When will rounding of individual transactions on form 8949 be corrected?

[Ordiemn]

Will Turbo Tax also pay for my time just trying to correct the problem that Turbo Tax caused!

Last time I attempted to contact the IRS to correct a tax worksheet calculation I spent weeks just trying to find the right person to talk to then they could not even see my tax return.

Turned out it was their mistake but wasted over 10 hours of my time and a lot of frustration.   

[grimb300]

I am seeing the same rounding error others have posted. This is causing a significant (to me) error in my transaction reporting. Please fix as soon as possible. I'm now questioning my 20+ years of TT loyalty.

[Scotca]

I reached out last night to  the office of the President, and they have been extremely responsive.  The office of the president phoned me this morning, and I sent them my tax return for their review.  A CPA called me this afternoon, and understands the problem.  He is going to see what he can find-out over the next two days, but he has seen this in the past with other forms  / other years, and TT was able to resolve.  I am cautiously optimistic.

[Scotca]

Here is the response I received from TT.  Based on this information, I'm going to file as is with the rounded numbers reported on form 8949.  It won't match my 1099-B exacly, but will be close enough.

Hi Scot,

Thanks for taking the time today - we appreciate your input and I hope this brings some clarity to the issue you described.

Form 8949 Rounding

The 2020 TurboTax software has been modified to conform to the IRS instructions/guidance and industry guidelines.  Publication 17, 2020 Tax Guide for Individuals (on P. 13) provides that:

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.

The TurboTax program, beginning in 2020, now rounds the individual entries for sales price and cost basis and then computes the gain/loss based on these rounded numbers.  While we recognize that this may cause differences from the actual totals reported on Form 1099-B.  The rounding differences are well within the IRS built-in tolerances for rounding discrepancies.

When entering specific individual amounts from Form 1099-B such as Sales Proceeds and Cost Basis, the second paragraph above does not apply - as the entries are not considered by the IRS to be “two or more amounts to figure the amount to enter on a line”. 

As an alternative, TurboTax provides the ability to report Form 1099-B transactions as “summary transactions”.  If a detailed Form 8949 is required, then the TurboTax online program also has a new feature that will allow you to upload a pdf copy of Form 1099-B that will be transmitted to the IRS with the tax return (in many cases, this will not be required if you have only A or D transactions with no basis adjustments, which are not required to be reported on Form 8949).  TurboTax Desktop does not have the ability to include PDF documents in electronic filing.  If you choose to use the summary reporting method on TurboTax Desktop, you may need to mail the detailed information about your sales to the IRS using Form 8453.

Pub 17, 2020 Tax Guide for Individuals, along with the Instructions for Schedule D and Form 8949 are consistent with the above. 

[JoshB1]

I'm waiting on an update - that sounds like a really dumb explanation and it doesn't really make sense why they would potentially risk being off when we are talking about 2 decimal points of precision - which has always been the case

I don't think they factored in people having hundreds of transactions which could cause a bigger delta 

That and the inability for TurboTax Desktop (I do *not* want to use their online app) can't submit the PDF of the 1099...yeah, I'll wait for them to fix the bug 

[DJG]

FYI, I received precisely the same response/explanation as @Scotca did, and I discussed it with the CPA who wrote it.  To be clear, there is no "fix" coming, so don't wait for one.  They made the switch to transaction-level rounding intentionally and do not view it as a bug, so they will not be updating their software to "fix" it.  The guy I spoke with left open the possibility that they'll revisit the issue for next year based on the feedback they're receiving, but he made even that sound pretty unlikely.  He said they made the change to be more consistent with IRS instructions about rounding and to be more in line with the "industry standard" approach.

Although this obviously wasn't the answer we were hoping for, I do feel satisfied that we now have the official, decisive response from Intuit on this question, so we can now all go about finishing our taxes.  I am satisfied that any discrepancy between our 1099-B and TT's calculated capital gain will be acceptable to the IRS and will not trigger an audit.  So really it's up to each of us whether you want to file with the discrepancy or use the workaround of reporting summary transactions and then mailing your 1099-B to the IRS w/form 8453.  Personally, I will be using the workaround because all the rounding results in a capital gain calculation that is significantly higher than my actual capital gain.  If the discrepancy were in my favor, I'd probably just go along with it.

