Maryland First Time Home Buyer's Saving Account Credit for Joint Returns

[lizandian]

Hello,

Turbotax is telling me that there is an error because the maximum amount that I can claim for the Maryland First Time Home Buyer's Saving Account Subtraction is $5K. However, per Maryland tax code (https://www.law.cornell.edu/regulations/maryland/COMAR-03-04-02-18), for spouses filing jointly, "Each spouse on a joint return who is the sole account holder of a first-time homebuyer savings account may claim up to the full amount of the subtraction under §B(1) of this regulation" - that is, each spouse should be able to claim up to $5K ($10K total for the joint return) if they meet those conditions. Turbotax will not allow me to put in an amount greater than $10K. I believe this is a bug in the software (I'm using online Turbotax). Please advise; else, I will look for a different tax preparation software.

Liz

[AmyC]

The deduction is limited to $10k for contribution but the earnings don't have a limit, whatever is in your federal return interest can be adjusted as a deduction. Your contributions and interest earned both apply toward the 10 year limit.

Have the reached your maximum allowed deduction? The subtraction modification may be claimed for up to 10 years and for a maximum earnings amount of $50,000 during the 10-year period per person.
 

I was able to enter more money.  If you have been taking extra amounts allowed for interest, that reduces your timeline. Check to see what deduction you have left.

[lizandian]

The issue is that if I enter a value greater than $5000 (note the screenshot you showed says "the maximum amount is $5000", which is inaccurate, per the tax code, for married couples filing jointly), Turbotax online throws an error and will not let me e-file. Specifically, on the "Let's make sure everything is accurate" screen, it says: "We're close to finishing up to e-file. But we found a couple little things on your Maryland return that need fixing. Let's take care of these now. If you're not able to fix these, you will return to this screen and you can print the return by selecting File by Mail." The only options available are to "Fix Maryland Return" or "File by Mail". Essentially, your tax software has a bug, and because of the software bug, you are forcing me to do the work that you want me to pay you to do (i.e., e-file). Please advise.

[BrittanyS]

Thank you for your patience. I have reported your concerns and will have the developers look into it.

[lizandian]

Any updates?

[BrittanyS]

This issue is still with the developers.  We will update once it has completed the review.

@lizandian 

[Vanessa A]

This is not a TurboTax error.  Instead, this is an issue between the state forms instructions and the actual law.   

The instructions clearly state "Enter the amount contributed during the taxable year to a designated First-Time Homebuyer Savings Account, up to $5,000, on Line ww1."  while the statute says "Each spouse on a joint return who is the sole account holder of a first-time homebuyer savings account may claim up to the full amount of the subtraction under §B(1) of this regulation" and since this for is for both taxpayer and spouse, you cannot add a second form. 

So basically, there is nothing TurboTax can do, as we have to follow the instructions to the forms or the return would not be correct.  In order for this to change the state would have to change the form instructions.  

You could choose to file separate returns, but MD requires you to file using the same status for federal and state so you would also have to file your federal return separately. 

@lizandian