529 and Coverdell Gains and Dividend Income reported in Tax Summary Reports

jrm

Hi. Q2019 R17.6 Build 27.1.17.6 Windows.

I just went to generate a tax summary report and found that the Reinvested Dividend and long term gain transaction for a Coverdell account that I track, as well as the realized gains for both the Coverdell account and a 529 are showing up in the report, thereby skewing my numbers.

To simplify matters for here, I selected only a couple accounts, attributed to my son. Interestingly, as a side note, when I did that, the _401ContribSpouse (hidden category) appears and I can't figure out how to avoid that showing up.

The first attachment is a portion of the report that shows what I am describing. I have blanked out the personal information. The first handful of lines, with the completely blanked out lines can be ignored as they are in fact, legitimate to be on the tax summary, so are not pertinent to my question.

The lines relating to account "educ sav" and "529" are the cause of my question. I don't believe these transactions should be appearing in my tax summary report. Both accounts are set up with their appropriate category and are identified as tax deferred accounts. I have included a pic of the  account detail for one.

As far as I can tell, when I am tracking the dividends, gains, and sales, this are not distinct categories to use to for purposes of not associating with a tax schedule.

Am I missing something here? In the past, I deselected these accounts by default.

Thanks!

Jim_Harman

If you customize the tax summary report so that it does not include the educ save and 529 accounts, those transactions should not show up in the report.

jrm

yes. That I knew I could do, and is what I've done in past years. But, since this year there are distributions from those accounts, I thought I should see what appears. I do know distributions for qualified expenses are not taxable, however, since this is my first year with distributions, and I haven't yet looked at tax forms, I wasn't certain if there would be any other information I might need to include.

NotACPA

jrm said:

yes. That I knew I could do, and is what I've done in past years. But, since this year there are distributions from those accounts, I thought I should see what appears. I do know distributions for qualified expenses are not taxable, however, since this is my first year with distributions, and I haven't yet looked at tax forms, I wasn't certain if there would be any other information I might need to include.

Have you assigned a Tax Line to those distributions from the account?

TOOLS, Account List, click EDIT next to the account name, and click TAX SCHEDULE at the bottom of the Account Details window.  Then assign the appropriate Tax Line in the "Transfers Out" dropdown.

jrm

jrm said:

yes. That I knew I could do, and is what I've done in past years. But, since this year there are distributions from those accounts, I thought I should see what appears. I do know distributions for qualified expenses are not taxable, however, since this is my first year with distributions, and I haven't yet looked at tax forms, I wasn't certain if there would be any other information I might need to include.

I haven't thought of the transfers in/transfers out tax scheduling, and in fact, I'm not sure I registered that you could do that on an account by account basis. It also means, presumably then, that any XOUT transactions in that account will always fall to that tax line. (This shouldn't be an issue with these accounts, since the only way to use without penalties is for qualified expenses, but I am just clarifying in the event I were to use for a different investment account.)

I have now looked at what you suggested, but got "stuck." We've received a 1099-Q from the FI indicating what was disbursed. In Q tax schedule, it describes 1099-Q as Qualified State Tuition Earnings. So, I'm not sure that's one and the same. (Again, I'm not porting into tax software, so maybe ok.)

Another complicating fact, or maybe just a question, is in one account the disbursement transactions are SOLD (removing the shares only not transferring to another Q account.)  In this case, one transaction is followed by an XOUT (to deal with date of deposit, due to receiving a check). The second transaction in this account is followed by a Write Check, b/c the money was in fact direct paid to the university.

The other account the disbursement transactions are SOLDX (as I did show the transfer to another Q account. Maybe the SOLDX would work, but I'm not certain the SOLD will.

I haven't played with it yet, but I will try it out.

NotACPA

jrm said:

yes. That I knew I could do, and is what I've done in past years. But, since this year there are distributions from those accounts, I thought I should see what appears. I do know distributions for qualified expenses are not taxable, however, since this is my first year with distributions, and I haven't yet looked at tax forms, I wasn't certain if there would be any other information I might need to include.

It looks to me like that 1099-Q tax line is correct ... see this, from TurboTax: https://turbotax.intuit.com/tax-tips/college-and-education/what-is-irs-form-1099-q/L7MAdcKz5