Properly Calculate Tax Liability for Social Security Benefits

LarryC
LarryC Member ✭✭
In the Tax Planner, all amounts assigned to the tax-related category "Form1040:Social Security income, self" show up as "Taxable Social Security Benefits". This is NOT CORRECT. Some or all social security payments are not taxable according to the IRS worksheet. In my case, this GROSSLY overstates my tax liability and indicates that I should send in quarterly estimated tax payments, WHEN IN FACT I WILL OWE NOTHING. Quicken should be fixed to properly calculate the tax liability for users receiving social security.
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Comments

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    What appears in Box 3 of your SSA-1099 is what goes in this Q tax line ... and Q';s calculation is correct.  What you're referencing needs to be calculated by a tax program ... not by Q.
    I'd vote NO if that option were available.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    This is just one of the limitations of the Tax Planner.  It isn't a tax program like a lot of people would like to believe.

    Over in the Lifetime planner there were similar problems just deciding on how much one would get from Social Security.  In the past it was making a "guess" based on the "most common".  Needless to say that was wrong for a lot of people.  And so when they recently revised it they changed it to having the user enter the amounts and have a reference to the Social Security site to find out for sure.

    And the "taxable" amount of Social Security is at least as complicated as finding how much you are going to get.  You can't even begin to know the right answer without knowing the persons total tax situation, and the Tax Planner doesn't have that.
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  • LarryC
    LarryC Member ✭✭
    @NotACPA and @Chris_QPW

    The calculation of taxable Social Security is straightforward and not that complicated. All the information is already in Quicken if you use it to track income and investments, as do many users. To see how simple it would be to add to the tax planner checkout the IRS worksheet at https://www.irs.gov/pub/irs-pdf/n703.pdf
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    There are MANY questions that the worksheet asks that aren't in Q.  And, that tax line in Q is STILL completely accurate for what it purports to be: Box 3 of SSA-1099.
    Your premise is flawed.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • LarryC
    LarryC Member ✭✭
    One of the most important financial problems I face each quarter is how much to send the IRS in estimated tax payments since I'm retired and my income is no longer mostly W-2 earnings. To do this I enter information that I pull *entirely* from Quicken into an IRS worksheet. How much better would it be for Quicken to incorporate that worksheet into the product as part of the tax planner?

    This would be a key selling feature for Quicken that would provide measurable benefits to millions of Social Security recipients. If Quicken is to maintain relevancy it needs to show that it is worth the price of an annual subscription.
  • LarryC
    LarryC Member ✭✭
    @NotACPA:

    Estimated quarterly payments are just that: estimated.

    If Quicken can cover 90% to 95% of user situations it would be sufficient for its purpose.

    The formula is strikingly simple for most cases. Start with 50% of your social security benefits. Add in any other income (pensions, wages, interest, dividends, and capital gain distributions). Deduct $25,000 if single and $32,000 if filing jointly. The remainder (if more than 0) is the taxable amount that can feed the rest of the tax planner. All the required information is already present in Quicken if used to track investments and bank accounts.
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    Q, currently has NO "IRS worksheets" ... and shouldn't in my opinion.  That's a TTAX function.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • LarryC
    LarryC Member ✭✭
    @NotACPA:

    Having the Tax Planner function properly calculate taxable social security is no different in principle than what it does now to properly apply the standard deduction or itemized deduction to arrive at "Remaining Tax Due." Both are "IRS Worksheets."

    The only difference is that in the Tax Planner under "Other Income" there is a worksheet entitled "Taxable Social Security Benefits" which calculates the total incorrectly.

    It wouldn't be that hard to fix and would provide considerable benefits to many users and potential users.
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
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