Be careful with TurboTax if you have retirement income. When I tried to file my tax return on TurboTax, they required me to update the software, and once I did what had been a refund of over $1500 became a tax due of over $6700. When I tried going through the return to fix the problem, I found that the update has problems with Minimum Required Distributions on retirement accounts, and does not allow me to enter my wife’s pension as not subject to MRD. Their computer chat acknowledged they have a problem and does not have an estimate of when it will be fixed. I don’t know if there are other problems, but I’m going to wait a while before trying it again. This bug was not present a week or two ago.
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Well, Intuit is on my shortlist of companies I won’t deal with under any circumstances. I’ve been using H&R Block the last couple years. It’s OK, no accounting problems, but updating the program from inside the program has never worked right. I have to go to their website and manually download and run the updater.
I’ve been using Quicken and TurboTax since they first started.
Don’t know if this problem exists this year yet but I have had outstanding service and support.
David
I had problems with H&R Block several years ago because they had difficulties with my rather complex tax return (rental property with depreciation, self-employment with office-in-home expenses, and mutual-fund investments that were messy to handle), so I switched to TurboTax, which did better. I’m not happy with either TurboTax or Quicken now, but I don’t see any alternatives that would be worth the tremendous effort of changing.
The biggest problem I have now with Quicken is the new system of classifying the type of purchase made by payments. However, that also affects the data provided on bank and credit card statements because many vendors don’t identify their products properly. For example, charges from the small pharmacy we deal with have been marked as being payments for mobile phone service, and a Dr. Kaplan was listed as providing education service. So you can’t trust what your bank or credit card company lists as your payments are for.
I usually download TurboTax and start entering information to get an estimate of my taxes before the end of the year. (Just in case there is something I need to adjust before the end of the year.)
This year TurboTax was practically non-functional until updates at the end of January. I could not enter property tax I had paid and there were other anomalies. I cancelled my subscription for early availability of TurboTax, because I can’t use it that way any more.
Finally my tax return was done. I waited a few days to file it, anticipating another update or so that would correct any lingering bugs.
This week’s update arrived, I installed it, and the same thing happened to me: my refund went from positive to several thousand due!
This has been a bad year for TurboTax.
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Thanks for the warning Jeff! I have unable to replicate the problem, but there has been some discussion of it (one marked “solved”) on the TT Community website.
I found that discussion on the TurboTax community website and tried it. As of this noon, there is nothing new in the TurboTax to download since I downloaded the current version a few days ago. What they have done is to provide some badly-needed explanation for the somewhat cryptic instructions in the TurboTax software. That addressed one important problem – a place where you have to enter a 0 (zero) rather than leave a response blank.
However, it did not solve all of my problems. If you have multiple IRA accounts with minimum required distribution (MRD) requirements, the IRS lets you meet the requirements by taking all the money from a single account rather than taking the exact RMD from each of two or more accounts, which can be convenient if you have some money in fixed term investments. You have to enter in the “Total RMD for all other IRAS”, and when I went on to the next step, Turbotax I had not met the MRD requirement by exactly the total I had just entered. That looked suspicious, so I tried entering another number, and was told I had missed the MRD by exactly that number. So it had been programmed to use whatever number was entered as the total RMD for all other accounts as the amount by which you had missed the RMD requirement. That is a bug and needs to be fixed before I can file my return. I don’t know how common it is, but I doubt I’m the only person affected.
It’s TurboTax’s fault, although the IRS deserves a share for the convoluted rules of the tax code.
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I’ve used TEurbotax for several decades to make good estimates of taxes- but used an account for real filing. However this year (tax year 2024 ) version was so messwed up from day one I gave up even after loading most recent but late updates. So much so I will never use turbotax again
It would need severe upgrades and simplifications to even raise it to the fubar classification.
And to trust it for real to file or help my taxes- not in this universe. I’m not too sure what happened but spending several hours trying to figure out what errors it kept insisting- it deserves the trashbin and never to be used again. Back to my simple excel tracking- predictions
I had exactly the same error when I took all my RMDs from one account. Solved by dropping the cents from the total RMD required since the other entry didn’t provide cents.
That’s odd. When I pulled the cents out, it still claims I was short by the same amount in my RMD, which is wrong.
