TurboTax results in Alberta residents paying too much tax

[RJSLGS]

Case ID# [phone number removed] (You say it is resolved but it is not)

 TurboTax 2023 Results in Alberta Residents Paying Unneeded Tax

I am a retired Chartered Professional Accountant who specialized in taxation. I use TurboTax software to prepare tax returns for me and my wife. I wish to point out a deficiency in your 2023 software that results in Alberta residents paying more tax than needed.

Prior to 2023, it was advantageous to claim all charitable donations on one return rather than splitting them up between spouses. This was because the federal and Alberta donation tax credits on the first $200 of donations were lower than for donations above $200. For federal taxes, the credit for the first $200 is 15% and 29% for donations above $200. The credit for Alberta taxes on the first $200 was 10% and 21% for donations over $200.

However, in 2023 that has changed for Alberta residents. The Alberta tax credit on the first $200 of donations was increased to 60% versus 21% for donations over $200. This means an Alberta couple with charitable donations should make sure each person claims at least $200 of donations to minimize their taxes. Having each spouse claim at least $200 of donations will reduce their combined taxes by $50 versus if one of them claims all of the donations. Their Alberta taxes will go down by $78 = $200 x (.60 - .21) while their federal taxes will go up by $28 = $200 x (.15 - .29), for a net tax reduction of $50.

Your software does not permit splitting the donations claim between spouses unless each return is completed separately which is not feasible if one wishes to take advantage of pension income splitting, maximizing medical expense claims etc.

This deficiency should be corrected as you are making each Alberta couple with charitable donations overpay their 2023 taxes by $50. This despite your claims of “Taxes Done Right” and Maximum Refund Guaranteed.”

When I spoke to an agent on February 29, 2024 regarding my case, she did not understand the issue. So I requested that a more senior person contact me so I could explain it in detail. However, TurboTax sent me an email (to which one cannot respond) saying they have closed my case # [phone number removed] even though no one has called me and the issue is still unresolved. I phoned in again today, March 1, 2024,  and spoke with Victor, who was very helpful, and he  helped me access the community site to post about the deficiency.

I am requesting that a more senior person from the technical team call me to discuss this.

[TurboTaxBrenda]

Can you please clarify if you are using TurboTax Online or TurboTax CD/Download? We will try to replicate your issue. Meanwhile we will put a callback in for you.  

Thank you for choosing TurboTax.

[RJSLGS]

I am using TurboTax 2023 Home &Business download on my PC. It does not allow both spouses to each make a claim for some donations so as to use the 60% Alberta tax credit on the first $200 of donations per taxpayer. The program says donations cannot be split

[TurboTaxSusan · Accepted solution]

Yes, if you are using forms, TurboTax CD/Download defaults to claiming all the donations on one return. However, you can over-ride the line that says "Amount claimed by your spouse or partner" on one of the spouses DON worksheet. This is one of the rare occasions where overriding will not stop you from NETFILEing. If you use EasyStep mode, it will actually ask you if you want to split the donations, and make the over-ride on the DON worksheet for you.

[RJSLGS]

Thanks Susan! That worked. However, you might want to update your software help feature which gives conflicting and erroneous information.

When I searched in help for "split donations" it brings up the response below which indicates that you cannot split donations with your spouse unless you do the returns separately. You have shown this to be false.

"If you are preparing your return together with your spouse, you cannot split charitable donations between you. If you prepare your returns individually, you can each claim your charitable donations on your own return. However, when you prepare your returns individually, you might miss out on other tax credits that the software calculates when you prepare a coupled return."

The above statement is then refuted as the help goes on to say you can split donations with an override but then cannot NETFILE (see below). Again you have shown  the last part of this statement to be false.

"To split charitable donations between spouses do the following:

1. Determine which taxpayer will perform the override.

   The taxpayer who performs the override on their tax return cannot use NETFILE."

Had the help feature contained correct information and the procedure for splitting donations, there would have been no need for me to contact TurboTax. Perhaps the help should also indicate where in the software (i.e. form and line item) to do the override.

Again thank you very much for your help. I will make a note of the procedure for splitting donations for future years.

[TurboTaxSusan]

I have passed on your comments & suggestions to our product development team.

Thank you for your input.