Do TurboTax “Rounded” 1099-B input entries need to be manually “corrected” to be consistent with 1099-B reported to IRS?

[ReneeM7122]

You're right, tax liability reporting in the case of negative numbers can seem like it is being done incorrectly when rounding occurs.  However, IRS has provided clear language that instructs taxpayers to round up when the amount is 50 cents and over, and down when it's 49 cents and lower.  

The following can be found on  the IRS website: https://www.irs.gov/publications/p17/ch01.html  

Computations

The following information may be useful in making the return easier to complete.

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.

If you are entering amounts that include cents, make sure to include the decimal point. There is no cents column on Form 1040 or 1040-SR.

Form 1099B doesn't allow a negative number for these transactions, so it causes an error.  

Here is how to fix the issue in TurboTax:

You will need to revisit the input section for the Form 1099-B transactions.  Use the following steps:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “1099-B” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to 1099-B”
• Click on the blue “Jump to 1099-B” link
• Click Edit beside the institution name
• Click Edit beside each transaction that contains a wash sale adjustment amount of $0.49 or less
• Delete the wash sale adjustment amount and click Done

@rockdoctor

[sophieluu1606]

Funnily, while TurboTax "Tax Expert" is ignoring what we have pointed out regarding the IRS rounding quote, I found this from a different tax filling option, Tax Act: https://www.taxact.com/support/1183/2017/form-1099-div-rounding.

Apparently they also round each sale transaction, but they used the total provided in the 1099 form (in this case 1099-DIV, but I would say it's similar in case of 1099-B), not computing from the rounded transaction line like what TurboTax is insisting on doing. Therefore, the final amount is corrected and same as what reported on 1099.

If you haven't filed, probably move your business somewhere else, and get your refund on TT software if you can.

[rockdoctor]

You are incorrect. Quote: "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 stop replying and elevate this issue to your manager.

[MaxTax00]

How does Turbotax not understand that because they are rounding sooner than necessary, they are making life very difficult for their customers in trying to reconcile statements?!?  If you have enough transactions and Turbotax rounds all of them at the individual transaction level then you get uncomfortably large variances between the total that a TurboxTax produced return provides the IRS and what your Broker sends to the IRS on something like a 1099-B.  Fix it, please. I do not recall  having this same issue in any of my prior decade using Turbotax.

[mjrengaw]

One interesting thing that I noticed was that if you switch to Forms view within TT and go to the Form1099-B Wks and scroll down and look at the top of page 2 you will see a notation at the top that includes the following last two sentences:

"Note that individual sales are rounded off to the nearest dollar. As result, the various summarized values below may differ slightly from statement totals." 

That certainly indicates that the TT folks specifically intended to round off the individual sales. My concern here is that they are rounding the individual cost basis and proceeds numbers prior to the net calculation. I'm not sure that is correct but it would surprise me if the decision to do it that way was not thoroughly vetted. Based on the wording at the top of page two of the Form1099-B Wks I would say it was intentional rather than a mistake.

[rockdoctor]

The problem for me is that when a wash sale amount is less than 0.50, the adjustment field is 0, which is an error. Manually removing the wash sale field to remove this error is clearly not reporting accurate info. The more important point is that the IRS grants the filer the OPTION to round, and so should TT. For the filer, this means beimg able to reconcile the numbers with use-cases that dont round and for the IRS, if they really are allowing this, a day trader could theoretically harvest a huge amount of tax loss while realizing significantly lower actual loss by wash selling at 0.49 cents per trade.

[mjrengaw]

I agree, it should be an option. The only point of my post was that I don’t think this was a mistake or something that theTT folks “missed”, I think it was intentional and I would certainly hope they would know what is and isn’t allowed.

[MaxTax00]

Yes, the forced Rounding at the individual transaction level by TurboTax is absurd. The IRS certainly does not require it. Why does Turbo Tax force it upon us when it only makes everything much more difficult to reconcile? We are using software, not pen and paper! Precision makes our jobs much easier. Rounding makes it much more complex and less accurate. 

[rockdoctor]

and the idea that because TT has a disclaimer that their sums wont match those reported to them by the broker due to rounding does not make me feel better at all. returns with basic rule-based mismatches and arithmetic errors get flagged, period.

[mjrengaw]

I just personally find it hard to believe that TT would purposely do something that would cause the IRS to flag returns. And based on everything I’ve seen this was purposely done, not a mistake or error. But who knows...

[rockdoctor]

Well I am filing a summary report (which only rounds the total) and mailing the 1099-B with form 8543 so that everything checks out.

[mjrengaw]

I considered that but whenever you mail anything to the IRS you just raise your odds of your return getting flagged. Since I owe, as usual, I’m in no hurry to file so I’ll just wait to see if TT makes any changes. If they don’t I’ll e-file as is. 

[MaxTax00]

Just because the IRS allows it does not mean TurboTax should make it a requirement. It makes our job much more difficult because we have to hunt for why we are getting a variance. Is it because of unnecessary rounding at the individual transaction level or is there something else? Imagine someone with 1,000 transactions that all get rounded and the variance this creates with the 1099-B the Brokerage provides the IRS.  At the very least, no rounding at the individual transaction level should be an option. TurboTax is software. I get ZERO benefit and only a large headache from them deciding to round so early. We are not out here using pencil and paper so rounding at the individual transaction level is not a "feature" but rather a "bug."

[mjrengaw]

I agree it should be an option rather than a requirement. But a “bug” would be something that was not working as designed and this is working exactly as designed. IMO it’s more of a poor design decision and I personally don’t see any real benefit, in fact it seems to be the exact opposite. 

[MaxTax00]

I should have called it a  "bug" from my viewpoint as it has completely messed up the reconciliation process. I am sure someone at TurboTax thinks they are doing customers a favor by rounding at the individual transaction level but it makes zero sense to me since we are talking about software performing the calculations and the IRS does not require this rounding.  My hope is that as most brokerages have now made the 1099-B available as of today, and more customers get around to doing their taxes ..... thousands of people will become frustrated and TurboTax will provide a reasonable solution. There are going to be lots of confused faces from people  when Turbotax gives them a completely different number than what they see on their 1099-B.  Please TurboTax, save us and yourselves a huge headache, and just make this easy fix. Best we can do is keep this thread active and raise awareness.