2008 Program issues

[BulldogTom]

I have been playing with the software, and I found two things I don't really like this year.

#1 - If the property taxes are filled in on the schedule A, but the amount of Schedule A is less than the Standard Deduction, the amount of Property taxes does not flow to the new worksheet for the Standard deduction. You have to go manually to the worksheet and fill in the amount again. Am I doing something wrong? Wouldn't it seem that if there is an amount added to the Sch. A for property taxes, it would flow to that worksheet when it realizes that the Standard deduction is better?

#2 - Stimulus Refund Recovery Worksheet. This thing takes a little bit of time to get through. I want to charge for it, but I can't find a place to add the charge in the billing rates? Am I just missing it, or are we not able to charge for this? I only want to charge if I have to fill out the forms.

If anyone out there has some time to check these out and see if the problem is with me (most likely) or if this is in fact the way the program operates this year?

Tom

Lodi, Ca

[jainen]

>>Wouldn't it seem that if there is an amount added to the Sch. A for property taxes, it would flow to that worksheet when it realizes that the Standard deduction is better?<<

That would help in most cases, but not all. You can only deduct FOREIGN property taxes on Schedule A, not as standard deduction. Perhaps they should have "itemized itemized" deductions, but then everybody would have to take another step (at least mentally) instead of just the few who are borderline for itemizing.

[BulldogTom]

You can only deduct FOREIGN property taxes on Schedule A

No - you can deduct the amount of property taxes you paid on your personal residence on your Schedule A, and it does not have to be FOREIGN. The new change this year is you can deduct up to $1000 of your personal residence property taxes as an additional amount of your standard deduction. Since we are already filling in the amount of the personal residence property taxes on the Sch. A worksheet, it seems to me that amount should flow to the worksheet for the additional amount on the standard deduction. The software already makes the choice of which option is best (std vs itemized), so it should make the std deduction plus the amount of prop taxes paid versus the sch A amount part of the decision process, don't you think?

Tom

Lodi, CA

[TAXBILLY]

Jainen's statement is correct. He is only saying that if you have a foreign re tax it would only be deductible on Schedule A and would not be deductible under the new option of re tax added to the standard deduction.

The re tax that can be deducted if you don't itemize is the lower of the tax or $500 ($1000 if MFJ).

taxbilly

[BulldogTom]

Taxbilly, you are ruining my fun. I figured that is what Jainen meant, but because it was not the most precise sentence he has ever written, and could be twisted a little bit, that is what I was doing. What do they call it - trying to get his knickers twisted?

Now, back to the original intent. Do you think that is why they left it that way? We are talking about a very small amount of returns that would have a foreign property tax for their main home. I think the majority of us are looking at the personal residence tax amount and comparing it to the standard deduction plus the 500/1000 amount.

I know what I need to look for. I am just wondering if this is how the software is intended to operate this year? Or am I missing something (like a new check box) that will make the software do this for me?

Tom

Lodi, CA

[jainen]

>>am I missing something (like a new check box) that will make the software do this for me?<<

I put this question up to rchinchilla in his thread about the top 20 poll, since he is actively developing software for this very purpose. (As for my knickers--it's a holiday weekend and I'm working at home, if you know what I mean.)

[Dan]

It does not seem like Form 1040 is working correctly. Individuals who do not itemize their deductions on the federal income tax returns may claim an additional standard deduction for state and local real property taxes, up to $500 ($1,000 for joint returns.)

For example for a joint return when the total amount on Schedule A is below $10,900 the program should add another $1,000 making a total of $11,900 as the standard deduction to go on page 2 of Form 1040.

I am looking at the "Housing and Economic Recovery Act of 2008"

[Catherine]

>>am I missing something (like a new check box) that will make the software do this for me?<<

I put this question up to rchinchilla in his thread about the top 20 poll, since he is actively developing software for this very purpose. (As for my knickers--it's a holiday weekend and I'm working at home, if you know what I mean.)

If this means you are working in your knickers (and only your knickers), we do not need to know this. Thank you.

Catherine

;-)

[David1980]

Now, back to the original intent. Do you think that is why they left it that way? We are talking about a very small amount of returns that would have a foreign property tax for their main home. I think the majority of us are looking at the personal residence tax amount and comparing it to the standard deduction plus the 500/1000 amount.

I agree, reminds me of this other tax preparer in the area here who is always going off about how if something is exceedlingly rare the software should assume the most common scenario and allow for adjustment. IE, if 99% of people do not have foreign property tax then just auto-carry it to the standard deduction and allow an adjustment for that 1%. For what it's worth some other software companies went that way, perhaps with a review message to adjust it if the amount does include foreign property tax.

[TAXBILLY]

BT:

The foreign re tax which is deductible only on Schedule A is not limited to a personal residence. You can have a foreign investment property re tax.

Dan:

The local and state re tax that is in addition to the standard is not a flat $1000 for MFJ if the actual tax is lower.

taxbilly

PS to Catherine:

More information than you want to know department ... I'm in my shorts today since my office is in my home and there is no one coming over. After all it is 75 here in sunny Florida!

[Dan]

Taxbilly, thanks for the warning if your real estate taxes are below $1,000.

How do you get the extra $1,000 in addition to the standard deduction flow over to page 2, Form 1040 if your real estate taxes on your personal residence were $1,974

Under line 39c "Real estate taxes" it says, "your standard deduction is increased by the state and local real estate taxes you paid, up to $500 ($1,000 if married filing jointly). The real estate taxes must be taxes that would have been deducted on Schedule A if you had itemized your deductions..."

