Confusing Calculations - Turbotax

[Foxyss]

What is the name of your state? WA

Hi, I have some interesting questions after using Turbotax.

First off, when I downloaded the financial information (stocks) from my institutions, one set came through with all the cost basis and purchase dates. The other came through with all of them missing. This is several hundred sales, so it turned into a nightmare.

NOTE: before I entered all the missing cost basis/dates, it said I owed $5000 dollars.

I went ahead and entered all the information manually and it kept making me owe less and less all the way up until now- It says I get a refund of $8300 dollars?!

It was my understanding that you could only claim up to $3000 in losses per year on stocks, so why does adding the cost basis and dates affect my calculation by $13,000?

Secondly, when calculating cost basis, do you go by the actual total amount you paid or the Share price X the Number of shares? The reason I ask is because most of my buys, I bid higher than what was needed to purchase to make sure the sale went through.

I'm just a little mythed at how I can be getting $8300 in refund when I'm positive it should not even be close to that much. I know I had a lot of losses, but that does not seem right. I'm afraid this will not be right and I will be in trouble for underpaying the IRS.

Any ideas would be greatly appreciated!!!

 

[efflandt]

It is quite understandable that if you only report sales and neglect to properly factor in cost basis, it could appear that you have much more income than the actual taxable gain.

If the 1099-B just reported a sale for $5000.00, if you did not figure the cost basis, the IRS would figure you owned tax on $5000.00. If your cost basis was $4500, your actual taxable income (gain) is $500.00, a big difference. Or suppose it went the other way where if it was sold for $4500.00 after buying it at $5000.00. Without the cost basis the IRS would think you had $4500.00 profit, when you actually had a ($500.00) loss.

For Schedule D you also have to pay attention to whether the 1099-B reports "gross" sale price (sale price of stock without factoring in commissions) or "net" with sales commissions deducted.

If 1099-B reports "gross" 100 shares sold $50 ($5000) and trade commission is $10, and you purchased it for $45/share, your cost basis would be $4500 + $10 (buy) + $10 (sell) = $4520, or taxable gain of $480.00.

If 1099-B reports "net" after sale commission of $4990 with commision deducted and purchase price (cost basis) of $4510 with commission included, it is the same taxable gain of $480.

In either case it the only information was sales proceeds without cost basis factored in at all, it would appear that you had much more taxable income than you should. In the past many brokers only reported sales proceeds (in which case you have to keep track of cost basis). It is just recently that some account for cost basis on your copy of 1099-B info.

 

[LdiJ]

What is the name of your state? WA

Hi, I have some interesting questions after using Turbotax.

First off, when I downloaded the financial information (stocks) from my institutions, one set came through with all the cost basis and purchase dates. The other came through with all of them missing. This is several hundred sales, so it turned into a nightmare.

NOTE: before I entered all the missing cost basis/dates, it said I owed $5000 dollars.

I went ahead and entered all the information manually and it kept making me owe less and less all the way up until now- It says I get a refund of $8300 dollars?!

It was my understanding that you could only claim up to $3000 in losses per year on stocks, so why does adding the cost basis and dates affect my calculation by $13,000?

Secondly, when calculating cost basis, do you go by the actual total amount you paid or the Share price X the Number of shares? The reason I ask is because most of my buys, I bid higher than what was needed to purchase to make sure the sale went through.

I'm just a little mythed at how I can be getting $8300 in refund when I'm positive it should not even be close to that much. I know I had a lot of losses, but that does not seem right. I'm afraid this will not be right and I will be in trouble for underpaying the IRS.

Any ideas would be greatly appreciated!!!

Your basis is the total you paid for each stock.

It could be accurate or it may not be accurate. I don't have a lot of confidence in Turbo Tax for a return like yours, unfortunately.

Personally, I think a return like yours should be handled by a professional.

However, what you could do, to double check the numbers, is take the grand total of the short term stock sales and short term basis, and a grand total of the long term stock sales and the long term basis, and go run your return on a different online program, to see what results you get. You will get the same results entering them individually as you will entering them as a total, so don't so unnecessary work to check the figures.

If you get a different answer on a different program, then I would definitely go see a professional, but take a really good listing of your individual stock sales with you, with date of purchase, date of sale, proceeds and basis, or you will pay way too much money to get your return done.