AccessibilitySkip to Top NavigationSkip to Main ContentHome  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 6. Data Processing (DP) Tax Adjustments (Cont. 2)

3.11.6  Data Processing (DP) Tax Adjustments (Cont. 2)

3.11.6.7 
Specific IMF Adjustments

3.11.6.7.5 
Credits - Non Refundable (Line 7)

3.11.6.7.5.2  (01-01-2008)
Child and Dependent Care Credit (Form 2441) (Line 7)

  1. If Child and Dependent Care Credit claimed on Line 7B is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 2441 does not have to be attached. Continue processing using RC 036.

  2. If Child and Dependent Care Credit claimed on Line 7B is ≡ ≡ ≡ ≡ ≡ ≡ , Form 2441 must be attached for math verification. The following items must be completed.

    1. Line 1(a), Provider’s Name must be present

    2. Line 1(c), Provider’s TIN must be present, unless the provider is an exempt organization, such as, but not limited to the following:

      • Churches, synagogues, mosques, or temples
      • Schools-both public and private
      • YMCA/YWCA or YMHA/YWHA
      • Other nonprofit organizations
      • The provider was a foreign citizen with no U.S. address and the child care was provided in a foreign country

    Note:

    Do not correspond for the missing TIN when more than one provider name is entered on Line 1, and at least one provider's TIN is present.

  3. The provider's TIN is not required when the taxpayer has exercised "due diligence" in his/her attempt to comply with the requirement. Due diligence applies only to notations that indicate:

    1. the provider has moved and the taxpayer is unable to find the provider to get the TIN, or

    2. the provider has refused to give the TIN to the taxpayer.

      Note:

      Notations that indicate the taxpayer is "unable" to get the TIN, that the TIN is "not available" , that it is "unknown" , "pending" , "applied for" or any notation other than those listed above are not acceptable due diligence statements.

  4. Line 2(a), Qualifying Person(s) name must be the taxpayers dependent child, or spouse or dependent claimed unable to care for himself or herself.

  5. Line 2(b), Qualifying Person(s) TIN must be furnished. It can be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification Number (ATIN). If blank and the filer is claiming an additional exemption who appears to be the same child claimed for this credit, do not correspond.

    Note:

    For taxpayers indicating a religious group (e.g. Amish/Mennonite), "Exempt-Form 4029" , allow the credit without a TIN. Do not allow the credit for taxpayers with notations of "religious or conscience based objection" who object to obtaining a TIN. Refer as CIS/AM.

  6. Line 3 cannot exceed $3,000 for one dependent or $6,000 for more than one dependent for Tax Years 2004 and subsequent tax years. If blank, see Line 2(c) of Form 2441 for an amount paid.

  7. Line 4, if blank enter the amount from Line 18 of Form 2441 if present. If not, research RTVUE and/or IRPTR to verify if they had earned income. If unable to determine the amount, correspond.

  8. Line 5, Spouse’s Earned Income must be present if Joint Filing Status (FS 2). If not present enter amount from Line 19 of Form 2441 if present. If not, research RTVUE and/or IRPTR to verify they had earned income. If unable to determine the amount, correspond.

  9. Correspond for Lines 1(c) and 2(b) if missing and cannot be determined from NAMEI, NAMEB, NAMES, NAMEE, etc. See "NOTE" above for Line 1(c).

  10. For current year returns, update CC DUPED if a TIN is being added, or deleted. See IRM 3.11.6.7.3.2

3.11.6.7.5.3  (01-01-2008)
Form 5695, Residential Energy Credits (Line 7)

  1. The Energy Policy Act of 2005 (Tax Year 2006 and 2007) provides for a Non-business Energy Property Credit (Part I) and a Residential Energy Efficient Property Credit (Part II) to qualified taxpayers who made a energy-conscious purchases after December 31, 2005 and before January 1, 2008. If form is missing, correspond; if present continue processing using RC 036.

  2. Part I -- Non-Business Energy Property Credit provides taxpayers a credit for improving the energy efficiency of an existing home and for costs relating to residential energy property expenses. The maximum amount allowable for this credit is $500. If taxpayer is claiming more than the maximum amount allowed, send 105C Letter disallowing the claim. Select paragraphs B, 1, 2 and 8; use the following fill-in for B: "We cannot allow the amount you claimed for the Residential Energy Credit on Form 5695, because you claimed more than the maximum amount allowed."

  3. Part II -- Residential Energy Efficient Property Credit provides taxpayer a credit for adding qualified solar panels, solar water heating equipment, or a fuel cell power plant to their homes in United States.

