Question

IRS calculates taxable Social Security benefits differently from TurboTax

Forum|Forum|1 year ago
July 20, 2024
5 replies
0 views

I just got a letter from the IRS stating that my taxable Social Security benefits are $8K higher than what TurboTax calculated for 2022. There is a BUG in the TT software and I will pay penalty and interest for TT mistake. So I used the TT worksheet and found out the IRS is correct. Then I used the worksheet for 2023 and guess what, TT calculated the taxable portion of SS incorrectly lower again. I'll get another letter from the IRS and will pay more penalties and interest. What is my recourse here. Obviously this is affecting millions of TT users.

TurboTax Premier Online

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xmasbaby0

TurboTax provides do-it-yourself tax software. TurboTax guarantees the calculations done by its software. The information entered into that software is data entered by you, the user. TurboTax cannot and does not check that information against any outside sources, so TT cannot know if you entered your information completely or correctly. It is up to you to enter all of your information correctly and completely, and to check your tax return before you file it. If you forget to enter some income, or enter it incorrectly, enter it in the wrong place, etc. then you may end up owing additional tax to the IRS and/or state. TurboTax does not pay the additional tax you owe. If TurboTax’s calculations were incorrect, and you owe penalties and/or interest, then TT will pay the penalties and interest. The tax due is always owed by you, and must be paid by you.

If you need to enter a claim for the accuracy guarantee:

https://ttlc.intuit.com/turbotax-support/en-us/help-article/intuit-account-billing/submit-claim-turb...

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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TomD8

"Obviously this is affecting millions of TT users."

But if that were so, this forum would (presumably) have been flooded with similar questions, which it was not.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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TurtleTooAuthor

I just got the IRS letter yesterday. Wait until millions get the same letter and react to the TuboTax software bug.

DoninGA

@TurtleToo

If this was really an issue, it would have generated tens of thousands of complaints on this forum and others. Since it has not then the reply by @xmasbaby0 is accurate.

Note - I receive SS benefits and the taxable portion of my benefits from tax years 2010 through 2023 using TurboTax has always been correct.

SteamTrain

Unless you filed really early in the season (i.e. anytime in January) there was unlikely to be a software error for that calculation.

As a wild guess...The one thing I can think of that could have been missed...or mis-entered by you into the software,.....that would be your tax-exempt bond interest. Those $$ do figure into the calculation.

Check that the total of all your box 8$$ (minus box 13) in all 1099-INT, plus all box 12 in all your 1099-DIV forms ...make sure that total adds up to what you see in line 2a of your form 1040. If line 2a on your 1040 is significantly lower than your manually-totaled amount, then it's most likely you didn't enter all of your tax exempt $$ when you originally filed.

(I've heard that there can be $$ from forms K-1 too with tax exempt $$, but I'm not familiar with that form)

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

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TurtleTooAuthor

I have filled in the SS Benefits Worksheet for both 2022 and 2023. My results of taxable SS benefits comes in much higher than TT calculates (if I use "total income" on line 3 of the worksheet) and is close to what the IRS claims the taxable amount should be. If, however, I use AGI on line 3 then my manual calculations using the worksheet are much closer to what TT calculates. I'd love to tell the IRS that TT is correct and the IRS is wrong. Any thoughts on using total income vs AGI on line 3 of the worksheet?

fanfare

BUT, the worksheet Line 3 calls for total income Line 9, not AGI line 11.

@TurtleToo

VolvoGirl

Are you using the actual Turbo Tax Social Security worksheet in your return? To see the Social Security Benefits Calculation Worksheet in Turbo Tax Online version you would have to save your return with all the worksheets to your computer. Or if you are using the Desktop CD/Download Software you can switch to Forms Mode (click Forms in the upper right) and click on SS in the list on the left side.

Then are you using the IRS Pub. 915 on Social Security. There is a blank worksheet on page 16

https://www.irs.gov/pub/irs-pdf/p915.pdf

SteamTrain

Sheesh...it's getting difficult to determine which SS worksheet each person is referring to.

The IRS SS worksheet? or the TTX SS worksheet. The values in the various lines can be different

e.g.

a) The IRS SS worksheet , line 3 does not include the 1040 line 2a value....they add that in line 4 of the IRS SS Worksheet.

b) The TTX SS worksheet includes the value of line 2a of the form 1040 in the line 3 total.

________

The TTX SS worksheet also includes or subtracts some other values not immediately apparent when using the IRS SS worksheet.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

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alex 4

I also received a letter from the IRS for underpayment of my social security taxes. The glitch in the TT software combined my wife's income as mine and as a result capped the social security taxes and underestimated my tax liability. The glitch is present in both the 2022 and the 2023 software. TT's reply is that i made the mistake of not properly identifying my wife income as hers but I've been doing my taxes for the past 40 years and never had that issue and I know for a fact that when I reported my spouse's income as hers and not mine. TT is trying to avoid this liability by blaming it on the user when in fact it is a software error that should have been admitted and not denied to avoid paying interest and penalties assessed by the IRS. I will never ever use their software again as they caused me more distress and i'm pretty sure millions of others similar to my situation.

VolvoGirl

@alex 4 I think the IRS is saying you claimed paid excess Social Security tax. Check 1040 Schedule 3 line 11 which goes to 1040 line 31. Do you have an amount there? That will happen if you enter both spouses W2s under the same person. You only get excess SS back if one person had more than 1 employer and those employers took out more than the max. For 2023 the max for Social Security is $9,932.40 on $160,200 of wages (160,200 x 6.2%).

THEN when you do 2024 next year, if you transfer over from 2023 you should delete ALL the W2s and re-enter them from scratch making sure to assign them to the right spouse.

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TejasKR

I believe this is the same bug I noticed that TurboTax has been ignoring for some time, obviously.

When I did the online tax form, I assure you, there was NO checkbox for my spouse where I would state they had *not* lived in one of the half-dozen countries which would exclude the Social Security income from being taxed in the US. Yet, that button was there and checked when I reviewed the form after hearing from the IRS. Further, in the personal info data collection, TurboTax asked if we lived in our current state and both myself and my spouse were marked as having lived in our current state in the USA for the entire year. Yet the review failed to flag a discrepancy, and so an incorrect return was submitted. This is not a data entry error, IMO, because it was not even asked in the data collection period for 2024 returns or before.

Feeling a little PO'd.