@npierson7 wrote:
Yes, that's a correct calculation. You supposed to report the maximum value of your accounts at any time during the year.
First of all I am not a tax advisor or expert, just another tax payer with similar issue. It is not a tax advice just summary of what I've found out online. But don't just trust "tax experts" because they are not giving you full answer...
The statement above by "npierson7" is simply not true or half truth at best and it's rather concerning that Tax Expert of Turbo Tax is giving such response....
The maximum value of his/her "accounts at any time during the year" is $300k and not $500k. If you have any doubts about it ask yourself... If the house price was $500k, was this person able to buy it at any time of the year? NO. If it was worth $300k was this person able to buy the house? YES, because he/she had "maximum value of the accounts during tax year" of 300k, not 500k!
Let me ask it differently. If the person above came to you, nprieson7, and said: Please take the accounts I have and pay me $400k would you do it? Their maximum value is $500k so why not? You would get something with "max value" of $500k for $400k? No? Maybe because maximum value is 300k and not 500k?
Dear felkhati1970,
The best answer you will here is below as I've spent too much time researching exactly the problem you have.
No. One. Gives .A. **bleep**.
The maximum value of your accounts in any given moment of the year is obviously $300k and this is likely the value you should put into the form... BUT
- Calculating such value with 2 accounts is trivial. In my case with something like 24 accounts, including 4 pension accounts in three countries is very hard as I moved money around a bit and pension accounts change value each day. I would need to basically calculate value for each day in a year, for each account and pick the max day. This is not practical, this is crazy.
- I had my taxes done professionally by PwC for 6 years. They've always done what TurboTax does so sum up all the values. They knew it's not super accurate and double counts some money but they never had problems so why not take the easy way.
- I have a friend in another major, global tax company. They do the same thing. They know it might not be correct. No one cares.
- TurboTax does it like that for probably dozens of thousands Americans every year for many years. They were not forced by IRS to fix it. No one cares.
- I found a person who actually managed to talk to IRS about it (it's somewhere in this forum). They confirmed that TurboTax is doing it wrong but.... it seems no one cares.
Long story short. No one cares. It does not impact your tax due. IRS tolerates all major companies doing it in a wrong way because it's not that important apparently. Is it correct? NO! It's not. But I will just file as TurboTax calculates it and let them fix my problems if their calculation is wrong and for some weird reason IRS decides that after seeing literally millions of wrongly filed forms they are going to force people to spend hours calculating the real max value of their accounts.
