Dear TurboTax,
I desperately need help. I have been an enthusiastic user of TurboTax for my taxes for many, many years. In addition, I was a volunteer tax aid in Albuquerque, New Mexico for AARP from 2012 to 2022, helping low-income tax payers with their taxes. Many of these tax payers wanted recommendations that would allow them to do their own taxes and I probably recommended Turbotax several dozen times. I am therefore a terrific fan of TurboTax. I am currently a California resident, but since I have investments in New Mexico, I must do both New Mexico and California taxes.
That said, I recently bought my copy of TurboTax Premier 2023 (License Code WCNC-PDCW-7ML6-73B9) to do my 2023 taxes (extended due date of October, 2024) and I have run into several significant issues that I need help on, related to the Foreign Tax Credit. In the past (I looked at my 2018, 2019, 2020 and 2021 returns), TurboTax has handled the calculations on Form 1116 and the Foreign Tax Credit Computation Worksheet. When I did my 2022 taxes (License Code BP7F-MFCS-ZLV3-LGKP), I assumed that TurboTax again handled the credit, but when I recently looked at my 1040 for 2022, there was no Schedule 3 included, so this credit was somehow not calculated in 2022. Looking recently at my 2022 Form 1116, it was totally blank except for $220 carry-over on line 10 and 0 on line 35 (e.g., no foreign tax credit). When I recently examined the 2022 Foreign Tax Credit Computation Worksheet, it had Part I entries on line 2a(4) ($8642), 3a(2) ($1344) and line 3a(5) ($1546) for Total itemized deductions not definitely related of $2890. I have been unable to figure out where the $8642 and the $1546 came from, but I think the $1344 is a totally mistaken number, so the other 2 numbers may also be incorrect. This is critically important since the sum of $1344 and $1546 ($2890) is entered on Form 1116, line 3a and is used to calculate the line 35 foreign tax credit. After a tremendous effort, I determined how the $1344 was obtained. My taxes are limited to $10,000 on Schedule A. With real estate taxes of $10,807 (line 5b on Schedule A), $114 on line 5c and $69,499 on line 5a for a total of $80,420 (line 5d), the $1344 comes from 10,000(10,807/80,420). However, the $69,499 is totally wrong. It comes from adding $20,000 of my estimated 2022 state tax payments ($18,000 to California and $2000 to New Mexico) to the $49,499 shown in the top box of the 2022 Federal Carryover Worksheet as the Totals in column g. The New Mexico Applied Amount in column g ($4200) is correct, but the California contribution of 45,299 shown in Column g is incorrect. This is immediately clear since the mistaken California amount listed as applied to 2022 taxes (column g of $45,299) is greater than the total overpayment listed for 2021 California taxes (column f of $24,781), which is of course impossible. This mistake comes from mistakenly having two CA entries in the 2021 State Tax Refund Information Box (left-hand box at the bottom of page 1 of the Worksheet). One CA entry ($39,500 in column d and $14,522 in column f) correctly reflects my CA tax form, with all of the $14,522 applied to 2022 estimated taxes (CA 540, line 98). However, the other CA entry ($39,500 in the Total Withheld/Pmts column d and $10,259 in the Total Overpayment column f) is incorrect. The $4263 difference in the 2 CA Total overpayment values represents the $4263 reduction in CA taxes caused by payment of $4263 to New Mexico (CA Form 540, line 43). One possible cause of this mistake might be if the TurboTax software automatically subtracts line 35 CA tax ($29,241) from line 78 CA total payments ($39,500) on CA Form 540, giving an overpayment of $10,259, leading to the one of the CA entries, and then, in addition, uses the correctly submitted CA numbers as a second CA entry. Thus, the correct CA numbers in the top box should be $39,500 in column d (not $79,000), $14,522 in column f (not $24,871), and $14,522 in column g (not $45,299). This leads to a column g Total Applied Amount of $18,722, compared to the listed value of $49,499. This lower number will change line 5a of Schedule A to $38,722 and line 5d to $49,643, therefore changing line 3a(2) of the Total column in the Foreign Tax Credit Computation Worksheet to $2177 instead of $1344? It may also change line 3a(5) of the Total column but I have been unable to figure out how line 3a(5) is obtained. The corrected sum of 3a(2) and 3a(5) would be entered on line 3a of Form 1116 and influence the foreign tax credit amount. Therefore, the mistakenly added second CA number results in an erroneous foreign tax credit amount. Attempts at overriding numbers that I think are incorrect were rejected by the software.
Bottom line- I desperately need your assistance so I can send in corrected 2022 taxes, saving me a substantial sum of money, so I can then work on my 2023 taxes. In addition, my experience implies that your software may have errors that need to be corrected when more than one state income tax is required. Please help!!!
