Iowa update 3/21/24 messed up 2022 federal refund reporting

[taxiowa]

All Iowa returns that are reporting a federal refund from 2022, which is about 75% of the returns are wrong as of the update this morning (3/21/24).  The federal refund amount from 2022 is showing up as double the amount on Line 14 of Iowa Schedule A.  This increases the Iowa taxable income by double the amount.  The real cause of this is coming from the federal tax worksheet Line Q showing a negative amount.  Iowa returns which are reporting federal owed from 2022 are not affected.

You can correct it by going into the Federal Tax Worksheet and deleting the amount on line Q if it is a negative amount equal to the amount above it below line F.  You also have to delete the amount below line R.  Returns that did owe federal tax last year and do not have a number on line A are not effected.  The update also changed all past returns that have not yet been e-filed.  So check all returns that have been printed but not filed before e-filing them.  @The_AntiTax_Man 

[The_AntiTax_Man]

@taxiowa  thanks for the heads up!

@IntuitGabi the Intuit programmers broke something that was working.  Can you tell us if and when this will be fixed?

[taxiowa]

Proseries did something tonight about 10:10.  They started rejecting all Iowa returns.  No explanation, but said there is an update next week that will happen before we can file anymore.  I filed 38 Thursday and 13 today at like 10:00 and they were not rejected.  I had fixed these already so I was not worried about any errors.  But the 10 I filed shortly after were rejected. So while I am happy Proseries listened to me; there will be a backlog of files to release next Thursday.  It was just luck I caught mistake before I filed any because almost every return is wrong.

But that brings us to the crux of the problem.  Does Intuit check the updates to see if any errors were created before sending updates.  I have an extra computer in back room that I could lend them.  So while this error was not easily spotted, my secretary could have found it if she had an hour to try different things and compared previous results on Iowa return.  It is pretty easy to compare a return filed Wednesday with one after update and see if refund or amount owed changed.  And if so what changed.

[The_AntiTax_Man]

@taxiowa  Product Quality Control in tax software has slowly and steadily declined over the past decade.  It is cheaper for the company to just release the software and let the users find the bugs in the code.  The users are the final quality control.

Ok, so the users find a bug.  There is no actual system in place to notify the company of the bug.  The company usually doesn't alert all of the users of the bug.  The company doesn't usually provide any updates about when the bug will be fixed, or a work around solution, or that an update to the fix the bug is in the most recent update.  The company doesn't usually tell the users when they decide they are not able or willing to fix the bug and you are on your own to find the work around that suits you.  Then, if they do release a software update that fixes the bug, the fix may very well change tax returns that have already been filed.  Or, it might change tax returns that you have already employed a work around on and after the update your work around is now making the returns compute incorrectly. 

So yeah, this is a big problem for the software users that has been steadily getting worse year by year.  You must constantly be on guard when an update comes through.  Did the current update change anything on the returns that were completed since the previous update, or worse yet, change something on returns that have already been e-filed successfully.

Iowa did change most of the Iowa tax laws and, of course, almost all of the Iowa tax forms.  Obviously it's a very large programming project.   But the program code should have been completed last summer/fall and the software should have been ready to roll in January.  Instead, the programmers seem to be writing the code in the middle of the tax filing season.  It's no wonder that the programmers have created new bugs during the filing season.      

FUBAR!

[IRonMaN]

I have one token Iowa return that I prepared Thursday.  I couldn’t figure out why they were paying Iowa tax until I saw the amount of federal refund.  I was thinking they had some kind of law that made Mn residents pay double for the privilege of crossing that state line.  I did eventually find that box to get rid of the double taxation without representation.

[IntuitGabi]

The unexpected behavior you have experienced regarding IA 1040, Sch 1, Line 14 calculation, has been fixed in an update scheduled to be released on 3/28/24. Thank you. 

[The_AntiTax_Man]

@IntuitGabi  the PS23 Iowa module does not appear to have been fixed. 

Was there a PS23 version update today yet? 

When was the most recent update for the PS23 Iowa Individual component?  I'm showing version 2023.3213.0.0 on my system.  Is this the version that was going to fix the Iowa problem? 

[taxiowa]

It is fixed.  Proseries just fixed in a weird way, but it is fixed.  So you should be able to file away.  And so far I have not noticed anything broken with the update.

[IRonMaN]

Thanks.  I had my one token Iowa return waiting to take the bus ride south.

[Flinders]

Would be super helpful if they could notify us when s#!t likes this happens!! There's a really cool feature that sends a notification to all users, right in the software!! Maybe they should use it!!!?????

