Can't efile if filing 8615 with pre-TCJA rules

[ldurgin]

Since form 8615 was FINALLY released, I went back to complete the returns for our two college-student children who each have unearned income over the threshold due to financial aid that was used for room and board.

HOWEVER, once completed, I receive an alert that their returns cannot be e-filed because "You have indicated on Form 8615 that you are electing to modify tax of unearned income." This is a tax situation that Turbo Tax does not support for e-filing. This is apparently tied to my answer to the question of calculating taxes based on pre-TCJA rules. When I went back and answered "No" to that question, my son's tax amount did not change AND we were able to e-file. Just thought I would point that out to anyone who might fall into the same situation. 

[sher1]

Hi,

I had the same error but when I switched my answer from yes to no using pre TCJA rules, the amount owed changed significantly.  After saying no they owed a lot less so I'm wondering whether this is correct.

Also not sure why it won't let us efile if we want to use pre TCJA rules. 

[Anonymous]

This is just a guess about the efile...Using the pre-TCJA, it may need to be paper filed so that the IRS can cross reference the parent’s AGI entered for tax bracket purposes. Since it was added late, the IRS may not be set up to do that electronically. 
But efile should be set up to compute using the Estate and Trusts rates because that’s the current law. Again, just a guess.

[Bob87]

So...is Intuit going to fix this issue???  I have submitted my son's 1040 twice, answering "no" to the pre-TJCA question, and it has been rejected twice.  The program tells me I have no errors and no updates, but alas, the IRS thinks differently.  

[LinaJ2020]

The Form 8615 issue has been fixed. You just need to update your program and try to re-file it.  If you are using the TurboTax CD/Download software program, open the program, from the top, under Online, select Check for Updates.  If the software does not update after you have done the step, I would suggest you contact the customer service department at TurboTax contact and ask for a new software push.  

@Bob87

[LinaJ2020]

It really depends if your parent is in a high tax bracket or if you have a lower amount of investment income.  Without seeing your return, I can't tell you why your taxes changed.

But here is the reference:

Usually, the TCJA rate ( Estate and Trust rate) benefits you if your parent is in a higher tax bracket or you have a smaller amount of unearned income.  Otherwise, the Pre-TCJA rate could be better.  For example, if your parent's income is in $300,000, which is in the high-income tax bracket (~35%) and let say you have about $2,500 investment income.  The TCJA rate would benefit you more as you will be in the 10% or less.  You would need to enter all the information and select both of the rates for comparisons. 

See the images below. 

The 2019 rates and brackets were announced by the IRS in Rev. Proc. 2018-57 on Nov. 15, 2018.4

• $0 to $2,600 in income: 10% of taxable income
• $2,601 to $9,300 in income: $260 plus 24% of the amount over $2,600
• $9,301 to $12,750 in income: $1,868 plus 35% of the amount over $9,300
• Over $12,750 in income: $3,075.50 plus 37% of the amount over $12,750

The way how Kiddie Tax is calculated by using the Pre-TCJA rate:

First, add up the child’s net earned income and net unearned income. Then subtract the child’s standard deduction to arrive at taxable income. The portion of taxable income that consists of net earned income is taxed at the regular rates for a single taxpayer. The portion of taxable income that consists of net unearned income and that exceeds the unearned income threshold ($2,100 for 2018; $2,200 for 2019 and 2020) is subject to the Kiddie Tax and is taxed at the parent(s)’ marginal federal income tax rate. That rate can be as high as 37% for ordinary income and short-term gains and 20% for long-term gains and dividends. 

@sher1

[jarodsmommy]

I disagree with the reply about the tax rate and selecting pre-TCJA giving a lower tax rate for high brackets. There is clearly a calculation issue with your program. When I entered my child's info it gave a ridiculous tax owed amount. He had $3687 total income. All unearned income from interest and dividends. Turbotax calculated his Taxable Income as $2587 yet the program says he owes $9868. He can't owe almost 4 times more taxes than his Taxable Income. This is a tax rate of 381.4%. When I entered my second child's tax info it gave a ridiculous tax owed amount. He had $3070 total income. All unearned income from interest and dividends. Turbotax calculated his Taxable Income as $1970 yet the program says he owes $5781. He can't owe almost 3 times more taxes than his Taxable Income. This is a tax rate of 293.5%. I looked at the forms and your program error is on 8615 Schedule D Worksheet Under Family Aggregate Line two, the number being pulled in to each child is different (can’t determine source) but is not the 1040 Line 3a number from parent form that is indicated and which was entered correctly in step-by-step of child’s form as asked. This occurs if option to use pre TCJA is selected and if not their taxes owed is zero.

[LinaJ2020]

If you prefer having somebody to look over your tax return, I would suggest you consider using TurboTaxLive to file your 2019 taxes.  This way you could have one of our tax professionals to review your tax forms to make sure everything is correct.  

To upgrade from TurboTax edition, click here: https://ttlc.intuit.com/community/choosing-a-product/help/how-do-i-get-turbotax-live/00/27305

@jarodsmommy

[sher1]

Hi,

The software update from 3/27 didn’t fix the 8615 calculation errors. I was on the phone with TT support for over a couple of hours with no resolution.

Will there be a software update that will fix this?

I don’t feel we should have to pay to upgrade to TT live to get this resolved.

Please advise as this is very frustrating.

Thank you!

[Peestercarr]

I totally agree. This issue is infuriating!  I have been told three times that the updates have corrected the issue, but they have not.  We should not have to upgrade and pay more money to get this resolved when it is a TT technical issue not an enduser issue.  TT needs to recitify the calculation issue in the software ASAP or offer TTLive for free to those affected by this 8615 calculation issue.  

[LinaJ2020]

The issue has been fixed on 4/3/2020.  Please update your program and file. 

[sher1]

Hi,

I updated the program. I have the cd and it still doesn’t seem to have changed the numbers? Is there something else I need to do prior to efiling as I have a feeling it will get rejected again.

Thank you!

[Peestercarr]

I have updated several times since Sunday and the updates have not changed the information that TT is autocalculating for Form 8615 and relative worksheets.  The issue seems to be Form 8615 Line 7 QDCG worksheet.  The worksheet is not the same as what the IRS shows as the updated worksheet and the autofill numbers are incorrect as well.  I have done as I was directed before by the TT specialist, deleting the forms, save the file , run an update and then search Form8615, jump to form8615.  Everytime I go back thru the questions, TT inputs the same numbers and incorrect autofills. The forms have not changed or updated. This is beyond ridiculous. TT needs to allow us to send our tax return to the tax experts free of charge since this is a TT issue that can't seemed to be resolved.

[sher1]

Hi,

I know beyond frustrating and the updates haven’t resolved. It it with the 8615 line 7 worksheet so I manually over wrote the answers. I believe lines 2 and 5 I had to over write. To do so, right click when on the line item and click manual override for both lines. You will see the amount owed changes. I finally efiled again and it was accepted.

This was beyond frustrating speaking to so many TT people and then inquiring on this platform and the updates never resolved it.

Try the manual over write and see if that works for you.

i hope so. 🤞

[Carl-AZ]

I am likewise having a problem when selecting pre TCJA rules.  The tax amount is greater than the taxable income.   I am using a Premier disc and have updated.