Dividend adjustment

[WinstonS]

In 2022 I bought a preferred stock.  The purchase date was between dividend payouts for the stock.  As part of the purchase, I paid what the trade confirmation refers to as 'accrued interest', although it really should have said 'accrued dividend'.   The stock paid dividends in 2022 but I need to reduce what was reported on form 1099-DIV by the amount of the accrued dividend that I paid as part of the purchase.  In TurboTax Deluxe, desktop edition, I enter the 1099-DIV, click continue, and come to the 'do any of these uncommon situations apply to you?' screen.  I choose 'I need to adjust these dividends' and click continue.  I enter a positive amount for the adjustment and choose 'other adjustment'.  However, the amount TurboTax uses for the dividend reduction is not what I entered.  As an experiment, I entered 200.00 for the adjustment.  TurboTax lists an adjustment on schedule B of 196.62.  Line 3b (ordinary dividends) on form 1040 is reduced by 197 and line 3a (qualified dividends) on form 1040 is reduced by 196. 

I assume that my thinking on how to reduce the dividend amount is correct but how do I get TurboTax to accept the actual adjustment I want to make?  

Thank you.

[Mike9241 · Accepted solution]

Turbotax's bad programming. when you enter an adjustment it is prorated against certain other lines.

say line 1a of 1099-DIV is $80 and line 2a is $20 (all dividends not just the specific one). if the adjustment is $5. TurboTax applies the $5 pro rata to lines 1a and 2a so dividends come through as $76 and capital gains as $19 obviously incorrect. the only way around this is to enter 1 1099-DIV without this specific dividend and adjusting all other lines affected by it then enter a second 1099-DIV reporting only this specific dividend and the adjustment - only line 1a is needed because after adjustment all other lines should be zero.

[WinstonS]

Thanks Mike9241!  You are exactly right that the dividend adjustment also reduced capital gains, which is wrong.  What a dumb error.  Since there are so many boxes on the 1099-DIV, you would think that if you choose 'I have an adjustment', a screen would appear allowing adjustments in all boxes.  

In my specific case, the only investment affected was a qualified dividend.  I received more dividends than I paid out in accruals.  So I will try your suggestion, except I will enter amounts in 1a and 1b of my 'fake' 1099-DIV for the total of the affected investment.  Then I will 'adjust' that amount using TurboTax's feature.  Fingers crossed that gives me the amount I'm looking for.

Thanks again for your response.