USA tax software - rounding the amounts

I used TurboTax for a few years, and now I’m trying H&R Block’s tax software. Both of them round every dollar figure that I enter. If I type “27.34”, it automatically gets changed to “27”. If I type “27.83”, it automatically gets changed to “28”.

But the IRS instructions explicitly say that I can choose to round or not round. Their exact words, on page 20 of the instructions for Form 1040 are:

Does anyone know why these programs force me to use rounded figures? I understand that some people might prefer to use rounded amounts, but why can’t they offer me the option?

(Actually, I can understand rounded figures for people who are doing their taxes literally by hand, with paper and pen – fewer digits means less chance for arithmetic errors. But what’s the advantage of rounding when the computer does all the calculations? Please don’t say that it is a data storage problem; in this age of terabyte drives, I really can’t believe that the fractional numbers will strain the software.)

WAG - It’s easier to read and understand the numbers.

Have you performed a manual test comparing a return with rounded numbers vs. all exact to the penny numbers? Does your refund (or tax due) remain the same?

For about 30 years I did my taxes manually, with pen and paper. About half the time I one would be better, and half the other would be better. Usually the difference was less than a dollar, but sometimes could be more than $2. It’s like flipping a coin and getting “heads” four times in a row – there are so many numbers on that form that the rounding errors usually cancel each other out, but occasionally they do accumulate.

But although I am a really cheap tightwad who would like to get every last penny out of the IRS that I can legally get, that’s NOT the main reason I like to put the exact numbers on the form. The main reason is because I find that it makes it easier to find the errors. If I do a calculation twice, and the two numbers are off by $1.17, then it is (comparatively) easy to look for a number that ended with 17 cents, or two numbers where the pennies add up to 17. But when everything is rounded, and the two numbers are off by $1, it is like looking for a needle in a haystack. The error could be anywhere.

Let me add that many people perceive my desire for such precision as extreme. They have a valid point. But here’s the thing: That appreciation for precision is shared by many people who are accountants and programmers – exactly the sort of people who wrote this software. I find it mind-boggling that they force us to use the imprecise rounded numbers.

But this is not the Pit. I’m not here to rant. I figure that there’s gotta be a good reason to force us to round the numbers, and I’m curious what that reason is. And that’s why I hope the mods will let this stay in GQ.

The tax tables round quite a bit, so the cents in the input don’t matter.

I much prefer that the numbers I type in be left exactly as I give them. It makes it a lot faster to double check my work. I can glance at my 1099s and such and then glance at the screen and see that they are identical. I don’t have to stop and do the rounding for each one.

If the software wants to round the numbers after adding them up, okay. But leave my numbers alone for verification.

As I wrote, most of the time it matters very little or not at all. But every once in a while, it will make a very big difference. You mentioned the Tax Table, so here’s an example from there, from the top of page 80:

This means that if a single person’s taxable income is $48,049.78, then his tax debt is only $7935. But if the software forces him to round his figures, his taxable income will appear to be $48,050, and the government will want $13 more than indicated by the tax table.

Of course, it could work the other way too: If that same guy had three jobs, and earned (after deductions, let’s keep it simple) $16017.40 at one of them, and $16016.40 at each of the other two, then his actual total is $48050.20 and he should pay the larger tax. But if he rounds the three figures, it will appear to total only $48049, and he’ll pay the lesser amount.

(Yes, I know that perhaps the rules insist that he do the rounding only after adding up the three jobs, but the same effect can occur when the rounding error occurs from separate lines of the tax form.)

Why don’t you call H&R Block’s customer service line? That would be the best source for the factual answer you seek. Otherwise you should request that this thread be moved to IMHO.

I just remembered – it actually happened one year that my taxable income straddled the border between two lines of the Tax Table, and choosing to round or not did save me a few dollars.

Now that I think about it, since those tax brackets are in widths of $50, approximately one in fifty tax returns will fall between the brackets if they don’t round the numbers. Half of them will stay on the low side even with rounding, so it doesn’t matter. But the other half will end up in the higher bracket. That is approximately 1% of all tax returns which use the Tax tables! That’s a lot!

Math dopers: Did I make any errors here? It seems that by structuring the Tables in a “At least X, but less than X+50” manner, the IRS guarantees an profit from 1% of their users.

