Qualified dividends error

[ssb149256]

There seems to be an error with the 1099-Div qualified dividend's tax calculations. When I enter the amount of my dividend the tax liability decreases when it should increase. In other words it seems TT is treating this as a deduction and not income. So I enter $10,000 as a qualified dividend in box 1b on the 1099-Din and my refund amount increases significantly instead of decreasing. If I enter the same amount in either box 1a or 2a my tax liability increases as it is supposed to do. It seems only Box1b has an error. I am using TT 2020 Home and Biz download for Mac.

[DanaB27]

Qualified dividends and Capital Gains are taxed at 0%, 15%, or 20% tax rate depending on your income. Therefore, if you first enter 1a and then 1b you tax liability might decrease because qualified dividends are taxed more favorable than ordinary dividends.

Your 1099-DIV should have an entry in both 1a and 1b, if it has an entry in 1b. Please be sure that you have an entry in both 1a (total ordinary dividends which includes the amount in 1b) and 1b (qualified dividends).

You can look at your forms and find the Qualified Dividends and Capital Gain Tax Worksheet  which is used to calculate your tax if you have Qualified dividends or Capital gains on your return.

[Edited 1/31/2021 | 12:05pm PST]

[Mike9241 · Accepted solution]

total dividends must be entered in 1a (that includes the amount of qualified dividends on 1b). your 1099 should reflect an amount on 1a and 1b

[ssb149256]

thanks. my 1099-div was filled out incorrectly. appreciate the help

[gloriah5200]

The box 1a total dividends included as income (generally would increase your tax). 

Box 1b. Qualified Dividends - An amount entered into line 1b is qualified dividends and is subjected to the capital gains tax rate instead of ordinary income so it should reduce your tax as long as your ordinary income is in a higher tax rate than your capital gains tax rate for your income level.

Box 1a includes amounts entered in boxes 1b and 2e and it also includes the amount of the recipient's share of investment expenses that you report in box 6

Refer to the IRS Instructions for 1099-DIV

[SteamTrain]

I see what you mean, that entering a value in 1b increases a refund if 1a is empty.  It would be nice if the software  would immediately tell you that you can't do that

What you don't see is that it generates an error, that you won't see until you run the Federal Error check, (or switch to Forms Mode to see the error).  So the software won't let you file that way.

____________________________

IF the entire 10k are qualified dividends

a)  .....putting 10k in 'only" box 1b in my test file increased my refund by $1200   (but eventually the software will show an error if left that way)

b) ......then, with 1b still at 10k,  putting the proper  10k in box 1a decreased my refund $1710.....from the starting point before entering either value....so my tax situation for my test file is one in which the 10k of qualified dividends is, on the whole, being taxed at less than the 20% max rate for qualified dividends, for whatever income level is being used in that test file.