Should reinvested dividends in a tax-deferred account be showing on the Tax Summary report?

EmKay
EmKay Member ✭✭✭
This is something I've always manually worked around, but taxes are a big deal to me now as I will start drawing on my retirement investments soon (having retired in August).

I have a 403(b) account that was set up as tax-deferred.

When I run the tax summary report for the current year, _DivInc is reported as being on Schedule B.  If I relied on that as my only source of information as to what I should put on Schedule B, I would be reporting it as dividends - but it's not, in a tax-deferred account (right??).  They also show on the Tax Schedule report.

Should they show up in these reports if they're not, currently, taxable income?

Answers

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    When you get dividends in a tax deferred account they are still not taxable.  It isn't until you withdraw the money from the account that they become taxable.

    From what I see on the tax reports the way they handle this is by default they do not select the tax deferred accounts, and as such don't report the dividends in those accounts.
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  • EmKay
    EmKay Member ✭✭✭
    It's disappointing that tax-deferred accounts' interest is not recognized as "different" by Quicken, because when I run my tax reports, I run them wide open so as to not miss a thing.  I will continue to ignore them where appropriate, going forward.
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    edited November 11
    [Mistaken in what the issue was]
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  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    edited November 11
    I agree that Quicken should be automatically screening out the data from tax deferred accounts so it does not get included in them. The default of these reports (to exclude the tax deferred accounts in the customizations) does this quite well.  But it also opens the door for loss of report accuracy and integrity by allowing users to select tax deferred accounts in the customizations. 
    Ideally I think it would be best if Quicken were to totally disallow selection of tax deferred accounts in the customizations.  Or, at a minimum, to pop up a message when users attempt to add tax deferred accounts in the customization warning them that the integrity and accuracy of these two reports may be compromised by doing this.
    The good news is that Quicken seems to do pretty well with properly screening out most tax deferred accounts data in Tax Planner.  The data that it does not screen out (like transfers out of the accounts) is properly accounted for.
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  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    I can see where a warning would be nice, but I don't think Quicken should remove the flexibility to show it either way.  After all if one size fit all this question wouldn't have come up at all.  And one can have two saved reports showing it both ways.

    I also don't think a separate category for reinvested dividends in a deferred account would be the right way to go.

    Right now basically for the most part, you have a generic investment account with a "attribute".  So basically most of the code doesn't know/care about the "type" of the account.  It is in everyone's best interest "specialize" the account in least possible way.  If all the reinvestment transactions in a certain account type are different category, if one finds that they have setup the type wrong then converting to the new type means altering many transactions (and hopefully there is a one to one conversion).  If all it is an attribute that things like the reports look at the actual account data doesn't have to change.  This means less work, less chance of bugs, ...

    Note with the 401K and 403(b) accounts there are things that are "special" about them with the employer contributions and hidden tax accounts and such.  And yes those hidden specializations have caused problems in the past.  It is best to keep them to the minimum in my opinion.
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  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    @EmKay What others are telling you is that tax-deferred accounts are by default not included in off-the-shelf tax reports (Tax Schedule, Schedule B, Tax Summary, Capital Gains, etc.).

    If you are running your reports "wide open" so as to not miss anything, you have likely opted to include ALL accounts.  Doing so DOES then include tax-deferred accounts in those reports.  

    Solution:  Don't run your reports "wide open".

  • EmKay
    EmKay Member ✭✭✭
    As I return to making sure that Quicken has all my tax line categories correct, I'm still finding things to be confused about, on this topic.  If I contributed to my traditional IRA this year, I *want* those to show up on the tax report and, if I do some Roth conversions, I want those in my tax report - but I still don't want the _DivInc to show up, right?  Do I just have to work around this, and manually exclude the Div Income while including that particular tax-deferred account in the report?