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

[DJG]

@vulpinepuppy I think maybe you can manually enter the wash sale transactions (if you don't have too many), and then enter summary amounts for the remainder and mail in your form?  The TT CPA I spoke with mentioned something about that, but I haven't really looked into it yet.  I haven't even looked at my taxes in weeks while I was waiting for a resolution on the rounding Q. 

If anyone has figured this out already (i.e., employing the summary/mail workaround when you have wash sales) and can post clear instructions for what to do, I'd appreciate it.  Good luck, all. 

[mjrengaw]

While I think it's very unfortunate that TT seems unwilling to provide a real fix for this issue I think there may be a simpler way around this if you don't have too many transactions that are getting rounded. 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 total will exactly match what my broker reports on the 1099-B.

It's unfortunate that a manual work around is needed but it is what it is. I will of course save the return exactly as TT calculated it (with the transaction level rounding and the resultant incorrect gain/loss) and also save my corrected and correct return after the manual corrections. I will use the difference between those two to file for a refund of the purchase price of TT based on the "Maximum Refund (or Tax Savings) Guarantee or Your Money Back." It's TT so of course they will try to find a way to weasel out...LOL.

[flatflo]

This is the first time I've had capital gains to report to the IRS due to selling employee stock purchase plan shares last year.  I imported my 1099 from Fidelity so was having the toughest time trying to figure out where I went wrong. I finally did a search and found this is a known issue. Luckily for me the amount is minimal but it did cause me time and aggravation. We're paying extra for Premium to address capital gains so please fix, TT!

[dryan1]

I notice this thread is at least 4 weeks old. After entering my stock information there is no possible way I can make the totals match my 1099B. In a year where there have been losses for many people, this oversight by Turbo Tax has implications. I have always used Turbo Tax except for one year where it was a total fail and I used H & R Block software.  Looks like I'm heading this direction. It is late enough in the tax season this should have been addressed.  Please tell me there is an upcoming solution to this issue or you can't fix it. ONE WAY OR THE OTHER!!!!!!!!!!

Is there any other option to contact Turbo Tax?

[sophieluu1606]

Well the whole reason why I decided to try out Turbotax is mainly because of the broker import functionality as I do have a lot of sales with wash sales. So while there is the workaround to put in summary line then mail in the 1099-B, I don't see any perks of using Turbotax personally. Guess I will do what I always do and mail my return.

@DJG @vulpinepuppy So regarding Wash Sale for form 8949, you can still just put in summary (per broker) and mail in your 1099-B. Check out exception 2 from this IRS link for form 8949, they do specify and very easy to understand: https://www.irs.gov/instructions/i8949#idm[phone number removed]600

[sophieluu1606]

If you go the previous page (page 9), one of the user, DJG, has attempted to email Intuit's CEO and the response from them it's that this rounding on transaction level is intentional change, so they are likely not going to fix it. So if you don't think you cannot accept this issue, maybe it's best to move to another solution and request you money back.

[thomaswhitmire]

Hi everyone,

I will share my workaround, which I submitted a couple weeks ago, 3/5/2021. As of today (3/17), my state and federal refund is coming into my bank account. So far so good. 

I had a $4 discrepancy between 8949 and 1099-B. The -B was higher than the 8949, which meant I would be underreporting my income. After much deliberation, I decided to add one last entry at the end of the investment transactions list in TT:

"Correction for Turbotax rounding error"

01/01/2020 purchase date

12/31/2020 sale date

Basis $0

Proceeds $4

It brought my 8949 to match the 1099-B. They accepted it, and refund is in my account. 

Use at your own risk, but I thought being exact was most important. 

[DJG]

@thomaswhitmire  I really like your solution, it's very elegant.  It shouldn't trigger an audit since your totals will exactly match what your broker reported to IRS.  And if you were to get audited for some reason, your solution is easily defensible so even if the IRS were to overrule you for some reason and insist on using TurboTax's rounded figure (i.e. w/o your correction entry), it's hard to imagine them giving you a hard time about it or penalizing you since you were just trying to be more accurate by matching your 1099-B exactly.  I think I might end up going this route, so thanks for suggesting it!

@sophieluu1606 Thx for the link.  Sorry, I realize I asked the wrong Q.  I think what the TT CPA was suggesting was actually a combination of Exception 1 and manual entry -- i.e., if you only have a few wash sales and everything else qualifies for Exception 1, then you could manually enter the wash sales on Form 8949 (rounded, of course!) and then enter the remainder in summary directly on Schedule D.  So then there would be no need to mail anything to the IRS.  I'm pretty sure--just not 100% sure--that's what he was suggesting.  Does anyone know if that would be kosher?      

[sophieluu1606]

@DJG Gotcha. So in that case you will only be using exception 1 and not exception 2, which works if you don't really have that many wash sales as you can manually enter them, you won't need to mail 1099-B in this case. I think @thomaswhitmire solution can also work too. I have heard this recommendation by someone claiming they used to be IRS revenue agent (auditor), and they also suggested that do a separate adjustment line for short term and long term if you have differences for both so that they are treated correctly.