In regard to the $1,974 real estate taxes for a joint filer, should not the standard deduction amount on page 2 of form 1040, line 40 be $11,900 instead of $10,900?

Standard Deduction Worksheet--page 40

1. Enter amount show for filing status 1. 10,900

2. Can you (or spouse if filing jointly) be claimed as a dependent? No

4. Enter the smaller of line 1 or line 3 -- 4. 10,900

7. Enter the state and local real estate taxes you paid -- 7. 1,974

8. Enter ($1,000) if married filing jointly -- 8. 1,000

9. Enter the smaller of line 7 or line 8 -- 9. 1,000

10. Add line 4,5,6, and 9 and enter on form 1040, line 40 -- 10. 11,900

[Don in Upstate NY]

#1 - If the property taxes are filled in on the schedule A, but the amount of Schedule A is less than the Standard Deduction, the amount of Property taxes does not flow to the new worksheet for the Standard deduction. You have to go manually to the worksheet and fill in the amount again. Am I doing something wrong? Wouldn't it seem that if there is an amount added to the Sch. A for property taxes, it would flow to that worksheet when it realizes that the Standard deduction is better?

I'm teaching a TaxWise course this year for AARP/TCE. TaxWise operates as you suggest - the real estate taxes are entered on the Schedule A worksheet (there is a dedicated line for taxes on the principal residence) and the program correctly chooses between the itemized and the enhanced standard deduction. The students are grumbling about this - they would prefer to manually enter the taxes on a worksheet for the back of the 1040, rather than open up a Schedule A that they know they are not going to use. Guess you can't please everybody.

[TAXBILLY]

Don:

You said that the Taxwise program has a line dedicated to taxes for the principal residence. Does it also have a dedicated line for other re taxes such as on investment property because that also should flow to the additional tax deduction?

taxbilly

[Don in Upstate NY]

You said that the Taxwise program has a line dedicated to taxes for the principal residence. Does it also have a dedicated line for other re taxes such as on investment property because that also should flow to the additional tax deduction?

Yes. "Other real estate taxes you paid, not listed elsewhere on this return" Also flows nicely through to an Illinois return, where you get a credit based on the RE taxes on your principal residence, but not on your vacation home.

On the other hand, TaxWise does NOT add up your foreign taxes from 1099-INT or 1099-DIV and carry them anywhere, nor does it account for NY SDI deductions from box 14 of a W2. And interest from Private Activity Bonds, which shows up only on a 1099-INT, must be entered on the 1099-DIV worksheet. Guess no program has everything we want.

[Dan]

Program Issue solved.

1. Left click once on line 40 of Form 1040

2. Click on the bunny and it will give you a choice between adding the Sch A or selecting

a worksheet.

3. Select the 1040 worksheet and go to line 7

4. If you have state and local real property taxes check the yes box

5. If you have filled out Sch A those taxes now will appear on the worksheet.

6. When you go to page 2, Form 1040, you will see the change.

I did not have to enter the property taxes again on the worksheet, they carried over from Sch A that I had already done. All I had to do was check the yes box and the amount of property taxes entered on Sch A came over. Clicking the yes box was the answer.

[BulldogTom]

Program Issue solved.

1. Left click once on line 40 of Form 1040

2. Click on the bunny and it will give you a choice between adding the Sch A or selecting

a worksheet.

3. Select the 1040 worksheet and go to line 7

4. If you have state and local real property taxes check the yes box

5. If you have filled out Sch A those taxes now will appear on the worksheet.

6. When you go to page 2, Form 1040, you will see the change.

I did not have to enter the property taxes again on the worksheet, they carried over from Sch A that I had already done. All I had to do was check the yes box and the amount of property taxes entered on Sch A came over. Clicking the yes box was the answer.

Aha! It is the Bunny. It is always the Bunny that has the answer in ATX. If they ever got rid of the Bunny, the software would be useless.

Thanks for the proceedure Dan.

Now - if I can just figure out how to charge for the Stimulus Payment, I would be on my way.

Tom

Lodi, CA

[jainen]

>>It is the Bunny. It is always the Bunny <<

Big fan of Buffy the Vampire Slayer, are you?

[BulldogTom]

>>It is the Bunny. It is always the Bunny <<

Big fan of Buffy the Vampire Slayer, are you?

No. I think I saw part of it one time. Not my style of TV.

Tom

Lodi, CA

[jainen]

>>Not my style<<

That's okay. I think we can still be friends. In the final episode, it was the vengeance demon's fear of bunnies that kept the uber-vamps confined to the school until the apocalypse problem could be settled.

[Catherine]

>>Not my style<<

That's okay. I think we can still be friends. In the final episode, it was the vengeance demon's fear of bunnies that kept the uber-vamps confined to the school until the apocalypse problem could be settled.

You are all such very STRANGE people. I am proud to be a member of the group.

Catherine

[jainen]

>>very STRANGE<<

Buffy isn't exactly counter-culture. Successful Hollywood movie released on DVD by Fox, seven years in prime time, an Emmy, TV Guide and Time magazine greatest shows of all time lists, a popular spinoff, more than 60 novels, at least five video games, a long-running comic book series....

[NECPA in NEBRASKA]

I was glad that it was Spike that saved the world from the Uber-vamps though. It was hysterical that Anya was terrified of bunnies.

[Catherine]

I was glad that it was Spike that saved the world from the Uber-vamps though. It was hysterical that Anya was terrified of bunnies.

I didn't follow the TV series all that much but did catch it occasionally. But I really liked the original movie with Christy Swanson and Donald Sutherland. PeeWee Herman's unending death was hysterically funny.

Catherine