Turbot tax reporting qualified dividends wrong

[myhui]

@rjs This is the 1099 from the brokerage, which was directly imported by TurboTax Online via their own servers, not by me uploading a local file:

[rjs]

On your 1040-X note that line 6 says the method used to figure the tax is QDCGTW. That stands for Qualified Dividends and Capital Gain Tax Worksheet. I'm not sure why you're not seeing it. It looks like maybe you can only see that worksheet in the CD/Download TurboTax software, not in TurboTax Online.

If you want to go to the trouble, you can work through the Qualified Dividends and Capital Gain Tax Worksheet on page 36 of the IRS Instructions for Form 1040 and see if you get the same result as TurboTax. But it's extremely unlikely that TurboTax is calculating the tax incorrectly.

Doing a second amended return gets very complicated. When you cancel an amended return in TurboTax it removes the Form 1040-X, but it does not undo the changes that you made in income, deductions, etc.

By the way, under the new tax law that was passed in 2017, the cost of tax preparation software is not deductible on Schedule A for 2018 through 2025. Since you are using the standard deduction it doesn't affect your tax, but you should take that out, and certainly take it out of your explanation.

[jeffrytt]

I am also see that TT incorrectly handles 1099-DIV box 1b and 2a.

I purchased TurboTax DELUXE for Tax Year 2022. I have both 1099-DIV box 2a Capital Gains and 1099-DIV box 1b QUALIFIED DIVIDENDS from a large, popular mutual fund. I fit into the 15% MFJ IRS criteria, net capital gain. I used the 1099-DIV IMPORT in TT.
TurboTax DELUXE seems to be treating box 1b and 2a as Ordinary Income. For example Line 1 on 1040 has the box checked and Schedule D is blank)
What should I do with DELUXE to treat 2a and 1b as long term?
NOTE: as a Temporary Comparison, I tried using TT Online with identical 1099-DIV Import, however TT Online wants to charge Full Price me before TT will show me the Forms, Worksheets. 

[VolvoGirl]

1040 line 1 is wages.  You mean line 3 for Dividends?  Even though qualified dividends show up included in line 3b  the tax is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.

In the online version you need to save your return as a pdf file and include all worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

[myhui]

@jeffrytt There is no discount for buying both an Online and Download TurboTax license for the same year. I asked, and received that reply.

@rjs Thanks for your tips on trying to undo a second amended return that wasn't filed. Yes I'll try to manually do the calculations as you've suggested according to the  IRS Instructions for Form 1040 .

[rjs]

@jeffrytt 

You can't tell from Form 1040 how TurboTax is calculating the tax on qualified dividends and capital gain distributions (1099-DIV boxes 1b and 2a). You have to look at the Qualified Dividends and Capital Gain Tax Worksheet. Schedule D is not needed to calculate the tax on qualified dividends and capital gain distributions. It's all done on the Qualified Dividends and Capital Gain Tax Worksheet.

I don't understand why you're trying to use TurboTax Online if you have the CD/Download software. In the CD/Download software you can do any comparisons that you want, save multiple versions of your tax return with different file names, and easily see any of the forms in forms mode.

[jeffrytt]

Hi @rjs Thanks for indicating to me to look at the TT "qualified dividends and capital gains tax worksheet" to assess how TT DELUXE is calculating the long term Cap Gains tax on qualified dividends and capital gain distributions (1099-DIV boxes 1b and 2a).

Prior to posting, I have reviewed the TT "qualified dividends and capital gains tax worksheet"

In summary, TT DELUXE is circular and not correctly handling 1099-DIV boxes 1b and 2a.

TT "Qualified Dividends and Capital Gain Tax Worksheet" states:

"Line #3. Are you Filing Schedule D?

if Yes. Enter the smaller of line 15 or 16 of Schedule D. If either line 15 or 16 is blank or loss, enter -0

if No. Enter the amount from Form 1040 or 1040-SR, line 7

TT DELUXE is populating line 3 with 1040 Line 7  "

TT DELUXE is not populating Schedule D with 1099-DIV boxes 1b and 2a. I qualify for the IRS 15% MFJ  net capital gain. 

Here is a screen shot of TT "Qualified Dividends and Capital Gain Tax Worksheet" :

[rjs]

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@jeffrytt wrote:

TT DELUXE is not populating Schedule D with 1099-DIV boxes 1b and 2a.

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The amount of qualified dividends from 1099-DIV box 1b does not go on Schedule D. There is no place to enter it on Schedule D. The qualified dividends from 1099-DIV box 1b are entered on Form 1040 line 3a, and from there they flow to line 2 of the Qualified Dividends and Capital Gain Tax Worksheet.

If you are filing Schedule D, the capital gain distributions from 1099-DIV box 2a are entered on Schedule D line 13. That is in the long-term section, and the capital gain distributions are combined with long-term capital gains on Schedule D line 15, so the capital gain distributions are treated exactly the same as long-term capital gain.

But capital gain distributions alone do not require Schedule D. If you have capital gain distributions from 1099-DIV box 2a, but you do not have any investment sales, you do not file Schedule D. In that case, the capital gain distributions from 1099-DIV box 2a are entered on Form 1040 line 7 and the box on that line is checked.

It's not clear to me exactly what you think TurboTax is doing wrong.

[myhui]

@rjs  Below is my hand-calculated Qualified Dividends and Capital Gain Tax Worksheet, and the tax worked out to zero. I appreciate everyone's help on this thread, including @VolvoGirl .

[Sauzege]

Hello,

Yes.  This is a very confusing topic.  To see how Turbotax handles qualified dividends, go the following Turbotax thread that discusses how to print out all the tax forms (not just the one filed to the federal government).  These additional forms include the qualified dividends and capital gains worksheet which is used to figure out tax on qualified dividends and capital gains.  Disclaimer:  I'm not an accountant but when I used one, my accountant used this qualified dividends and capital gains worksheet to determine the "tax" on line 16 of Form 1040 (Tax).  This line 16 comes from the calculations of the qualified dividends and capital gains worksheet.

Link to How to Print Qualified Dividends and Capital Gains Worksheet:  https://ttlc.intuit.com/community/taxes/discussion/how-do-i-download-my-qualified-dividends-and-capi...

In brief to Print Qualified and Capital Gains Worksheet from Turbotax:

When you sign onto your online account and land on the Tax Home web page, scroll down and click on Add a state. 

This will take you back to the 2021 online tax return.

Click on Tax Tools on the left side of the online program screen.  Then click on Print Center.  Then click on Print, save or preview this year's return.  Choose the option Include government and TurboTax worksheets