Minnesota M1WFC not computing properly?

[kgryting]

I am using the desktop version of TT Home & Business software.  TurboTax software version 022  000  0599 on  Windows 10.

When I try to see if I am eligible for the Minnesota working family credit, the TT interview tells me that I am not eligible and the form is not even generated.

When I print the form manually from minnesota's treasury department and follow the manual instructions, copying values from my turbo tax 1040 per minnesota instructions, I am indeed eligible.

How do I find out if there are known bugs and any workarounds?

Help!  It's a $1200 difference to me.

[kgryting]

I just spent several minutes on the phone with Minnesota's tax department.  They also agree that I should receive the working family credit...  so TURBO TAX you need to update your state software.  It's worthless to me at this point, and will make next year's taxes unable to transfer accurately.

Ugh.

[HollyP]

There are no known defects with this Credit. However, you aren't eligible if any of these apply:

• You were a full-year nonresident
• You file with an Individual Taxpayer Identification Number (ITIN)
• You do not meet the state income requirements based on your filing status or number of qualifying children (see Schedule M1WFC instructions for details)
• You are another person's dependent
• The IRS restricted you from claiming the federal EITC

See: Working Family Credit for more info. Also, review your dependent entries in the personal information section to help ensure the credit is properly calculated. 

[kgryting]

@HollyP How would I report this then?  I spent a long time with a MN tax assistance person reviewing all my data from my federal 1040 and she agreed that I was eligible.

I deleted my TT state return and filed it totally by hand.  It was awful.

My suspicion is that my medicaid waiver payments were accidentally ADDED to my income, even though they are included on my 1040 line 1z.  I receive a W2 for them - part of them are nontaxable and the part that was paid PTO is taxable.  My Schedule 1 subtracts the nontaxable portion.

Filling out Minnesota's M1 form, only demands that you add back in any medicaid wages not already included on 1040 1z.  With 2 eligible children, line 1 on M1WFC value leads to a working family credit value over 1000.  Line 3 (federal AGI) is less than line 1 and less than the value noted in instructions for M1WFC, so I do get the credit.

The MN tax rep agreed.  I think Turbo Tax has a bug and I'd like to report it officially.  Can you point me to that process?

[HollyP]

We appreciate the feedback @kgryting. I'd be happy to take a deeper look at this, and report it accordingly. However, I need a diagnostic file, which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign in to your online account.
2. Locate the Tax Tools.
3. A dropdown will appear. Select Tools.  
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent”
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number that was generated in the response.  
   
   
    

[kgryting]

@HollyP Is there a way to send you the token number directly or is it OK to post it here?  THANK YOU.  I've sent it, just need to find a way to get you the token.

[VolvoGirl]

Post the token # here in the forum.

[kgryting]

#1141785  @HollyP 

[HollyP]

Thanks for the token @kgryting. Unfortunately, the data that you sent doesn't indicate any qualifying children on your tax return, nor does the income indicate a Medicaid waiver payment. Thus, TurboTax isn't qualifying you for the MN Working Family Credit because you are showing no qualifying children and your income exceeds the limits. 

You will need to review your dependent information and all you income entries on the federal return as this will flow to the MN return. As you already know the income requirements are mentioned in the M1WFC Instructions, as noted below. 

 

Also, see How do I enter my tax-exempt Medicaid waiver payments from IHHS in TurboTax?

Thanks again for taking the time to report your experience. Let us know if you have any additional questions.

[kgryting]

@HollyP. I have one fully dependent child and one who is not a dependent except for the EIC because of disability.

Why wouldn't those carry over to state?

Aren't they both part of my qualification for federal EIC?

[kgryting]

@HollyP    I just triple confirmed that my turbo tax "Personal Info" contains three children.  One NOT a dependent.  One dependent for EIC/dependent care only, and one FULL dependent.   That should flow to both Federal AND State forms.

Also medicaid waiver payments were recorded on Schedule 1, line 8s (as a negative) so I did answer a TurboTax question with that value, though I can't remember exactly where that was asked.  For me, the medicaid earnings are reported on a W2 in box 1 even though zero taxes are withheld.  The company managing those funds has always sent W2 for that. 

[HollyP]

I appreciate your diligence @kgryting! I reviewed your token file again and I can now see your two qualifying dependents for M1WFC purposes.

In TurboTax, on Schedule M1WFC the Total Earned Income (Line 1) flows from the federal Earned Income Credit Worksheet, line 2c PLUS Earned Income Smart Worksheet, line A. So this includes your reported nontaxable Medicaid Waiver payments, plus your net self-employment income. These two amounts together put you over the income limits for the Working Family Credit. ‘

As you correctly noted, the MN Working Families Credit, Line 1 page instructions say to enter, “Line 1z of federal Form 1040 or 1040-SR. Include any Medicaid Waiver Payments you received that are not already included on line 1z of Form 1040.” However, line 8 of the M1WFC Line 1 instructions, also requires you to  include your self-employment income. See the Worksheet for Earned Income, page 3, here. This is what’s pushing you over the limit to qualify. 

I assume that you didn't include your net self-employment income when you completed the M1WFC, which would have resulted in you qualifying for about $1,200. ‌Let me know if my assumption is incorrect, and provide some additional information about the calculations that you made by hand. If you’d prefer to discuss this in a private conversation, you may also contact us directly here. 

[kgryting]

Thanks @HollyP   

Initially I read the Line 8 instructions as NOT having a comma - so 

"If you were self-employed, filing federal Schedule SE as a member of the clergy, had church employee income, or are filing federal Schedule C as a statutory employee, use this amount on line 4a of Worksheet B of the instructions for line 27 of Form 1040. Complete the federal worksheet and enter the amount from Step 6 of EIC Worksheet B on line 1 of this schedule."

So - I assumed it was ONLY for "self-employed filing federal Schedule SE as a member of the clergy" etc.  which I am not.  So I did not go down that rabbit hole.  BUT, in re-doing it, let me see if I can follow your path:

MN worksheet line 8 says to subtract Line 7 [which is Lines 4+5+6 which are all intentionally left blank, so ZERO] from Line 3, so essentially Line 8 starts out the same as Line 3.  Then I think instructions say to take that Line 8 value and use the Federal EIC Worksheet B for Line 27, but CHANGE the value in Line 4a (which is not zero for me on federal return, but is small) to be this initial Minnesota worksheet Line 8 value (essentially 1040 Line 1z)??  and then flow through the federal worksheet AGAIN but specifically for MN?  Which would have me NOT eligible per the federal form round 2, copying Line 4b forward to Line 6 on federal Worksheet B, then moving that to M1WFC Line 1??

Those Minnesota instructions sure are confusing and the agent who spoke with me by phone must have been incompetent.  THANK YOU for tracking down at least what was happening.  Now I will follow up with Minnesota.  Ugh. 

Thanks again @HollyP 

[HollyP]

My pleasure, @kgryting. Your understanding of the state instructions is correct. I hope this helps with your follow-up with Minnesota. 

[statussuprem]

My turbo tax charged me but it stated that it was free what do I do?