Question

Can anyone explain why TurboTax 2021 gave the Montana Senior Interest Income Exclusion of $800 to both my wife and me, but TurboTax 2022 gives my wife $800 and me $0?

Forum|Forum|3 years ago
March 27, 2023
3 replies
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As in 2021, my wife and I are both over age 65 and have jointly owned accounts with more than $1600 interest income earned and included in our Montana adjusted gross income. In our 2022 Montana tax return, Married filing Separately, Form 2, page 5, General Subtractions, Line 3, TurboTax enters a $0 exclusion for me and an $800 exclusion for my wife. Can anyone explain this apparent discrepancy in Montana tax reporting between TurboTax 2021 and TurboTax 2022? Thanks!

TurboTax Online

J

JohnW152

If you're married and filing your Montana return separately, you can only exempt up to $800 of interest that you reported on your state return.

According to Line 3 -- Partial Interest Exemption for Taxpayers 65 and Older in the Montana Individual Income Tax Return (Form 2) Instructions:

If you are married and filing your return separately and are age 65 or older at the end of 2022, you can exempt up to $800 of the interest income that you reported in your Montana Adjusted Gross Income. Note, however, that you are not allowed to exclude interest income earned by and reported by your spouse.

P

pkck4321Author

John, please note that in our 2021 Montana tax return prepared with TurboTax 2021, my wife and I both received the Montana Senior Interest Income Exclusion of $800 (a total of $1600).

This year, TurboTax 2022 gives my wife the $800 exclusion and gives me $0 (no exclusion). Today I visited with a Montana Department of Revenue representative who confirmed that both my wife and I qualify for this $800 interest exemption in our Montana - Married Filing Separately return. The MT DOR representative said that I should report this to TurboTax, which promptly I did this morning in a phone call to TurboTax representative Patricia ____. Also, I am unable to override the error in my TurboTax MT Form 2, Page 5, Line 3. Please explain this discrepancy between TurboTax 2021 and TurboTax 2022 and please fix this error.

J

JohnW152

Two factors that may be producing this result are age and who's listed as the recipient of your interest.

I'm sure you entered your birthdates correctly, but I'll go through the steps, just in case. In TurboTax Online:

If you don’t see 2022 TAXES in the left pane, select the dropdown to the right of Personal Info on the Hi, let’s keep working on your taxes! page and then select Let’s get started, Pick up where you left off, or Review/Edit.
- Otherwise, in the left pane, select My Info
Scroll down and select Edit to the right of your name
Verify that your Date of birth is correct, then select Continue
Go through the same process for your spouse

Now, check your Interest information:

In the left pane, select the dropdown to the right of Federal, then select Wages & Income
On the Your income and expenses page, scroll down to Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto), and select the Edit/Add button to the right
On the Your investments and savings page, scroll down until you see an Interest item. Select the dropdown for that item, then select Edit
See who is listed in the This 1099-INT belongs to box. You and/or your spouse may be listed, depending on how the payer entered your Form 1099-INT
If the entry is correct, select Continue
Repeat this process for each of the Interest items on the Your investments and savings screen

If only your wife is listed as recipient on your Forms 1099-INT, this is why you're not receiving the exclusion.

B

BillM223

I quickly cooked up a Montana test with a married couple and $5,000 in interest in an account owned by both spouses. The federal was married filing joint. As I progressed through the Montana interview, TurboTax (the CD/download software) suggested that I file Montana as Married filing separate, I said YES.

Then later in the MT interview, The program said that Married filing joint in MT would be better (less tax due). I chose to stick with Married filing separate in MT.

The result was that I got the exclusion of $800 for each spouse.

I mention my progress on the off chance that you did not see the same choices as me, and that one of my choices (switching from MFJ to MFS then staying with MFS) caused the difference.

So what was your path?

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

P

pkck4321Author

Bill, in answer to your observations:

Montana is a state with a marriage penalty, and the remedy is Married Filing Combined Separately, as recommended by a CPA friend of mine and as proven when I calculate our Montana taxes.

To compare with your Montana test, I again navigated the TurboTax MT interview, which began by confirming our Montana residency status and then suggested that we file as Married Filing Separate.

Late in the Montana interview TurboTax says “Confirming Married Filing Combined Separate ...we’ve determined that there isn’t a tax benefit to filing your Montana return as married filing joint. We recommend keeping your current filing status of married filing combined separate.”

