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Recatagorize Dividends from Roth IRA

steveweaver48

I have erroneously been posting dividends received from a Roth IRA to "_DivInc" rather than "_DivIncTaxFree". How can I recatagorize those entries?

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Jim_Harman

If the Roth account is set up as Tax deferred Quicken will take care of assigning the _DivInc Tax Free category to the dividends.

[see correction below]

steveweaver48

Thanks Jim for your response. I just recently changed the Roth IRA account to tax deferred. I would now like to go back and change the previously entered transactions to _DivInc Tax Free category but cannot figure out to do so. Any thoughts?

Jim_Harman

Actually my previous respone was incorrect. When an account is marked as Tax deferred, it is excluded by default from the tax reports but dividends are still recorded as _DivInc.

The _DivIncTaxFree category is supposed to be used for securities like tax exempt bond funds where the security has been marked Tax free.

So you don't need to convert previous dividends in a Roth account to __DivIncTaxFree, just make sure the account is excluded from any tax report.

steveweaver48

Thanks Jim for the clarification!

Ps56k2

Jim_Harman said:
The _DivIncTaxFree category is supposed to be used for securities like tax exempt bond funds where the security has been marked Tax free.

Interesting.... just reading along -
Looked at my Vanguard Muni fund (in a taxable acct) and the fund was NOT marked as Tax-Free and the Divs were just Reinvested -

Will have to go back and take another look.

I don't import Quicken into TurboTax - and just use the Quicken Tax Planner for a ballpark idea of the financials, so it doesn't really matter - in our case -

Jim_Harman

@ps56k,

Right. You should mark the Muni fund Tax free in the Security Details. You can use the regular Inc and Reinvest dialogs to record the dividends and Quicken will categorize them as _DivIncTaxFree. This affects dividends that you have already entered as well.

You will see this categorization in the Investment Income report for example. One thing I noticed however is that if you change the Tax free box for a security the report is not updated dynamically - you have to close and re-open the report to see the change.

q_lurker

Perhaps it is worth noting that for Quicken that tax-free checkbox for a security is all-or-nothing. In the real world at tax time, a 'tax-free' muni bond fund may actually report some taxable dividend income. Quicken cannot replicate that real-world circumstance.

That represents a case where the download from Quicken to TurboTax is inaccurate and needs to be corrected at the TurboTax level. I would not consider the deficiency significant with respect to Quicken's tax-planner module.