IRS Letter: Capital Gains Distribution that were on my tax return

[Spouse1234]

I just received a letter saying asking me to pay a lot from my 2017 taxes saying I didn't report a number of Capital Gain Dividends. I just searched the PDF file of the tax return saved for my records and see those numbers on there on my smart worksheet for Schedule B. All of it had been downloaded from Fidelity. What should I do to try to resolve this?

[Lisa995]

IRS can make mistakes.   If those figures they say are missing are showing on your tax return, then you need to respond to the notice and show then copies of the return where they are reported.

Dividends entered in Sch B should also appear as ordinary dividends on Line 9a, Qualified Dividends on Line 9b and Capital Gain dividends should be on Sch D and flow over to Line 13 of the 1040.

[Spouse1234]

Here's what I've found. IRS listed capital gains totalling $9691 from 8 securities . TurboTax  has it at $9594 from only 7 securities. On Qualified Dividends, that one security is also missing, for a total of $1210. I went to my download summary, and it seems that one security did not download from Fidelity, totalling $1310, for which I have located the 1099-DIV. So the question is, why didn't they download? And how do I respond?

[Lisa995]

Imports don't always import correctly (TurboTax has no control over the data the banks make available in the file that they gets downloaded), its always important to verify the figures on the tax return against the actual 1099 form to be sure it all transferred over properly. I've honestly never imported a document into a tax return, I find the few minutes it takes to input manually is less time consuming than to have to verify the accuracy of an import.

Since the notice is correct, just mark the box that you agree and send a check for the balance due.

[Opus 17]

Is the notice correct? Does it have the right amount of gain or is the IRS assuming zero basis?   You may want to prepare an amended return  just to see if the IRS is correct. If the IRS is correct, just mail a check, you don’t need to mail the amended return. But if the amended return comes up with a different amount of tax due, mail the amended return, a check, and a letter of explanation to the office that sent you the notice; not the normal amending address.

We don’t know and can’t tell you why some transactions downloaded and some did not. Ultimately, you are responsible for the accuracy of your own tax return and for checking that all the transactions were reported correctly.

[Spouse1234]

OK, I'll try entering it in TurboTax and see what happens. This is just one of three issues in the letter (You Lisa995 have posted on my other two threads on the other issues), and I know at least one of the other two issues is correct by IRS.

[Critter]

Usually one issue will affect others like the taxable portion of  SS benefits or credits ... use the amendment process to add the changes the IRS made and you agree to then review the return ... does it now match ?

[Opus 17]

If you have multiple issues, you really should do a full amended return, to make sure the IRS calculations are correct. Make sure to include every correction and change.

[SteamTrain]

You might check to see when that one security reports their dividends.  

Depending on the holding, some don't issue their reports until March (usually REITs), and if you imported from Fidelity before then, that one might not have showed up until later in your Fidelity import.  IF you do own that type of security or real-estate trust type of holding...you'll have to wait until mid-march to import our documents and file every year until you get rid of it.

[Spouse1234]

As I at least trace this error, I'm still getting a bit confused. The security was National Financial Services from Fidelity, from my brokerage account. It had downloaded correctly from my wife's account (but seems in TurboTax I said it belonged to me, not my wife). According to IRS, $1,695 was Reported by Others, but $0 Shown on my return. $1,695 is on my 1099-DIV as 1a, Total Ordinary Dividends. That's why I thought it didn't download. But here is where it gets strange. That same 1099-DIV had $1,210 in Qualified Dividends. IRS reports $1,210 for Qualified Dividends reported by Others, and $1,210 shown on the return, suggesting this WAS reported. However, neither when I look at the PDF of my return, nor in TurboTax (e.g. Dividend Income Smart Worksheet), I can't figure out where this $1,210 came from. So why does IRS think it is in the return. Then also on that 1099-DIV is $100 in Capital Gains. I can't find that anywhere in my return either, and IRS seems to have not found it either.


The reason I'm concerned is in TurboTax, I'm about to manually create this 1099-B, but I don't want to list this $1,210 in Qualified Dividends if somehow IRS found it in my retur, but then why didn't they find the Total Dividends or Capital Gains from this one?

