Tax Planner - Compute taxable Social Security income

Rocket J Squirrel

Tax Planner doesn't calculate the taxable portion of Social Security income. It should. The following is from online help.

      In the Taxable Social Security Benefits field, enter the appropriate value.

• The Basic Rule. Up to 50% of Social Security benefits are taxable if total “provisional income” (adjusted gross income, tax-exempt interest and one half of Social Security benefits) exceeds a base amount: $25,000 for single taxpayers and $32,000 for married taxpayers filing jointly.
• The Second Tier. A second tier of income tax of up to 85% of Social Security benefits received kicks in (1) for single taxpayers with provisional income over $34,000, (2) for married taxpayers filing jointly with provisional income over $44,000, and (3) for all married taxpayers who file separate returns, but do not live apart.
• Currently, the Tax Planner doesn't automatically calculate the taxable portion of your Social Security benefits. As a result, your taxable income may be higher than expected. To compute your taxable Social Security benefits, please refer to the worksheet in your Form 1040 instructions or IRS Publication 915.

Burt - Q17 H&B

I know that 85% of my Social Security will be taxable. So, on my SS benefit, I just split the gross income up between a taxable income category (ie. 85%) and a non-taxable income category (ie. 15%). This makes Tax Planner closer to accurately forecasting my taxable liability.

Rocket J Squirrel

That workaround fails if you feed Quicken data to TurboTax. Both TT and Quicken's Tax Planner rely on Tax Line Items, not categories. TT wants to know all your SS income because, unlike Quicken, it will calculate the taxable portion of SS.

Burt - Q17 H&B

Yes, you are right. But, I have another report that shows me the total SS payments which I can easily enter manually into TurboTax. It's the AGI and taxable income for the year that I am trying to forecast to keep below certain income levels. BTW, I also have a spreadsheet that does this calculation and Tax Planner and spreadsheet are very close if all data is entered correctly (including the Qualified Dividends amount.

R DIlly

I don't seem to be getting Social Security represented at all in my Tax Planner report. Does anyone see it?

That seems like a glaring omission. I'd much rather have the inccome be on the high side! (That's a big part of our income these days.)

Lenn

Another work around: In Tax Planner on the taxable social security page, enter a negative adjustment for the non-taxable portion. This will help Tax Planner to more accurately calculate projected taxes. It also allows Quicken to maintain the gross SS to pass to Turbo Tax.

Rocket J Squirrel

R DIlly said:

I don't seem to be getting Social Security represented at all in my Tax Planner report. Does anyone see it?

That seems like a glaring omission. I'd much rather have the inccome be on the high side! (That's a big part of our income these days.)

Yes, I see it, but I had to set it up. What you are showing is the tax summary report. Here is mine.

You need a top-level income category named Social Security. If you are single, you must assign it the tax line item "Form 1040:Social security income, self". If you are married, you should have 2 subcategories, 1 for each spouse, with the appropriate "self" & "spouse" tax line items.

Bruce Waln

Tax Planner not properly supporting the tricky Social Security calculation makes it almost useless for me now. I was able to get the calculation right in an Excel spreadsheet by mimicking the 1040 Social Security Benefits Worksheet.

Since I was born pretty much smack in the middle of the Baby Boom generation, I don't think I'm alone in being disappointed.

Boatnmaniac

It would be great if Tax Planner would calculate the taxable portion of SS income.  At a minimum, Quicken should add a field where we can enter the taxable percentage instead of the taxable dollars.

Until/unless this improvement is added to Tax Planner the easiest way to get a good taxable SS income dollar number to enter into Tax Planner is to use any one of a number of online taxable SS income calculators.  No need to manually calculate that number.  My favorite is on The Motley Fool because it is so easy to use:  https://www.fool.com/retirement/2016/06/06/social-security-tax-calculator-are-your-retirement.aspx#top.  (Don't be concerned about the date of the article being 2016.  The calculator at the bottom of the article is updated every year.)

LarryC

A key benefit to Quicken would be properly calculating quarterly tax payments. Because it doesn't account for Social Security income properly, the tax planner feature is worthless to me. In my case, this GROSSLY overstates my tax liability. This should be an easy fix that would benefit many users.

