Reporting a bug in TurboTax for TY2024, Colorado form 104, line 35: TABOR tax refund left blank

[ajs]

If line 34, modified federal AGI, is negative, TT leaves line 35 blank, requiring manual fill-in. However if line 34 is positive, it computes the refund automatically. You can see this by fiddling numbers upstream, or just overriding line 31. Colorado online information in page 14 of the form 104 instructions clearly says that a negative AGI does not preclude TABOR refund.

[BillM223]

Please quote for me the text that states that a negative AGI does not preclude the TABOR refund. I have read and reread page 14, and I don't see it. Please copy and paste the relevant text here in your next answer.

It seems pretty clear to me that if line 34 is zero or blank, that there is no TABOR refund according to the table just above line 35 on the DR 0104 form.

[ajs]

There is no rule saying a zero or negative AGI precludes a TABOR refund. The CO Form 104 instructions say this:

Line 35 TABOR State Sales Tax Refund
To be eligible for this refund:
• You must be a full-year Colorado resident;
• Your return must be postmarked or transmitted by October 15, 2025;
• In general, you must be 18 or older as of January 1, 2024. If you were under 18 as of January 1,
2024, you must either have a Colorado tax liability (line 2 must be greater than 0) or be claiming a
refund of Colorado wage withholding on a W-2;
• You must not have been convicted of a felony and incarcerated in a correctional facility operated
by or under contract with the Colorado Department of Corrections or Federal Bureau of Prisons
for 180 days or more during the year; and
• A deceased person must have met all applicable requirements as of the date of their death

---

Read carefully, the refund is only precluded based on zero tax due for under age 18.  Also the table you mentioned does not preclude a refund for negative AGI:

Incomes up to $53,000

$177

"UP TO" does not mean "0 up to".

In principle, the TABOR refund is based on all government revenue, not just income tax, also sales tax, so it isn't limited just to people who pay income tax -- even though in recent years it's now prorated according to reported income.

As it turns out WE don't care any more, because before filing my wife's brother's return, we adjusted one rental property which is now sitting empty indefinitely (long story) from rental to personal use partway through the year, resulting (correctly) in lower allowed deductions and thus a higher (positive) AGI and autofill of a TABOR refund. But I still think TT is wrong in this case.

At a meta-level, this kind of behavior hidden in many dusty corners of TT is one of the reasons I don't strongly recommend it to other people. We use it as a trusted expert on tax law; it does something funky; we can't find much about it on the web, and most of the time can't get any explanation from the program either, like in this case, "why are you leaving the TABOR refund amount blank, but still allowing us to fill it in without an override either?"

[BillM223]

You said, "Colorado online information in page 14 of the form 104 instructions clearly says that a negative AGI does not preclude TABOR refund." My point was that it does NOT so clearly state. 

I see your argument that an income of zero or less does not preclude the TABOR credit, unless you are less than 18. And, in fact, I have found a State of Colorado video that shows that you can file a return with zero federal income on the state's website, and this return generates a TABOR credit of $177, even on zero income. Please see TABOR-FAQs, and go down to "How do I claim a TABOR refund while filing a Zero Income return?"

As you can imagine, we in the Community do not have access to all the information that the product managers and software engineers have about the state tax code (i.e., if the product manager has asked the state for clarification on something). I think it odd that they went to the effort to make a video on this subject yet did not add this somewhat obvious question to the FAQ. 

So I will pass this example on to the group that researches such things to see what they have to say, and perhaps create an update to the return.

Writing to you from just outside one of the dusty corners...

[adville]

Hi @BillM223,

I've discovered an issue with TurboTax's handling of the Colorado state returns that may be related to the issue AJS reported, so you may want to pass it along with AJS' example. In my situation, I am preparing a return for my teenage child, as follows:

• Age < 18
• Positive Federal AGI (1040 line 11) in the single-digit thousands of $
• $0 Federal taxable income (1040 line 15).  It would have been a negative number ($X) because AGI is < the standard deduction, but the instruction for line 15 says (and TT correctly calculates on the federal side) "If zero or less, enter -0-."
• There is state wage withholding on a W-2 for which the child will be claiming a refund, so, as quoted above, the sales tax refund will apply. See DR104 Book, page 14, instructions for line 35.

The issue I have found is with line 1 of the Colorado return, which is supposed to insert "Federal Taxable Income from your federal income tax form: 1040, 1040 SR, or 1040 SP line 15".

Instead of inserting $0 from 1040 line 15, it inserts the negative number ($X)--the amount by which the standard deduction was more than AGI.

This does not appear to affect the calculations--it still correctly shows the refund of all the state withholding, and still correctly shows the $177 TABOR State Sales Tax Refund. But I still don't want to file the return attesting to a number incorrectly transferred from the federal return.

Thanks!

[ajs]

Thanks for writing back again, and anything else you can add. Yeah I knew (although failed to state it) that in Colorado it's common advice to be sure to file a tax return even if your liability is zero, even if your taxable INCOME is zero, to get the TABOR refund.  That's why without any evidence explicitly saying so, I didn't think that a NEGATIVE AGI would disqualify anyone.

As for "I can imagine" how you don't have access to the product developers and maintainers, unfortunately I can related because my career was also doing (software) development for a large company with all associated organization bureaucracy etc. BUT when you post here, labeled as an employee -- I/we assume you are a public face of the company and SHOULD be able to connect with those experts as needed. I certainly spent time filing internal defect reports, chasing down present package owners who could resolve my customers' issues, etc.