Bill, please note that our Montana tax information is considerably more complicated than your interest income test. When I choose Married Filing Jointly, TurboTax correctly gives me and my wife the $800 interest exclusion ($1600 total), but this is a small benefit compared to our Montana marriage penalty. For my wife and me, Married Filing Jointly yields a MT tax burden $549 greater than if we choose Married Filing Separately; and this marriage penalty would be $603 if TurboTax correctly applied the $800 interest exclusion to both me and my wife when we choose Married Filing Combined Separately.

My wife and I had already looked at both Montana filing status scenarios. For many years, using TurboTax, we have chosen Married Filing Combined Separately for our Montana taxes. In our 2021 return, TurboTax correctly gave me and my wife the $800 interest exclusion ($1600 total).

This afternoon, I e-filed our Montana taxes as Married Filing Combined Separately, so I don’t plan to spend more time or mental energy on this. I respect the time and effort that you and others have devoted to this apparent discrepancy between TurboTax 2021 and TurboTax 2022. Considering the hardships that many other Americans encounter, I consider myself very fortunate and wish the best to you and others at TurboTax.

B

BillM223

I concentrated on the question at hand - why did you not get the $800 deduction while your spouse did.

My experience is that the path through the interview that the user takes (or is forced through) can have big changes on the results. I was hoping that we could get to a resolution in a short timeframe.

However, since you have already filed, "Let's declare victory and go home." Thank you for your kind wishes.

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T

TaxingDK

I experienced exactly the same issues as pkck4321 when filing my MT Return using the CD version from Costco. With extension for filing on October 16, 2023, TurboTax (Intuit) still had not fixed the problem. TurboTax has never provided adequate support for Montana state filers -- perhaps understandably based on our relatively low population. Yet a product is a product, no matter how small the client base. I had to file to meet the deadline, so my questions are:

CAN I FILE AN AMENDED RETURN TO GET WHAT MONTANA TAX LAW ALLOWS? IS THAT A BIG HASSLE, OR SHOULD I JUST EAT IT.

HOW ABOUT GETTING TURBOTAX TO HONOR THEIR GUARANTEE OF ACCURACY??

P

pkck4321Author

In answer to TaxingDK's message following my 3/2023 messages:

Rather than filing an amended MT return, you may find success as I did:

I chose to not follow the remedy recommended by a TurboTax expert (returning the TurboTax CD to Costco for a refund and purchasing the online product directly from TurboTax), which would add more expense and time to completing my tax reporting.

Instead, I filed my Federal and MT taxes with my (defective) Costco CD TurboTax product and followed up with a letter to

Montana Department of Revenue

Montana Individual Income Tax – Attention Auditors

P.O. Box 7149

Helena, MT [removed]

"Dear Sir/Madam

...I would appreciate your help in addressing a TurboTax error in Montana Form 2 Page 5 Line 3. You will note the $800 partial interest income exemption for my wife in Line 3 Column B and the $0 interest income exemption for me in Column A, even though both my wife and I meet the requirements of Montana Rule 42.15.215 (4). We are over 65 years of age and have interest income greater than $1600 from jointly owned CD and Savings accounts. This income is reported in 1099-INT forms. This income, our joint ownership of the Bank CD and Savings accounts, and our ages are correctly entered in TurboTax.

Last year TurboTax 2021 gave the $800 interest exemption to both me and my wife.
This year TurboTax 2022 gives me $0 interest exemption (see our Form 2 Page 5 Line 3).

In multiple efforts, I (and another Montana resident who posted on the TurboTax Community site) failed to resolve this issue. A TurboTax Expert concluded that the Costco TurboTax 2022 CD product that I purchased was apparently the source of the error and that an online upgrade would not be possible. Frustrated by this experience, I e-filed our Montana taxes. I invite your review of Montana Form 2 Page 5 and would welcome an adjustment to correct this error. Please apply 100% of our overpayment to our 2023 Montana estimated tax. Thank you

____________"

An online message via mt.gov TransAction Portal is another way to send this communication to MT DOR, but I printed and mailed my letter. Soon thereafter, I received from MT Department of Revenue an Adjustment Notice, which gave me the $800 interest exemption, thereby reducing my MT tax for 2022.