This has been going on since the horrific transition to EWC+. My mutual funds don't often throw off Short Term Gains, but when they do, they are incorrectly categorized as Dividends. Long Term Capital Gains transactions download correctly.
Hello @ChrisP.,
Thank you for letting us know you're seeing this issue. To help determine if this is caused by the way the data is being sent to Quicken or by something happening after Quicken receives the data, please navigate to Help>Report a Problem and send a problem report with log files attached.
Please include the names and symbols of the affected mutual funds, the date(s) of the most recent transactions that were downloaded incorrectly, and the $ amount of those transactions.
Please post to let me know once the problem report is sent.
I look forward to your reply!
I manually change DIV to CGShrt whenever they download from Fidelity. Quicken hasn't been treating CGshort correctly since the EWC+ change. Tax wise it could make difference for tax-exempt securities.
Hello @leishirsute,
Thank you for sharing that you're also seeing this and how you manually correct it. Have you contacted Quicken Support directly about this issue?
Thank you!
Not to hijack this thread, but Vanguard has the same problem, where long and short term capital gain distributions are downloaded as dividends. See this discussion
As noted, this is beyond Fidelity; I, too, have seen it from Vanguard more recently via Direct Connect downloads.
As I believe all STCG as MF distributions are taxed as non-qualified dividends, I am not sure there is real or meaningful significance to the ‘error’.
I take the position that Quicken should not ‘fix’ the error. They should take what the FI sends with priority to the FI provided action over the FI provided memo. The FI should fix the problem.
In the case of Fidelity, the income is shown as Short Term Capital Gain in the Fidelity website Activity screen. That usually matches how it is sent to Quicken but that's just a guess on my part. STCG reported as Div for tax exempt MF's will incorrectly be reported in the Tax Planner which could be meaningful if using the Tax Planner for estimated taxes.
I don't think I've reported the issue because the capital gains transactions are not frequent. I'll report it next time it occurs.
STCG reported as Div for tax exempt MF's will incorrectly be reported in the Tax Planner
That is the part that I disagree with, but will not swear to.
STCG will still be subject to income tax and tax-exempt DIV is not. Same with LTCG for a tax-exempt security.
The tax rates for dividends and short term capital gain [adding - distributions] for a taxable security may be the same, but the rules are different, so it is important to keep them separate.
The rules are complicated, see this IRS summary https://www.irs.gov/taxtopics/tc409
[update] I stand corrected, it appears that short term capital gain distributions from mutual funds are taxed the same as ordinary dividends. The instructions for Sched D say the following:
Capital Gain Distributions
These distributions are paid by a mutual fund (or other regulated investment company) or real estate investment trust from its net realized long-term capital gains. Distributions of net realized short-term capital gains aren’t treated as capital gains. Instead, they are included on Form 1099-DIV as ordinary dividends.
Enter on Schedule D, line 13, the total capital gain distributions paid to you during the year, regardless of how long you held your investment. This amount is shown in box 2a of Form 1099-DIV.
Also for funds that have been marked Tax Exempt in Quicken, if STCG distributions are recorded as dividends, Quicken will convert them to _DivIncTaxFree, which is not included in the Dividend numbers in the Tax Planner.
And when Quicken supports identifying a security as generating Qualified dividends (hopefully in R68), if the STCG distributions are recorded in Quicken as dividends, they will be added to the Qualified line in the Tax Planner, which would be wrong.
So at least in those cases I think it is important to record any short term capital gain distributions correctly.
See this from American Funds https://www.americancentury.com/insights/municipal-bonds-tax-time-considerations/
I edited the title of the OP to add "dsitributions"
The tax rates for dividends and short term capital gains for a taxable security may be the same, but the rules are different, so it is important to keep them separate. The rules are complicated, see this IRS summary
The tax rates for dividends and short term capital gains for a taxable security may be the same, but the rules are different, so it is important to keep them separate.
The rules are complicated, see this IRS summary
This discussion is not about general ST capital gains which I agree can get somewhat complicated. It is about ST capital gain distributions from mutual funds.
The 1099-B forms that I get include the STCG distributions from mutual funds in the Total ordinary dividend line (Box 1a). I don't have a way to check immediately if they get included in the Qualified dividend line (Box 1b), but I doubt that they do. There is no separate line for ST capital gains reported on form 1099-B. The Box 2a line is for LT capital gain distributions which flows to Schedule D line 13. There is no comparable Schedule D line in Part I for short term transactions.
Within Quicken, the default tax line for category _ST CapGnDist is Schedule B Dividend income. That is wholly correct as far as I have seen. That is the same tax line assignment for category _DivInc. Thus there is no difference in how transaction categorized as _DivInc versus _ST CapGnDist are treated. I am looking at tax reports rather than the tax planner, but I would not expect the tax planner to screw that up.
Regarding the concern @leishirsute raised about tax-exempt mutual funds, I have not faced that issue. The logic I would offer is that for such securities, it is the income generated by the securities held by the MF that is tax exempt; not the capital gains that the MF develops in buying and selling those tax-exempt securities. The ST and LT cap gains the MF develops in trading the tax-exempt securities are (I expect) no more tax exempt than if you and I were trading those securities. Further to that consideration, I have had situations where a 'tax-exempt' MF has identified a small part of their overall dividend payments through the year as taxable.
@q_lurker I agree with you regarding tax exempt funds and the treatment of mutual funds capital gains distributions. That is why it is not correct to have short or long term capital gains distributions as Action=DIV for tax-exempt securities. It produces incorrect Tax Planner results. I manually change DIV to CGShrt of CGLong (if needed) to keep proper tax planning info. Usually Quicken treats CGLong correctly. It's a mutual fund's short term capital gain distribution that is usually incorrectly treated as DIV in Quicken. I think for non-exempt funds, DIV and CGShrt don't really make a difference except that qualified dividends can be taxed differently than a short term capital gain distribution.
I’ll try to be clear, because I think my position been misunderstood.
So while my point 1 stands, and I too correct such download errors (which are limited. I had 9 total STCGs last year, 6 in 2024, and 2 in 2023. Not all were erroneously downloaded),
