Finance Questions? Ask a Financial Expert for Answers ASAP
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The schedule A should be printing IF you are actually using itemized deductions on the return. The software compares the total itemized deductions you input to the standard deduction and uses the one that produces a better result for you. It may be that the standard deduction is the better choice. IF this is not the case, you will need to over ride the system and print Schedule A so that you can attach it to your return.
Some disability incomes are considered a continuation of wages and Turbo Tax is apparently reflecting this. Check the disability forms to see is there is anything in this area. If not please get back to me with the line item, description, and amounts shown on each 1099 and I will dig further.
I have found the answer. It is something I would never have dreamed. In the case of disability payments made prior to normal retirement age, box 7 is indicated code 3. The amount that qualifies as code 3 is to be recorded as wages on line 7 of the tax return. That is what your software is doing. The IRS agent you spoke with is in error.
AS an interesting aside, you may also, because of this reporting methodology, be entitled to the earned income credit. Take a look into that and see if it helps.
The error of $400 is the same amount as the "Making work pay credit" on line 63. Because Turbo Tax recorded $7,000 in box 7 (wages) as should be done, it automatically calculated the credit. Technically, you are not entitled to the credit here since your income is from disability benefits rather than work. However, I could argue that you are entitled because the disability is the result of working and that is why $7,000 goes to line 7.
The entry on line 40 baffles me. I do not use Turbo Tax. Too many people with problems coming here to us. It is a great program but requires a bit more knowledge than many do it yourselfer possess.
Nevertheless, I see the return as only having only potential change that will effect you. The reason I say this is that with your total income, the taxability of only a portion of your Social Security, the standard deduction, and your personal exemption you should have a tax on line 44 of zero. Therefore all withholdings ($850) plus the EIC ($26) and maybe plus the $400 should be refunded to you. The $400 is the only area of possible change and it is money that you did not pay in. I would not lose any sleep over it. If you get it great, if not let it go.
I would contact Turbo Tax about what is happening here. Send them a printed copy of the return and a letter explaining your issues. If they have been wrong they can at least use it to improve for the future. Also,do not think that all IRS personnel are so very smart on tax issues. Some are seasonal help, some are experienced in only one area and yet the IRS uses them as needed at this time of year. The IRS does not even guaranty the accuracy of telephone advice given by its own staff.
Let me know if you need additional assistance.