2020 TT showing tax due before starting return

[Benjamine]

I just transferred my 2019 TT into 2020 TT and have yet to begin entering any information.  However, TT is showing a $300 tax due Schedule 2 Line 10 (HDHP).  Last year we received a refund.  I have never had this occur before.  Could there be an error in the transfer of data?

[ThomasM125]

Form 1040 Schedule 2 is Additional Taxes and line 10 of that schedule would just be a total of all the entries on that schedule.

What form number or schedule letter do you see the tax due on?

[Benjamine]

I just opened the return and it is showing a negative amount on a rental property (Schedule 1, Line 5) as well as Line 8 (Other income HSA amount).   I did contribute to my HSA ($4,500) in Feb 2020 for 2019.  When I completed the return, there was no indicate of any last month rule penalty.  The Form 8889 (for 2020) Line 18 is showing $3,000.  I had Obama Care coverage for the entire year - from Jan - Aug (non HDHP) remained of the year was HDHP.  I am 63 years old.   Husband was also covered from Jan - Aug and then went on Medicare. 

Evidently, the import of data is reflecting Last Month Rule of $3,000 resulting in $300 tax.  Form indicates max contribution was $1,500.   Can you clarify and if I'm in error, how do I correct this?

Thank you!

Thanks for any help you can provide! 

[Benjamine]

As an aside, I have continued to have a HDHP through all of 2020 so I believe I am covered under the Last Month Rule; i.e., December 1, 2019 through December 31, 2020. 

Thanks again!

[BillM223]

As you seem to know, the last-month rule allows you to use the full annual HSA contribution limit if you had qualifying HDHP coverage and no conflicting coverage on December 1, of the tax year. It appears that you had HDHP coverage on December 1, 2019 which would have invoked the last month rule, but, as you note, you would have passed the testing period by retaining HDHP coverage for all of 2020.

You note that your husband went on Medicare during 2020. Do you two have only  one HSA? If so, who does it belong to, you or your husband?

I am assuming that the HSA belongs to you, and that the HSA interview did not ask anything about your husband's HSA (yes, you are each allowed an HSA, well, your husband was until he went on Medicare).

And I also assume that your husband was asked the question, "What kind of HDHP coverage did [name] have on December 1, 2019?" How did you answer? If your husband did not have his own HSA, then the correct answer would be "None" because the question is only for people who had an HSA in 2019 and actually contributed to it in 2019.

I don't really understand why your return would show a line 18 (8889) entry as soon as you carry over the data from 2019; this suggests that you have some data that probably should not have carried over.

If things don't get better, you may want to delete all HSA information in your return so that you have a fresh start. To do that, please do the following:

1. make a copy of your W-2(s) (if you don't have the paper copies)

2. delete your W-2(s) (use the garbage can icon next to the W-2(s) on the Income screen)

*** Desktop***

3. go to View (at the top), choose Forms, and select the desired form. Note the Delete Form button at the bottom of the screen.

*** Online ***

3. go to Tax Tools (on the left), and navigate to Tools->Delete a form

4. delete form(s) 1099-SA (if one), 8889-T, and 8889-S (if one)

5. go back and re-add your W-2(s), preferably adding them manually

6. go back and redo the entire HSA interview.

[Benjamine]

Thanks Bill for all your help! 

1.  Husband did not have an open HSA (but opened one in Feb 2020 for 2019 - his last year to contribute) - I contributed the maximum amount of $2,625 and he was covered by an HDHP from Jan 2019 until August 2019 when he went on Medicare.

2.  I can't remember how I answered the questions, but the existing HSA was in my name.  I do remember having considerable issues with the interview forms on the HSA section regarding him. 

I will take your advice and delete the form and see what happens.  Since I have not entered any data (or even begun the interview) would I be better served to delete the return and retry the import to see if that might help?  Another strange thing is TT is showing the red exclamation point on several forms (indicating an error) and again, I've not entered anything!  I've used TT since the late 90's and when I've transferred my info, I've never had those red exclamations appear until after I've done the interview and entered data.  Is this something new?  For example, the 1040 shows the standard deduction amount of $26,100

Also, I'm still confused as to why TT is reflecting a negative $$$ amount on my rentals on Schedule 1, Line 5.  Those amounts together with the HSA are reflected on the 1040WS and 1040.  When I look at the form for Schedule E, it has filled in depreciation amounts for each of the two rental properties.  Again, I don't recall ever seeing this in the past. 

Very much appreciate your assistance and looking forward to your thoughts! So, again, would I be better off deleting the return and starting over?

[Benjamine]

Hi Bill - I'm sure your swamped but I have not received a response to my question posted on Saturday about all the red exclamation points appearing on the individual forms (without me starting any input of info).  Could you please let me know?  Thanks!

[BillM223 · Accepted solution]

Hmmmn, the red exclamation points are a concern.

Well, I would suggest that you re-import the return, but I want to be sure that you will not be charged twice. So tell me,

* are you using Online or the download software? 

* if Online, have you paid for it yet? 

* are you using a state? have you added it already? Have you paid for it?

With these answers, I can determine the best way for you to restart.

On another subject, there has been an issue with depreciation on rental properties. The depreciation on the primary property (at least) is not being carried over. 

This is a known issue. Please see this TurboTax Help page and sign up to be notified when it has been addressed.

You will probably want to wait until this issue has been addressed to re-import your data. 

If you reply to me, please enter @ and BillM223 (all one word) at the end of your answer so that I will be notified.

[Benjamine]

Prior to your latest response, I uninstalled and reinstalled 2020 TT (cd) and then re-imported my 2019 TT returns.  The same issue appeared with the penalty on the HSA, but as soon as I answered the interview questions, the "tax due" changed to a "refund" at present so clearly no penalty is correct since I met the 12 month Rule.  Now, the red exclamations are only appearing as they should (areas I have not yet addressed).  Yes, I also use two states since my rentals are not in my home state, but have not purchased or downloaded them. 

Thanks for the sign up link on the rental properties - ah well - guess I'll have to start the whole return again when the issue is resolved since I already imported last year's return.  Frustrating to say the least, but I do greatly appreciate all your help!  If you become aware of another solution rather than having to start another return, please post!  Thanks again and stay safe! @andBillM223