TurboTax Early Rounding Issues creating LARGE variances between TurboTax Produced Return and Brokerage 1099-B Data

[bredman]

@thomaswhitmire It is not clear to me where the extra entry for the correction was added - to the 1088-B or to the 8949. Please clarify.

[bredman]

@thomaswhitmire Sorry for the typo. I meant to ask if the extra entry for the correction was added - to the 1099-B or to the 8949.

[RDavis2528]

OK, even if the rounding is within the norms of the IRS, let's look at the cost to the environment TurboTax.  For 2019 to print my Federal & State returns with the recommended documentation resulted in 102 pages printed. For 2020 to print my Federal & State returns with the recommended documentation results in over 1,300 pages printed due to the huge number of Adjustment to Gain/Loss Worksheets that TurboTax uses. That is ridiculous!

[DJG]

@PlotinusRedux  I did indeed recommend to them that they post an official response so everyone else who is dealing with this problem has the same info. I know they have provided the same response, verbatim, to other individuals who have reached out to the office of the president with this problem, so I'm not sure why they don't want to just post it directly for everyone.  Instead, they told me they are "monitoring the message boards" to make sure everyone gets the info. Maybe they feel like having a customer like me relay their message will get fewer angry responses than if they post directly?  Who knows, your guess is as good as mine.  

That said, I really wouldn't worry about it.  I *strongly* suspect it makes no difference w/the IRS whether you can point to an official reply from TT or not.  Even if the IRS is not ok with TT's use of transaction-level rounding (and presumably they are ok with it, because it's hard to imagine TT wouldn't take on that liability unless they were confident), it's extremely hard to believe that they would actually penalize anyone for submitting a return prepared as calculated by TT.  I gotta believe the very worst-case scenario is they'd just adjust your capital gain w/o penalty.  And even that seems pretty unlikely.  

Honestly folks, we have our answer and I think it's just a waste of time to keep spinning our wheels over this.  I'm not happy with the answer either, but mostly I'm just unhappy about how difficult it was to get that answer.  Personally, I intend to employ one of the workarounds to make sure my return exactly matches my 1099-B rather than being $70 off due to rounding--and if I had to guess, that's probably a bigger (though still very small) risk than just going with what TT calculates.  After tax season when the IRS phone lines aren't jammed, I'll probably give them a call to ask them directly what their view is about rounding on Form 8949.  But for now, I don't think there's much value in us spending more time agonizing over this.  

@bredman For adding a reconciliation line to offset the rounding, do it on Form 8949.  Your 1099-B should show the correct/precise capital gain, and the goal here is to adjust Form 8949 so it matches your 1099-B.  

NOTE:  I'm not a tax expert, and everything above is just my own opinion/understanding.  Good luck finishing your taxes, everyone!

[davidL88]

Here's a direct copy and paste from IRS Publication 17, under computations section:

Rounding off dollars. You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.

Please correct me if I read it wrong:

1. Rounding is optional not mandatory.

2. If you do rounding, only rounding the end results but not each amount needed to compute that result.

I believe TT is rounding each cost basis and proceed first which introduce even bigger errors. Also, why not give your customer the choice of enabling rounding or not in the first place?

[mjrengaw]

The position that TT is taking in their response to this issue is that the sentence - 

"If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total. "

does not apply to the proceeds and cost basis on form 8949. Myself, and obviously many others here, think that interpretation is incorrect but at this point TT has made it clear that it is their interpretation. None of us here are going to change that position. 

Personally I think this change was made this year without completely realizing the full implications. That said, at this point TT will NEVER admit that the decision was wrong. In fact they will double down on how it actually is the correct way to do it. Large corporations NEVER voluntarily admit they have done anything wrong in today's environment because they would open themselves up to litigation and their corporate attorneys will not allow that to happen. And trust me, the corporate attorneys are involved in EVERY public statement.

My guess is that they will stick to their guns and not make any changes. Best case they will insist that they are doing it correctly but make an "accommodation" for customers to allow TT to not do the transaction level rounding on form 8949...but I wouldn't bet on even that happening.

[MaxTax00]

@thomaswhitmire 

I agree that is a practical solution for some people.  In my case, however, this is not doable because the rounding done by TurboTax makes the  sales proceeds on my return higher than they actually are on the 1099-B.  As a result,  I can't Add a Rounding Adjustment for negative proceeds.

[DJG]

@MaxTax00 Don't think you need to get the proceeds to exactly match the proceeds.  Just make sure the overall LT capital gains match each other and overall ST capital gains match each other.  So your reconciliation line can be either a capital gain or a capital loss, as needed.  

[mjrengaw]

@MaxTax00 If you don't have too many transactions on 8949  that are getting rounded you might be able to use this method instead. I went thru my 8949 and only have 19 entries that are affected.  If what TT says is true - 

"The rounding differences are well within the IRS built-in tolerances for rounding discrepancies."

Then changing the cents either in the proceeds or the cost basis that TT imports in order to make the calculated gain/loss amount come out correctly so that the totals equal the amounts reported by your broker on 1099-B should also be acceptable.

