UltraTax MAGI calculation error 2018

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Just thought I'd share this for anyone who uses UltraTax. I discovered an error in the MAGI calculation on 8582 and 8962 in a very limited scenario. UT has acknowledged the error and said they will fix it for 2019, but not for 2018 or previous years (I haven't looked back at previous years yet, but I would think the error existed since the introduction of Form 8962).

In my situation, a MFJ family of 5 with AGI of 105k had income from Schedule C, rental losses, and SEHI from the exchange. Because they are in the phase-out range for both the 8582 and 8962, I thoroughly double checked all the calculations. In this situation, the MAGI for 8582 as calculated on the Passive Activity MAGI Calculation worksheet (which is correct) does not transfer directly to Line 7 of Form 8582. Instead, this MAGI is increased by the amount of SEHI allowed on Line 29 of 1040. This made the MAGI 9k higher, allowing less PAL, resulting in a higher AGI and less qualification for the PTC.

Just over-riding Line 7 of form 8582 doesn't completely fix the problem though, and this part is even less obvious. If we over-ride the 8582 to be correct (which is UT's recommendation), all of the other tax forms appear to calculate correctly, including Form 8962. But the repayment limitation as calculated on Line 28 is based on a back-end calculation which still uses the MAGI (for 8962 purposes) based on the lower PAL allowance and higher AGI, rather than the actual correct calculation as displayed on the top of the form. In this instance the taxpayers were at 296% of FPL which should have a limitation of $1,550. But the system still calculated $2,600 as if they were at 300-400%.

While UT is suggesting that this is a very rare combination and shouldn't affect many taxpayers, I felt the need to share my experience in case any one else out there wants to review their tax returns for a similar scenario. I know for sure I'll be looking back at 2016 - 2018 returns which have 8582 and 8962 at least.
 

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