Adjustment to Qualified Dividend amount 1040, 3a

[stmcfadden]

I am trying to overwrite the calculated amount for Qualified Dividends on 1040, line 3a.

I am preparing a return for my deceased mother in law. I have entered an adjustment to Total Ordinary Dividends(1099-DIV box 1a) on 1099-DIV in the Adjustments to Dividends section, to indicate Nominee Distribution (these are amounts subtracted from her return that will appear on her Estate return because the income was received after her death.)  The subtraction flowed through correctly.  However I am unable to overwrite the calculated amount for Qualified Dividends that flows through to 1040, line 3a.  It seems to be calculating Qualified Dividends prorata.  However, I have the correct amount of Qualified Dividends and would like to use the accurate amount instead of an estimated amount.

[rjs]

You can't just change Form 1040 line 3a. You have to make the adjustment where you enter the 1099-DIV. After you enter the 1099-DIV, on the screen that asks if any uncommon situations apply, check the box for qualified dividends or Section 199A dividends that didn't meet the required holding period. Then, when you get to the screen for the holding period adjustment (probably the next screen), enter the correct amount in the box for dividends that meet the 60/90 day holding period. It will then use that amount on form 1040 line 3a instead of the amount from box 1b of the 1099-DIV. You can use this for any adjustment to qualified dividends, not just the holding period rule.

[stmcfadden]

Thanks for the response.  However, I don't think this answers my question.  I am not attempting to adjust Qualified Dividends due to holding period. (all qualified dividends met the holding period requirement)

Rather, I am trying to adjust qualified dividends that were auto-calculated by Turbotax due to a adjustment due to Nominee Distribution.  So, I entered the full amount of dividends on 1099-DIV, box 1a; then an adjustment at the bottom of same form in the section called Adjustments to Dividends or ESOP Distribution.  I selected box N -- Nominee Distribution.  This results in the Total Ordinary Dividend Amount being reduced by the Nominee amount, and the reduced amount flows through to 1040, 3b. 

However, Turbotax won't let me enter the reduced amount of Qualified Dividends, which I know.  It insists on calculating an amount that is not correct -- it's a prorata reduction of the gross Qualified Dividend amount that I entered on 1099-DIV, box 1b.  Since I know the correct amount, I would like to use it, instead of a prorata estimate. All I want to do is overwrite 1040, 3a.

[Mike9241 · Accepted solution]

This is a long time bug in TT. if you enter a nominee distribution for line 1 as you realize a prorated amount of qualified dividends is subtracted.  the workaround  I use is to enter 2 1099-div's.

one with only line 1 for the nominee amount and the second reports the remaining amount of total dividends along with the correct amount of qualified dividends.

other method using 1 1099 div

enter line 1 per 1099 and the nominee amount

computed % nominee amount to line 1

divide the correct qualified dividends by 1- % computed on prior line

say 1099-div gross is $8K  and qualified div are $4.5K

however, the correct amounts to be reported are $6k and $3k respectively

so nominee amount is $2K which is 25 % of line 1

so qualified dividends to enter is $3k / (1-.25) = $4k

Turbotax will reduce this by 25% so you'll end up with the correct amount of $3k of qualified dividends and $6k of total dividends

[stmcfadden]

Thanks!

Perfect advice.  It worked just as you described.