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Turbo Tax strangeness
Old 03-18-2010, 10:34 AM   #1
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Turbo Tax strangeness

I am having a hard time understanding Turbo Tax. First, a little background. DW and I have used an accountant for years because DW partenership income was complicated with multiple states involved. Starting in 2010 DW is semi-retired. She will remain on the firm's rolls with a $29K COLAd income and in return she will do some business development for the firm and will not practice law elsewhere. In the past, we filed quarterlies but now I have increased my withholding to accomodate my pension, her annual $29K, plus anticipated dividends/CGs. I set the initial withholding rate based on guestimates and the tax tables for 2009. Now I am attempting to fine tune withholding using Turbo Tax by entering anticipated 2010 earnings into 2009 turbo tax to see what next year's earnings would be based on this year's tax situation.

Here is the problem. Since she is still partner, DW has to contribute $4K of her $29K to a retirement plan (401K like). The retirement amount appears as a deduction in block 13 of her K-1 form. When I entered all of our anticipated earnings in TT, including the $4K deduction in box 13, TT seemed to end up with too high a taxable income. And in its summary of our situation I couldn't see anything that indicated that it took into account the $4K. I re-ran TT using $25K as DWs total income (instead of $29K) and removed the $4K entry for box 13. Now TT returns a taxable amount $4k lower - like I would have expected.

Does anyone else use K1s with TT? Do you know what is going on here?
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Old 03-18-2010, 10:49 AM   #2
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Sometimes it is a lot easier to just sharpen the pencil and calculate your taxable income the old fashion way, instead of depending software.
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Old 03-18-2010, 11:21 AM   #3
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Does anyone else use K1s with TT? Do you know what is going on here?
I use TT and enter data from MLP K-1s. But I do not know the answer to your question. I do know that there is a turbotax forum that might be useful.

Ha
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Old 03-18-2010, 05:24 PM   #4
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Well, I tried running it through the free TaxAct online return and got much better results. The help was better than Turbo Tax and the software reminded me that I have to account for DW's self employment tax (social security) which Turbo Tax seemed to miss. On the missing deduction, TaxAct's help pointed me to another area where I entered it. Net effect is I had to up my withholding a bit to account for $4K in self employment tax and slightly higher Fed and DC than I anticipated
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Old 03-18-2010, 05:36 PM   #5
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In TT, on the K -1 under Block 13, hit QuickZoom to enter additional information for codes R,T,W and then enter the $4000 under whatever kind of retirement plan fits best.
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Old 03-18-2010, 06:41 PM   #6
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In TT, on the K -1 under Block 13, hit QuickZoom to enter additional information for codes R,T,W and then enter the $4000 under whatever kind of retirement plan fits best.
Thanks Furball. I couldn't find QuickZoom. The deduction is listed as code W in the K-1. I get a box on TT that allows me to enter the amount and type in my own reason for it. On help I learned that I might have to enter it somewhere else and should consult details on the K-1 to figure out where. There are no details on the K-1 so I guessed and searched on SEP. That got me to payments to an indivdual 401K or Keogh plan which seemed about right. Through that set of screens I got the $4317 to actually show as a dedcution and got AGI down to the correct amount. But I can't figure out how to get TT to calculate the self employment tax DW owes to cover Social Security. The search on self employment and social security just brings up W2's. Any idea how to get TT to deal with the SE tax?

HaHa mentions using a pencil and the forms. I used to do this "back in the day" and actually prefer following the details step by step. But with all the forms needed to get K-1s in and SE taxes paid, I am afraid I need the tax software just to get the right forms printed out
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Old 03-18-2010, 07:45 PM   #7
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Originally Posted by donheff View Post
HaHa mentions using a pencil and the forms. I used to do this "back in the day" and actually prefer following the details step by step. But with all the forms needed to get K-1s in and SE taxes paid, I am afraid I need the tax software just to get the right forms printed out
I think that must have been someone else. Once you start in on K-1s that gets confusing fast! So I stick to TurboTax.

Ha
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Old 03-19-2010, 07:05 AM   #8
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HaHa mentions using a pencil and the forms. I used to do this "back in the day" and actually prefer following the details step by step. But with all the forms needed to get K-1s in and SE taxes paid, I am afraid I need the tax software just to get the right forms printed out
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I think that must have been someone else. Once you start in on K-1s that gets confusing fast! So I stick to TurboTax.

Ha
Sorry, that was Frayne with the manual computations.
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Old 03-19-2010, 08:31 PM   #9
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But I can't figure out how to get TT to calculate the self employment tax DW owes to cover Social Security. The search on self employment and social security just brings up W2's. Any idea how to get TT to deal with the SE tax?
I have SE income and enter it on a 1099-Misc and a Schedule C. That causes TT to calculate the SS/Medicare owed. If the self-employment is coming from the K-1, then it would be on Box 14 with code A on the K-1 and for me that also triggers Schedule SE to calculate the SS/Medicare owed.
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