Turbotax/CO/pension deduction (closing, income, taxes)

[Therblig]

In finishing up my 2019 taxes, I found a minor entry in Turbotax about the Colorado "pension" deduction: you are allowed to exclude the first $20k of income from any pension, retirement plan, IRA, etc. Entering the amount for which I tapped my IRA in 2019 eliminated my state tax due.

So I looked at last year, and in rerunning my state filing for 2018 and including that exempted amount, found the state owes me $800 back.

First off, does anyone know why TT leaves this as a minor, optional, "figger it out yourself" deduction when the data needed to at least suggest it is all in place?

Second... anyone else been paying taxes on $20k in retirement money because you trusted TT a bit too far?

[COcheesehead]

File an amended return for 2018. TurboTax makes it easy. You just correct the section in error. I did it once, I bet it takes you 15 minutes.

As far as TT goes, there is a check box in the capital gains section largely left unexplained unless you click on the more info button. That little check box saved me thousands. So there is a bit of personal responsibility assumed when doing your own taxes.

[Therblig]

Originally Posted by COcheesehead

As far as TT goes, there is a check box in the capital gains section largely left unexplained unless you click on the more info button. That little check box saved me thousands. So there is a bit of personal responsibility assumed when doing your own taxes.

I don't disagree, but TT presents itself as a comprehensive guru and aide and goes to great (mostly pointless) lengths to emphasize how hard it's checking things and looking for deductions and savings. It's beyond a mature product; while there may be complex overlapping situations it can't reasonably handle, my example and yours are things that should be presented, explained and offered for user selection.

The idea that it does a "mostly" job and you still have to carefully check every line and option and form is completely contrary to Intuit's claims. I maintain that my case simply should not have been missed or left for me to investigate and guess about it - my age bracket, the rule and the stated income should have been enough to trigger the result.

ETA: About 10 minutes only because I checked everything three times.

[BarryK123]

I've been using TT for a number years. I no longer use the query approach, but go right to the sections where need to enter stuff.

It's been several months since I entered the data, but I don't recall specifically entering that info in the CO section. I entered my RMD (from the 1099-R I received) in the Fed section and I'm pretty sure it carried over for the CO deduction without me re-entering anything. Where exactly did you have to figure it out on your own?

Maybe it makes a difference which version you use? I have the premier version and import all my brokerage 1099s.

[COcheesehead]

Originally Posted by Therblig

I don't disagree, but TT presents itself as a comprehensive guru and aide and goes to great (mostly pointless) lengths to emphasize how hard it's checking things and looking for deductions and savings. It's beyond a mature product; while there may be complex overlapping situations it can't reasonably handle, my example and yours are things that should be presented, explained and offered for user selection.

The idea that it does a "mostly" job and you still have to carefully check every line and option and form is completely contrary to Intuit's claims. I maintain that my case simply should not have been missed or left for me to investigate and guess about it - my age bracket, the rule and the stated income should have been enough to trigger the result.

ETA: About 10 minutes only because I checked everything three times.

My example was of something that is there and requires me to take action. Your example is the same. Will TurboTax make me a martini with olives, no, but it gives me the recipe.

[davebarnes]

This is why I have used the same tax prep firm for the last 39 years.
https://www.barkerfinancial.com/index.html

I paid $320 to have our taxes done.
I only spend 3 hours per year doing taxes and this the 1 hour round trip to Barker's offices.

[Therblig]

Originally Posted by COcheesehead

My example was of something that is there and requires me to take action. Your example is the same. Will TurboTax make me a martini with olives, no, but it gives me the recipe.

I understand what you're saying and completely agree that even the simplest pass through TT requires user attention and judgment. But this (to me) is an oversight by Intuit. It's a simple, black and white issue that represents a fairly significant tax savings.

1. Are you 55 or over? (Yep.)
2. Did you have 'pension' income (reported in an earlier step as such)? Yep.
3. CO law says $20k of that is exempt. Good with that?

I can't see any reason, technical, user, regulatory or common-sense, that TT shouldn't handle this automatically, with at least a detailed presentation and query if not a more or less silent action as with so many others. It does not appear to have any complex 'what-ifs' and 'except-buts' involved that might take user or CPA judgment. As it is, it's an opaque question in CPA-ese among many others.

Originally Posted by davebarnes

This is why I have used the same tax prep firm for the last 39 years.

Spent many years with a CPA on speed-dial.

Used CPAs to handle taxes for several years after closing a complex business.

Used TT in the days prior with no issues.

Used TT, with and without accountant review, in years since without issues.

Cost: about $50-60 a year.

If TT is going to leave things like this on the table, buried in regulationese questions the user has to find and follow through upon, my prep costs for 2020 will be $0 since I will just do it myself, line by line, without the supposed super-helpful guaranteed comprehensive reviewed-to-the-bulkheads "help" of TT... that isn't.

[BarryK123]

Originally Posted by davebarnes

This is why I have used the same tax prep firm for the last 39 years.
https://www.barkerfinancial.com/index.html

I paid $320 to have our taxes done.
I only spend 3 hours per year doing taxes and this the 1 hour round trip to Barker's offices.

My father was a CPA. He did my taxes before he died. Now that I'm retired, it's easy enough to do myself. And I also do my kids' taxes, though one of them drives me a little nuts with stock options paid in Swiss Francs :-)

Here's a little secret for you - CPAs use software, too. As a matter of fact, it's made by the same company that makes Turbotax. It's Turbotax on steroids and called Lacerte.

[Therblig]

Originally Posted by BarryK123

Here's a little secret for you - CPAs use software, too. As a matter of fact, it's made by the same company that makes Turbotax. It's Turbotax on steroids and called Lacerte.

That's part of my gripe, here — Intuit, for good or bad, has wormed its way into being almost an arm of the IRS and prides itself on providing all the knowledge most taxpayers can't hope to have without devoting a hard week or more to studying the current tax code and every line of their 1040.

Some situations are too complex and murky and require meatware to sort out. I don't think my example is any more complicated than totting up dependents.

[BarryK123]

Originally Posted by Therblig

I can't see any reason, technical, user, regulatory or common-sense, that TT shouldn't handle this automatically, with at least a detailed presentation and query if not a more or less silent action as with so many others.

Did you see my post above? I'm still not convinced that Turbotax doesn't do it automatically if you enter the info correctly. Did you enter a 1099-R (or maybe it's a diff form for various other retirement distributions besides an IRA?) in the Federal section?