[Lisa995]

Ive seen weird things like that on CP2000 notices with dividends.   

They seem to show Qualified Dividends as being reported but no Ordinary dividends (but you cant have qual divs without them being included in ordinary divs as well)....so really what they are saying is that the Ordinary Dividends are missing from the return.

[SteamTrain]

The $100 in cap gains (if in box 2a) should show up as a part of line 13 on your Schedule D.

[Critter]

You can use the program to amend without losing the original return ... and you can do it many times by starting up a new file based off the original ...the downloaded version has lots of abilities ...

Select a tax year for specific amending instructions.

Keep in mind: You have 3 years from the date you filed your return (or 2 years after you paid the tax due, whichever is later) to file an amended return, which means you don't have to get it done by the April 15 filing deadline.

·         2018

·         2017

·         2016

This is my mini version of the downloaded tutorial that should be in the downloaded program: 

  What is Forms Mode?

Forms Mode lets you view and make changes to your tax forms "behind the scenes."

If you're adventurous, you can even prepare your return in Forms Mode, but we don't recommend it. You may miss obscure credits and deductions you qualify for, and you may forget to report things that will come back and haunt you later.

Forms Mode is exclusively available in the TurboTax CD/Download software. It is not available in TurboTax Online.

Related Information:

·         Why would I use Forms Mode?

·         How do I switch to Forms Mode in the TurboTax for Windows software?

·         How do I switch to Forms Mode in the TurboTax for Mac software?

If you want to play around with different figures and tax scenarios without affecting your original return you can ….

·         >>>In the TurboTax CD/Download software by creating a test copy: 

·         1.  Open your return in TurboTax. 

·         2.  From the File menu, choose Save As. 

·         3.  Give the copy a new name to distinguish it from the original (for example, by adding "Test" or "Example" to the file name). 

·         4. Click  Save. You are now safely working in the test copy and anything you do here will not affect the original. 

·          https://ttlc.intuit.com/questions/1900642-how-to-make-a-test-copy-of-your-return

·         >>  use the WHAT IF tool: 

·         - Click Forms Icon (upper right of screen) or Ctrl 2 (forms view) 

·         - Click on the Open Form Icon 

·         - In the “Type a form name.” area type What-If (with the dash), click on the name of the worksheet - click on Open Form 

·         - You will see the worksheet on the right side of the screen; enter the information right into the form 

·         - To get back to interview mode - click on the Step-by-Step Icon (upper right of screen) or Ctrl 1

It's always a good idea to make a backup copy of your tax data file, in case your original gets lost or corrupted. Here's how:

1.     From the File menu in the upper-left corner of TurboTax, choose Save As (Windows) or Save (Mac).

2.     Browse to where you want to save your backup.

o    Tip: If you're saving to a portable device, save it to your computer first to prevent data corruption. Then, after completing Step 4, copy or move the backup file to your device.

3.     In the File name field, enter a name that will distinguish it from the original tax file (for example, add "Backup" or "Copy" to the file name)

4.     Click Save and then close TurboTax.

5.     Restart TurboTax and open the backup copy to make sure it's not corrupted. If you get an error, delete the backup and repeat these steps.

If you make changes to your original tax return file, repeat these steps to ensure your original and backup copies are in-synch.

Related Information:                             

·         Retrieve a Tax File from a Portable Device

·         What's the difference between the tax data file and the PDF file?

·         How do I save my return as a PDF in the TurboTax software for Windows?

·         How do I save my return as a PDF in the TurboTax software for Mac?

·         How can I protect the tax files on my computer?

GEN85508

Answered by  TurboTax FAQ  to  this question

[Spouse1234]

Just want to update this thread from months ago.

I had updated my return and mailed a check of $1300 for what I thought it should be for the missing amount. As I posted on other threads, I also had issues with Dependent Care not reported correctly and a back door contribution. As I posted on another thread, IRS still thought I owed because I didn't include some form for Dependent Care, which I promptly faxed.

Hadn't heard anything from IRS, and now, about 2 months from the last correspondence, I get a check from them of a little more than $1300. No idea why, but suggests I didn't make a mistake since I had sent them $1300 thinking I had made an error.