TurboTax 2020 rounded each trade from my 1099-B upload. The cost basis/proceeds do not match my 1099-B by a difference of $18. Is this normal?

[Fred58]

After uploading the 1099-B, both the cost basis & proceeds do not match my 1099-B due to rounding of each individual trade, leaving a difference of $18 between TurboTax and the reported 1099-B values. Is this expected?

[hbl3973]

Fred58,

The short answer is Yes, TurboTax is permitted to round figures.  These appear on IRS form 8949 "Sale and other Disposition of Assets".  The instructions for that form (https://www.irs.gov/pub/irs-pdf/i8949.pdf) state on page 2:

Rounding Off to Whole Dollars
You can round off cents to whole dollars on Form 8949. If you do round to whole dollars, round all amounts. To round, drop cent amounts under 50 cents and increase cent amounts over 49 cents to the next dollar. For example, $1.49 becomes $1 and $1.50 becomes $2.

In fact, at least the last time I looked into it, IRS blessed software is required to round and report dollar figures.

If the 1099B total gain is less that what TurboTax computes, by all means be happy you are saving a few bucks.  If it went the other way, you may be able to close the gap by reporting only 1099-B totals in TurboTax.  This is available through one of the two Exceptions listed on page 3 of those instructions.  Exception 2 is a bit onerous as you would essentially have to make an equivalent of 8949 showing the pennies and any adjustments and then attach it as a PDF or print it out and mail it separately using form 8453.

[Fred58]

@hbl3973 

Hi hbl3973,

The Turbo Tax rounded value is underreporting the capital gains from the 1099-B, shouldn’t the values match on the form 8949? I did read through the exceptions, but wouldn’t Turbo Tax ask before marking the item as completed on its software?

[fanfare]

 How many transactions?

If it is many hundreds then the rounding should all cancel out in the end since it should be random.

[sethaadams]

I have a problem with this too.  This behavior in TurboTax 2020 is different than the behavior in TurboTax 2019 where TT2019 only rounded at the end of all of the transations.

>> Intuit, will you be fixing this in a new update?  Or is this a new permanent "feature" of TurboTax 2020?  It's not cool.  Totally ready to ditch 20+ years of TT returns to try another product.

[Fred58]

@fanfare

About a hundred transactions. They don't cancel out, I'm looking at the totals after the upload and they don't match the 1099-B.

As an example, if you had 100 transactions, all for $0.49, would you be expected to report your $49 in earnings, or round down to $0 on each transaction and report $0?

[fanfare]

Trick question.

What is the profit shown on your consolidated 1099-B for that sales category.?

The totals Line 2 on the bottom of Form 8949 has to match that.

If you choose to aggregate category A with no adjustments,

the totals on Schedule D must match your broker 1099-B.

After rounding that would be +/- one dollar.   

Form 8949 is not required.

Then, if you choose to use Form 8949, the totals on Form 8949 Line 2 must match the totals on the corresponding lines on Schedule D.

------

P.S.

Meanwhile TurboTax exhibits various kinds of rounding behaviors that cause problems. not just with stock transactions.

[fanfare]

@hbl3973 

@Fred58 

8949 instructions are missing the clarifying sentence in Schedule D instructions:

'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."

In the old days all your transactions were on Schedule D and there were no categories.

[hbl3973]

Fred58,

As the rounding results in a smaller capital gain than what keeping the cents would have given, just relax, you've saved some tax.  There's no penalty for using the pennies vs. the dollars to save some tax.  I do that every year to save a couple of bucks.  TurboTax has handled the values consistently, including transferring the dollar totals to Schedule D.

As to the exceptions, which aren't advantageous for your current situation, Exception 1 is taken care of by TurboTax.  Exception 2 arises only if you manually opt to provide sums of transactions as a single entry.  In that case, you may be asked to fill out and mail in Form 8453 if you cannot upload the statements with the details of what would have appeared on 8949 for those composited entries.

[hbl3973]

Fred58,

Your example is a correct, if extreme situation.  Basic statistics says that the standard deviation, i.e. the approximate width of the spread of values in a sum, grows proportionally to the square root of the number of entries summed.  So with a 100 entries, you would expect a 10-fold growth in the range of possible swings away from the penny-precise average.  (I ignore the technicality that the +/- 50 cent penny range is a uniform distribution and not a normal (bell-shaped) distribution.)  For 100 entries, 95% of the time the swing will fall within about $5.75 each way.  $18 is an outlier, but, as you have seen, not impossible.

[Fred58]

Thanks so much! I appreciate you helping & taking the time to look into this! 

[hbl3973]

fanfare,

So true that it was much easier before 2010 to handle capital gains before the rules were changed to discourage fraud.  In that setting then, yes, one added the pennies and rounded the sum onto Schedule D.

With regards to needing to match the brokerage statement penny-correct totals, I respectfully disagree.  Neither the Schedule D instructions nor the Form 8949 instructions impose such a requirement.  They simply say that 8949 individual line entries can be individually rounded and their sum(s) transferred to Schedule D on the appropriate line(s).

That said, I always maintain my computer tax spreadsheets with penny accuracy and choose, if I am ambitious, to enter it into TurboTax to see if I save money by rounding.

[fanfare]

As an active investor, if you aggregate Category A or D transactions without adjustments, Form 8949 is not required and does not come into the picture. No mailing is necessary.

That's the simplest way to report your activity.

Clearly in that case your Schedule D is going to match up with your consolidated 1099-B.

That's all I was saying..

Then I argued that if you do use Form 8949, logically the Line 1b totals should be the same as the Line 1a totals would have been.

But you don't have a problem with a 5-18 dollar difference, I won't argue the point.

As far as your statistics analysis goes, I'll take your word for it.

If you are arguing that the clarifying instruction for Schedule D is not applicable to form 8949 because it is not  in the 8949 instructions, I would argue that point.

[sethaadams]

The answers here seem to miss the point entirely.  It's not that TT2020 is rounding, it's that this behavior is DIFFERENT than how TT2019 and earlier years handled this.  In prior years, TT would keep each individual transaction to the penny and only round the total, so that the brokerage 1099-Bs matched the total in TT within $1.

This is now completely different in TT2020 and each transaction is now rounded at the transaction level.  I appreciate your discussion of randomness, but the sales prices are not random.  They're usually to a whole dollar amount when trading 100 shares, less consistent SEC fees and commissions that do not lead to random sales prices, even across hundreds of transactions.

What I would appreciate in an answer is an explanation as to why this changed from previous years, not simply, "it's okay, it's just rounded" and if Intuit has any plans to update this.  It's sloppy and I personally don't like it.  If it's deemed a new feature and I should just accept and be happy with it, I'm going elsewhere.   Clearly the inflated amounts do not support "Let's get your maximum refund, guaranteed" if I'm paying more taxes as a result, and manually completing lots of extra forms kind of takes away the whole benefit of using tax software.  If Intuit would like to reach out to me directly, I'd welcome their response.

Thank you for your help and any additional clarity you may be able to provide.

[Ordiemn]

This is not Cool

Who thought this was a good Idea ???????

Time for a different Tax Program