Dividend Income Not Imported by Turbotax

[bethwr]

I received a CP2000 notice from the IRS identifying underreported income related to dividends in 2019.

I thought it was an error on the IRS's part, but after I investigated it it's clear that Turbotax did not import dividend income from Schwab nor Edward Jones.  It seems very strange because Turbotax imported all other taxable transactions from the three impacted accounts (two Schwab, one EJ).

The taxes and penalties are over $2000, so it's no small oversight.

What's my best course of action?  Can I try to re-import my 2019 tax statements from Schwab and EJ?  Or do I need to go back and manually calculate this underreport income?

Thanks in advance.

[rjs]

It's not clear that you have to make any adjustments or changes to your tax return. If the IRS is correct, maybe all you have to do is pay the amount that you owe. Read the instructions in the notice for what to do if you agree with it.

If you do have to, or want to, revise the tax return for some reason, you can no longer import 2019 brokerage information. You would have to enter the missing information manually from the printed or PDF statements. And you cannot do this in TurboTax Online. You would have to use the CD/Download TurboTax software for 2019.

You should also check your 2020 tax return to see if the same error occurred. If so, you can file an amended return for 2020 instead of waiting until you get an IRS notice for 2020.

[bethwr]

I think I need to redo my 2019 return altogether.  There is one other error that they identified that does not result in $ owed by me.

Yes, I did check my 2020 return - everything seems to have imported correctly.  Not sure what happened in 2019.  But paying $2000 in interest and fines sure makes a CPA seem like an inexpensive option.

[ClickIt]

How early in the year did you import the data?  Brokerages sometimes have incomplete or updated information available which will be reflected in the mailed 1099-B statements.  I usually do not file unless I have that printed statemen in hand to agree the numbers to the imported data.  And of course the brokerages do release corrected 1099-B statements from time to time, like 10-15% of the time in my experience. YMMV, but be careful filing with early brokerage report numbers if they make a significant difference in your tax liability.

[fanfare]

"But paying $2000 in interest and fines sure makes a CPA seem like an inexpensive option."

CPA is not going to enter your dividends unless you supply them with your 1099-DIV.

Same with TurboTax.

Always print a copy of your completed tax return for your records, and review it carefully before e-Filing. Particularly Schedule B and D.

You will need it if you are audited by the IRS, or to amend if a TurboTax update changes your return or for any other reason,

AND, to find your AGI next year.

[bethwr]

The point is that my financial institutions provided a composite tax document for each account held at the respective firms.  When I imported that composite tax document, Turbotax failed to import a single type of transaction across multiple accounts.

Upon completing the forms, I reviewed the outcome only to confirm that a file was uploaded for each account, I didn't have any reason to believe that some things would be imported on an account while others were not.

I went back to the tax documents at both Schwab and EJ and confirmed, there is only one document per tax year per account.  

I also used Turbotax for 2020, and had the same variables (one tax document, multiple taxable transactions, multiple accounts at multiple institutions), and all of the details appear to have been imported correctly.  

It just doesn't make sense.

[rjs]

TurboTax does not import the composite tax document that the broker sends you. That document is a human-readable PDF or printed document that the TurboTax software cannot use. The brokerage creates a special computer-readable file of data specifically for importing by TurboTax. TurboTax can only import what's in the special import file that the brokerage provides.

Errors do occur in importing data. There are two companies involved, and lots of moving parts, so there's plenty of opportunity for slip-ups. You can't rely on just checking that something was imported. You have to check all the details.

[Mike9241]

I've noticed that with some brokers you must do check off each form you want imported. so you could have check 1099B but not 199-DIV.