[DJG]

Makes sense, thanks @sophieluu1606 .  

[PlotinusRedux]

@DJG Thanks for finally getting us an answer.

So Intuit: "The rounding differences are well within the IRS built-in tolerances for rounding discrepancies."  I.e., the IRS doesn't care about a few hundred dollars.  That's great for me, it came out to around $200 less than my 1099-B totals.  Not so great for those it's over-reporting gains for, though.

Guess I'll do the attach the 1099-B as a PDF thing so it's accurate--after getting a refund for the desktop edition since they say it can't handle PDF attachments (really, guys?).

At least we can all decide how we want to proceed now.

[JoshB1]

Let me get everyone's take on my situation - I have two brokerage accounts with 1099B transactions for 2020 and I don't think it is a really unique situation for a Schedule D:

Schedule D Short-Term

1A - Covered (reported by two brokerage accounts)

• D - Proceeds (summed) off $1.39 - in my favor - I'm assuming this is fine
• E - Cost Basis (summed) off $8.06  - in my favor - cost basis reported is higher - guess this is fine?
• G - No Adjustments
• H - Gain / loss off by  9.45 - in my favor (bigger  loss) - guess this is fine?

Schedule D Long-Term (only reported from one of two brokerage accounts):

8A and 8B - Covered - I had to adjust a portion of the transactions due to ESPP transactions (hence 8B) 

• D - Proceeds off by $2.69 - not in my favor - higher proceeds reported
• E - Cost Basis off by - $1.28 - not in my favor - 
• G - this is where things get more complicated:
  • I used the ESPP summary wizard to get this amount which I *believe* is mostly correct
  • Adjusted the gain down by $359
• H - Gain / Loss - again the complications:
  • 8A is reporting $493 gain / 1099B is reporting $1851
  • 8B is reporting $1003 (I'm not sure I fully understand this number)
  • I'm assuming by adding:
    • $493 + $1003 - (-$359*) = $1855 - which is off by $3.97 - not in my favor
    • * because of the adjustment to cost basis
  • So again, none of the numbers really match the 1099B summary but they *mostly* make sense (in my mind)

9  - Not Covered - Basis not reported to IRS

• D - Proceeds off by $2.88 - not in my favor - higher proceeds reported
• E - Cost basis off by $0.22 - rounded up in my favor - higher cost basis
• G - N/A
• H - Gain / Loss of by $2.66 - not in my favor - less loss reported

In the end, I'm taking the full $3000 loss (line 21 on Schedule and line 7 on 1040)  for 2020 with $14 roll over to 2021 - I think I could easily support this if there was an issue (but then again, I *really* don't want to have an issue with my taxes). 

But as you can see, due to this STUPID rounding, this gets far more complicated to reconcile (especially since all transactions are not just reported on the 8949 for 8A/8B/9 like they were in 2019.

Thoughts? Feedback? Corrections?

[jeffecohen]

@thomaswhitmire 

This is what I was thinking of doing, although I've got to reconcile 3 accounts. Glad it worked for you.

[bredman]

@thomaswhitmire Thank you for your suggested workaround - it seems to me to be the simplest of the various method suggested to correct Turbotax's error.

It is unfortunate that we need to implement any workarounds just because Intuit refuses to correct this bug saying that the resulting errors are within the acceptable range for the IRS and we are supposed to take Intuit's word on this. So much for Intuit's 100% accuracy guarantee, but I suppose Intuit considers 95% accuracy to be within an acceptable rounding error of 100% accuracy.

[dryan1]

This is quite a simple workaround, and I appreciate your solution.  I just saw on tv the IRS is extending the filing date until May 17, 2021. 

My real issue is it's obvious this is something people consider a real problem. In all the years of doing taxes I have never found myself in this situation. I want all of my entries to be exact, especially coming from a broker! It has been beat into our heads for as long as I can remember. Tell the truth, be honest, file your taxes!!! Truly people don't think the margin of error suggested by Turbo Tax is a good idea, especially if it underreports your income, or can be taken as a loss! 

We are in the middle of an unprecedented pandemic with millions of people sick and thousands dying. Grief is a household word. On top of that millions are trying to get vaccinated. 

 The IRS still needs to process 7million returns from 2019. They have been trying to juggle delayed tax filing dates, and now a new one. The IRS is responsible for 3 sets of stimulus checks. Why should the resolution be to send more paper separately to the IRS?

TurboTax, although a great tax preparing software, has now changed a procedure that has been in place for years. The solution of entering summaries and then MAILING the correct paperwork to a Federal Institution in the midst of all this, seems a foolish endeavor that could possibly create more issues for the IRS and us. I am solely disappointed in this year's product and with the extension, Turbo Tax has time to effect a solution.

I will be requesting a refund and will search out other avenues to correct this.