Rounding on IRS forms

Discussion in 'US Taxes' started by TObject, Jan 26, 2006.

  1. TObject

    TObject Guest

    What are the rules on rounding amounts to the whole dollar
    when filing returns with IRS? Is it ok to round on some forms
    and not round on other forms, or all forms need to done
    the same way?

    My particular interest is the schedules D, D-1 with a lot of very
    small transactions, where rounding would introduce a substantial
    inaccuracy. If I don't round on these schedules, should I also not
    round on the form 1040, and all other forms, or can I take the
    fractional amount from schedule D, round it, and then place
    the rounded amount on form 1040?

    TIA
     
    TObject, Jan 26, 2006
    #1
    1. Advertisements

  2. TObject

    Phil Marti Guest

    "TObject" <> wrote:

    > What are the rules on rounding amounts to the whole dollar
    > when filing returns with IRS?


    Round EVERY entry on every form or none.

    If you choose not to round, you'll have to do the return by hand. Every
    software package I've seen automatically rounds, and the time it would take
    you to override each rounded entry would make the software more trouble than
    it's worth.

    Check your state rules if you don't round the Federal. Many states now
    require rounding.

    --
    Phil Marti
    Clarksburg, MD
     
    Phil Marti, Jan 26, 2006
    #2
    1. Advertisements

  3. "TObject" <> wrote
    > What are the rules on rounding amounts to the whole dollar
    > when filing returns with IRS? Is it ok to round on some forms
    > and not round on other forms, or all forms need to done
    > the same way?




    As Phil said, you round on alal forms and schedules or on none of the forms
    and schedules.

    The rules are basically, less than 50 cents gets rounded down, 50 cents or
    more gets rounded up.




    > My particular interest is the schedules D, D-1 with a lot of very
    > small transactions, where rounding would introduce a substantial
    > inaccuracy. If I don't round on these schedules, should I also not
    > round on the form 1040, and all other forms, or can I take the
    > fractional amount from schedule D, round it, and then place
    > the rounded amount on form 1040?



    If the "very small" Schedule D transactions are with the same stock, you can
    round up or down on the group of stocks to get the most accurate net gain or
    loss amount. But I know what you are going through if you bought and sold
    fractional shares (or a few truly penny stocks, like Enron!!) and have
    pennies in sales price, pennies in basis, and pennies in gain/loss amount.

    And while you can't e-mail it, you can build a spread sheet of the "D"
    transactions and attach it to the return when you mail it in.



    --
    Paul Thomas, CPA
     
    Paul Thomas, CPA, Jan 26, 2006
    #3
  4. TObject

    TObject Guest

    Thanks for the answers.

    In case I choose to round, do you think it would be ok to
    add an extra transaction on the Schedule D / D-1,
    and call it "ROUNDING ADJUSTMENT" (or something
    similar), just to make the sales total better match what was
    reported to the IRS?
     
    TObject, Jan 27, 2006
    #4
  5. TObject

    Phil Marti Guest

    "TObject" <> wrote:

    > In case I choose to round, do you think it would be ok to
    > add an extra transaction on the Schedule D / D-1,
    > and call it "ROUNDING ADJUSTMENT" (or something
    > similar), just to make the sales total better match what was
    > reported to the IRS?


    The theory of rounding is that it all balances out in the end, and the more
    transactions, the more likely it balances. If you somehow wind up with a
    total sales price significantly less than the 1099-B total, I'd first
    suspect a missed transaction.

    If you're over the 1099 total, no sweat. If you're under, your proposed
    adjustment shouldn't hurt, but it also probably wouldn't be necessary.
    --
    Phil Marti
    Clarksburg, MD
     
    Phil Marti, Jan 27, 2006
    #5
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. Patrick

    IRS and Forms?

    Patrick, Nov 9, 2005, in forum: Accounting
    Replies:
    8
    Views:
    305
    Paul A. Thomas
    Nov 9, 2005
  2. Berel
    Replies:
    0
    Views:
    517
    Berel
    Mar 4, 2004
  3. Replies:
    3
    Views:
    571
    Phil Marti
    Feb 1, 2007
  4. John
    Replies:
    0
    Views:
    529
  5. James Stewart

    Send Forms but no forms to send...

    James Stewart, Jul 2, 2009, in forum: Quickbooks
    Replies:
    3
    Views:
    758
Loading...

Share This Page