2018 state tax refund wks calculations

[dsacpa]

Is there a bug with the 2018 Individual ProSeries program calculations of taxable State tax refunds from 2017 received in 2018?  My program (fully updated as of 2/6/19) reflects the refund as non-taxable when I think it should be taxable. Part II, Line 5 is showing $-0- when on my 2017 Sched A Line 5 reflected $15,608 of State Income Taxes paid and deducted.  Is there a problem with the program or am I not reading something correctly?

[garman22 · Accepted solution]

This issue was fixed several weeks ago. If you had transferred your files prior to fix, you would need to delete and re-transfer your clients. If you've worked on any clients prior, you'll need to re-transfer the ones you have not. Either that or manually make change on the worksheet.

[IntuitCharlene]

Development is looking into this issue. 

If the Income Taxes box is not checked on Line C of the State and Local Income Tax Refund Worksheet and it should have been then you would want to check that. 

If you are sure the full prior year refund should be taxable this year you can skip making the manual adjustment and just check the box below line 4 for "Use this worksheet to complete taxable refund amount? - If no, skip this Smart Worksheet. Total refund from Line 1 column (b) will be reported as income." 

[TaxPrep99]

Charlene--so what did "Development" determine when they looked into this issue?

This has caused a major problem for tax preparers and has harmed our clients who have had returns filed with erroneous state tax refund information (tax refunds that should have been taxable and were not reported as taxable).  How can we log a complaint with Intuit as to how this was handled and who will be paying our clients interest and penalty that may be charged when we have to amend returns to report this income that Proseries erroneously  missed?

[garman22]

PS came out with this fix back in January. I doubt they are liable here.

[IRonMaN]

None of my clients were harmed.  None of Garman's clients were harmed.  Your clients would not have been harmed if you did some due diligence and reviewed the returns before you filed them.  Intuit had a bug in the software and issued an alert early on to preparers about the issue.  It seems to be a natural human tendency to try to blame everyone else for our own failures.  Once in awhile we have to look in the mirror and admit that the guy you are looking at is to blame.  

[garman22]

Correct....I have a check list of sorts which I use when I prep/data entry returns. I usually catch all my errors.

[TaxPrep99]

So exactly when was the alert issued because I went back to beginning of January and found no alert.

[taxiowa]

I think it was end of November.  Maybe 26th of November 2018.

[TaxPrep99]

Thank you. If back to November I hadn't even purchased the program until end of December.  

[taxiowa]

Darn, so you missed alert then.  Next best thing is checking in here to hear about complaints and errors in program.  Because there had to be 25-30 mentions of this problem in January from others who missed alert.  I would explain to clients that it was something you could have caught but usually program carries over every other year correctly so you missed the program error.

[abctax55]

AND pay the related penalties (the interest is debatable...) because YOU didn't recognize the issue when finalizing the returns.  The software is just a tool; I verify every line on the returns I prepare.

[TaxPrep99]

Thank you taxiowa. I really appreciate your comments and suggestions. I have been using the program for many years and I am really good about watching for alerts and feel I am very diligent.  I don't usually go to this site but will watch in the future.  I closely monitor the alerts in the program itself. With all the tax changes that have occurred this year it has been a difficult year. I still feel that Intuit should have used different avenues to report this issue due to its severity.

[TaxPrep99]

As do I abctax55 and I did notice the state tax refunds were not being taxed. What I failed to notice was the wrong box was checked. One would hope that this avenue of communication would not be used as a slamming session.

[abctax55]

I agree...and I don't think Intuit should be slammed

[TaxPrep99]

Whether you agree with me or not I strongly feel that the communication from Intuit was lacking on this subject. All the information I was able to obtain on the issue was from tax preparers. I did not obtain the software until end of December/beginning of January so received no alert on the issue. I will be contacting Inuit directly.

[Just-Lisa-Now-]

I agree, they should have put out an alert in January once it was fixed.  I only transfer clients in as they arrive for their appointment, so I didn't have any issues with this...I didn't start preparing returns until mid January...but if I hadn't seen the reports of it here in the message board, I may not have noticed at first, especially with the new forms and how difficult it is to see everything spread out onto so many pages....was SO much easier when everything was right on the front page of the 1040.

[IRonMaN]

Nobody reads alerts saying things are broken so who is going to read alerts saying that things are fixed?

[rbynaker]

"who will be paying our clients interest and penalty that may be charged when we have to amend returns to report this income that Proseries erroneously  missed?"

I'd think that would be the person whose signature is at the bottom of the 1040/8879.

That said, I absolutely agree that the Intuit communication was sorely lacking on this.  The November Alert said it would be fixed in December but to my recollection this was not fixed until January.  I don't know when it was fixed because there was no Alert informing folks 1) that it was fixed and 2) the steps they would need to take to ameliorate the problem.

It should not have happened to begin with.  Somehow Intuit has a nasty habit of breaking things that worked perfectly well in prior years.  Hey, stuff happens.  But they're a big enough company that they should have a well-staffed QC department to keep the stuff that happens behind closed doors rather than releasing it to their customers.  They were clearly aware of the problem in November, yet it took them well over a month to fix it.

The only "fix" was to the transfer-from-prior-year process, nothing was done regarding data files that had already been transferred.  While doing so certainly would have been difficult (arguably impossible under the current programming), it would not have been difficult to add a diagnostic (if transfer date < 1/xx/19 AND state refund wks box C2 is checked then trigger diagnostic warning).  Another alternative, there are already at least 3 check boxes I have to check on clients *every* year to "verify" that the information transferred over correctly.  Direct deposit info, ID info and the state ID number on every W-2 and 1099-R.  Those checkboxes are mandatory and flag a red error if they are not checked.  So they could have easily added a checkbox after the fact for the preparer to verify that the state tax refund transferred correctly.

Rick

[Just-Lisa-Now-]

:+1:

[abctax55]

I 100% agree Rick.....Intuit's communication skills are marginal.
That, however, does NOT absolve the tax preparer of his/her responsibility for getting the numbers correct.