Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
First time doing our taxes - How enter Mutual Fund Distros?
Old 12-14-2020, 02:44 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
First time doing our taxes - How enter Mutual Fund Distros?

Now that we no longer have rental property, have sold no real estate, and live in a no-state-income-tax state, I decided to try doing our 2020 taxes (previously we've always used a CPA). I purchased H&R Block Deluxe.

The questions are self-evident, except for one thing: They ask for mutual funds capital gains distributions, but do not distinguish between long-term and short-term gains. My understanding is that short-term gains are taxed as regular income, while long-term gains are taxed 20% (we are in the 24% marginal bracket).

I searched the HRB web site, and only found info on gains related to sales of mutual funds. Next I tried chatting with an HRB agent but all she did was direct me to "search" for this and that, which I'd already done.

I must be missing something. How do others handle this?
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-14-2020, 03:42 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 2,409
You will get a 1099-DIV next quarter that will have the short term gains in box 1a, as ordinary dividends; and long term gains in box 2a.

I don't use H&R Block software, but I would definitely expect that it knows how to handle this. Maybe search for 1099-DIV in the help files?

Here are the IRS instructions for issuers of 1099-DIVs. This will tell you what's in each box: https://www.irs.gov/pub/irs-pdf/i1099div.pdf
cathy63 is online now   Reply With Quote
Old 12-14-2020, 03:49 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 2,614
I use TurboTax and import the data directly from my brokerage.

I would assume H&R Block has the same functionality?

Of, course, this only works in February when all the forms are final.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 12-14-2020, 04:09 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
Yes, I know the 1099-DIV will have the info. The question is how to enter it.

I'm actually doing a dry run right now, with manual entries, to see if we need to send the IRS money before the end of the year. We have less dividends this year, but more cap gains distro's.

The software literally does not ask for anything except "capital gains." The only time it asks for long or short-term gains is if you sell a security.

It's odd, because the software does break out dividends vs. Qualified dividends.

Quote:
Originally Posted by cathy63 View Post
You will get a 1099-DIV next quarter that will have the short term gains in box 1a, as ordinary dividends; and long term gains in box 2a.

I don't use H&R Block software, but I would definitely expect that it knows how to handle this. Maybe search for 1099-DIV in the help files?

Here are the IRS instructions for issuers of 1099-DIVs. This will tell you what's in each box: https://www.irs.gov/pub/irs-pdf/i1099div.pdf
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 12-14-2020, 04:10 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
Exactly. I am doing a dry run to see if we owe extra this year. Want to avoid penalties.

Quote:
Originally Posted by CardsFan View Post
I use TurboTax and import the data directly from my brokerage.

I would assume H&R Block has the same functionality?

Of, course, this only works in February when all the forms are final.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 12-14-2020, 05:03 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 29,138
I don't use Block but presume it is similar to TT. You'll create a 1099-DIV form for that brokerage account that looks just like the 1099-DIV that you received from the brokerage... then input the numbers into the form of TT just like they are on the paper 1099-DIV. I use the Forms mode in TT and not the Interview mode.

That is actually how I used to do it... now I just import the data from the brokerage and check that the amounts were imported correctly... they always have been so far.

ST capital gains are combined with dividends on box 1a the 1099-DIV since they are both ordinary income.

Quote:
Why aren't short-term capital gains listed separately on my form 1099-DIV?

The IRS requires that short-term capital gains paid by mutual funds be treated as ordinary dividend income on Form 1099-DIV
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA TBD
pb4uski is offline   Reply With Quote
Old 12-14-2020, 05:05 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 2,409
Quote:
Originally Posted by Amethyst View Post
Yes, I know the 1099-DIV will have the info. The question is how to enter it.

I'm actually doing a dry run right now, with manual entries, to see if we need to send the IRS money before the end of the year. We have less dividends this year, but more cap gains distro's.

The software literally does not ask for anything except "capital gains." The only time it asks for long or short-term gains is if you sell a security.

