Is anyone else getting an erroneously generated "Deferral for Certain Schedule H and SE Filers Smart Worksheet" that can't have a valid Line 11 value?

[jspruell01]

We answered "no" to the question of "would you like to defer," and we are ineligible to defer because we're getting a refund. The invalid deferral worksheet is preventing TT from finalizing the return

[KathrynG3]

This error is being seen by taxpayers in similar situations. How to resolve it depends why Schedule 3, Line 12e would be in your return. Schedule 3, Line 12e, refers to both Schedule H or SE filers.

The error is generated because the system needs to update. Perhaps initially when entering your details, you were going to owe taxes. Then, as more details were entered, the status changed to a refund. 

This would have made any tax deferral of Self Employment tax on Sch H or Sch SE tax no longer valid.

To get past this error, first try entering a blank as a response. If there is a 0 or spaces in this cell, delete them.

In either case, you must get back temporarily to owing money in order to decline the deferral. Then, go back to your current details to resolve the issue.

To do this in TurboTax, follow these steps:

If you are filing Schedule H, try deleting Schedule H using the steps included for deleting Sch SE-T. Then, re-enter Schedule H.

To delete Schedule H:

• From the left menu, select Tax Tools.
• Select Tools.
• Scroll to Delete a Form.
• Scroll to Sch H select Delete and Delete Selected Form and Continue.

To Re-add Schedule H:

• In the search box, enter sch h.
• Click the Jump to link and continue through the interview. The first page will be: About Your Nanny or Household Employees.

If you are self-employed:

First, revisit the section for the Self-employment tax deferral entry and accept it, change it, and then decline it by deferring 0:

1. Return to the Deductions & Credits section.
2. Scroll to Tax relief related to COVID-19 and Show More.
3. Select Self-employment tax deferral and select Revisit.
4. Answer Yes at the next screen to get back to Let's start by getting your eligible income.
   1. If you do not want to defer any self-employment income, at "Enter your eligible self-employment income", you have three options. Try them in the following order:
      1. Enter nothing--be sure the cell is completely blank.
      2. Enter 0 (as in 0 is the portion of self-employment I will defer) OR 
      3. Enter 280/366ths of your income to reflect the income from March 27-December 31, 2021.
   2. Select Continue.
   3. At Tell us how much you'd like to defer, 
      1. "Enter amount" should be blank if you entered blank above.
      2. Enter 0 if you entered 0 or 280/266ths of income above.
   4. Select Continue.
5. Scroll down and select Wrap up Tax Breaks and Continue.
6. I recommend running through the Federal Review again.

Secondly, if the error is still in the return, it is because Sch SE-T or Sch SE-S is not updating properly. To update the return automatically, it is best to close out completely and close the browser, as well. Re-open in Chrome on a PC.

1. Delete the Sch SE that applies--(Sch SE-T is for Taxpayer, Sch SE-S for Spouse)--by following these steps:
   1. From the left menu, select Tax Tools.
   2. Select Tools.
   3. Scroll to Delete a Form.
   4. Scroll to Sch SE-T and/or Sch SE-S and select Delete.
2. Return to the self-employment income & expenses interview in the Income & Expenses section and select Edit/Add.
   1. Select Edit for your business.
   2. Scroll down to Done so that the Sch SE is recalculated. 
   3. Finish any other questions in the self-employment interview and click Continue.
3. Review the return again.

[DAyers]

hello Kathryn,

  I have a question about this form. I have already filed my taxes and received my refund, but it's short $854 due to this SChedule H that was not shown to me before my refund was deposited. In fact, the IRS site and turbo tax are still saying we should be getting the total amount that includes the missing 854.

I am a sole prop, I sell on Etsy and my own website. I do not have any household employees. Is this possible to fix?

[Cynthiad66]

You can amend your 2020 taxes to correct that error.  Here is how to amend:

First, make sure you really need to amend and that your 2020 return was accepted in TurboTax Online or paper-filed through the mail. You can't amend a return that hasn't been filed yet.

IRS Form 1040-X (amend your return) will be ready on March 25, 2021. Sign up for email notification and we'll let you know when the most current form is available.

When you're ready to amend, find your situation below and follow the instructions.

[glenshoward]

@KathrynG3,  I have deleted Schedule H per your instructions and then regenerated it with a much higher number (and then without).  TT still overrides my election NOT to defer household employer taxes.  (I do not need Schedule SE.)

My situation does not fit your first-owing-and-then-refund status situation.

When you say, "To get past this error, first try entering a blank as a response. If there is a 0 or spaces in this cell, delete them."  What question are you referring to for this response?