[Scotca]

I agree - TT is not classifying this as a bug.  Based on my interactions,  I don't expect any "fix"

[JoshB1]

There's too many threads on this or like this ...and it seems that people are also getting different answers: 
* https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/re-imported-1099-b-cr...

* https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/turb[product key remo...

* https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/re-espp-rsu-issues-on...

At the bare minimum, there is clearly a bug with the ESPP transactions in TurboTax Windows Desktop - one of the flows is absolutely not working - I think I have the correct numbers and the delta just isn't worth me spending hours trying to get Intuit to confirm a bug - I'll give it another couple of weeks to see if any updates come out and if not, file - my risk of audit should be extremely low (unless of course the IRS is verifying 1099s numbers) 

[sfamsieg]

It seems the issue with rounding has been fixed recently. After deleting and importing 1099-B forms again numbers in Totals look fine.

[azrozbud]

I am done with turbo tax.  This rounding of each entry will cause paying taxes on more than i should.  I have used TT for years but now I plan to just print the forms I need from IRS and do it myself.  It is sad that I can do it myself more accurately!!!  Will not purchase TT again!

[ThatGrapefruit]

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@sfamsieg wrote:

It seems the issue with rounding has been fixed recently. After deleting and importing 1099-B forms again numbers in Totals look fine.

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Then they broke it again for Tax year 2021, as I just noticed the issue when trying to divvy up my income between two states for a move.  Since the total amount depends on my residency when sold, I have to do summation based on sale date, and then find the ratio and apply that to the total.  Otherwise I have to redo my summation off the rounded values in Form 8949, but that's a pain and something TT should be able to do for me given they know my residency switch date and the sale dates of all the stocks.

What's nice is dividends were imported as the sum total, so I don't have to deal with early rounding there.

If you elect not to put summary values and only got stock sales at $0.50 and below, this rounding would mean you could make money without directly reporting it due to the style of entry you chose.  And I haven't seen anything saying you have to choose a method of entry with an error of less than XX% or anything like that. 

[Nan2C]

Having a guarantee isn't as good as having peace of mind going in.

The logistics and stress of added messes would in my book be good to avoid.

I have found quite a few glitches that seem fixable--both on the website and in the Mac download version-- that would produce more peace of mind if someone attended to them in a timely fashion after being notified. 

I am very disappointed after seeing pages after pages of complaints on simple issues. 

Who is in charge of the Simple Fixes Department??

[fanfare]

@Nan2C 

You don't get much credit for Simple Fixes.

Where I used to work, some developers would deliberately insert bugs, 

and then be praised at review time for fixing it so quickly after System Test reported the problem.

[huskerdooo]

This is exactly my case. 100's of sub 50 cent short-term transactions from ETFs all rounded to 0 on the 8949, and thus not shown on Schedule D.

This is an acceptable rounding error? I am sure the IRS would disagree. I could have had 10,000 imported sub 50 cent  transactions (TT limit per brokerage firm) amounting to $4999.00 and I would not have to pay tax on it. Does that sound reasonable? Imagine if I had multiple brokerage firms. TT is saying this is tax free. I don't think that would fly in an audit.

What is the fix for this (before I spend hours entering transactions)?

"You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was
reported to the IRS and for which no adjustments or codes are required. Enter the totals directly on
Schedule D, line 1a; you aren’t required to report these transactions on Form 8949 (see instructions)."

It sounds like if I enter summary data  on Schedule D, Line 1a, then I do not need to worry about the 8949, but I am not sure if TT will like it. I also do not believe this is doable because the transactions had no reported basis?

[fanfare]

A) It is the subtotals on 8949 Line 2 that have to match the corresponding totals on Schedule D.

B) no basis reported? That's not the same as basis = zero due to rounding.

if no basis is reported, your broker statement will tell you to mark Box B or E.

The detail reporting exception is only for Box A or D with no adjustments.  (Schedule D line 1a or 8a). For those, no mailing is needed.

NOTE: based on the forum, TurboTax doesn't handle this  very well at all.