For 2012, New York changed its tax forms so that you have to round every amount you enter on the forms. But because many of the amounts come from the federal forms, I plan to do the same on the federal forms so the two sets of forms are more consistent with each other.
The rules about rounding off to whole dollars are little vague on the federal forms. I am supposed to round to whole dollar on the forms and schedules. And if I have to add two or more amounts to figure the amount on a line, I keep dollars and cents and round only after adding the unrounded amounts together. But what about worksheets such as the one for dividends and cap gains? Then there are special rounding instructions for form 8949, the relatively new one which goes with Schedule D. There, it says to round all amounts if I wish to round at all (which I do).
What do you all do if you round?
mhc Posts: 5515 Joined: Mon Apr 04, 2011 10:18 pm Location: NoCoPost by mhc » Sun Feb 17, 2013 10:20 pm
Turbo Tax handles it with no problems. Is it really worth it to do it by hand? 52% TSM, 23% TISM, 24.5% TBM, 0.5% cash Topic Author scrabbler1 Posts: 2816 Joined: Fri Nov 20, 2009 1:39 pmPost by scrabbler1 » Sun Feb 17, 2013 11:21 pm
mhc wrote: Turbo Tax handles it with no problems. Is it really worth it to do it by hand?Yes it is. I consider it a waste of money to pay for something I can do myself. I am good at math and good with spreadsheets.
kaneohe Posts: 6786 Joined: Mon Sep 22, 2008 12:38 pmPost by kaneohe » Mon Feb 18, 2013 2:34 am
Where did you find the 8949 instructions? I can't seem to find them.
I find the 1040 instructions a big ambiguous.
Suppose
wages 1.49
interest 1.49
total 2.98
but if I round before adding
wages 1
interest 1
total 2
unless I round after adding
wages 1
interest 1
total 3 but then it looks a bit weird
perhaps they meant that if you have internal adding WITHIN a line (such as 2 interest sources w/o using Sch B)
wages 1
interest 1 (= 1.00 + 0.49)
total 2
personally (may not be correct) I round everything for simplicity and I have some faith in some rule of large numbers that says somehow
things have to even out within a few bucks for income and some fraction of that for taxes. I'm sure IRS has bigger fish to fry.
Post by scrabbler1 » Mon Feb 18, 2013 6:33 am
Kaneohe, it looks like you have to use dollars and cents within a given line then round after adding them together. So because wages and interest are entered on separate lines you would in your example post $1 and $1 then add the two lines together to get $2.
To answer your question about instructions for Form 8949, is it on page 108 of the PDF file. Strangely, if you do a search for the word "rounding" in the big PDF file, it takes you directly there and skips earlier mentions of the word in the directions for rounding in Form 1040 (page 20 in the PDF file).
SSSS Posts: 1914 Joined: Fri Jun 18, 2010 11:50 amPost by SSSS » Mon Feb 18, 2013 6:52 am
scrabbler1 wrote: Yes it is. I consider it a waste of money to pay for something I can do myself. I am good at math and good with spreadsheets.
TaxAct is $18 for federal + state. How much time have you spent on this? TaxAct shouldn't take more than 2 hours for a moderately-complex return.
livesoft Posts: 87313 Joined: Thu Mar 01, 2007 7:00 pmPost by livesoft » Mon Feb 18, 2013 6:55 am
mhc wrote: Turbo Tax handles it with no problems.That is not quite true. I have a letter from the IRS late last year that says I owe one more dollar in tax for 2011. This is because TurboTax rounded and added instead of added and rounded.
So what do I do about rounding on the worksheets? I use TurboTax and let it do whatever it does anyways.
It is not a big problem for me since I always apply a refund to next year.
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Topic Author scrabbler1 Posts: 2816 Joined: Fri Nov 20, 2009 1:39 pmPost by scrabbler1 » Mon Feb 18, 2013 7:12 am
SSSS wrote:scrabbler1 wrote: Yes it is. I consider it a waste of money to pay for something I can do myself. I am good at math and good with spreadsheets.
TaxAct is $18 for federal + state. How much time have you spent on this? TaxAct shouldn't take more than 2 hours for a moderately-complex return.
I am an early retiree. I have plenty of time The $18 is a waste of money IMHO. walker46 Posts: 60 Joined: Wed Jan 05, 2011 8:06 amPost by walker46 » Mon Feb 18, 2013 7:38 am
I wish the tax forms didn't require rounding. I think it is more work to do the rounding than just to use the actual numbers. I would think there would be more rounding errors on tax forms than there would be math errors if the real amounts were used. For most people after all, the math is done by either software or a handheld calculator.
House Blend Posts: 4880 Joined: Fri May 04, 2007 1:02 pmPost by House Blend » Mon Feb 18, 2013 8:43 am
mhc wrote: Turbo Tax handles it with no problems. Is it really worth it to do it by hand?Yes. Your mileage may vary.
