How to recoup overpayment of [taxes - Fidelity account]?

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Topic Author
Merry
Posts: 48
Joined: Sun Jan 31, 2021 7:04 pm

How to recoup overpayment of [taxes - Fidelity account]?

Post by Merry »

Here’s a tax situation that I’ve been unable to find an answer to and wondering if anyone here knows. I was reviewing our Fidelity statements and just noticed that for our money market cash settlement account, it shows the dividend paid and then taxes are subtracted with only a reinvestment of the remainder. I called Fidelity and apparently when I opened our Fidelity joint brokerage account earlier this year I must have accidentally selected an option that said Fidelity was to make tax payments for me to the IRS. It looks like they are doing so at 24% (but we are going to be in 12% bracket this year). They won’t let me change the selection online so they are looking to see if they can mail me a form to complete otherwise I have to go to a Fidelity office. So at least I’ll be able to fix it moving forward.

They can’t help with the taxes already paid because that’s with the IRS now. Does anyone know what 1040 forms I would file to fix the overpayment or somehow show the credit that’s due?

Once I fix this for future tax years so taxes aren’t removed, which is what I assume most of you do, does Fidelity send a 1099 for this income?

Thanks for your help!
fabdog
Posts: 2168
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: How to recoup overpayment of interest?

Post by fabdog »

When you get your form 1099 from Fidelity next year, in addition to the interest/dividends, you'll have an entry in Box 4 for Federal income tax withheld. Just enter that in your tax software, and it will get treated just like withholding on your W2. If you owe, it will go towards your bill... if getting a refund, it will come back to you

Mike
Silk McCue
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Joined: Thu Feb 25, 2016 7:11 pm

Re: How to recoup overpayment of interest?

Post by Silk McCue »

This will simply get reconciled when you file your taxes for 2022. There is no way to recover it apart from that process. If the amount withheld is significant you could adjust withholding elsewhere through the end of the year to recoup it now.

Is the amount withheld to date significant?

Cheers
Topic Author
Merry
Posts: 48
Joined: Sun Jan 31, 2021 7:04 pm

Re: How to recoup overpayment of interest?

Post by Merry »

Thanks for the answers. I still do my taxes hard copy so do you know what form I’d use to enter what Fidelity shows on 1099 box 4? Would I list it on Schedule B part II and show it as a minus? It’s not significant to need it urgently so waiting until tax time would be fine. Thanks again!
fabdog
Posts: 2168
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: How to recoup overpayment of interest?

Post by fabdog »

Line 25b.. federal tax withheld from 1099.

Gets added to your other witholdings

Mike
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Metsfan91
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Joined: Sat Jan 11, 2020 12:33 pm

Re: How to recoup overpayment of interest?

Post by Metsfan91 »

Merry wrote: Wed Nov 23, 2022 6:33 pm Here’s a tax situation that I’ve been unable to find an answer to and wondering if anyone here knows. I was reviewing our Fidelity statements and just noticed that for our money market cash settlement account, it shows the dividend paid and then taxes are subtracted with only a reinvestment of the remainder...

Does anyone know what 1040 forms I would file to fix the overpayment or somehow show the credit that’s due? -- Looking at my 2021 tax return, dividend went on line 3. Taxes reported on 1099 went on line 25b...Assuming 1040 form stays same, this is how you will be able to recoup overpayment.

...does Fidelity send a 1099 for this income? -- Yes.

Thanks for your help!
"Know what you own, and know why you own it." — Peter Lynch
Topic Author
Merry
Posts: 48
Joined: Sun Jan 31, 2021 7:04 pm

Re: How to recoup overpayment of interest?

Post by Merry »

Metsfan91 wrote: Wed Nov 23, 2022 7:10 pm Looking at my 2021 tax return, dividend went on line 3. Taxes reported on 1099 went on line 25b...Assuming 1040 form stays same, this is how you will be able to recoup overpayment.[/color][/b]

...does Fidelity send a 1099 for this income? -- Yes.

Thanks for your help!
[/quote]

Ok I see that, thanks!
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