3.11.6.7.5.4  (01-01-2008)
Form 6478, Credit for Alcohol Used as Fuel (Line 7)

  1. Form 6478, Credit for Alcohol Used as Fuel, is used to claim the credit for alcohol used as fuel in a trade or business. The credit consists of:

    1. Alcohol Mixture Credit

    2. Alcohol Credit

    3. Small Ethanol Producer Credit

  2. Form 6478 must be submitted. If the form is missing, correspond. If the form is attached and the credit is reported on the Credits line on the Form 1040X (Line 7), continue processing.

  3. In addition to TC 29X to adjust the credit, input credit reference number 884 and RC 036 to record the credit.

3.11.6.7.5.5  (01-01-2008)
Form 8396, Mortgage Interest Credit (Line 7)

  1. To qualify for the Mortgage Interest Credit, the taxpayer should have received a Mortgage Credit Certificate (MCC) issued under a qualified MCC program in connection with their principal residence.

    Note:

    This certificate is not required to be attached to the Form 8396.

  2. This form must be math verified.

  3. If the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ , process using RC 036.

  4. If Form 8396 is attached and the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ process using RC 036. If Form 8396 is not attached, correspond.

  5. If amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , route as CAT A.

3.11.6.7.5.6  (01-01-2008)
Form 8826, Disabled Access Credit (Line 7)

  1. To qualify for the Disabled Access Credit, Form 8826, the taxpayer must have an eligible small business which has eligible access expenditures and Form 8826 must be submitted to claim the credit.

  2. One of the following indicators of some type of "business income" must be present on the original return or the amended return in order to allow the credit. Check RTVUE or look for one of these schedules or a statement attached.

    1. Schedule C

    2. Schedule E

    3. Schedule F

    4. "Other Income" claimed on line 21, Form 1040 or the equivalent on Form 1040X.

  3. For TY 2005 and prior Form 8826 must be submitted. If the form is missing correspond. If the Form 8826 is attached, business income is present, and credit claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , continue processing. Using RC 036. If form is missing, correspond.

  4. If a Form 8826 is attached and the "business income" criteria above is met, route as CAT A if the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  5. If the Form 8826 is attached and the "business income" criteria above is not met, route as CIS/AM.

  6. For TY 2006 and subsequent the credit can be claimed as a general business credit on line "1e" of Form 3800, General Business Credit and/or Form 8826. Process using RC 036. If credit is claimed on line 7 of Form 1040X and neither form is present, correspond.

3.11.6.7.5.7  (01-01-2008)
Form 8834, Qualified Electric Vehicle Credit (Line 7)

  1. To qualify for the credit, taxpayer must have placed a qualified electric vehicle into service within the tax year. Exception:If a Fiscal Year filer (2005-2006), refer as CIS/AM.

  2. The full amount of the credit is available for qualified purchases made in 2004-2005. If the taxpayer is claiming more than the maximum deduction of $4,000, refer to CIS/AM .

  3. The maximum credit allowable for a qualified vehicle purchase in 2006 is $1,000. If taxpayer claiming more than the maximum deduction, refer to CIS/AM .

  4. For TY 2005 and prior Form 8834 must be submitted. If form is missing, correspond. If the form is attached and the credit is reported on the Credits line on Form 1040X ( Line 7), continue processing using RC 036.

  5. For TY 2006 the credit can be claimed as a general business credit on line "12c" Part II of Form 3800, General Business Credit and/or Form 8834. Process using RC 036. If credit is claimed on line 7 of Form 1040X and neither form is present, correspond.

3.11.6.7.5.8  (01-01-2008)
Form 8835, Renewable Electricity, Refined Coal, and Coal Production Credit (Line 7)

  1. To qualify for the credit, taxpayer must sell electricity produced in the U.S. or U.S. possessions from qualified energy resources at a qualified facility to an unrelated person. Also, the credit is allowed for the production of refined coal and Indian coal sold to an unrelated person.

  2. For TY 2005 and prior Form 8835 must be submitted. If the form is missing, correspond. If the form is attached and the credit is reported on the Credits line on the Form 1040X (Line 7), continue processing using RC 036.

  3. For TY 2006 and subsequent the credit can be claimed as a general business credit on line "1f" of Form 3800, General Business Credit and/or Form 8835. Process using RC 036. If credit is claimed on line 7 of Form 1040X and neither form is present, correspond.

  4. Generally, the filer will be required to recompute their Alternative Minimum Tax (AMT) when claiming this credit. If AMT is recomputed, or is required, refer to CIS/AM.

