Claim of Right IRC 1341 credit for repayments of prior year income not adding to NC refund in TurboTax Home and Business 2018 when entered on NCDOR-specified line. Why?

[mdn6]

For the 2018 tax year we are eligible for a tax credit via IRC 1341 (claim of right for prior year income repayment).

For the federal return, we claim this credit on line 73d of the 1040.  TurboTax handles this correctly and adds the amount to our refund.

North Carolina specifies that this credit be claimed "on the same line as S corporation payments" (https://www.ncdor.gov/taxes-forms/individual-income-tax/repayment-claim-right-income). 

Following NC's guidelines, we entered the credit amount on form D-400 line 21d (S corporation).  However, TurboTax does not handle this correctly as the amount is not added to the NC refund.  Note that this did require right clicking on the cell and using the "override" function to enter the amount.

A workaround is to instead manually add the credit amount to form D-400 line 16 (Tax credits), which appropriately adds the amount to the NC refund.  However, this is not technically the correct line on which to claim the credit and does not permit specification of what the credit is for when e-filing.

How can we force TurboTax to correctly handle the credit when appropriately claimed on NC D-400 line 21d?

Thank you,

Mike

[MichaelL1]

If you "right click" on line 21d of the D400 will TurboTax take you to source document to enter that IRS 1341 state amount?

[mdn6]

Hi Michael - thanks for your response.  Oddly, I may have found the issue.

I right-click on that cell and find the only source document is the line itself (Line 21 of D-400).

Line 21d actually has separate cells for Taxpayer and Spouse which together add to the total amount for 21d (Taxpayer + Spouse = total in far right cell).

Here's the weird part (maybe a bug?):

If I enter the credit in the Taxpayer cell (and leave the Spouse cell blank), the total correctly shows on Line 21d.  However, TurboTax still handles this incorrectly and does not add the credit to my refund.

However, if leave the Taxpayer and Spouse cells blank and simply enter the total amount on line 21d, TurboTax correctly adds the credit to my refund.

So manually entering Taxpayer amount to calculate line 21d doesn't work: Taxpayer (credit) + Spouse (0) = Line 21d (credit)

But avoiding the automatic calculation and instead manually entering the amount on Line 21d does work: Taxpayer (0) + Spouse (0) = Line 21d (credit)

This is bizarre.  A bug?  

Thanks again for your timely response!

[MichaelL1]

Thank you for taking the time to detail this all out, and I will let our programmers know as this is as you say bizarre.

Main thing I am pleased you are able to continue with your taxes correctly.  

I am going to post part of your comment so others will see this in the answer also.

[MichaelL1 · Accepted solution]

"This deals with IRC 1341 on the NC return only"

However, if leave the Taxpayer and Spouse cells blank and simply enter the total amount on line 21d, TurboTax correctly adds the credit to my refund.

So manually entering Taxpayer amount to calculate line 21d doesn't work: Taxpayer (credit) + Spouse (0) = Line 21d (credit)

But avoiding the automatic calculation and instead manually entering the amount on Line 21d does work: Taxpayer (0) + Spouse (0) = Line 21d (credit)

For more details see comments above. 

[thewordpro]

I had the same problem and appreciate the information above. It is complicated by the fact that the link above, which I had previously seen, says to enter the amount on line 22D (which doesn't exist) and not 21D. I think your programmers should look at the question and answer on this also. It addresses repayments of less than $3000 as itemized deductions but totally leaves the user hanging if the amount is over $3000. Further, your instructions say that if the customer uses the override feature the return cannot be e-filed. I guess I'll find out.

[natalie_k]

@MichaelL1 , @mdn6 
I am currently facing the same problem, need to add the claim of right repayment credit to D-400, line 21d S Corporation (NC return). I am using Turbotax Deluxe software and it doesn't allow me to add new data to this cell, as it reads data from schedule K-1, which I do not have in my Federal return. Is there a way to do it without overriding the cell? Is there any new information appeared since the last year that you might be aware of?
Thank you very much in advance!