So here is what I'm going to do. I will go to the imported details for the 19 transactions where the early rounding of the proceeds/cost basis causes the total gain/loss to be wrong and I will change the cents in the imported data on either the proceeds or cost (not sure it matters which one) so that after rounding and calculation the gain/loss comes out correctly (as if the calculation had been done with the non-rounded numbers and then the total was rounded). Then my totals will exactly match what my broker reports on the 1099-B.

[vpeppen]

You wonder when brokerages will stop reporting cents on downloads if all tax software companies are rounding each downloaded amount anyway.

[JoshB1]

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@DJG wrote:

That said, I really wouldn't worry about it.  I *strongly* suspect it makes no difference w/the IRS whether you can point to an official reply from TT or not.  Even if the IRS is not ok with TT's use of transaction-level rounding (and presumably they are ok with it, because it's hard to imagine TT wouldn't take on that liability unless they were confident), it's extremely hard to believe that they would actually penalize anyone for submitting a return prepared as calculated by TT.  I gotta believe the very worst-case scenario is they'd just adjust your capital gain w/o penalty.  And even that seems pretty unlikely.  

...

NOTE:  I'm not a tax expert, and everything above is just my own opinion/understanding.  Good luck finishing your taxes, everyone!

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Yeah, this is the problem though - TurboTax isn't taking on any liability - not really - you are responsible for your tax return, not TurboTax and so pointing to even an official statement from Intuit might not help your case if the IRS decides to do a deeper dive on your taxes

I'm also not a tax expert but rely on the TurboTax to bridge the gap and reduce all possible risks as they are supposed to be the tax preparation experts. 

Making their software less precise (and dumber) opens those risk...I don't think we will get them to change anything, I just think its utterly ridiculous that they made the un-necessary change in the first place

[Anonymous]

At the end of the day, TurboTax's baffling change for the worse probably won't affect me. (My totals deviate by less than $10 for each category, e.g. proceeds, cost basis, etc.) But why/how did TurboTax go out of their with to break something that wasn't broken before?

Moreover, TurboTax has the audacity to instruct their customer support to just tell people to manually input their transactions instead of doing anything to fix this bug. 2020 was the year when a lot of people started actively trading stocks because of COVID. TurboTax couldn't have picked a worse time.

Based on multiple threads, TurboTax has been informed of this issue for months. Months. Intuit is a publicly-traded company with more 10,000+ employees and revenue in the billions. They couldn't fix this, or care to fix this?

TurboTax's customer support is also providing inaccurate, misleading information in these threads--with potential tax fraud liabilities and tax penalties for TurboTax customers.

IRS allows for rounding of totals, but not for the underlying numbers. Here's the quote from the IRS website: "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total."

Not to mention, Intuit spends millions of our money lobbying Congress every year to keep tax filing complicated. IRS already has most of our tax information and can file taxes for a lot of us or make it a lot easier to do so. Instead, Intuit takes our money to perpetuate a problem that they profit from at our expense.

It's clear that TurboTax isn't going to fix the issue. Based on all the other threads about this same problem, it's clear that customer support (whose hands are tied) can't provide any useful answer that "you paid $90 to save time, but we're going to make you spend hours anyway to fix an issue we caused."

Please @ me if you have any recommendations about boycotting TurboTax and moving to a different tax preparation software. I wouldn't be surprised if there's a class action lawsuit in the next few months. Please @ me when that happens so I can join. It's a shame my law firm doesn't do class action lawsuits, but I'll definitely mention this with the attorneys and ask around.

By the way, if this comment gets deleted, I'll post the same thing on Facebook, on any subreddits that deal with taxes and personal finance, and any Reddit posts that already complain about this issue.  I'll also blog about this. TurboTaxFraud.com and CovidTurboTax.com domains are both available for $12/year.

At this point, my options are: 1) just bend over and take it from TurboTax or 2) export my data to TaxAct or something. I'm going to take a few hours to think about this.

[Anonymous]

I emailed the CEO and a couple other members of their executive team at their publicly-listed email addresses on the company's website. Some assistant is going to read this and give a boilerplate reply, if at all. But the more complaints they receive, the more likely they'll address it, if not this year, then next year.

I'm also hours away from moving off TurboTax altogether. I've only been using them for around 5 years, and with any luck, I'll be filing taxes for the next 50 years. If I decide to move, that just means I'll be spending my tax preparation budget with TaxAct, Credit Karma, Tax Slayer, H&R Block, etc. instead of TurboTax. Oh well.

[dm47208tt]

@Anonymous -- if your dissatisfaction is with Intuit (mine is), then take Credit Karma off your list as Intuit completed their purchase in Dec 2020. 

[tuser8]

This official answer still sounds ridiculous.  If every number (proceeds and cost) in a single transaction is rounded, as Turbo Tax is doing this year, there is certainly no need to round after addition or subtraction.  Turbo Tax needs to go back to doing the calculations as has been done in previous years.  Turbo Tax numbers need to match those in brokerage statements as in previous years.  This is a computer program that should be able to handle many dollar and cent transactions in fractions of a second.