I noticed that the VA state spouse tax worksheet does not properly handle the situation where some of the savings bond interest was previously reported. In the screen shot below it shows the total savings bond interest amount under my wife's income but it incorrectly shows the amount that was previously reported on the inherited savings bond estate filing as negative income as taxpayer income. The correct way would show the net bond income under the spouse income.
The inherited bond showing up under the taxpayer instead of the spouse forces me to ask you to double check that you have correctly marked your spouse as the owner for all bonds.
Thanks for the reply. The 1099-INT for the savings bond is marked as interest belongs to my spouse only. On the next screen we checked the "We need to adjust the taxable amount." since some of the interest was paid by her mother's estate. On the next screen we entered the adjustment amount and clicked on the "This savings bond interest was previously reported." radio button.
This appears to be a bug in the Virginia handling of this situation on the "Worksheet for Spouse Tax Adjustment". I belive that for line 7.b , "Income from obligations or securities of the United States" the adjusted taxable amount should appear under my spouse and a zero should appear for the taxpayer. Currently the full bond amount shows for my spouse and the adjustment amount appears as a negative value for the taxpayer.
I'm investigating your issue and will report back to you. What type of return are you preparing?
I am preparing Federal 1040 and Virginia state income tax 760.
Please note that this bug results in an incorrect spousal tax adjustment on VA 760 which results in an incorrect amount of Virginia state income tax.
You win. My program is duplicating your issue. In order to move forward, 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:
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Locate the Tax Tools on the left-hand side of the screen.
A drop-down will appear. Select Tools
On the pop-up screen, click on “Share my file with agent.”
This will generate a message that a diagnostic file gets sanitized and transmitted to us.
Please provide the Token Number that was generated in the response.
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