Computation of Modified AGI for SS recipients who contribute to a traditional IRA

[meinfeldt]

I filed my 2019 personal tax returns in the middle of April, 2020.  I recently accessed my tax file and noticed that my federal refund amount listed per the program was different from what I had received after e-filing my fed and state income tax returns.

In looking over things...it appeared that the amount on Line 1 of Worksheet 1 (Computation of Modified AGI) of the "Social Security Recipients Who Contribute to a Traditional IRA Worksheet" was different from the amount shown on the tax return schedules that I had printed out when I e-filed my tax returns.  Has anyone else had a similar situation?

Is this a program error that has not been reported?

The bottom line is that the amount of my taxable SS is substantially understated per the current program parameters.

I hope someone can shed some light on this that makes sense to me.

[George4Tacks]

The program is updated multiple times during the year and what is corrected is not published. It really is up to the preparer to check items like this. I am guessing you are self employed, possibly have SE health insurance and maybe a pension plan deduction. This makes for multiple places for the program to screw up. Here is a link to the IRS calculator. Try it to see if what is in the program now is correct. https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

OR use the worksheet in https://www.irs.gov/pub/irs-pdf/p915.pdf

[Just-Lisa-Now-]

I cant think of any of my clients off the top of my head that collect SS benefits and also contribute to an IRA, so I dont have anyone I can spot check for you, sorry.

[Terry53029]

I did a simple test return (ProSeries Pro 2019) Single, 63, w2 wages $65000, no 401, SS $35000. The program filled out the worksheet for "SS recipients who contribute to a traditional IRA". Although the program came up with the correct answer ( $29750 ) for taxable SS the IRS instructions say this client would not use this worksheet. the instructions from pub 590-A below: As you can see this client is not covered at work, so it should not be used. Maybe @IntuitBettyJo will check further for us.

Social Security Recipients

Instead of using Table 1-2 or Table 1-3 and Worksheet 1-2, complete the worksheets in Appendix B of this publication if, for the year, all of the following apply.

• You received social security benefits.
• You received taxable compensation.
• Contributions were made to your traditional IRA.
• You or your spouse were covered by an employer retirement plan.

[meinfeldt]

Here are some additional facts concerning the incorrect calculation of Social Security benefts from my initial post:

husband medicare age / wife younger

filing status joint

husband and wife each have small business so maximum SEP contributions made for each/ net earnings enough for cover maximum IRA contributions

self employed health deduction on husband's business

wife has ObamaCare high deductible plan so maximum HSA contribution made for her coverage.

both husband and wife each qualify for maximum IRA contribution and they are made

husband receives SS benefits

husband receives IRA distributions / fully taxable / no IRA basis

When I remove the IRA contribution for husband....the calculation for taxable SS benefits appears correct...when I add it back...the amount of the IRA distribution isn't included in the modified adjusted gross income on the special worksheet which results in an understatement of taxable SS benefits.

I hope someone can duplicate my observation.  I think I might have found a bug in the program.  Or maybe I am overlooking something???  or maybe I am getting too old for this business:-)

[George4Tacks]

Contact support! Our share all the numbers, so we can try to replicated, but best choice CONTACT SUPPORT!
This is a user group, NOT SUPPORT.

[qbteachmt]

There is no reason to start this same topic yet again; you are reaching the same peer users that are already helping here. If you have an issue with the Program, the peer end users are not going to be able to change it for you.

[Terry53029]

@meinfeldt  if you click on Appendix B  in my previous post, it will take you to the worksheet in pub 590-A, and you can fill out by hand. Let us know if it comes up with same answer as ProSeries.

Thanks Terry