Schedule 1, 2, 3 .....Turbotax Free (Not IRS Free File)

[STinGA]

Since Turbotax is not going to ba an offering for 2021 tax filing through IRS Tax Freedom file for free I have a question about my tax situation that involves a w-2 that I receive each year for imputed income. 

Last year (tax year 2020) the tax for the imputed income from the W-2 ended up showing up on Schedule 2, Additional Taxes. in Part II Other Taxes on line 8c, Instructions; enter code(s) UT ......

Was this possibly an error in the 2020 tax app or for tax year 2021 will a w-2 for imputed income be handled differently so that it doesn't show up on schedule 2 and require paying for use of Turbotax? 

[xmasbaby0]

If your income is less than $72,000 for 2021 there are still 8 other free software programs that will be available in January 2022 through the IRS free file program:

Use this IRS site for other ways to file for free

https://apps.irs.gov/app/freeFile/

[STinGA]

I know that, but the loss of continuity from year to year using the same software and not being able to import previous years return information is a pain. 

Perhaps some can answer the real question. Why does inputed income tax from W-2 end up on schedule 2.  That seems dumb.

[rjs]

What is the imputed income for? Is it for group-term life insurance over $50,000? Exactly how is the imputed income shown on your W-2? The code UT on Schedule 2 line 8c implies that there's an amount in box 12 of the W-2 with code M or N (or both). If so, the problem is that the W-2 is incorrect. Codes M and N are not supposed to be used for a current employee. They are only used for a W-2 issued to a former employee who still has life insurance coverage. The code M and N amounts are the Social Security and Medicare taxes on the imputed income. For a current employee, those taxes should be included in boxes 4 and 6 on the W-2.

Code M or N in box 12 of the W-2 requires Schedule 2 in your tax return. But if the W-2 was filled out correctly, box 12 would not have code M or N, and you would not need Schedule 2. So if the imputed income is for group-term life insurance while you were still employed by the company, the solution is to get your employer to fill out the W-2 correctly, without code M or N in box 12. Tell them to read the topic "Group-term life insurance" in the IRS instructions for Form W-2.

If the imputed income is for something else, and you don't have code M or N in box 12 of your W-2, tell us what the imputed income is for, what codes and amounts are in box 12 of your W-2, which boxes are checked on Schedule 2 line 8c on your 2020 tax return, and what codes are on the dotted line on line 8c.

[rjs]

Another possibility, that could also cause the UT on Schedule 2 line 8c, is that you mistakenly entered code A or B in box 12 instead of the actual code from the W-2. Sometimes people see the box number 12a and think that the "a" is the code, so they enter code A, or the same for box 12b and code B. The lower-case a or b after the 12 is part of the box number, not the code. Codes A and B in box 12 are for Social Security and Medicare taxes on tips, if the employer was unable to withhold those taxes. If you did not get tips, you should not have code A or B in box 12. If you mistakenly entered code A or B in box 12, you can eliminate the need for Schedule 2 by entering the correct code.

[STinGA]

Yes, it is for group-term life insurance over $50,000.  I am not a current employee. I am retired and the codes M & N appear to be recorded correctly and amounts calculated correctly according to IRS rules that are published. 

The real issue I have is that if these are reported as they were last year (although lower because of reduction annually of the insurance amount) it will end up showing on schedule 2nad that will disqualify me from being able file my taxes "free" with turbotax (which I have used for years and years). Other than the imputed income I have ZERO tax liability. 

So the question is, is there a way to report the imputed income amount and the taxes to be paid without it appearing on the schedule 2?  

I supose I could leave the imputed income w-2 out of the return and then file an amended return later to pay the tax on the imputed income?   I have done that by mistake in past years a couple of times but that was before the TT change to no do taxfiling for free if there was a schedule 1,2,3.  

This is the last year that I will have imputed income as the wonderful company that I worked for is dropping everyone whose age has reached 70 to total of  $15000 and there will no longer be imputed income since no longer will be above $50,000.  

I don't want to have to use another tax prep software for one year and then switch back to TurboTax because of this. Any ideas will be appreciated!

Thanks for your input so far!

[rjs]

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@STinGA wrote:

So the question is, is there a way to report the imputed income amount and the taxes to be paid without it appearing on the schedule 2?

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No. It has to be reported on Schedule 2. For 2021 it will be on line 13 of Schedule 2. There is a specific line for it, instead of checkboxes and codes on a multi-purpose line.

[STinGA]

Not the answer I want to hear, but thanks for the response!!

[rjs]

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@STinGA wrote:

I supose I could leave the imputed income w-2 out of the return and then file an amended return later to pay the tax on the imputed income?

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I don't think that will work. My understanding is that if something in an amended return requires a higher version than the original return, it will make you upgrade in order to complete the amended return. Free Edition will not let you enter something in an amended return that it would not have supported in the original return.

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@STinGA wrote:

I don't want to have to use another tax prep software for one year and then switch back to TurboTax because of this. Any ideas will be appreciated!

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The best idea I can think of is, for one year, pay for TurboTax Deluxe.

[STinGA]

Kinda seems like Intuit might be grasping for straws to try to increase profits! Kind of like they did with the Quicken product. Now that quicken is a standalone product and no longer an Intuit product is it get upgrade and the support is awesome. I wonder if Turbotax migt spinoff and be come a stndalone product and improve their "free" product to support more fixed income "poor" folks!! May have to go back to something like TaxAct.

[fanfare]

switching out of TurboTax.

If  filing for free is so important to you, type in the "Personal Info" again.

The amount of time you've spent examining this "problem" is more than the time it will take to enter the info.

amending later.

the amount in Box M,N may be so small that your tax is unchanged with or without that amount on Schedule 2 line 10.

This depends on which tax computation rule is used on your return.

but you won't be able to know that until you get upgraded.

You will have this issue every year going forward into the future.

There's other free tax software out there. any income level, even without the IRS Free File Program.

[rjs]

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@STinGA wrote:

Kinda seems like Intuit might be grasping for straws to try to increase profits!

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Grasping for straws? TurboTax is not under any obligation to let you use their products for free. It's not a charity. It's a commercial company that is in business to make money by selling software and services. They don't make any money by giving away their products. Offering a very restricted version of the product for free is a marketing strategy. They do it in the hope that you will buy something. It's like any other business that gives free samples as a way of introducing their product to potential new customers. When a food store gives you a free sample, they don't give you a full portion or a full meal. They give you a taste. If you want more, you have to buy something.