It's odd, because the software does break out dividends vs. Qualified dividends.
The software is mirroring the categories that will be on the 1099-DIV. There is no category for STCGs on a 1099-DIV, so the software won't ask you for it. Enter the numbers this way:

capital gains: long term cap gains distribution
dividends: short term cap gains distribution + all dividends
qualified dividends: the portion of all dividends that are qualified (This one is hard to tell in advance, but there may be some info on your brokerage statements or on the fund's website that can help you figure it out.)
cathy63 is online now   Reply With Quote
Old 12-14-2020, 05:24 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 5,814
I thought it was 1099-B to report sales of stocks and funds
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 12-14-2020, 05:28 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
Got it!

I was actually going to do this (combining STG and dividends) as a workaround, but now I see that's how it's supposed to go.

Thanks, all!


Quote:
Originally Posted by cathy63 View Post
The software is mirroring the categories that will be on the 1099-DIV. There is no category for STCGs on a 1099-DIV, so the software won't ask you for it. Enter the numbers this way:

capital gains: long term cap gains distribution
dividends: short term cap gains distribution + all dividends
qualified dividends: the portion of all dividends that are qualified (This one is hard to tell in advance, but there may be some info on your brokerage statements or on the fund's website that can help you figure it out.)
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 12-14-2020, 08:01 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 5,302
Quote:
Originally Posted by jazz4cash View Post
I thought it was 1099-B to report sales of stocks and funds
1099-B is if you sell an asset.

1099-DIV is if you own a mutual fund and they sell an asset inside the mutual fund.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 12-14-2020, 08:24 PM   #11
Thinks s/he gets paid by the post
rk911's Avatar
 
Join Date: Dec 2018
Location: DuPage County IL
Posts: 1,393
Quote:
Originally Posted by Amethyst View Post
Exactly. I am doing a dry run to see if we owe extra this year. Want to avoid penalties.
if you use TT you can manually enter the 1099-DIV data. TT will walk you thru it box-by-box. just use TT's "interview mode". i do it this way every year.
__________________
Rich
Ham Radio, Sport Pilot, RVer
FIRE: 8/11/2005, age 55y,1d
Administrator for a regional 9-1-1 call center
rk911 is offline   Reply With Quote
Old 12-14-2020, 10:18 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 29,071
Quote:
Originally Posted by Amethyst View Post
Now that we no longer have rental property, have sold no real estate, and live in a no-state-income-tax state, I decided to try doing our 2020 taxes (previously we've always used a CPA). I purchased H&R Block Deluxe.

The questions are self-evident, except for one thing: They ask for mutual funds capital gains distributions, but do not distinguish between long-term and short-term gains. My understanding is that short-term gains are taxed as regular income, while long-term gains are taxed 20% (we are in the 24% marginal bracket).

I searched the HRB web site, and only found info on gains related to sales of mutual funds. Next I tried chatting with an HRB agent but all she did was direct me to "search" for this and that, which I'd already done.

I must be missing something. How do others handle this?
They are entered on Schedule D. Line 13.

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

Search on distributions in that document.

Yes, short-term cap gains distributions are lumped in with ordinary divs, unfortunately. Which means you can’t use a short-term capital loss to offset them.

Long term capital gains aren’t taxed at the 20% rate until your total income exceeds over $490K. In fact if your joint income is under $100K the long-term cap gain tax rate is 0%!
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 12-15-2020, 04:01 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
As I said previously, I'm not working from 1099's yet. Just from my own tracking, and the year-end-distribution pages we've been sharing. I'll clear all the fields and re-populate with real 1099's when they arrive.

It was rather dispiriting to watch our "refund" evaporate as I re-populated the Dividend fields with Ordinary Div + STG, although that means our CPA last year did a good job estimating what we'd need to withhold in 2020.

It was nice not having to do a State return this year. I hope COVID's heavy blows to the hospitality/tourist industry don't force FL to institute an income tax.

Quote:
Originally Posted by audreyh1 View Post
They are entered on Schedule D. Line 13.

https://www.irs.gov/pub/irs-pdf/i1040sd.pdf

Search on distributions in that document.

Yes, short-term cap gains distributions are lumped in with ordinary divs, unfortunately. Which means you can’t use a short-term capital loss to offset them.

Long term capital gains aren’t taxed at the 20% rate until your total income exceeds over $490K. In fact if your joint income is under $100K the long-term cap gain tax rate is 0%!
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 12-15-2020, 04:16 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 29,071
Quote:
Originally Posted by Amethyst View Post
As I said previously, I'm not working from 1099's yet. Just from my own tracking, and the year-end-distribution pages we've been sharing. I'll clear all the fields and re-populate with real 1099's when they arrive.

