Why is turbo tax putting qualified and ordinary dividends together?

[Tollmas]

"That tells the software, to treat that sub-portion of the total ordinary dividends in a special way".  But this is exactly the problem, the software is not treating that sub-portion in a special way, but just as ordinary dividends. 

[SteamTrain]

@Tollmas 

Nope...it is all doing it correctly as long as you entered your total dividends in box 1a for the 1099-DIV, and the sub-portion that were also "Qualified" in box 1b.

Now...if you are looking at your form 1040,  yes...the total of all of them go onto line 3b.....even the qualified part that are shown on line 3a. 

And YES, it all adds into the AGI number.....BUT, the tax software knows to use special tax calculations to break out the Qualified part (Plus capital gains) for special treatment.........as long as you entered the proper Qualified $$ part in box 1b of any 1099-DIV forms you have.

[SteamTrain]

Example:   

Single person. Standard deduction

W-2: 30,000

1099-DIV:  1a: $5000,  1b: $4000

______________________

1040 shows

Line 11 AGI     = $35,000

Line 12 Std Ded  = $14,600

Line 15 Taxable Inc  = $20,400

Line 16 Tax      =  $1,739

______________________

Now, if the tax table was used directly on the line 15 amount, the tax would have been $2,219

...BUT it's lower because the Cap Gain and Qual Dividends tax worksheet determined that the $4,000 of Qual Dividends would be taxed at 0%.

[WarriorsFan]

I am using TT Deluxe, and indeed there is a form called Qualified Dividends and Capital Gain Tax Worksheet.  On this form, line 2 does have the correct amount of Qualified Dividends. And the amount is indeed being used  in line 4 and 17 to calculate the long term capital gain using a rate 15%. There are a dozen number of this form, and is a bit dizzling to go through all of them, but looks correct though. So I think TT is doing the right computation, but I think the UI can be improved. It would be much better if Qualified Dividend is computed and reflected in the Capital Gain worksheet. This is far more intuitive and easier to follow. Now this change may need actions from both IRS and TT though...