Tax Planner Errors Persisting in Quicken 2016 R8

markus1957markus1957 SuperUser ✭✭✭✭✭

Quicken for Windows 2016 R8 Tax Planner Errors Identified

(Examples use Married Filing Jointly tax status but also apply to other filing statuses)

1.     Deductions

1.1.  Scheduled State tax quarterly estimated payments made in the following year are included in this year's tax planner deduction. Q1 (last payment due) scheduled estimated payments made in following year should not be included in the current year estimated state tax deduction amount. They should be assigned in the year they are paid by utilizing the “last year's taxes paid this year” input box.

2.     Capital Gains

2.1.  Beginning with 2015, Quicken began correctly calculating Long-term capital gains (LTCG) by applying 0% tax for the balance of regular TI remaining in the 10% and 15% brackets and 15% thereafter. But in 2016, Quicken is incorrectly using the 2015 tax table value ($74,900) rather than the 2016 value ($75,300) for the 25% tax bracket threshold value to begin applying the 15% LTCG tax rate.

3.     Alternative Minimum Tax (Other Tax, Credits)

3.1.  AMT Long-term capital gains (LTCG) are incorrectly taxed as regular AMT income rather than applying 0% tax for balance of regular TI remaining in 10% and 15% brackets and 15% tax thereafter.

3.2.  The AMT excluded deductions value incorrectly incorporates a 2.5% add-on to the medical and dental expense value shown in the Schedule A regular tax screen. This is a left-over from when the regular tax medical expense deduction was greater than 7.5% AGI and the AMT deduction was greater than 10%. They are both now greater than 10% AGI.

4.     No provision is made in Tax Planner for the 3.8% Medicare surtax on investment income for AGI >$250K.

Comments

  • NotACPANotACPA SuperUser ✭✭✭✭✭
    edited October 2018
    You know how to make suggestions to Q ... AND you know that this forum isn't for making those suggestions.  SO, what's the purpose of this message?
    Q user since DOS version 5
    Now running Quicken Windows Subscription
    Retired "Certified Information Systems Auditor"
  • markus1957markus1957 SuperUser ✭✭✭✭✭
    edited January 11
    It's not a suggestion. It's a heads-up to point out some documented calculation errors so users can apply workarounds if they so desire. It's also become somewhat of an annual personal task after Quicken applies updates to the tax tables. Tax Planner is actually pretty usable since 2015 when Quicken corrected most of the major errors.
  • edited February 2017
    I use Quicken regularly and upgrade the software every year.  I also use Tax Planner extensively since my income can vary significantly each year. I always appreciate the tax analysis/testing that markus1957 does with each new release.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited March 2017
    Mark, what is "TI"?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • edited July 2016
    Taxable Income
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited March 2017
    Thanks.
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • markus1957markus1957 SuperUser ✭✭✭✭✭
    edited January 11



    Tips and Work-Arounds





    General-



    • Read the Tax Planner topics in the Help Menu.
    • Diligently assign Categories with appropriate tax-lines to income and expense register entries.
    • Use Scheduled Transactions- Review the screens in Tax Planner and for each input box you expect to accrue tax category values, consider setting up a Scheduled Transaction at an appropriate frequency with the appropriate tax-line assigned to the Category to estimate the Projected Amount for the year-end total. This usually provides a more accurate estimate than the YTD daily average, even for categories like capital gains, interest and dividends.



    Qualified Dividends-



    • Quicken treats QDI like ordinary income. If your dividend income stream is fairly predictable, you can use a Scheduled Transaction(s) and assign to it the Long-Term Capital Gain Distribution (LTCG) tax line in the Category (I created a QDI category and an annual scheduled transaction in late December).  Tax on LTCG is the same as QDI and is computed correctly in Tax Planner except as noted above. In the Planner Dividend screen, set it to a User Entered value of zero. Monitor your actual dividend stream and make adjustments as necessary to the scheduled transaction to keep the tax estimate reasonably close. Also for any non-QDI dividends received (usually from mutual funds) re-assign them to the Interest category.