More here. (Un?)fortunately, I am still unable to reproduce the bug in my up-to-date Mac version of Quicken Deluxe 2024. The 1099-R for the account reports the distribution to the penny, and I entered it that way, checking “yes” to “entire gross applies to December 31 2024 RMD.” TT rounded it (down, in my case) to the dollar and transferred the rounded amount to lines A and B of the RMD excess accumulation worksheet. It also, as it has every year, transferred the rounded amount for this income and all my other reported income (pension, dividends, CG, etc.) to my 1040. So all seems correct and as usual.
Haven’t tried to file yet and won’t until April because I owe them $$ this year, but TT finds no errors and alleges they’re “ready to file.”
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TurboTax is a mediocre program with longstanding bugs that never get fixed (are you listening Apple?) but unfortunately I have to use it. I have to submit federal form 1065 for a partnership pass through entity and TurboTax is the only option that will directly import my Quickbooks data. In the company info section there is a field for “country where entity was formed”. It is a pull down menu but, wait for it, United States is not an available option. Huh? Leaving this blank makes the state e-file fail. Year after year.
TuboTax’s response?
David
I haven’t received anything from TurboTax yet. I suspect a lot of the problems come from poor or absent instructions that confuse users so we enter the wrong information. Another problem is the complexity of the tax code, which politicians further muddle all the time. I did tax returns one spring when I was a hungry grad student long ago, and I was able to do returns after reading a 150-200 page notebook of instructions. Now tax returns are far more complex and confusing, and it’s only getting worse.
Interesting. I have a laddering IRA at a credit union. Basically it split my IRA into 5 year increments with each renewing in succeeding years, so I installed the update to test it. Sure enough what had been a small refund bloomed into a several hundred dollar tax due! Fortunately I had filed a month ago and received my refund 2.5 weeks ago! One more reason to repeal the 16th Amendment.
Same here…went from an expected refund to owing $1,800!!! Deleted my account and used FreeTaxUSA and am getting the refund I expected.
I spent some time switching between the Turbotax EasyStep routine designed for us to use and the “Forms” view that shows much more of what’s going on. There’s a form 5329 covering “Additional taxes on qualified plans” including IRAs, and the problem I hit is in Part IX where the “Smart Worksheet” for Additional Retirement Accounts is not able to compute Required Minimum Distributions correctly if you don’t pay the RMDs from all accounts, even if you pay the correct total from (in my case) one of them, which the IRS allows. I have not had time yet to try to get TurboTax to fix the problem.
I’m retired and the situation you describe is exactly mine: I have multiple IRA accounts that are subject to an RMD. I guess I’ll have to wait before I can file my taxes. Many thanks for revealing this problem!
Regarding the initial post. If you enter the retirement account as an IRA then requiring RMD be entered is correct.
If you enter it purely as a pension that whould not happen. Please check that detail.
There is no perfect tax reporting program because there is too much complexity in the IRS rules – nothing is linear anymore - everything has multiple contingencies and variables. (I have done my own returns for decades - this is lay filer perspective.)
I hit a problem last year on TT with a K-1, K-3 report and “upgraded” to a commercial program geared for professional tax preparers. It was almost impenetrable. The solution was just to learn more about the K-1 system and its expectations and then it worked on TT.
Bob
This may be too late for this tax filing year but something TT users can potentially do without relying (hoping) on Intuit bug fixes going forward is:
- Get the full set of transcripts for your IRS account (available both online and via USPS).
- Review the transcripts to see if the IRS verfies RMD amounts and withdrawals by 1099-issuer or as a lump sum.
- If lump sum, it might not make a difference to the IRS if RMDs are all attributed to a single 1099-issuer.
I’m not a RMD-person but I have a similar issue with taking the Foreign Tax Credit. If a 1099-issuer reports foreign taxes paid on non-US stocks by individual country, TT wants each foreign tax credit linked to its own 1099. Obviously, if multiple stocks are held at the same institution, there is only one 1099.
So, since all the IRS verifies is the total sum of dividends and taxes each year on my tax return, I’ve had to create separate “1099s” by country for TT input purposes for many years. This allows TT to generate the forms required to take the Foreign Tax Credit but on my Schedule B it looks like I received many more 1099s than I actually did. To the best of my knowledge, the IRS doesn’t care about this workaround because it works with totals for dividends and foreign taxes paid.
Note: I am not a tax professional.