The numerous threads on this forum detailing the frustrations of getting the software to put the right numbers in the right places is one reason. The last thing I need is software that impedes filing my taxes. Free fillable forms is more my style.
To the OP, I also file taxes in a state that requires rounding.
Not sure what you mean about the different rounding instructions for Form 8949. I think you are still supposed to keep cents until the time comes to write a number into a box. Or are you worried about the $0.50 case? That is, does a capital loss of $1.50 round down to -$2, or up to -$1? (The author of that passage in the f8949 instructions deserves an F for clarity.)
The IRS wrote: Rounding Off to Whole Dollars
You can round off cents to whole dollars on Form 8949. If you do round to whole dollars, you must round all amounts. To round, drop cent amounts under 50 cents and increase cent amounts over 49 cents to the next dollar. For example, $1.49 becomes $1 and $1.50 becomes $2.
On the question of whether or how to use rounding on the worksheets, I use rounding on each line of the worksheets as well. And I sleep well at night.
If the IRS wants to come after me for an off by $1 error, it's a serious misappropriation of resources. And I'll mail them a paper check and be done with it.
kaneohe Posts: 6786 Joined: Mon Sep 22, 2008 12:38 pmPost by kaneohe » Mon Feb 18, 2013 9:00 am
scrabbler1 wrote: Kaneohe, it looks like you have to use dollars and cents within a given line then round after adding them together. So because wages and interest are entered on separate lines you would in your example post $1 and $1 then add the two lines together to get $2.
To answer your question about instructions for Form 8949, is it on page 108 of the PDF file. Strangely, if you do a search for the word "rounding" in the big PDF file, it takes you directly there and skips earlier mentions of the word in the directions for rounding in Form 1040 (page 20 in the PDF file).
I agree w/ your WITHIN a given line statement. Didn't see that word used in the instructions tho.
Thanks for location of F8949 instructions. I would have found it in paper version but I didn't see it listed in pdf ..Table of contents so I stopped too soon.
They needed that Table to cover the whole booklet, not just the 1040 part in the beginning.
Post by scrabbler1 » Mon Feb 18, 2013 9:25 am
House Blend, the inconsistent instructions with regard to rounding can be found here: In the instructions for Form 1040 (and schedules), the phrase (emphasis mine), "If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total." But for Form 8949, as you posted, "you must round all amounts." This means when you are entering your individual sales in Form 8949, Line 3, you have to round each individual dollar amount within that line even though they are immediately added together in Line 4. I did not notice the altered rounding rule for Form 8949 until I had done my first draft of it (in pencil).
I have to go back to my homemade spreadsheet and alter my rounding formulas so they follow the special rounding instructions for Form 8949.
Yes, Kaneohe, if there is an exception to the general rounding rule shown on page 20 the IRS should have mentioned it on page 20 (are there any other exceptions?). Or better yet, don't have an exception.
SSSS Posts: 1914 Joined: Fri Jun 18, 2010 11:50 amPost by SSSS » Mon Feb 18, 2013 9:29 am
livesoft wrote: That is not quite true. I have a letter from the IRS late last year that says I owe one more dollar in tax for 2011.
How much do you think it cost them to mail that letter & then process the additional payment? Calm Man Posts: 2917 Joined: Wed Sep 19, 2012 9:35 amPost by Calm Man » Mon Feb 18, 2013 11:04 am
livesoft wrote: mhc wrote: Turbo Tax handles it with no problems.That is not quite true. I have a letter from the IRS late last year that says I owe one more dollar in tax for 2011. This is because TurboTax rounded and added instead of added and rounded.
So what do I do about rounding on the worksheets? I use TurboTax and let it do whatever it does anyways.
It is not a big problem for me since I always apply a refund to next year.
BTW, did they just take it from the estimated overpayment or did you have to approve it? If they just took it were you able to just ignore the letter? Yes, I too have gotten into the habit of applying the refund to the next year too. I do it in a strange way though. If the refund is xx,yyy let's say 13,467, I apply the 13,000 from the 2012 return to 2013 as it is nice and easy to remember and write down and helps in estimating if I meet the safe harbor for the next year. And I request an ACH refund for the 467. That also let's me know that it has been processed. Like you, I have given up doing it by hand. It is just too much of a pain now. I simple Schedule D for 1 darned sale becomes a pain with 8949 then schedule D< etc. Then there's AMT which is a super pain and I know that you, livesoft, have TISM and take a foreign tax credit which requires 2 AMT calculations. It is amazing to me that the people have tolerated a system that is so complex that not even government people who do the tax laws and regulate them can do their own taxes without software. And they even make errors with the software. Where are the good old days? To the commenter about doing it himself (maybe OP), there are now different levels of phaseouts for a whole slew of things starting this year and ACA taxes and I doubt anybody can do it correctly anymore.
