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.
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.
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.
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.