[Flinders]

No it's not fixed, just did one late yesterday that I had to correct the lines on the federal worksheet for the right 2022 federal PAID amount to flow through to Iowa return.

[The_AntiTax_Man]

I concur with you @Flinders , the PS23 Iowa module "IA 1040 Schedule 1", line 18 "Federal tax paid for prior years", "Additional Federal Tax Paid for Prior Year (2022) Worksheet" is NOT computing correctly as of Thursday, March 28, 2024.

@IntuitGabi is this a swing and a miss on the PS23 Iowa correction?  Or, did a PS23 Iowa correction not make into the Thursday 3/28/24 update?

[Sharon7]

The issue is still not fixed. 1st the refund was doubling and now the paid amount is incorrect. I certainly wish they would notify us when rejects are going to happen and about problems. There's a nifty little alert option in the software that goes to everyone. Maybe we should contact customer service and let them know about the notification option, LOL?! (have to laugh so I don't stress out)  I would not have to try to figure out the problem and would save a huge amount of valuable time!

[IntuitGabi]

Thanks for all your feedback.

@Flinders @The_AntiTax_Man I may have misunderstood the report. I messaged you information on how to send us a file for review.

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[Flinders]

@IntuitGabi did you get my upload?

[taxiowa]

It is indeed fixed and everything flows to line 14 and line 18 correctly.  Not so much on the federal tax worksheet which is still wrong.  Did you read when I said they fixed it in a weird way?  Negative tax owed does not transfer, it just gets in the way of a nice looking worksheet.  And negative taxed owed on worksheet Line Q does not mean they owed last year.  You can obviously see that yourself when you look at last years return.

I did alert Intuit about 12:30 on last Thursday in the lounge and posted here about the problem little later.  Should they have stopped Iowa e-filing then?  Yes of course.

@IntuitGabi   They have fixed it and I hope they don't try changing now that it is fixed.  The worksheet just looks a little odd is all.  Do not have them try to re-fix it.

[Flinders]

@taxiowa I just did one this afternoon and it was wrong. 2022 return showed tax due of $266, but $444 of that was penalty for early withdraw on IRA. Therefore, it should have been a $178 refund included in 2023 Iowa income. Unfortunately, the software calculated $279 for the refund because of the split on line Q showing 101 for the spouse and -279 for the taxpayer...it did not net to -178, which is the correct answer!

[The_AntiTax_Man]

@taxiowa  This issue is not fixed if the taxpayer made a year 2022 4th quarter estimated federal tax payment in January of 2023 and then had an overpayment of 2022 federal tax on the completed 2022 Federal 1040 filed in 2023.  

In this case, the taxpayer has both a 2022 federal tax payment and a 2022 tax overpayment both occurring in 2023.

PS23 IA1040 is computing the 2022 overpayment received in 2023 correctly [and this solved your issue], but on the Additional Federal Tax Paid Year (2022) Worksheet [AFTPY22] it incorrectly reduces the 2022 tax paid in 2023 by the 2022 overpayment amount.  Then this incorrect amount on the worksheet flows onto the Iowa 1040 Schedule 1, line 18 Federal tax paid for prior years.  

@IntuitGabi   Please have the Intuit programmers fix the AFTPY22 Worksheet.  There should not be a negative 2022 federal overpayment amount received in 2023 showing up on this worksheet.

[taxiowa]

Of course that is an extreme unusual example.  I did not check in that particular instance.  Does it show refund of $279 refund and also $101 tax paid on line 18?  That is a good example of why the worksheet is not clear.  But that again is a once or twice a year example that you would have to check every year to make sure it flowed correct.  My point is everything flows correct if they owed or got refund in the usual manner except as @The_AntiTax_Man pointed out the Jan. 2022 federal estimate.

[The_AntiTax_Man]

@taxiowa  it is actually a common occurrence in my practice.   If Intuit is going to fix it, then fix it.  If not, I guess I will just have to keep on overriding the program error.   

[taxiowa]

It is common that taxpayers pay a penalty on early withdrawal?  That is what I was speaking of.  I did not try one with January estimated tax to see if that is correct.  but I keep correcting them as you because that is the 1 good thing about Intuit.  They allow overrides in almost all cases.

[Flinders]

@taxiowa It is not unusual and no it did not show $101 tax paid on line 18, only the refund of $279 on line 14. 

*edit* from irs.gov "Generally, early withdrawal from an Individual Retirement Account (IRA) prior to age 59½ is subject to being included in gross income plus a 10 percent additional tax penalty." Against my advice, I have many clients take money out early.