Turbo Tax 2022 Social Security Calculation

[FTERoo]

I have received and paid an IRS Tax due and Penalty for this error, which has been referenced elsewhere.

1. Turbo Tax 2022 incorrectly calculated Taxable social security Form 1040 Line 6b
   
   1. This error has been noted, and as far as I know, not answered in a post by Kestrel061, Dated May8, 2023.
2. With an IRS agent on a call, I reviewed the worksheet calculation from Publication 915, Cat. No. 15320P, pg 16: Worksheet 1. Figuring Your Taxable Benefits
   1. On my filed return, I offset a calculated liability with the necessary IRA contribution to force my tax liability to $0 on Form 1040 Line 37
   2. A manual calculation performed on the IRS worksheet results in the liability assessed by the IRS.

THEREFORE: This error in calculation resulted in a tax liability that I would otherwise NOT have had.

What is my recourse?

[rjs]

See the following FAQs.

What is the TurboTax 100% Accurate Calculation Guarantee?

How do I submit a claim under the TurboTax 100% Accurate Calculation Guarantee or 100% Accurate, Exp...

[dmertz · Accepted solution]

TurboTax correctly calculates the amount that should be on line 6b based on the amount of your Social Security income and other income.  If the amount on line 6a is correct but the IRS disagrees with the amount on line 6b, it means that the IRS disagrees with the amount of some other item of income that you reported on your tax return, perhaps not recognizing the use of Worksheet 1-1 from IRS Pub 590-B for determining the taxable amount of your traditional IRA distribution.  The effect on line 6b is only a side-effect.  The IRS refers to any difference like this as a "calculation error."  It doesn't mean that the line-6b disagreement was the result of the line-6b calculation itself being done improperly by TurboTax.

If the IRS legitimately disallowed the use of Worksheet 1-1 from IRS Pub 590-B and TurboTax used this worksheet, you would have a reasonable claim under TurboTax's accuracy guarantee.  TurboTax is rather liberal in the use of this worksheet, in my opinion.

[FTERoo]

After calling the IRS and confirming their calculation of the amount underpaid/due,  and then BACK CALCULATING the amount difference in income ($4k), I called Turbotax.

One of their support people (Donita, WHO WAS FREAKING AWESOME!), found the difference in the previous year lump-sum received worksheet.

The amount calculated by the IRS is there, along with the adjusted amount determined by Turbotax. I'm on the phone with the IRS right now.

This was my first interaction with Turbotax support, and I was frankly expecting a fight on my hands. As I stated above, the rep:Donita, was stellar. She understood the issue and wasted no time tracking through the forms to find the location of the calculation difference.

Surprised and pleased. IRS is going to have to cut me a refund. 😉

[dmertz]

If 2022 TurboTax used the lump-sum election method to calculate the taxable amount of your Social Security benefits, TurboTax would have marked the new-for-2022 checkbox on line 6c of Form 1040.  The IRS Automatic Under-Reporter system should have taken this into account.  (Perhaps the IRS was overlooking a lot of the "LSE" notations next to line 6a for this purpose on Forms 1040 prior to 2022.)

If you mailed a paper tax return the individual transcribing your tax return into the IRS system could have missed the checkbox on line 6c.  Your tax return transcript, downloadable from the IRS, would reflect this omission if that's the case.  Even if you e-filed, if your tax return was examined for some other reason, the examiner could have overlooked the marking of this checkbox.  It's also possible that the IRS has an undisclosed policy of questioning the use of the LSE if it results in an amount being excluded from income greater than some threshold.

[FTERoo]

Continuing to chase this issue, and am consequently filing an amended return.

1. Received an IRS letter dated Sept 29 disallowing any change to the assessment amount.
2. Reworked the return to better clarify the details of the Lump Sum Election.
3. Also note that the Turbotax output as printed for Home & Business DOES NOT flag Line 6b as resulting from an LSE as IRS Form 915 instructs.
   1. Additionally, the LSE Checkbox on line 6c of the printed return is NOT CHECKED, even though the amount on 6b is the result of the Lump Sum Election.`

Small other issue: Cover page displays the correct amount due, but fails to display the $150.00 credit required to make the math work.

I'll report back.