turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

shmc
Returning Member

MAGI calculation for ROTH Contribution

Line 1 of the Roth IRA Contribution Limit Worksheet is incorrectly calculating MAGI... it appears to be subtracting inherited IRA distributions (in addition to IRA Roth conversions). Why ?

 

also affects the Traditional IRA deduction, inherited IRA distributions are being subtracted from the MAGI caclculation in error.

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

39 Replies
dmertz
Level 15

MAGI calculation for ROTH Contribution

Wow!  You are right!  Very observant!  My own tax return shows the same problem.

 

Perhaps @BillM223 can help in reporting this bug.

 

I'll do a bit of research to see how long the bug has been present in TurboTax, but I suspect it's been there for a LONG time since it's not something that one would readily notice.  Of course somebody who did not actually make an excess Roth IRA contribution would not care.

shmc
Returning Member

MAGI calculation for ROTH Contribution

it's been there since at least 2021, an error in the taxpayer's favor since it lowers the MAGI more than it should.

dmertz
Level 15

MAGI calculation for ROTH Contribution

 Not as log ago as I expected.  This bug was introduced with an update to 2021 TurboTax and remains present in 2022 and 2023 TurboTax.  It was not present in 2021 TurboTax on 3/19/2022 when I filed but is present in the last update to 2021 TurboTax.

dmertz
Level 15

MAGI calculation for ROTH Contribution

The error is not exactly in the taxpayer's favor since, if TurboTax fails to recognize an actually excess contribution due to this bug, the excess-contribution penalties can accumulate without the taxpayer's knowledge.  At least the SECURE 2.0 Act has created a statute of limitations for the IRS to be able to assess excess-contribution penalties, but the IRS has not yet provided guidance on how that statute of limitations will be applied.

BillM223
Expert Alumni

MAGI calculation for ROTH Contribution

@dmertz 

 

Thanks for the note. Any additional information you can provide here (or through other channels) would be appreciated.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
shmc
Returning Member

MAGI calculation for ROTH Contribution

The same is happening on Line 12 of the IRA Deduction Worksheet. I am missing something when it comes to how inherited IRA distributions are treated.

BillM223
Expert Alumni

MAGI calculation for ROTH Contribution

@dmertz  it has been suggested to me that I get a sanitized return from you of a test case that acts the way you describe. Can you do that?

 

Of course, you don't need to do any of the sanitizing; the TurboTax sanitation process while creating a token works very well...sometimes too well.

 

Let me know if you can do this for us.

 

Online

  • Log into your TurboTax Online tax return
  • On the left, click on Tax Tools
  • Under Tax Tools, click on Tools
  • In Tools Center, click on Share my File with Agent
  • TurboTax will give you a “token”, a 7-digit number
  • Post the token number in this thread
  • Be sure to add to that post “@” “billm223” (without the space in between) so that I will be notified

 

Desktop

  • Open your return in the desktop product
  • Look along the top and click on Online
  • Click on Send Tax File to Agent
  • TurboTax will give you a “token”, a 7-digit number
  • Post the token number in this thread
  • Be sure to add to that post “@” “billm223” (without the space in between) so that I will be notified

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
dmertz
Level 15

MAGI calculation for ROTH Contribution

In trying to create a stripped-down version of a tax return, so far I have not been able to reproduce the problem that is shown in my personal tax return by building a new tax return, likely due to some interdependency with something that should be unrelated.  My personal tax return has more in it than I want to include in even a sanitized submission, so it will take me some time to figure out the interdependency and make the submission.  I think it has something to do with other Forms 1099-R that are present because if I delete those the symptom disappears.  I'll make the submission when I have something suitable.

dmertz
Level 15

MAGI calculation for ROTH Contribution

OK, I got it.  Token 1190388.

 

In this test file, the MAGI shown on the Roth IRA Contribution Limit Worksheet should be $250,000, not $50,000.

 

Recreating the problem required including a Form 1099-R for a Roth conversion from a traditional IRA and having basis in nondeductible traditional IRA contributions.  Got lucky in being able to initially see this symptom since my own personal tax return includes the necessary elements.

dmertz
Level 15

MAGI calculation for ROTH Contribution

@BillM223 , tagging you just to make sure.

BillM223
Expert Alumni

MAGI calculation for ROTH Contribution

@dmertz 

Thanks for the token. 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
shmc
Returning Member

MAGI calculation for ROTH Contribution

@BillM223 I also uploaded a version of my file with both a ROTH IRA contribution and a Traditional IRA contribution so you can see both MAGI's on the worksheets . token number 1190456

 

BillM223
Expert Alumni

MAGI calculation for ROTH Contribution

Thanks @shmc  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
dmertz
Level 15

MAGI calculation for ROTH Contribution

Not realizing the interdependencies, my previous testing to determine when this bug got introduced was incomplete.  It now appears to me that it was introduced in 2020 TurboTax.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies