Extreme Investment taxes after adding 1099-DIV

[MARC1TIM]

Hi,

I have a 1099-div from Ameriprise that imported as shown below. I know owe a lot this year due to several factors. But should this cost me so much? Am I or TT doing something wrong?

Thanks in Advance.

Tim

Capital Gains	$729.00
Exempt	$0.00
Ord. Divs	$846.79
	Fed	MN	Total
With DIV	$2,717	$979	$3,696
Without DIV	$2,265	$786	$3,051
Difference	$452	$193	$645

[SamS1]

It should not, unless your modified adjusted gross income is over $250,000 if filing joint or $200,000 if single.  Your capital gains dividends should only be taxed at probably15% and ordinary dividends would be taxed at your marginal tax rate.  If you are over the modified adjusted gross income levels, an additional 3.8% net investment income tax is added.  You can review your 1040 in TurboTax to pinpoint where the additional tax is coming from.  Scroll down the form and find Schedule 2.  That is were you will see any additional taxes.

You can review your 1040 in the following steps:

1. While in your TurboTax account, select Tax Tools in the left margin
2. Select Tools
3. Select View a Tax Summary
4. In the left margin, select Preview my 1040

[MARC1TIM]

Thanks Sam!  No values in the Schedule 2 at all. But I did find this...?

Still don't understand. Our income is not >$250k

[SamS1 · Accepted solution]

It looks like you have some additional capital gains transactions that imported with the dividends.  The 1099-DIV information looks right with the $847 of ordinary dividends being included in income.  The qualified dividends will be tax at the capital gains rate and are included with the capital gains tax calculation.  The amount on line 7 is from the 1099-B form that imported with the 1099-DIV.  These are probably stock or mutual fund sales transactions for the year that generated a capital gain.   The capital gains dividends from the 1099-Div would be added to the capital gains generated from the 1099-B to equal the amount on line 7.  I would recommend reviewing the hard copy of your 2020 Ameriprise combined 1099.  You should should see a section for 1099-B Capital Gains transactions.  

Note on Capital Gains, if the gains are short-term (less than a year holding period) the gains are taxed as ordinary income at your marginal rate.  If the gains are long-term (more than a year holding period) they are taxed a the Long Term capital gains rate, which is 0-15%.  Since your tax jumped, I am guessing the gains realized in 2020 are probably short-term but you will need to review your 1099-B information from Ameriprise.