Changes to Sch D Tax Worksheet released 5/15/19

[Abby Normal]

I've been seeing some buzz about the tax worksheet changing, so I checked the instructions for Sch D and they are dated May 15, 2019. I ran the original instructions and the revised one through a difference checker,  and found that line 18 of the worksheet is now 3 lines labeled a, b & c. Line b references the same amounts used in 199A calculations. I only had one or two returns that used the Sch D tax worksheet this year.

[Abby Normal]

https://www.irs.gov/forms-pubs/error-in-tax-calculation-in-schedule-d-tax-worksheet-form-1040

[Lee B]

According to the following article in Tax Pro Today, the IRS has announced corrections to Schedule D Worksheet Instructions  as of May 16th:

https://www.taxprotoday.com/news/irs-fixes-schedule-d-worksheet-that-miscalculated-capital-gains-taxes?feed=00000158-3f5d-dcbd-abf8-ff7f12270000

If your Tax Software followed the prior incorrect worksheet instructions, clients with certain Capital Gain scenarios may have paid more capt\ital gains tax

than they really owed! The IRS says they will review the tax returns affected and make corrections ???  The only way I can see using out tax software

to analyze the potential changes would be to make a copy of the return and recalculate once our software has updated the corrected Schedule D worksheet calculations ?

Just when I was relaxing into my offseason routine 

 

[Abby Normal]

I already posted about this:

But I only two all year that even used the Sch D tax worksheet. You have to have 1250 gain for it to apply.

[Lion EA]

 

https://www.irs.gov/forms-pubs/error-in-tax-calculation-in-schedule-d-tax-worksheet-form-1040

 

Error in Tax Calculation in Schedule D Tax Worksheet (Form 1040)

The 2018 Schedule D Tax Worksheet in the Instructions for Schedule D (Form 1040) contained an error. The tax calculation did not work correctly with the new TCJA regular tax rates and brackets for certain Schedule D filers who had 28% rate gain (taxed at a maximum rate of 28%) reported on line 18 of Schedule D or unrecaptured section 1250 gain (taxed at a maximum rate of 25%) reported on line 19 of Schedule D. The corrected worksheet is at the end of the updated instructions at the link above. If you downloaded those instructions before May 16, 2019, you should download them again. All returns filed after May 15 should reflect the new calculation; the IRS will update any returns filed after May 15 to reflect the correct tax using the new calculation. Because the IRS has already provided the corrected worksheet to its tax software partners, anyone filing a 2018 return, including those with extensions, after May 15, 2019, are not affected by the error.  Those taxpayers reporting these types of transactions typically file more complex returns and frequently obtain tax-filing extensions from the IRS. For that reason, the IRS believes that many potentially-affected taxpayers are yet to file. The correction results in a lower regular tax for most affected taxpayers, and a higher regular tax for a small number of the impacted taxpayers, depending on the taxpayer’s individual return.

Note that most taxpayers filing Schedule D do not have amounts on lines 18 and 19, check Yes on line 20, and do not use the Schedule D Tax Worksheet to figure their regular tax, and are unaffected.

Affected taxpayers need not file an amended return with the IRS or call the IRS. The IRS is reviewing returns submitted prior to May 16; more information will be provided about this review later. 

We corrected the Schedule D Tax Worksheet in the Instructions for Schedule D (Form 1040) by renumbering line 18 as line 18a, adding new lines 18b and 18c, and updating the text on line 19 to reflect those changes.  A Form 1040 taxpayer’s regular tax calculation using the worksheet is potentially impacted if:

1. Form 1040, Schedule D, lines 15 and 16 are both more than zero;
2. Schedule D, line 18 or line 19 is more than zero (or both are more than zero);
3. The taxpayer’s taxable income is more than $38,600 if single or married filing separately, $51,700 if head of household, or $77,200 if married filing jointly or a qualifying widow(er);
4. Line 15 of the Schedule D Tax Worksheet is not more than line 14 of the Schedule D Tax Worksheet (those lines were not impacted); and
5. Line 18 of the original Schedule D Tax Worksheet (line 18 a of the corrected Schedule D Tax Worksheet) is not more than $157,500 ($315,000 if married filing jointly or a qualifying widow(er)).

Potentially impacted taxpayers may recalculate their regular tax using the new worksheet to see if it changes. However, the IRS is reviewing all potentially impacted filed returns; more information will be provided later.

[Lee B]

What, I have to read every post here.

I guess age is catching up with me. My metal acuity  seems to failing.

Sorry, I didn't realize it as the exact same topic.

 

[Abby Normal]

No need to be sorry. I just wanted you to have more info on this.

And speaking of 'metal acuity', I just noticed that I typed 5/5 instead of 5/15 in the title, and left out a word in my last sentence above!

[Christian]

Has ATX provided an update covering this ?

[jklcpa]

2 hours ago, Abby Normal said:

I already posted about this

 

I merged the two topics and corrected the date in the title.

[Christian]

In checking my own return I see no amounts reported on line 18 or 19 on Schedule D so I can assume I am in the clear. Whoopee.

[Christian]

It would indeed be a cold day in Hades for me to get money BACK from the federal or state governments ! Some years back I had to contact my state senator to receive a $27 refund from our Department of Taxation. 

[Abby Normal]

4 hours ago, Christian said:

Has ATX provided an update covering this ?

Nothing yet.

[Hahn1040]

I don't see that ATX has corrected this yet

Am I missing something?

[Abby Normal]

9 minutes ago, Hahn1040 said:

I don't see that ATX has corrected this yet

Am I missing something?

It hasn't been updated. My guess is that it's a very low priority, especially after the malware fiasco. It also likely affects a very small percentage of taxpayers.

[Hahn1040]

thanks for the confirmation.

I know it only impacts a few people, but when it does, it can be significant.  I was able to override the field on the worksheet to get the correct calculation.

[Abby Normal]

ATX finally updated.