What are the IRS guidelines for rounding amounts to whole dollars on a return?
In 1120, 1120-S, 1065, 1040, and 1041 returns, the IRS states that you can choose to round off cents to whole dollars on the return and schedules. 990 instructions detail that the organization must round off cents to whole dollars on the returns and schedules, unless otherwise noted for particular questions.
For all return types, both of the following rounding rules apply:
- Amounts under 50 cents round to zero. Increase amounts from 50 to 99 cents to the next dollar.
- For example, $1.49 becomes $1 and $2.50 becomes $3.
- If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.
Beginning in Drake16, there is no longer an option regarding rounding in setup. All amounts will be rounded to the whole dollar to conform with IRS e-file guidelines.
Note: The IRS accepts e-filed returns rounded to the whole dollar only. A cent value can sometimes be present in data entry when a return is converted from another software that allows amounts after a decimal place, or if that amount is forced into the box (not recommended).
In Drake15 and prior, the option to determine rounding to the Whole Dollar or Penny is located under Setup > Options > Optional Items on Return.
- If the Dollars option is selected, only the whole dollar amount (based on rounding rules) will show. If you choose to have returns rounded to the dollar amount, do not enter cents on the entry screens as it could result in rounding errors. Round all amounts before entering them and then the program will round all line calculations to the dollar.
- If the Penny option is selected, you can enter dollars and cents on the data entry screens and the full, non-rounded amount will show.