Tax Software and handling of Schedule D

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oneleaf
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Tax Software and handling of Schedule D

Post by oneleaf » Fri Nov 24, 2017 5:24 pm

I am interested to hear others’ experience with how their preferred Tax Software handles sales of covered shares.

On Schedule D, it clearly states you can aggregate all sales of covered shares (separately for LT and ST gains/lossesj as long as they meet the requirements. They must be covered and have no adjustments. This makes tax prep way easier... what might be dozens of lines can be aggregated in one line, and Vanguard provides this summarized info on their VBS 1099B.

However, most tax software requires you to enter each sale separately before aggregating it for you. Tax Act lets you use “Various” for date aquired but explicitly forbids using it for date sold. So I would need to enter a dozen entries before it aggregates it, which would have been way easier if I just put in the summarized data.

I find this kind of hand holding to be more time consuming than necessary. I know I can do a dummy entry with a fake “date sold” date with the summarized amounts, and Tax Act will aggregate this single entry anyway and Schedule D will not show that date. So presumably the IRS will see accurate data, but I hate entering “wrong” data to get the result I want.

Is there any tax software that officially supports the aggregated sales and cost basis,i.e. line 1a for STCG and the equivalent for LTCG so that you can put in the necessary data without putting in Date Sold/Acquired? This is fully accepted bu the IRS and makes reporting sooooo much easier. But tax software has not seemed to have caught up with it.

I know Turbotax can import the transactions, but TurboTax is more money than I want to spend, and I don’t mind entering data myself if I can just put in the aggregated summary myself.

Thanks!

quantAndHold
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Re: Tax Software and handling of Schedule D

Post by quantAndHold » Fri Nov 24, 2017 6:17 pm

It’s worth it to me to pay for TurboTax to get it to automatically import. Besides the fact that life is too short to spend it on data entry, back in the days before you could automatically import this stuff, a single typo cost me $3k in interest and penalties. I can buy a lot of TurboTax for $3000.

jebmke
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Re: Tax Software and handling of Schedule D

Post by jebmke » Fri Nov 24, 2017 6:22 pm

quantAndHold wrote:
Fri Nov 24, 2017 6:17 pm
It’s worth it to me to pay for TurboTax to get it to automatically import. Besides the fact that life is too short to spend it on data entry, back in the days before you could automatically import this stuff, a single typo cost me $3k in interest and penalties. I can buy a lot of TurboTax for $3000.
I know what you mean. I don't have many transactions so I type it out. If I had a lot, I'd definitely import. You still should reconcile your Schedule D to the paper 1099B as well as your statement - don't assume that what comes across agrees. But doing a couple of account recs is still alot easier than typing a lot of transactions and needs to be done either way.
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Kenkat
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Re: Tax Software and handling of Schedule D

Post by Kenkat » Fri Nov 24, 2017 6:49 pm

I don’t understand why you would want to enter “various” for the sold date. Do you have a lot of different sell dates for the same security in the same year?

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oneleaf
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Re: Tax Software and handling of Schedule D

Post by oneleaf » Fri Nov 24, 2017 6:53 pm

Kenkat wrote:
Fri Nov 24, 2017 6:49 pm
I don’t understand why you would want to enter “various” for the sold date. Do you have a lot of different sell dates for the same security in the same year?
Not just same securities... ALL securities of the same category. Example: if you have 10 sales with Box A checked (basis reported to IRS), you do not need to list all 10 sales, just put the summary (which VBS provides) and put it in line 1a. Sooooo easy. But tax software makes you list all 10 sales before they aggregate it for you... a waste of time, imo.

kaneohe
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Re: Tax Software and handling of Schedule D

Post by kaneohe » Fri Nov 24, 2017 7:05 pm

oneleaf wrote:
Fri Nov 24, 2017 5:24 pm
............................................................. I know I can do a dummy entry with a fake “date sold” date with the summarized amounts, ..................................................................................
Thanks!
This would bother me a little bit but it's not really a fake "date sold", just incomplete, since it is , I assume, selected from one of the dates of the many transactions. The security that you list as being sold is also "fake" since I assume you input the brokerage , rather than the security. This also bothers me but not enough to stop me from doing it since it is so much easier as you know. I doubt that IRS would have a problem w/ this if the end result is correct.

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BL
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Re: Tax Software and handling of Schedule D

Post by BL » Fri Nov 24, 2017 7:10 pm

It might make a difference if you do estimated taxes rather than withholding, as w/h can be done at any time of the year. This method would cover it "just in case".

