Why does Quicken mess up dividend income???

LivingForEternity

I have a taxable brokerage account and a non-taxable. When dividends are either placed or reinvested in either account Quicken assigns it a category of _DivInc and does not allow me to ever change that. Furthermore to create a report of _DivInc you have to be sneaky because it is not a category that you can select in report categories, but there is a report that you can get to back into it.
Whatever happens Quicken is wrong because the dividends in one account are taxable and not in the other account. How in the world does anyone handle this at tax time? My tax summaries are just plain wrong since they lump dividends into one big category. I'm confused. Any help? 

Jim_Harman

I believe the RMD issue is discussed in this FAQ
https://community.quicken.com/discussion/7072150/faq-best-way-to-handle-distributions-from-ira

Do we need to correct that or update it to make it clearer?

Jim_Harman

The _DivInc category and all other categories that begin with "_" are internal categories and as you note you should not mess with them.

If you have set the non-taxable account as "tax deferred" in the Account details, those accounts and thus their dividend income (and also capital gains) are not included in Quicken's tax reports.

If you have a security which is tax free such as a muni bond or a tax exempt bond fund in a taxable account, you can indicate that in the "Tax Free" box in the Security details and that dividend income will automatically be called "_DivIncTaxFree" in your tax reports.

Quicken does not deal with state taxes and does not really address Qualified dividend income, you need to use TurboTax for that.

LivingForEternity

This is all messed up.
1. When I do an income/expense by categories report, all the _xxx income categories are not separated into taxable and non-taxable sections of the report. After your comment I took a look at the tax summary report and it seems to only report taxable interest and dividends. I find this misleading, but workable.

2. While looking at the tax summary report, I found none of my IRA distributions for last year were reported as income. Only one out of three of them appeared at all and that as a transfer. I rechecked the accounts and their withdrawals are set to be reported as 1099-R Taxable. So I still can't trust the tax summary report. 

Any help to get this to work right would be greatly appreciated.

q_lurker

LivingForEternity said:

I have a taxable brokerage account and a non-taxable. When dividends are either placed or reinvested in either account Quicken assigns it a category of _DivInc and does not allow me to ever change that. Furthermore to create a report of _DivInc you have to be sneaky because it is not a category that you can select in report categories, but there is a report that you can get to back into it.
Whatever happens Quicken is wrong because the dividends in one account are taxable and not in the other account. How in the world does anyone handle this at tax time? My tax summaries are just plain wrong since they lump dividends into one big category. I'm confused. Any help? 

Let's start at the top (in a manner of speaking).  Quicken provides 'general' reports such as Spending by Categories, and tax specific reports.  Those tax-specific reports include Schedule A, B, C, and D in higher level versions (Premier and above) and Tax Summary and Tax Schedule reports in all versions.  I'll focus only on those last two at this stage. 

Both reports default to only include taxable accounts; tax deferred accounts are omitted.  Both reports allow the user to customize the accounts, so a user could add the tax-deferred account to the report, but doing so would lead to misinterpretation.  To use those reports properly, the tax-deferred accounts should be excluded.  (Same with the Schedule reports in the higher levels of Quicken.)

For the Tax Schedule Report, Quicken uses the Tax Line assignments applied to each category to group the information presented by those tax schedules and lines.  (I am using QW2017 so I don't know how the subscription program is relating to the 2018 tax schedule and line information.  Doesn't really matter.  The basics are still the same.)  The Tax Summary report is more category based, keeps information in an Income / Expense format with the income separated according to category including the "hidden" categories of _DivInc, _IntInc, _DivIncTaxFree, _RlzdGn, etc.  But still the selected categories are based on the tax line assignments made for the individual categories.

Now while you might expect the two reports to match up with one another exactly, I do not find that true in my database of transactions.  First off, I note that the Tax Summary report includes categories _DivInc, DivIncTaxFree, and IntIncTaxFree.  The Tax Schedule report (in my case) includes for the Schedule B section -- Interest Income, Interest Income taxed only by State, and Dividend Income.   

In that presentation, the Interest Income includes both regular (taxable) interest and interest from tax-exempt bonds.  That is in error.  The section for "Interest Income taxed only by State" includes MiscExp transactions where I have explicitly specified _IntIncTaxFree as the category.  The Tax Summary Report gets it right. 

On the dividends side, the Tax Schedule report includes (correctly) ST Cap Gain distributions in the "Dividends" grouping.  The Tax Summary tabulation lists the two separately.  So there can appear to be a disconnect there - alternate values reported for the same thing.  In reality, I have not found that to be the case.

For the IRA distributions, my Tax Summary report is correct - it reports the distribution as a transfer received into the checking account where the money went.  Remember, the IRA account from which it came was not included in the report.  Quicken is drawing the information from the receiving account.  It is reported as a transfer because in that viewpoint (Income/Expense) it is neither.  

For the Tax Schedule Report, the distribution is reported as applicable to a 1099-R as a Total IRA Gross Distribution; correct. 

So sort of in answer to your opening question, I rely on both Tax Schedule Reports and Tax Summary reports; neither one totally.  I also have some customized reports like Div by financial institution, for example.  There is nothing to prevent you and no tricks involved with customizing a standard transaction report to include or be limited to _DivInc, for example.  You may need to ask that Quicken Show Hidden Categories when making such a customization.

LivingForEternity

Thank you for spending so much time writing all that out. I worked through it as carefully as I could. I never looked at the Tax Schedule report because the report description says it's for export to TurboTax which I don't use - a mistake on my part. However you prompted to look at it and to try again to make my 1099Rs (Required Minimum Distribution from IRA) show up in at least one of the reports. After deleting and re-entering several transactions for last year I discovered this:

1. If the RMD is recorded as a transfer from an IRA to a Taxable brokerage account, Quicken will NOT recognize the transaction as an IRA distribution - which is an error isn't it? To be more specific, if I start in the IRA account and select "Cash transferred out of Account" as the transaction type it won't recognize the transaction as a taxable event/distribution (even though the target account is not an IRA/ROTH/SEP).

2. However, if I start in the taxable account and set up a transaction as a "Deposit" to that account giving the the IRA account as the Category, then Quicken will make the transaction a transfer and have it show up as a 1099R distribution in both the Tax Summary and Tax Schedule reports.

Jim_Harman

I believe the RMD issue is discussed in this FAQ
https://community.quicken.com/discussion/7072150/faq-best-way-to-handle-distributions-from-ira

Do we need to correct that or update it to make it clearer?

LivingForEternity

I think that discussion thread has it correct.

q_lurker

A key point in that FAQ @Jim_Harman cited is point #3 in J_Mike's first post:

• 3) It is important to use the Deposit transaction when transferring to a taxable brokerage acct. QWin does not pick up the taxable event [the distribution] if one uses a 'Cash transferred out' transaction for some reason [bug?]. 

That seems to accurately describe @LivingForEternity 's observation.