It was rather dispiriting to watch our "refund" evaporate as I re-populated the Dividend fields with Ordinary Div + STG, although that means our CPA last year did a good job estimating what we'd need to withhold in 2020.

It was nice not having to do a State return this year. I hope COVID's heavy blows to the hospitality/tourist industry don't force FL to institute an income tax.
It may not be quite so bad. Your qualified dividends, which are taxed at long-term capital gains rates, may lower your taxes. You probably don't know the full amount of qualified dividends yet. Fidelity doesn’t report which dividends are qualified from mutual funds until late Jan. I imagine other brokerages are the same. I end up using prior year percentages of qualified versus ordinary dividends to get an estimate for my Jan 15 estimated taxes. If I assumed that all equity mutual fund dividends were ordinary, I would way overpay my Jan estimated taxes.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 12-15-2020, 09:53 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
Thanks! Actually Vanguard and T. Rowe Price do give an estimated %age of qualified dividends in their year-end projections. From looking at our 2019 return, the %age (for our funds, anyway) remains pretty close to last year's. We have little with Fidelity.

Quote:
Originally Posted by audreyh1 View Post
It may not be quite so bad. Your qualified dividends, which are taxed at long-term capital gains rates, may lower your taxes. You probably don't know the full amount of qualified dividends yet. Fidelity doesn’t report which dividends are qualified from mutual funds until late Jan. I imagine other brokerages are the same. I end up using prior year percentages of qualified versus ordinary dividends to get an estimate for my Jan 15 estimated taxes. If I assumed that all equity mutual fund dividends were ordinary, I would way overpay my Jan estimated taxes.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 12-15-2020, 10:31 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 29,071
Quote:
Originally Posted by Amethyst View Post
Thanks! Actually Vanguard and T. Rowe Price do give an estimated %age of qualified dividends in their year-end projections. From looking at our 2019 return, the %age (for our funds, anyway) remains pretty close to last year's. We have little with Fidelity.
Well that’s handy! I have funds from other fund families too, and none of them give estimated % qualified dividends, so I estimate based on previous year ratios. Which has been close enough for my Jan estimated taxes.

Did using qualified dividends help reduce your taxes owed?
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 12-15-2020, 11:37 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,925
Nope, because I already had entered QDI (the software asks for it).

Quote:
Originally Posted by audreyh1 View Post

Did using qualified dividends help reduce your taxes owed?
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 12-15-2020, 11:53 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 29,071
Oh well!
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 12-15-2020, 06:03 PM   #19
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 3,209
Quote:
Originally Posted by cathy63 View Post
The software is mirroring the categories that will be on the 1099-DIV. There is no category for STCGs on a 1099-DIV, so the software won't ask you for it. Enter the numbers this way:

capital gains: long term cap gains distribution
dividends: short term cap gains distribution + all dividends
qualified dividends: the portion of all dividends that are qualified (This one is hard to tell in advance, but there may be some info on your brokerage statements or on the fund's website that can help you figure it out.)

My understanding is that:
1099 DIV Box 1a Total ordinary dividends = ST cap gains distributions + dividends distributed + foreign tax paid (box7)



Obviously, the last part only matters if you have funds that invest internationally. You will not know the exact amount in box 7 till you get your 1099 DIV, but a 8-10% of that fund dividend will get you close.
walkinwood is offline   Reply With Quote
Reply

Tags
h&r block, income tax, mutual funds, stcg, tax software


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How to enter market with 300K- with TODAY's (markets all time high) MN_1021 FIRE and Money 16 11-14-2019 10:39 AM
Sell Mutual fund and taxes rjwassink67 FIRE and Money 5 02-17-2017 05:34 AM
Taxes: How/Where to Enter Royalties? TromboneAl FIRE and Money 6 04-08-2015 02:41 PM
How is your Mutual Fund portfolio doing? 6 months into 2005. ShokWaveRider FIRE and Money 25 07-30-2005 09:38 AM
Suggestions on our kid's first mutual fund? Nords FIRE and Money 4 11-16-2004 10:07 AM

» Quick Links

 
All times are GMT -6. The time now is 10:15 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.