Social Security-The Turbo Tax software does not appear to be correctly calculating the taxable portion of social security for married filing jointly. Is there a solution?

[lbnoon]

I entered total Soc Sec from box 5 on the  SSA-1099. Completed the remainder of the income section. In the Federal Tax review, the total income used includes 100% of the Soc Sec income when it should be only 85% according to IRS publication 915-Worksheet 1 and using my other income show in Turbo Tax. Is there a solution?

[xmasbaby0]

TAX ON SOCIAL SECURITY

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2023 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

The tax laws for 2024 will change——for  tax year 2024 Missouri and Nebraska will no longer tax SS

[lbnoon]

Thank you for you kind and quick response, but this does not answer my question. 

My husband is full retirement age and draws the social security. He did not work so there is no reduction. We file married filing joint. IRS publication 915 states that the maximum portion of taxable income can be up to 85% of social security. Turbo Tax, on the Federal Review tab, has 100% of the social security included in my husband's taxable income. This is incorrect. Is there a solution or workaround in Turbo tax?

[VolvoGirl · Accepted solution]

If you are looking at a summary screen or review screen those show the full amount as income and lump a lot of stuff together. You need to check the actual 1040 form and make sure it's right. Before filing you can preview the 1040 or print the whole return
https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

Check 1040 line 6b for the taxable amount.  

[xmasbaby0 · Accepted solution]

Instead of the review page you need to be looking at the actual tax form.  That review page can confuse people.  What do you see on lines 6a and 6b of the Form 1040?

[lbnoon · Accepted solution]

You are correct. The actual form 1040 does show the correct amount at 85%.  It is confusing to look at that Federal Review tab and even when looking at the details on that Federal Review tab you do not see the correct amount from the soc sec calculation. 

Thank you for being patient with me and helping me ensure that the correct amount is being used.

[lbnoon]

Thank you. You are correct. The actual form 1040 does show the correct amount at 85%.  It is confusing to look at that Federal Review tab and even when looking at the details on that Federal Review tab you do not see the correct amount from the soc sec calculation. 

Thank you for being patient with me and helping me ensure that the correct amount is being used.

[mrbillyo]

Hello: I think the SS taxable portion is still being calculated incorrectly by TurboTax. The IRS Instructions for 2023 Form 1040/1040-SR provides a worksheet to calculate the taxable portion of Social Security payments (pg. 32 of 114 pages). The worksheet contains 18 lines that are used to come up with the proper amount to be shown on 1040 line 6b. In my case, allowing TurboTax to calculate the amount, it plugs in $3,869. Running the same numbers through the IRS worksheet, it shows it to be $6,196 (big difference). I think the program is looking for a simple solution when it is a multi-step ITTT calculation. I think I'm going to need to file a 1040-X to fix this problem. It also throws off my state return.  I look forward to hearing if my observation is correct.

[VolvoGirl]

You should not use the worksheet on the back of the SSA-1099.  It can be complicated to figure out even though it looks simple.  Turbo Tax figures it all out for you.

When you enter 1/2 of your ss on line B it is not being subtracted from anything.  It is being ADDED to ALL your other income to see if any of the ss will be taxable to you.

To see the Social Security Benefits Calculation Worksheet  in Turbo Tax Online version you would have to save your return with all the worksheets to your computer.   Or if you are using the Desktop CD/Download Software you can switch to Forms Mode (click Forms in the upper right) and click on SS in the list on the right side.

[mrbillyo]

Hello: Thank you for your quick reply to my dilemma, apologizes for my delayed response. After downloading all the appropriate TurboTax worksheets, I completely understand and agree with your response to my inquiry. However, the worsheets exposed the real underlying problem, the calculation of line 3 on the Social Security Benefits worksheet. Using the TurboTax generated 1040, the total I come up with on all the lines listed is $3,256 higher than the total entered on the worksheet. This difference is what is throwing off the end result on the taxable portion of my Social Security entry. I'm not sure where to go from here as I don't think any of the entries can be adjusted. I appreciate your help with this.

[xmasbaby0]

Did you use that worksheet on the back of the SSA1099 and enter amounts that you came up with instead of just entering the amounts exactly as shown on the SSA1099 to begin with?   You are supposed to just enter the amounts from the front side of the SSA1099----no calculations necessary for you to do.   The software takes care of it for you.

[VolvoGirl]

Line 3 that says combine lines 1z,2b,3b,4b,5b,7&8?  More than the SS worksheet on IRS page 32 or the Turbo Tax worksheet?  You probably should call in for that or we can try to have a moderator look at your info.  You can send them a sanitized copy of your return.  @xmasbaby0  Can you ask a moderator to look at this?  

[xmasbaby0]

@VolvoGirl I will post to the moderators.

[mrbillyo]

I understand and agree. I am not doing any other calculations other than comparing the line 3 amount on the Social Security worksheet with the total of the numbers used from the 1040. The amount entered by TurboTax on line 3 is $693 lower than just the 1099-INT and 1099-DIV as reported by Schwab to the IRS. Lines 4b and 5b represent another $2,565 in taxable income that is not being included. I got tripped up once before when the IRS sent me an inquiry when one line on Schedule B reported by Schwab to the IRS differed from my entry on my 1040. I'm just trying to avoid another "surprise letter".

[rjs]

@mrbillyo 

You cannot compare the Social Security Benefits Worksheet in TurboTax to the worksheet in the IRS instructions. Some of the lines are different because they work differently in the way they handle certain less-common situations.

In particular, you cannot compare line 3 on the two worksheets. Line 3 on the TurboTax worksheet includes Form 1040 line 2a. Line 3 on the IRS worksheet does not include line 2a.

Before you go any further, read the Exception in the instructions for Lines 6a and 6b in the center column on page 30 of the Form 1040 instructions. If any of the situations listed under "Exception" apply to you, you cannot use the Social Security Benefits Worksheet in the Form 1040 instructions. Instead, you have to use a worksheet in either IRS Publication 590-A or IRS Publication 915. TurboTax incorporates some of the Exception conditions into its worksheet, which is one reason that it differs from the worksheet in the Form 1040 instructions.

Do any of the Exception conditions in the IRS instructions apply to you?

Also, please clarify whether you are using TurboTax Online or the CD/Download TurboTax software.