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Qualified dividends being taxed using TurboTax

DocBlitzen — Thu, 30 Jan 2025 02:11:11 GMT

I have about $1000 in qualified dividends that TurboTax is including as if they were "unqualified"--that is, being taxed. My total gross income (joint) with all Social Security is over the limit, but when I include the 15% reduction, it is below the limit. Thus, is that how the IRS is counting when it speaks of Gross? [If so, that's one more disgusting effect of taxing Social Security.]

Re: Qualified dividends being taxed using TurboTax

Hal_Al — Thu, 30 Jan 2025 02:18:56 GMT

Your qualified dividends (QD) are added to your other income and included in both your total income and Adjusted Gross Income. The special tax treatment for qualified dividends is not an exclusion from your income.

Among your work sheets, you will have a "Qualified Dividends and Capital Gains Worksheet" (abbreviated "Qual Div/Cap Gn" on the forms list) showing the tax calculation. That's where your QD are taxed at 0% or 15%. For more complicated returns it will be the "Schedule D Tax Worksheet" (abbreviated "Schedule D Tax").

Re: Qualified dividends being taxed using TurboTax

DocBlitzen — Sat, 01 Feb 2025 16:03:05 GMT

I think I solved my own problem. I am on Social Security, and I had used the 85% amount being taxed on my spreadsheet. I believe that ALL income before ANY deductions goes into the Gross amount that the IRS uses to determine whether you pass the limit. It seems that if dividend/CG amounts cause the Gross to exceed the limit by even $1, none are eligible for the 0% taxable rate.

I guess that's the danger of doing the calculation on a self-made spreadsheet. Now I have to figure how Minnesota taxes Social Security!