Why TurboTax did wrong calculations on my tax return due to long term capital gains?

[john989]

Turbotax is grossly wrong in calculating my federal tax!   I have been having long term capital gains in past 20 years, but only until 2021, IRS sent me a letter to point out the wrong tax calculations by TurboTax and refunded me a big check. For all those years, nearly 3 decades, I had been so relying on TurboTax, and I might had lost a lot of money by using TurboTax for all those cases where I had long term capital gains. I bet that million users probably have lost tons of money by using TurboTax software. Intuit, please fix your buggy software!

I bet that sooner or later there will be a class action lawsuit against Intuit for the aforementioned matter.

Thanks for your attention!

[rjs]

Duplicate post. See the reply to your other post of the same question.

https://ttlc.intuit.com/community/taxes/discussion/re-why-is-turbo-tax-calculating-an-incorrect-tax-...

[john989]

Your reply did not answer the question: Why Turbotax did the wrong calculations? Do you have any clue about it?

It makes the whole thing even worse that users simply cannot correct the tax calculations inside Turbotax. So, the way to correct  the wrong tax calculations is either switching from Turbotax to some other software or doing everything manually.

[fanfare]

This is not a duplicate post.

It is a new thread not piggybacking on an old thread.

[fanfare]

• TurboTax has changed the way it handles Schedule D and Form 8949 in recent editions. This probably causes confusion and errors for some investors.

• TurboTax has a reputation for "Import from Financial Institution" producing incorrect results.

[john989]

I carefully checked about imports from financial institutions, and they’re all correct.

The real problem is in its tax calculations from total taxable income when line 13 has a capital gain amount. All these calculations are internal to TurboTax software, users cannot correct it even if it made wrong. By checking it against TaxTable + capital gain tax, it is quite obviously wrong if you punched some number into line 13 on form 1040. The final federal tax number is neither based on long term nor short term gain tax rates, also not income marginal tax rate for line 13! It is is simply a mystery, but the end result is that you pay more federal tax than needed. I am lucky that IRS caught the wrong calculations for me. Afterward, I played around Turbotax software, and noticed the issues in the above.

Intuit need fix it, otherwise it will continue to hurt million customers each year.

[VolvoGirl]

If you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.   See the IRS worksheet on 1040 page 36 for how the tax is figured.  Turbo Tax uses the same worksheet.

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

In the online version you need to save your return as a pdf file and include all worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

You can probably tell because the tax on 1040 will be less than the Tax Table

https://ttlc.intuit.com/community/forms/help/form-1040-line-11-amount-is-less-than-standard-irs-tax-...

[john989]

You did not answer the question nor add new info. Everything you said is well aware of already. Please use this thread below if you have insight about it:

https://ttlc.intuit.com/community/taxes/discussion/re-why-turbotax-did-wrong-calculations-on-my-tax-...

[fanfare]

the only reason the tax would be wrong due to Line 13 is if the amount was wrong or didn't belong there in the first place.

Did IRS give a specific reason for the change? You may be jumping to conclusions.

@john989 

[john989]

Thanks, but line 13 is correctly automatically entered from Sch D. You maybe should play around with Sch D, and you’ll see line 13 changes accordingly, then you can manually calculate federal tax with different numbers that you played around in Sch D. Then, compare your manual results with TurboTax results, you’ll see TurboTax numbers are always bigger - lead you to overpay tax. IRS’s number is exactly the same as my manual calculation’s, certainly smaller than TurboTax’s internal calculation’s. As I mentioned in previous post, the manual calculation is the portion of base+marginal from tax-table for the amount that does include capital gain, plus capital gain tax.

[fanfare]

TurboTax Online 2020 was unable to calculate the the correct tax on my Form 8915-E plus Form 8606.
TaxHawk Online got the correct result there but was unable to calculate the correct tax using the required
Schedule D Tax Worksheet.
Another provider No.3 produced yet a different (wrong) total tax.

Finally found a tax program that calculated every thing correctly, after its May software update.

The 2021 Tax Day had been postponed.
Hint: it wasn't TurboTax.

@john989 

[john989]

Great to hear that you now get the same conclusion! @fanfare 

We should make a complaint against Intuit. 

To submit a claim for Turbotax software miscalculation: How do I submit a claim under the TurboTax 100%

For those users/customers who have long term capital gains, they are not able to make corrections in any way within TurboTax. As a result, they lost tons of money.

The miscalculation is TurboTax software's internal fault, Intuit should fix it. Otherwise a class action lawsuit should be filed.

At the same time, I am now looking around for a different tax filing software like the one that you mentioned.

[mrwnsing]

TurboTax has not corrected the problem - IRS sent a refund and corrected tax calculation for tax year 2024 (I received an earlier one for tax year 2022).  All of the input was verified and adjusted gross income/taxable income ties to IRS notice, but tax due was 6% less than TurboTax calculated.

[mrwnsing]

Correction on my post - the last problem was with tax year 2023, not 2024.

[Mike9241]

we can't see your return or the IRS notice.  I don't remember seeing another thread that this issue existed. I don't know how much detail the IRS notice contained but if it did you should compare it to the Turbotax capital gain calculation worksheet and then post more details. 

I would think that most likely Turbotax calculated some capital gain as short-term when the iRS calculated it as long-term. This is why AGI and taxable income would not differ, but the tax would. Another possibility is that the Turbotax capital gain tax calculation worksheet had an error at the time you filed but then I would expect to have seen multiple threads that this issue existed.