mw11373
Level 2

I'm happy to give details.  MFJ couple - retired, ages 67 (H) and 65 (W).

Income consists of (ballpark numbers)

Investment Income - $17,000
IRA Distribution (H) - $44,000 (If it matters - this distribution was converted to a Roth)
Pension (W) - $23,000
Social Security (Both) - Gross $31,225 / 85% = $26,541 (this is correct)
Self Employment Income - $3,000 for H
AGI = $110,541

With these elements, 85% of their Social Security Benefits are considered taxable.  This is appropriate.

I add a $2,722 Traditional IRA contribution for the husband (based on the $3,000 of SE Income).

Adding the IRA contribution generates worksheets from Publication 590-A. Appendix B. These worksheets calculate the following:

1 - The amount of IRA contribution that is deductible (for taxpayers who receive Social Security Benefits and make IRA contributions).  This schedule  indicates that the entire $2,788 is deductible.  I'm good with this.

2 - Computation of Taxable Social Security Benefits (for taxpayers who receive Social Security Benefits and take a Traditional IRA deduction).  In this schedule, Proseries is excluding the IRA distributions from the calculation of Modified AGI.  As a result, only 64% of the client's Social Security Income is considered taxable.  No where in the IRS instructions for the worksheet does it say to exclude IRA distributions from the calculation of Modified Adjusted Gross Income for purposes of calculating the taxable amount of Social Security Benefits.  As a result, I think Proseries is undercalculating their Federal Taxes.

I really do appreciate your responses. It just seems like such an obscure situation.

Thank you

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