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oneleaf
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Re: Tax Software and handling of Schedule D

Post by oneleaf » Fri Nov 24, 2017 7:52 pm

kaneohe wrote:
Fri Nov 24, 2017 7:05 pm
oneleaf wrote:
Fri Nov 24, 2017 5:24 pm
............................................................. I know I can do a dummy entry with a fake “date sold” date with the summarized amounts, ..................................................................................
Thanks!
This would bother me a little bit but it's not really a fake "date sold", just incomplete, since it is , I assume, selected from one of the dates of the many transactions. The security that you list as being sold is also "fake" since I assume you input the brokerage , rather than the security. This also bothers me but not enough to stop me from doing it since it is so much easier as you know. I doubt that IRS would have a problem w/ this if the end result is correct.
Yep, I would be fine with doing it (and I did this last year). I would love to have an officially supported way to do this, but for now, it is a workaround I can live with. I may just do Free Fillable Forms next year. The more I do taxes, the more I like to work closer to the original forms, rather than “interviewed”.

kaneohe
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Re: Tax Software and handling of Schedule D

Post by kaneohe » Fri Nov 24, 2017 8:16 pm

oneleaf wrote:
Fri Nov 24, 2017 7:52 pm
.................................................
Yep, I would be fine with doing it (and I did this last year). I would love to have an officially supported way to do this, but for now, it is a workaround I can live with. I may just do Free Fillable Forms next year. The more I do taxes, the more I like to work closer to the original forms, rather than “interviewed”.
I know nothing about the Tax software normally used by folks. For the AARP Tax-Aide volunteers, I believe the software we have used in the past allows both interview mode and forms mode. We have always used forms mode although often there are worksheets for data entry which does the actual population of the forms. I thought that TT and perhaps some others also allowed you to use forms mode.

As you noted in OP, IRS does officially sanction what you want to do on SCH D itself.........that seems to be enough license to do what you want to do.

livesoft
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Re: Tax Software and handling of Schedule D

Post by livesoft » Fri Nov 24, 2017 10:13 pm

WellsTrade provides summarized info on their 1099-B. Transactions are presented individually, aggregated to the investment, and aggregated to the account. You can decide which to enter. HRBlock could not import WellsTrade 1099-Bs, but it didn't really matter to me.
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tetractys
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Re: Tax Software and handling of Schedule D

Post by tetractys » Fri Nov 24, 2017 11:04 pm

One can do a lot of tax form entries in the time it takes to do a thread with the Bogleheads. It's nice to be here I guess. But my take is it doesn't matter how the IRS gets the info, as long as it's accurate. -- Tet

FactualFran
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Re: Tax Software and handling of Schedule D

Post by FactualFran » Sat Nov 25, 2017 1:10 pm

Those who use tax software likely should not be concerned about whether the tax return generated by the software uses lines 1a or 8a on Schedule D, when possible, instead of using lines 1b or 8b on Schedule D with each sale listed on Form 8949. Lines 1a and 8a on Schedule D can be viewed as reducing the paperwork to be filed by those who prepare their tax return line-by-line on their own.

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oneleaf
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Re: Tax Software and handling of Schedule D

Post by oneleaf » Sat Nov 25, 2017 7:52 pm

FactualFran wrote:
Sat Nov 25, 2017 1:10 pm
Those who use tax software likely should not be concerned about whether the tax return generated by the software uses lines 1a or 8a on Schedule D, when possible, instead of using lines 1b or 8b on Schedule D with each sale listed on Form 8949. Lines 1a and 8a on Schedule D can be viewed as reducing the paperwork to be filed by those who prepare their tax return line-by-line on their own.
I am not concerned, as I know both are valid. But using 1a and 8a is much easier for me when entering data.

MathWizard
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Re: Tax Software and handling of Schedule D

Post by MathWizard » Sat Nov 25, 2017 10:14 pm

I know lots of people who go to a CPA.
Turbo Tax at $59 seems quite cheap to me.

I used to fill out the forms by hand, but over the years with Schedule C's, Royalties, Schedule D, Education Credits or deductions, dependents, depreciation, and now K1s, having the ability to try options, itemized vs standard deduction,
MFJ vs MFS, on both federal and state, my returns are complicated enough that TurboTax has more than paid for itself over the years. I also do some tax planning with last year's psckage,.

annielouise
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Re: Tax Software and handling of Schedule D

Post by annielouise » Sat Nov 25, 2017 10:37 pm

We import Vanguard to H&R Block. We usually buy it from Amazon for about $20. We don't need state, so it is perhaps more with the state included. I have also used TurboTax (plus I have worked as a tax accountant) and I much prefer H&R Block.

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oneleaf
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Re: Tax Software and handling of Schedule D

Post by oneleaf » Mon Nov 27, 2017 5:26 pm

Update: FreeTaxUSA does this. It has a great explanation of how to use summarized data and when it is best to break out individual sales and how to combine the strategies.

The more I look at FreeTaxUSA, the more I like it. I understand why other tax software does not let you summarize. If any of the sales need adjustments, you need to separate it out. And by entering each sale manually, you can let the software decide which ones to summarize and which to separate out. But if you have 30 sales, that can be time consuming. I like how FreeTaxUSA lets the user decide rather than force them to do it one way.

Now that we have covered shares, reporting sales can be a lot easier, but only if the software allows it. If the software imports 1099-B sales, then this is all moot. So with TurboTax, this doesn’t matter. But TaxAct is awful in this regard... no importing AND no ability to officially allow summarized data for covered unadjusted shares (which should be the bulk of most people’s shares going forward). FreeTaxUSA has no importing but allows us to summarize and has a wonderful explanation. I like it.

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