Short-Term Capital Gains Distributions Classified as Dividends in Quicken Mac

Austin13

I have an investment portfolio in which I manually entered a transaction of type: Short-term Capital Gain. Quicken then enters this as an Investments: short-term capital gain category. But that category is assigned to the tax classification of Schedule B: Dividend Income. This does not seem correct to me. I believe it should Schedule D: Short-Term Capital Gains.

Adding insult to injury, Quicken Mac won't let me change the tax classification for the Investments categories.

I can imagine a work-around, but can anyone explain why Quicken Mac thinks short-term capital gains should be shown on the tax report as dividends?

NotACPA

By any chance did you download these transactions from Fidelity?  THEY download the Cap Gains (etc) using the DIVIDEND action ... and then post what it really is in the Memo section.

It wouldn't surprise me if other MF companies did the same.

You can look in the OFX Log to see what your fund company actually sent.

Rocket J Squirrel

Quicken for Windows also assigns "Schedule B:Dividend income" to the "_ST CapGnDst" category. This refers to distributions from funds as opposed to sales of stocks, but the concept is the same. Short-term gains are taxed as ordinary income, the same as non-qualified dividends.

It looks wrong, but QWin, at least, reports it correctly. In QWin, the report "Schedule D-Capital Gains and Losses" does show short-term gains & losses. I don't have QMac to try this on, but maybe it behaves the same.

I don't trust Quicken to be correct with respect to taxes, and I import my 1099 info from my brokerages, not from Quicken, so this bit of strangeness doesn't bother me much.

Rocket J Squirrel

Hmm, I take back part of what I said before. QWin does lump short-term gain distributions (as opposed to actual gains from sales) along with dividends when I drill down from a Schedule B report. That's the consequence of the tax line item showing Schedule B instead of Schedule D.

Austin13

NotACPA and RJS,

Thanks for your replies. You are correct that the they are both taxed at the same rate, but they are entered on different forms. So I'm always trying to get the totals to match as a check. Quicken Mac, unlike Quicken Windows, doesn't report it correctly.

I also have never trusted Quicken for tax data; much prefer the real-deal 1099s. But it seems like they have made a mistake in classification and it has been wrong for YEARS (at least in the Mac version)!

No big deal, I will just create my own Investments categories and provide my own mapping to tax forms. I'm kind of disappointed that Quicken Mac has locked down the mappings and provided no way to take the training wheels off, if you know what I mean. It would have been nice to have an option in Preferences to allow the elimination of "Required Accounts" and change their tax mappings.

I see you are both Windows users. I made a fatal mistake switching to the Mac version, and now I can't get back to the Windows version, as much as I REALLY would like to. The conversion back to Windows only somewhat works if you have no investment accounts. Who bothers to fool with Quicken if they don't have investment accounts? Really?

Enough whining. I appreciate your responses. Very helpful!

Austin13

Oh, BTW, the tax classification is correct if it is a reinvestment of ST CAP Gains, but is incorrect if it is a cash distribution. That makes no sense at all. I'm just saying...

brandongblack

I also just noticed this problem on Windows. It definitely looks like a bug to me (at least from a reporting accuracy standpoint. why would I want to intermingle dividends and short term cap gains?) I reported it to quicken support..lets see if they look into it. For now I just manually set the values in the tax planner

jacobs

@Austin13  My guess is that this isn't even on the Quicken Mac team's radar. And they won't see this discussion here, unfortunately. I suggest you write up a description of the error -- Short Term Capital Gains paid as cash, not reinvested, going into the wrong tax classification -- and use the Help > Report a Problem function in Quicken to report it. Unfortunately, you likely won't get a response, but if they can replicate the issue, it should get escalated into their bug database to be fixed somewhere in the future. (You can include a link to this thread on the forum in the text you submit via Report a Problem.) 

rputtick

I'm having similar problems on Mac subscription version; however my short-term gain redistributions don't show anywhere in the tax report. Long-terms show up as a schedule D as they should but short-terms do not show in schedule B as discussed above. I also don't use Quicken for taxes but this screws up my estimated tax payments as I rely on the tax report for that purpose.

jacobs

@rputtick I'm not seeing what you describe. I just entered two dummy transactions dated today, one as Income > Short Term Capital Gain and the other as Reinvest > Short Term Capital Gain. In the Tax Schedule report, both show up under Schedule B - Dividend Income. 



Are you sure that you are entering your short term capital gains in Brokerage accounts, rather than Retirement accounts? Quicken knows that income in retirement accounts is not taxable, so it doesn't include them in the Tax report. Are the actual transactions the types I mentioned, either Income > Short Term Capital Gain or Reinvest > Short Term Capital Gain?

rscotty

This thread is confusing people because there is a lack of understanding of tax reporting for short and longer term capital gain DISTRIBUTIONS vs short and longer term REALIZED GAINS. All realized gains (short and long term) are reported to you by your brokerage company on form 1099-B and are reported by the tax payer to the IRS on Schedule D.

Capital Gains Distributions are reported to you by your brokerage company on form 1099-DIV. The Tax payer reports these to the IRS on Schedule D ONLY for the distributions classified as long term (i.e. Long Term Capital Gains Distributions). Short Term capital gains distributions are reported by your brokerage firm on form 1099-DIV (box 1a) along with your ordinary dividends and are reported by the tax payer to the IRS on Schedule B. In other words, for tax purposes, short term capital gains distributions are considered ordinary dividends. They have separate categories in Quicken, but both are lumped together for tax purposes and reported in the same block on both your 1099-DIV as well as your schedule B (or at least should be).

This is not a quicken error/bug/glitch.