I KNOW that some will respond by pointing out that this is an intrinsic feature of the tables, which we wouldn’t have if everyone used a formula like the over-$100000 crowd. But that’s no true. It seems to me that if the tables were structured in a “More than X, but not more than X+50” style, then 1% would benefit from rounding, because even with rounding, the guy at $48,050.38 stays in the lower bracket.

I did. After an hour and a half waiting (there were 32 people ahead of me), the person I spoke with didn’t know the answer.

But yeah, maybe that’s a better forum. I’ll give it more time, unless a mod agrees with you.

I used Turbotax the past couple of years, and it didn’t round the imported numbers, at least. I couldn’t tell about the numbers that I entered, because I round them myself, but when it imported a form from my brokerage it kept the cents. (Which actually cost me the hassle of an amended return, because I had already entered one particular entry but didn’t notice the duplicate since I was using rounded numbers and the import used cents so they appeared as two numbers.)

I’m not sure I completely understand what you’re saying. But for starts it seems like you’re ignoring the fact that rounding works both ways and can push people into a lower bracket too.

In general, you seem to be assuming (for purposes of this specific argument) that everyone uses unrounded numbers until the final step of rounding - if that were so you’d be correct since the rounding point (the $50 multiple) is in the higher bracket (IIRC). But in reality people are rounding numbers along the way, and if most of these roundings are rounded down, they could be shaving dollars off their income.

But more broadly, since there are any number of figures being rounded, most likely with some rounded up and some rounded down, your 1% math doesn’t hold - it’s pretty indeterminate as to the percentage of filers who are impacted by this. But I would bet it’s an extremely low percentage

I just finished doing my taxes in Turbotax, an it did not round numbers for me. I recall that it did some number of years ago, but this is no longer the case.

I could be wrong, but I believe that rounding to whole dollars is a requirement of the e-file data specification. In other words, even if the software let you enter the cents, you couldn’t electronically file it that way.

I know that the IRS doesn’t use the cents in their own systems. If you pull a return or wage transcript, they truncate the number (they don’t even round; they just truncate). So if you omit a W-2 from your return for 1,234.56, the IRS will send you a letter adding 1,234 to your income.

In my daily experience, the only places the IRS cares about cents is in payroll filings like the forms 94x series, and when making sure you’ve paid all the interest and penalties.

I am with you brother. Everyone on Earth who counts money worries over the cents adding up properly and yet the IRS, the largest bunch of penny counters there is, decided to just drop them. It amazes me every year.

In the early days of TurboTax software they would try to round in some places and not others and the final amounts could come up one dollar too high or low. The software would then flag the value as suspect and I would have have to fudge a few cents someplace to make the numbers come out. Hadn’t had such problems lately. When I enter the values I still type the cents and let TurboTax round and it all works.

Yeah but guys, you don’t just round the adjusted gross income. That’s the point, you round every input. Every individual interest income, dividend, W-2 amount, charitable donation, mortgage interest deduction, property tax payment. We’re not just talking about a single value that gets rounded.

You probably put numbers in a couple of dozen different cells. The numbers should even out, although anything that ends in a .50 should not round up, but to the nearest even integer. That would be a better system.

Another reason they may want to round the numbers is that computers deal with integers much easier. Floating point errors can creep into the calculations when you have decimal points. Here’s just one of many examples using Microsoft Access VBA.

Debug.Print 3.1 - 3.11 = -9.99999999999979E-03

It should equal -.01.

Easily solved by internally figuring everything in cents, and using dollars only for entry and display.

Heh. I had 3 cents of interest on a bank account. Tried to be honest and say, yes- I have a 1099-INT. Enter amount, rounds to zero, throws error- “You must enter an amount if you have interest!”. Sigh. Back-Back-Delete 1099. Now I’m a liar.

Some bank sent you a 1099-INT for $0.03?

My bank told me not long ago that only interest amounts above <some small amount, I think it was $10> would result in a 1099 being produced.

They already kicked back my forms 2 times using EZ and Turbotax. :rolleyes:

Passwords Passcodes BE DAMMED!!!

I’m looking at the paper with all the info on it from IRS…FIX IT!!! :mad:

Just wanted to mention that my situation with 1099s and such and wanting to double check figures easily isn’t as small-scale as you might think. Yesterday I got six 1099s from just one company alone.