Boatnmaniac

LarryC said:

A key benefit to Quicken would be properly calculating quarterly tax payments. Because it doesn't account for Social Security income properly, the tax planner feature is worthless to me. In my case, this GROSSLY overstates my tax liability. This should be an easy fix that would benefit many users.

I agree.  Tax Planner should be able to calculate the taxable portion of our gross SS income for us instead of us needing to do that separately.  At a minimum, Quicken should stop pulling in SS income data from the categories in Quicken and make the User Entered field the default forcing us to enter something there, instead.

Since it does not currently do that, Tax Planner does give us the option to override the Quicken SS income category by entering the taxable portion in the User Entered field.

If we do not enter the taxable portion of SS in this User Entered field Quicken will simply use our gross SS income from the categories used in Quicken and our tax liability in Tax Planner can be grossly overstated. 

There are several online calculators available to determine what portion of your SS will be taxable and they are pretty easy to use.  One I like because it's pretty easy to use is https://www.fool.com/retirement/2016/06/06/social-security-tax-calculator-are-your-retirement.aspx.  The article is out of date but the calculator is updated each year.

Ps56k2

Just ran across this topic - and posted the same Q&A -
before I found these couple of threads...

For my planning - I would just like to see the total SSA benefits paid out, and use that as "added income" - then wrestle with the actual percentage later at actual tax time.

So... this - @Rocket J Squirrel comment worked perfectly - Tax Planner picks it up.

You can have a top-level income category named Social Security.
If you are single, you must assign it the tax line item "Form 1040:Social security income, self". If you are married, you should have 2 subcategories, 1 for each spouse, with the appropriate "self" & "spouse" tax line items.

Rocket J Squirrel

https://community.quicken.com/discussion/comment/20053329#Comment_20053329

I'm finally getting around to this in my year-end tax preparation. This seems like the best workaround. Just enter -15% (for many of us, no calculator needed) of the year's total SS benefit in the Adjustment field of the Quicken Data line.

Oh, also, BUMP!

markus1957

They tried and failed in R56.9. Unless Tax Planner is modified to collect tax-exempt interest, it cannot make an accurate calculation.

Chris_QPW

https://community.quicken.com/discussion/comment/20431178#Comment_20431178

It is worse than that, it is assuming everyone's Social Security is 85% taxable, which makes it harder to know what to put in to offset the full amount.

Jim_Harman

Another option would be to add an entry to the Tax Planner where you could enter the percentage of your SS income that is taxable. For most people, this would be a one-time entry and it would eliminate having to compute a negative adjustment to the total income.

Quicken Anja

Hello All,

The status of this Idea has been changed to Under Consideration as it has reached enough votes and has been submitted to our Product and Development team for further review.

Thank you!

Ps56k2

wow … 2019 —> 2024

leishirsute

From what I've been reading on another post.

This feature has been poorly implemented.

https://community.quicken.com/discussion/7949986/r56-9-tax-planner-enhanced-for-taxable-social-security

Jim_Harman

The hidden 85% calculation introduced in R56.9 has been removed, so the Tax Planner now works as before, and you need to enter an adjustment to your gross SS income.

It would sure be nice if you could just enter the percentage of your SS income that is taxed, 0 to 85%, and have Quicken make the adjustment.

Boatnmaniac

…the Tax Planner now works as before, and you need to enter an adjustment to your gross SS income.

Yes, or enter the full taxable amount into the "User entered" field.

It is disappointing that such a relatively simple calculation to determine what amount of SS income is taxable still cannot be performed by Tax Planner. Fortunately, there are a number of simple and easy to use online calculators that are available to assist on this matter.

On the other hand, if the current discussion in DC about eliminating the tax on SS income does come to fruition, then this whole Product Idea becomes moot.

Jim_Harman

The calculation of the SS tax percentage uses "Combined" income, which includes tax-free income. This is not otherwise tracked in the Tax Planner, and thus might be a good deal harder to implement than just having the user just enter the percentage.

Boatnmaniac

https://community.quicken.com/discussion/comment/20474361#Comment_20474361

Good catch. I realize that the Combined (Modified Adjusted Gross Income) income includes tax-free income but it went right over my head that this might make it more difficult for Tax Planner to take that into account.

