retiringwhen wrote: ↑Tue Jan 21, 2020 3:57 pm
House Blend wrote: ↑Tue Jan 21, 2020 3:03 pm
Can you post a screenscrape of how turbotax filled out Form 8995? Use fictitious numbers if you prefer.
TurboTax takes the value from the 1099-DIV box 5 and puts them in line 6 of form 8995, and then does the calculations on lines 8 and 9. It then pulls in data from other places to fill in rows 11-12 and calculates 13-14 and fills in the rest.
Line 11 comes from 1040 line 8b - line 9
Line 12 comes from 1040 line 3a as far as I can tell. (this seems odd and possibly even incorrect, not sure based on the names of the entries. it could also be my example which has a net capital loss for the year)
Basically, I think the gist is that you take the sum of all the box 5 inputs into line 6 and follow the bottom half of the page. Lines 1-5 only apply if you have other QBI from actual business activities you engage directly (or via an LLC).
Question regarding Line 12 of Form 8995 (or its equivalent, Line 34 of Form 8995-A):
The draft instructions for 8995-A state:
Enter the amount from your tax return as follows:
Form 1040 or 1040-SR filers, your qualified dividends on line 3a, plus your net capital gain. If you’re not required to file Schedule D (Form 1040 or 1040-SR), your net capital gain is the amount reported on Form 1040 or 1040-SR, line 6. If you file Schedule D (Form 1040 or 1040-SR), your net capital gain is the smaller of Schedule D (Form 1040 or 1040-SR), line 15 or 16, unless line 15 or 16 is zero or less, in which case nothing is added to the qualified dividends.
Okay, so that sorta
Except for this probably not unusual situation:
If you have a short-term capital gain (say, $500) and no long-term capital gains, your Schedule D will have an entry on line 15 of $0 and on line 16 of $500.
Your 1040, line 6, will also have an entry of $500.
Now, the 8995-A instructions suggest
that your net capital gain would be $500 (because that is what is reported on line 6 of your 1040), but the instructions explicitly state that your net capital gain is "the smaller of Schedule D (Form 1040 or 1040-SR), line 15 or 16, unless line 15 or 16 is zero or less, in which case nothing is added to the qualified dividends."
In the hypothetical, line 15 is zero, but line 16 is $500.
Shouldn't your net capital gain be $500, even though you have no long-term capital gains (as reflected by the zero on line 15 of Schedule D)?
Or do you just put $0 as the net capital gains in the equation because "line 15 or 16 is zero or less, in which case nothing is added to the qualified dividends"?
It just seems to me that those who have only short-term capital gains are, potentially, receiving a benefit (or is it a detriment?) simply because they don't have any long-term capital gains too.