As far as I can tell, the problem seems to be that Schedule H, line 8d is automatically populated by the number at Line B of the Smart Worksheet for lines 8b and 8e, i.e., the Employer's share of social security tax (which is correct).  That automatic population can be avoided by manually entering zero at line 8d (an override isn't available).  And doing that eliminates the entry at Schedule 3, line 12e.  But will messing with Schedule H, line 8d cause the return to be rejected??

[glenshoward]

@KathrynG3, to further clarify:

• At the "Some of your self-employment taxes may be eligible for deferral page" (which, by the way, says nothing about Schedule H taxes), clicking on the SKIP button does not prevent the amount on Schedule H, line 8d from populating Schedule 3.  TT implements a deferral even though not wanted.
• At that same page, if one clicks instead on the CONTINUE button and then, at the next page ("Do you want more time to pay your self-employment taxes or employer's portion of Social Security taxes"), clicks the No radio button, the result is the same -- an unwanted deferral.  FYI, at the page that follows, TT says "You owe no self-employment tax" and "... you're not eligible for this deferral."  But TT defers the employer's portion of Social Security taxes  from Schedule H anyway.

Is TT working on a fix for this?

Thank you.

[KathrynG3]

Thank you for clarifying this situation. In order of your questions~

1. Your question: When you say, "To get past this error, first try entering a blank as a response. If there is a 0 or spaces in this cell, delete them."  What question are you referring to for this response?  Reply~It is for the request to enter a tax deferral of Self Employment tax on Sch H or Sch SE tax amount.

2. Using overrides can require paper filing. It is best to respond in the Step-by-step interview instead of in the Forms Mode.

3. The way to turn off this automatic calculation is to answer as if you do want to defer. When I did this, it did not treat it as an override. 

• In TurboTax CD/Download, follow these steps:​​​​​​​
  • Inside TurboTax, enter sch h in the search box and select the Jump to ​​​​​​​link in the search results.
  • At About your Nany or Household Employees, answer Yes.
  • At Who is the Employer?, answer Yes to at least one of the questions and Continue.
  • At Wages Paid answer Yes.
  • Enter your EIN and the Wages and Withholding for your Schedule H employee and Continue.
  • Answer the questions regarding Qualified sick and family leave and at Unemployment Tax Information, select Continue.
  • Answer the Unemployment Tax Information and Continue through the subsequent details.
     
  • At Some of your self-employment taxes may be eligible for deferral, select Continue.
  • At Do you want more time to pay your employer portion of Social Security taxes? select Yes and respond to Whose eligibility should be checked and Continue.
  • At Let's get your eligible employer's share of Social Security tax, highlight the contents of the cell for Enter your eligible employer's share of Social Security tax and delete. Leave this cell blank and Continue.
  • At Tell us how much you'd like to defer, leave the amount blank and Continue.
    • When returning to Forms mode to check Schedule H, there will not be anything on Line 8d of Schedule H now.

@glenshoward

[glenshoward]

@KathrynG3 , thanks for your responses, but I'm still having the problem.  (BTW, I'm using TT Premier via download.)

First, FYI, when I last saved the return (yesterday), I manually entered 0 in Sch. H, line 8d.  When I just logged back in to try your guidance and I moved in the step-by-step from the Wages and Withholding page to the Qualified sick and family leave page, TT automatically reinstated the unwanted deferral re-inserting the original (non-zero) number in Sch. H, line 8d.

Re my 1st question, you say,  "It is for the request to enter a tax deferral of Self Employment tax on Sch H or Sch SE tax amount."  Do you mean the page in the step-by-step that asks, "Some of your self-employment taxes may be eligible for deferral?"  If so, there is no option to enter a blank as a response.  The only options are the blue SKIP and CONTINUE buttons.  And, as I said previously, neither of those options defeat the deferral.

Re my question #2:  Yes, I've responded in the step-by-step (both ways, without success), resorting to the forms mode only when nothing else worked.

I've gone back yet again through the steps you recommend to turn off the automatic calculation (in response to my question #3) and followed them exactly.  At Do you want more time to pay your employer portion of Social Security taxes? I select Yes and then responded to Whose eligibility should be checked and then click Continue.  The very next page is titled, "You currently owe no self-employment tax," and that page speaks only about self-employment tax with nothing about Schedule H tax.  Clicking on Continue at the bottom of that page brings up "Your 2020 Deductions and Credits."  The pages you describe in your last two bullets --"Let's get your eligible employer's share of Social Security tax" and "Tell us how much you'd like to defer"  do not show up at all; so there's no opportunity to follow your instructions for those pages.

