Is there a potentially very serious bug with Schedule C, sub-form 8829?? (Mac Desktop)... It has a broken calculation.

[bvz]

I am using the TT Deluxe desktop edition on a Mac.

When I enter my self employment info, everything appears to work as intended. But the moment I add even a single dollar in business expenses, my refund drops to just 1/4 of what it was prior to adding in these expenses.

So to debug what is going on, I printed out both versions of my schedule-C to see what changed between the two. The only difference I made in the two versions was that (in forms, though it behaves the same in easy step) I added a single dollar under the advertising expenses (Schedule C, part II, line 8). This triggers the drop in my refund.

In both printed versions, my self employment income is listed correctly under Gross Income, and. is identical.

But, going line by line through the form, I see the following two changes:

• Line 28 (Total expenses) is blank for the version with no business expense. It is $1 for the version with my business expense (as expected).
• When I added the single dollar expense, for some reason my home office deduction (part II, line 30) has been set to zero. Without this expense, this amount is what it should have been based on the square footage of my house and my housing costs. Losing this amout raises my net profit (part II, line 31).
• My Allowable Deductions Smart Worksheet section also has some changes. The "Total other deductions allocable to this business" has increased by about 15% (roughly).

And that is the extent of the changes I see on my Schedule-C (aside from the fact that each version carries its unique net profit value forward).

So I did a little more digging. I looked at the differences in Form 8829.

Without the single dollar business expense, line 8 ("Enter the amount from Schedule C, line 29, plus any gain derived form the business use of your home, minus any loss from the trade or business not derived from the business use of your home") contains the value from line 29 (Tentative profit).

But WITH the single dollar business expense, this same line contains "-1". (And if I enter, say, $20 as my business expense, it puts -20 in this line). This leads to line 15 being set to 0 instead of my Tentative Net profit. And so on down the line for the rest of this form.

It looks to me like the app has a bug where line 8 where it is somehow doing a calculation incorrectly. In my case, it should simply be the same as line 29. But instead it appears to use something like 0 - Expenses. Looking at Form 8829 Worksheet is of no help because TT does not appear to fully fill it out.

I am no tax expert, but this seems wrong. But I am open to hearing how it should actually behave.

[AnnetteB6 · Accepted solution]

First, if you are using either TurboTax desktop Premier or Deluxe, you will not see a specific question asking for the percentage of time spent working in your home office.  This is something that is currently being addressed in TurboTax and it may be a contributing factor to the situation you described.  Please enter this information using Forms by following the steps below. 

1. Click Forms in the upper right corner.
2. Look for Form 8829 on the left side of the screen under Schedule C and highlight this form.  
3. Scroll down the page to the section titled Line 8 Calculation Smart Worksheet.  It will have a box around it.
4. Type 100 in the box on line B.  If you did not use your home office 100% of the time for your business, but you also performed work in other locations, then enter the appropriate percentage of time for your situation.
5. This will then calculate the home office deduction.

Then, if you are still seeing the situation you described, it would be helpful to take a closer look by examining a diagnostic file of your tax return.  This is to be able to report the situation to the development team for further investigation if necessary.  The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  

To provide us with the diagnostic file, follow the instructions below and post the token number in a follow-up thread.

Using a Mac version of TurboTax, follow these steps:

• Go to the Menu at the top of the screen and select Help.
• Then, Send Tax File to Agent.
• Post the token number here.

[bvz]

That fixed it. Thanks!

But it is still a pretty serious issue. Why would I enter square footage of my home office, enter all of the associated information, and then have TT assume that my office use is 0%. It makes no sense at all.

But I appreciate your help in this matter!

[bvz]

Just an update... this same bug is in the '24 version and it reduced my refund last year as well. Why does turbotax have bugs that persist year after year?

[AnnetteB6]

Thank you for the feedback that you were able to correct the issue by using Forms.  As mentioned earlier, this particular situation has been reported and is hopefully in the process of being corrected.  

If you need information about how to file an amended return for 2024 to get the full benefit of your home office deduction, take a look at the following TurboTax help article:

How do I amend my federal tax return for a prior year?

@bvz