So, manually entering the percentage that is taxable might be the only good and reasonable improvement to Tax Planner that can be quickly implemented? Perhaps.

markus1957

https://community.quicken.com/discussion/comment/20474377#Comment_20474377

Actually, creating an automatically entered Income Reminder with splits for taxable SS, non-taxable SS and the Medicare deduction is the easiest way to handle getting the correct info to tax planner and cash flow projections. Assign the proper cat/tax line to each split and set up the reminder frequency to match your direct deposit day each month.

Jim_Harman

@markus1957 If you split the SS income as you describe, I can see that it would work for the Tax Planner, but is there a way to get the tax reports to be correct? Don't they expect to see the gross SS number?

markus1957

I suppose you would have to create a custom report that includes the non-taxable category if the report was important. I don't use the reports for importing into tax filing software, I enter or download 1099s & W-2s.

Boatnmaniac

https://community.quicken.com/discussion/comment/20474399#Comment_20474399

I agree with @Jim_Harman that it would cause issues for the Tax Reports. I don't import tax data from Quicken into tax software, either, but I do use the Tax Reports to start working with the tax software before the tax forms are available from the financial institutions. And I use the Tax Reports to also identify other income, deductions, etc., that financial institutions do not report so I don't forget to include them in my tax returns.

But I can see where your method could work if income throughout the year is level and predictable for all income sources (especially if your MAGI will always be high enough so no matter what 85% of your SS will always be subject to tax regardless of changes to your other income streams) and if the Tax Reports won't weigh in heavily in tax planning and reporting.

My income can fluctuate and change somewhat significantly over the course of the year so my estimated taxable SS income changes at least 2-4 times a year….mostly in the last 1-3 months of the year when I am considering various IRA distribution and Roth IRA conversion options. I really don't think it would be very efficient use of my time to go back and edit all of the previously entered SS income reminders as well as the future SS income reminders to get a good picture of the end of year results.

For me, I've found the easiest and simplest means of dealing with this is to enter the taxable SS amount into the User Entered field. The online calculators are very easy to use and provide the taxable amount very quickly…I can often get initial results in less than a couple of minutes and then tweak the data for other scenarios and get new results in just seconds. Then I simply copy and paste the taxable amount from the calculator into the User Entered field. As my wife likes to say, "Easy-breezy!"

fanfare

The Tax Planner is so tedious, awkward and flawed, why does it have any user at all ??

Jim_Harman

The Tax Planner is so tedious, awkward and flawed, why does it have any user at all ??

Despite its flaws, I find the Tax Planner very useful. Quicken has actually made some improvements in the past year.

I'm sure it would have more users if it were less persnickety.

Boatnmaniac

https://community.quicken.com/discussion/comment/20480336#Comment_20480336

I, too, find the Tax Planner to be an incredibly helpful tax planning tool. Generally, since starting to use it in 2010, it has helped me to forecast what my actual annual tax liabilities to within just a few hundred dollars….within $130 for 2024!

But it needs to be noted that Tax Planner is not an official tax reporting software. It is designed to work well for the majority of average tax filers but it is not 100% perfect nor 100% complete to cover all tax scenarios. For that, one would probably be better off purchasing a tax planning software or service from one of the big tax software companies like TurboTax, H&R Block or TaxACT, to name a few. But like any tax planning tool, the data coming out is only going to be as good as the data that is entered and the level of effort that one puts into setting up and managing the tool throughout the planning year.

What I find to be perhaps the biggest benefit from using Tax Planner is that it pulls actual tax event financial data from the accounts we have already set up in Quicken. That saves me so much time and greatly reduces the risk of data entry errors when opposed to doing everything manually outside of Quicken.

Jim_Harman

I agree with @Boatnmaniac. I could make a spreadsheet to track my dividends, capital gains, etc. throughout the year, but the Tax Planner if properly set up, does a good job of predicting what my refund or extra payment will be. without requiring me to enter the data separately.

Another benefit is tracking RMDs from my IRA, which can get complicated when I make donations via Qualified Charitable Distributions.