Now what?  Thanks for your efforts.

Glen

[KathrynG3]

First question~ Yes, select Continue here--you will be able to cancel the deferral, but not yet.

Second question~ Before returning to the Step-by-Step, cancel any overrides you have in the Forms Mode. This should help TurboTax will update.

Third question~ interesting. I am assuming that your household employee wages are above the threshold of $2,200 and at least one quarter included $1,000 or more in wages paid and that some taxes on the employer side have been submitted already.

I think it would be helpful to have a TurboTax ".tax2020" file that is experiencing this issue. You can send us a “diagnostic” file that has your numbers but not your personal information. If you would like to do this, here are the instructions:

For TurboTax Desktop:

• On your menu bar at the very top, click "Online"
• Send Tax File to Agent click Send.
• The pop-up will have a token number.

I'll be able to open TurboTax with your numbers but not your personal information. That may help diagnose the issue.

@glenshoward

[glenshoward]

@KathrynG3,

• I selected "Continue" and then "No" (i.e., not wanting more time to pay).
• I didn't have any actual overrides.  I had simply entered 0 manually in Sch. H, line 8d after deleting the amount that automatically populated that line (from SmartWorksheet line B).
• I have uploaded a diagnostic .tax2020 file.  How do I securely send you the token number?

Thanks.

[glenshoward]

Addendum to previous posting:

When I reopened TT, it had already -- on its own -- deleted my manual 0 in Sch. H, line 8d and reinstated the amount from SmartWorksheet line B.

[KathrynG3]

The token number can be posted here. This number is safe to post publicly. It is unusable by anyone but us.

Regarding the automatic correction, since it has updated itself, try returning to the Schedule H interview and following the steps to decline the deferral now. 

It is less important that an amount has been calculated in Line 8d of Schedule H than it is that any deferral is declined by entering 0 at Tell us how much you'd like to defer. If you also delete the calculated amount at Let's get your eligible employer's share of Social Security tax, it just provides further assurance that there would be no deferral.

But, in your case, you are not getting an opportunity to decline. 

[Edited 04/17/2021 | 12:15 PM PST]

@glenshoward

[glenshoward]

@KathrynG3:  Here's the token #823816

I've returned yet again to the Schedule H interview and again declined the deferral.   TT applies it anyway.

Whether I answer "no" to do-uou-want-more-time question or answer "yes" (and checking both spouses' eligibility), the result is the same -- the "You currently owe no self-employment tax" page.  There is no "Tell us how much you'd like to defer" question.  (And no mention at all of Schedule H taxes.)  And "Let's get your eligible employer's share of Social Security tax" is nowhere in the interview.

Line 8e does have a zero.  But Schedule 3 line 12e nevertheless includes the amount from Schedule H, line 8d (the Employer share of SS tax).   That is the amount that then populates Form 1040, line 31, rolling into line 33 Total Payments and thus reducing tax currently due.

So, none of your suggestions thus far has helped.  I hope that the diagnostic file will.

[KathrynG3]

I have reviewed your tax return and understand what you are describing. Yes, I am getting the same results. There is no opportunity to defer the Schedule H taxes. It instead displays a screen You currently owe no self-employment tax. instead.

While you can still file the return, in general, an override cannot be e-filed.

I found an interesting answer in testing this. I did two things to fix the issue.

1. In Forms mode, I scrolled to the shell of Schedule C that was started and deleted it.
2. In Forms mode, I navigated to Schedule H, Part A and answered No.
   1. I answered B and C, as well.
   2. Then, I went back and changed A back to Yes.

TurboTax retained the change and Line 8d stayed blank. Schedule 2 and Schedule 3 are correct and you will be able to e-file without errors or overrides.

At the beginning of the Review, you will see Some of your self-employment taxes may be eligible for deferral. Ignore and select Continue. There are no errors in the return.

@glenshoward

[glenshoward]

@KathrynG3, I haven't a clue how you found this convoluted fix!  Thank you.  Some comments FYI:

• Thanks for noticing the unneeded Schedule C.  I deleted it.
• I followed your instructions for Schedule H and answered "no" at Part A.  You didn't specify how you then "answered B and C, as well," so I tried every permutation.  But Line 8d remained populated both before and after I "went back and changed A back to Yes."  In all cases, both Line 8d and Schedule 3, line 12e remained incorrectly populated.
• It wasn't until I went to Review that I was allowed to enter 0 in response to "Some of your self-employment taxes may be eligible for deferral."  Now, there are indeed no errors in the return.

I hope that all these details will allow TT to develop a fix for this bug.  Both I and others will appreciate it.  Thanks again.