Tax Nightmare

[JPatrick]

I know some of us have had problems with the Fidelity "free turbo tax" but this is a new one for me.
I used turbotax for my 2020 returns both state and federal. All seemed to go well until this week. I received a notice from the state that I still owed ~ 2000 in taxes and a penalty. It's a touch early to point fingers, but it is obvious there is a screw up somewhere. (not I)
Has anyone else had problems similar to this, and if so how did you resolve it? Part of the problem is that the paperwork I was given by both parties lacks adequate detail to see where the error is.
Any ideas? Seems to me that Turbo Tax ought to grab this one and fix it, but then that might be wishful thinking

 

[Surewhitey]

Ouch, $2k is a pretty big miss... I've never used TurboTax, just HR Block and TaxAct. Never a miss like that, but it may be that things weren't caught.

 

[braumeister]

Not sure about your state, but when the IRS tells you that you owe more tax, they will tell you exactly why they think so. You should have a copy of the return you filed, so you can easily see what the disconnect is. I can't imagine a state tax agency not doing the same thing.

 

[JPatrick]

Not sure about your state, but when the IRS tells you that you owe more tax, they will tell you exactly why they think so. You should have a copy of the return you filed, so you can easily see what the disconnect is. I can't imagine a state tax agency not doing the same thing.

The turbo Tax form lacks detail and the state return does not point out where the error occurred. Hoping Turbo Tax will be helpful. Yet to hear from them.

 

[braumeister]

I really don't see how TT or anyone else can address the problem without knowing what the state thinks the issue is.

 

[JPatrick]

I really don't see how TT or anyone else can address the problem without knowing what the state thinks the issue is.

Yup, my fact finding has just begun.

 

[Sarah S]

Good luck. I live in MA and use a human accountant. A couple of years ago I got a vague letter from the state saying I owed 1000 something. It didn’t explain in any detail. I was planning to follow up with the accountant who was away A couple of weeks later I got another letter from the state saying oops our mistake- never mind

 

[cathy63]

TurboTax can only reproduce the state's own forms. They can't add anything to them, so if the form lacks detail, that's the state's fault.

If possible, you should go ahead and pay the state to avoid racking up further penalties while you continue to investigate. In the end, TTax will pay the penalties and interest (but not the tax owed) if you can demonstrate that there's a bug in their program. They won't be responsible if you forgot to go into a state screen and adjust your income in some way, or if you used the wrong version of their software (Deluxe vs Premiere).

 

[braumeister]

You should also have copies of all the worksheets, if any, that went into filling out the state return. Sometimes they can be rather complex -- they certainly are in my state. That may be where the detail exists.

The one time I got one of those "tax due" notices from the IRS, I was able to see that it was because of an omission I made on one of the forms. I simply corrected that and attached it to a letter replying to the notice and the IRS gave me their best Emily Litella response.

 

[fh2000]

When I was working, my annual state tax and fed tax were close enough to the prior years, so I have some idea if I did them correctly using TurboTax year over year.

If you have prior year tax returns, can you get them out and do a comparison to see which categories are off this year?

 

[RetiredHappy]

I hope you did not make the same mistake as us...

Silly us, the tax returns for the year after we retired, we used Turbo Tax instead of a CPA which we had always had since the beginning of time. We had a hard time unravelling our tax statements issued to us by our money manager firm. We missed putting in capital gains for that year and the following year. The worst part was that we bought all sorts of bills and whistles features including Turbo Tax CPA review and consultation but the omissions were not flagged. In the third year's filing I found the page for capital gains and was alarmed. We went back and submitted amended returns for the 2 years and checks of around $16K. We did not pay the penalty hoping for forgiveness. 5 months later we had to make out another 2 checks for late payment penalty for the omitted capital gains amounts.

 

[rothlev]

In my state those letters are difficult to interpret and do not generally tell you what is wrong, your first step is to call the state and ask. Once you clarify where the additional tax is flowing from, you can decide next steps. amended return if it was a clarical error. etc... bug in software etc... recompute manually or use different software to see what the tax is supposed to be.

 

[RetireBy90]

My Virginia return from last year I claimed a refund of about $6K as I had overpaid estimated taxes. My check was for about $2K but not much info as to why. I called and found they didn’t count one of estimated payments. Faxed it to them and had a second check about 2 weeks later.
Call the state and ask for more info would be my next step.

 

[WhenIsItTime]

Make sure you understand the code and math. The software is not always right. Bit dangerous to be an early filer.

Arguably a “2000” ($2k?) miss is not a lot as you might pay a few $ hundred to get a pro to help you get resolved.

 

[swakyaby]

I used turbotax for my 2020 returns both state and federal. All seemed to go well until this week. I received a notice from the state that I still owed ~ 2000 in taxes and a penalty.

Has anyone else had problems similar to this, and if so how did you resolve it? Part of the problem is that the paperwork I was given by both parties lacks adequate detail to see where the error is:

I used TurboTax Premier for both state and federal in 2020. I also received a notice this week from my state tax board (California) that I had underpaid my state tax and now owed another $22,230 which included penalty and interest fees. In their letter, they clearly itemized where the discrepancy was. It stated that the amount of estimated taxes I reported did not match up with their record of taxes received. And to my chagrin, after reviewing my pdf copy of my turbotax return and the electronic payments I had made, I had to agree and mailed them a check immediately.