax expert (returning the TurboTax CD to Costco for a refund and purchasing the online product directly from TurboTax), which would add more expense and time to completing my tax reporting.

Instead, I filed my Federal and MT taxes with my (defective) Costco CD TurboTax product and followed up with a letter to

Montana Department of Revenue

Montana Individual Income Tax – Attention Auditors

P.O. Box 7149

Helena, MT [removed]

"Dear Sir/Madam

...I would appreciate your help in addressing a TurboTax error in Montana Form 2 Page 5 Line 3. You will note the $800 partial interest income exemption for my wife in Line 3 Column B and the $0 interest income exemption for me in Column A, even though both my wife and I meet the requirements of Montana Rule 42.15.215 (4). We are over 65 years of age and have interest income greater than $1600 from jointly owned CD and Savings accounts. This income is reported in 1099-INT forms. This income, our joint ownership of the Bank CD and Savings accounts, and our ages are correctly entered in TurboTax.

• Last year TurboTax 2021 gave the $800 interest exemption to both me and my wife.
• This year TurboTax 2022 gives me $0 interest exemption (see our Form 2 Page 5 Line 3).

In multiple efforts, I (and another Montana resident who posted on the TurboTax Community site) failed to resolve this issue. A TurboTax Expert concluded that the Costco TurboTax 2022 CD product that I purchased was apparently the source of the error and that an online upgrade would not be possible. Frustrated by this experience, I e-filed our Montana taxes. I invite your review of Montana Form 2 Page 5 and would welcome an adjustment to correct this error. Please apply 100% of our overpayment to our 2023 Montana estimated tax. Thank you

____________"

An online message via mt.gov TransAction Portal is another way to send this communication to MT DOR, but I printed and mailed my letter. Soon thereafter, I received from MT Department of Revenue an Adjustment Notice, which gave me the $800 interest exemption, thereby reducing my MT tax for 2022.

[TaxingDK]

pkck4321,

   Thanks for that detailed follow-up.  If you do not object I am pretty much plagerizing your letter to MTDoR.  We'll see if I get the same satisfaction.

- Taxing DK

[pkck4321]

For a follow-up to this discussion, see the 3/29/2024 Post:

Is TurboTax not capable of acknowledging and fixing an error with the Montana Senior Interest Income...