    Scheduled State tax quarterly estimated payments-



    • Enter an adjustment in the appropriate Planner Details screen equal to the negative value of the Q1 estimated State Tax payment.



    Capital Gains-



    • As noted above Quicken is incorrectly using a 2015 tax bracket value in the calculation. It introduces a relatively small error and not much can be done regarding a work around. It does indicate Quicken still has some quality assurance deficiencies to work out regarding capturing and verifying all of the inflation indexed values in the tax code.



    Alternative Minimum Tax (Other Tax, Credits)



    • AMT Long-term capital gains (LTCG) are incorrectly taxed as regular AMT income. If Quicken shows you are subject to AMT, it is incorrectly applying a 26% tax to your LTCG and QDI rather than 15%. Entering a value in Credits to compensate is often the easiest workaround but it can get a little complicated to figure the credit when the high AGI AMT exemption reductions (and/or 28% AMT bracket) come into play or if you fluctuate between No AMT owed (credit should be zero) and AMT owed status (credit needs to be calculated).
    • The AMT excluded deductions value incorrectly incorporates a 2.5% add-on to the medical and dental expense value shown in the Schedule A regular tax screen. If you itemize medical deductions, multiply your AGI by 0.025 and enter the negative value of that in the Medical Expense Adjustments box in the AMT section of Tax Planner. If your AGI fluctuates, you will need to update the value entered.
  • markus1957markus1957 SuperUser ✭✭✭✭✭
    edited December 2016






    Tips and Work-Arounds





    General-



    • Read the Tax Planner topics in the Help Menu.
    • Diligently assign Categories with appropriate tax-lines to income and expense register entries.
    • Use Scheduled Transactions- Review the screens in Tax Planner and for each input box you expect to accrue tax category values, consider setting up a Scheduled Transaction at an appropriate frequency with the appropriate tax-line assigned to the Category to estimate the Projected Amount for the year-end total. This usually provides a more accurate estimate than the YTD daily average, even for categories like capital gains, interest and dividends.



    Qualified Dividends-



    • Quicken treats QDI like ordinary income. If your dividend income stream is fairly predictable, you can use a Scheduled Transaction(s) and assign to it the Long-Term Capital Gain Distribution (LTCG) tax line in the Category (I created a QDI category and an annual scheduled transaction in late December).  Tax on LTCG is the same as QDI and is computed correctly in Tax Planner except as noted above. In the Planner Dividend screen, set it to a User Entered value of zero. Monitor your actual dividend stream and make adjustments as necessary to the scheduled transaction to keep the tax estimate reasonably close. Also for any non-QDI dividends received (usually from mutual funds) re-assign them to the Interest category.



    Scheduled State tax quarterly estimated payments-



    • Enter an adjustment in the appropriate Planner Details screen equal to the negative value of the Q1 estimated State Tax payment.



    Capital Gains-



    • As noted above Quicken is incorrectly using a 2015 tax bracket value in the calculation. It introduces a relatively small error and not much can be done regarding a work around. It does indicate Quicken still has some quality assurance deficiencies to work out regarding capturing and verifying all of the inflation indexed values in the tax code.



    Alternative Minimum Tax (Other Tax, Credits)



    • AMT Long-term capital gains (LTCG) are incorrectly taxed as regular AMT income. If Quicken shows you are subject to AMT, it is incorrectly applying a 26% tax to your LTCG and QDI rather than 15%. Entering a value in Credits to compensate is often the easiest workaround but it can get a little complicated to figure the credit when the high AGI AMT exemption reductions (and/or 28% AMT bracket) come into play or if you fluctuate between No AMT owed (credit should be zero) and AMT owed status (credit needs to be calculated).
    • The AMT excluded deductions value incorrectly incorporates a 2.5% add-on to the medical and dental expense value shown in the Schedule A regular tax screen. If you itemize medical deductions, multiply your AGI by 0.025 and enter the negative value of that in the Medical Expense Adjustments box in the AMT section of Tax Planner. If your AGI fluctuates, you will need to update the value entered.
    Expanding the AMT LTCG workaround- for those whose AGI remains below the threshold for the AMT exemption reduction ($159,700 for married filing jointly) and that also have regular income low enough (<25% tax bracket) to allow for 0% tax of a portion of LTCG and QDI, subtract the sum of regular income amount (Earnings, INT, STCG, other) from the $75,300 25% bracket amount. Insert that as a negative value in the "Other Adjustments and Tax Preference Items" box in the AMT section of Tax Planner. This additional step will negate having to use the tax credits box until AMT clearly becomes the primary factor for determining the overall tax obligation.

    Once AMT begins to be owed under this workaround, the complexity of further Tax Planner error corrections increases dramatically as mentioned above, e.g.; reduction of the AMT exemption and credit for LTCG/QDI tax rate (15% or as appropriate based on income) versus the AMT tax rate incorrectly applied to LTCG (26% or 28%) need to be taken into account.
  • edited January 11
    Hi Markus

    I'm Sangeetha and i work for Quicken. We have finally started working on tax planner I would like to take your help in ensuring that we are fixing the right things.  I'm not a tax expert and hence i need some guidance on these issues.

    Can you please reach out to me at [email protected] so that we can take this further?

    Thanks
    Sangeetha
  • markus1957markus1957 SuperUser ✭✭✭✭✭
    edited February 2017

    Hi Markus

    I'm Sangeetha and i work for Quicken. We have finally started working on tax planner I would like to take your help in ensuring that we are fixing the right things.  I'm not a tax expert and hence i need some guidance on these issues.

    Can you please reach out to me at [email protected] so that we can take this further?

    Thanks
    Sangeetha

    I'd be glad to help. I have sent an email.
  • edited February 2017

    I use Quicken regularly and upgrade the software every year.  I also use Tax Planner extensively since my income can vary significantly each year. I always appreciate the tax analysis/testing that markus1957 does with each new release.

    Hear, hear. If this was Reddit he'd deserve Karma points.
  • edited February 2017

    Hi Markus

    I'm Sangeetha and i work for Quicken. We have finally started working on tax planner I would like to take your help in ensuring that we are fixing the right things.  I'm not a tax expert and hence i need some guidance on these issues.

    Can you please reach out to me at [email protected] so that we can take this further?

    Thanks
    Sangeetha

    Who says prayers are never answered?
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited February 2017

    Hi Markus

    I'm Sangeetha and i work for Quicken. We have finally started working on tax planner I would like to take your help in ensuring that we are fixing the right things.  I'm not a tax expert and hence i need some guidance on these issues.

    Can you please reach out to me at [email protected] so that we can take this further?

    Thanks
    Sangeetha

    Indeed. Mark's detailed descriptions of various Tax Planner bugs has been a huge help in getting those bugs addressed.
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • pdphillips51pdphillips51 Member
    edited July 2018
    Is there a listing of bug fixes that have been made to the tax planner for QW2018?
  • pdphillips51pdphillips51 Member
    edited December 2017

    Hi Markus

    I'm Sangeetha and i work for Quicken. We have finally started working on tax planner I would like to take your help in ensuring that we are fixing the right things.  I'm not a tax expert and hence i need some guidance on these issues.

    Can you please reach out to me at [email protected] so that we can take this further?

    Thanks
    Sangeetha

    To be more specific.  Has the calculation of AMT on LTCG been fixed.  AMT calculations are beyond me but I think the error persists in QW2018.
  • Quicken SarahQuicken Sarah Administrator, Moderator ✭✭✭✭
    edited December 2017

    Is there a listing of bug fixes that have been made to the tax planner for QW2018?

    Creating new conversation from old thread for more visibility.


    Please reference the new conversation here: List of Bug Fixes to Tax Planner for QW2018
This discussion has been closed.