3.11.6.7.5.9  (01-01-2008)
Form 8864, Biodiesel and Renewable Diesel Fuels Credit (Line 7)

  1. Form 8864 is use to claim the credit for biodiesel (after 12–31–04) and renewable diesel (after 12–31–05) fuels used or sold in trade or business.. The credit is claimed for the tax year in which the sale or use occurs and consists of the following:

    1. Biodiesel credit

    2. Renewable diesel credit

    3. Biodiesel mixture credit

    4. Small agri-biodiesel producer credit

  2. For TY 2005 and prior Form 8864 must be submitted to claimed the credit. . If the form is missing and there is an amount claimed on Form 3800 for any dollar amount, correspond.

  3. For TY 2006 and subsequent the credit can be claimed as a general business credit on line "1m" of Form 3800, General Business Credit and/or Form 8864. If credit is claimed on line 7 of Form 1040X and neither form is present, correspond.

  4. In addition to TC 29X to adjust the credit, input credit reference number 884 and RC 036 to record the credit.

3.11.6.7.5.10  (01-01-2008)
Form 8910, Alternative Motor Vehicle Credit (Line 7)

  1. Form 8910, Alternative Motor Vehicle Credit provides a credit for the purchase of a new qualifying alternative motor vehicle placed in service after December 31, 2005.

  2. The four types of qualifying vehicles are:

    • Advanced lean burn technology vehicle

    • Qualified hybrid vehicle

    • Qualified alternative fuel vehicle

    • Qualified fuel cell vehicle

  3. For tax year 2006 and subsequent, the credit can be claimed on line "1s" of Form 3800, General Business Credit and/or Form 8910. Process using RC 036. If credit is claimed on line 7 of Form 1040X and neither form is present, correspond. See table below to determine the maximum credit allowed for the model year of the vehicle claimed.

    Model Year 2005 Credit Amount
    Ford Escape 2WD Hybrid $2,600
    Ford Escape 4WD Hybrid $1,950
    Honda Accord Hybrid AT and Navi AT $650
    Honda Civic GX $4,000
    Honda Civic Hybrid MT and CVT $1,700
    Honda Insight CVT $1,450
     
    Model Year 2006 Vehicle Credit Amount
    • Chevrolet Silverado 2WD Hybrid Pickup Truck $250
    • Chevrolet Silverado 4WD Hybrid Pickup Truck $650
    • Ford Escape Hybrid (Front) 2WD $2,600
    • Ford Escape Hybrid 4WD $1,950
    • GMC Sierra 2WD Hybrid Pickup Truck $250
    • GMC Sierra 4WD Hybrid Pickup Truck $650
    • Honda Accord Hybrid AT and Navi AT without updated calibration $650
    • Honda Accord Hybrid AT and Navi AT with updated calibration $1,300
    • Honda Civic GX $4,000
    • Honda Civic Hybrid CVT $2,100
    • Honda Insight CVT $1,450
    • Mercury Mariner Hybrid 4WD $1,950
     
    Model Year 2007 Credit Amount
    • Chevrolet Silverado 2WD Hybrid Pickup Truck $250
    • Chevrolet Silverado 4WD Hybrid Pickup Truck $650
    • Ford Escape Hybrid 2WD $2,600
    • Ford Escape Hybrid 4WD $1,950
    • GMC Sierra 2WD Hybrid Pickup Truck $250
    • GMC Sierra 4WD Hybrid Pickup Truck $650
    • Honda Accord Hybrid AT and Navi AT $1,300
    • Honda Civic GX $4,000
    • Honda Civic Hybrid CVT $2,100
    • Mercury Mariner 4WD Hybrid $1,950
    • Nissan Altima Hybrid $2,350
    • Saturn Aura Hybrid $1,300
    • Saturn Vue Green Line $650
     
    Model Year 2008 Credit Amount
    • Ford Escape 2WD Hybrid $3,000
    • Ford Escape 4WD Hybrid $2,200
    • Mercury Mariner 2WD Hybrid $3,000
    • Mercury Mariner 4WD Hybrid $2,200
    • Mazda Tribune 2WD Hybrid $3,000
    • Mazda Tribune 4WD Hybrid $2,000

  4. The following table contains information for the phase-out credit for Toyota and Lexus Hybrids

    Qualifying Vehicle Full Credit When Purchased by 9/30/06 Reduced Credit When Purchased From 10/01/06 Through 3/31/07 Reduced Credit When Purchased 4/1/07 Through 9/30/07 No Credit When Purchased After 9/31/07
    2005, 2006 and 2007 Toyota Prius $3,150 $1,575 $787.50 $0
    2006 and 2007 Toyota Highlander 2WD and 4WD $2,600 $1,300 $650.00 $0
    2007 Toyota Camry Hybrid $2,600 $1,300 $650.00 $0
    2006 and 2007 Lexus RX 400h 2WD and 4WD $2,200 $1,100 $550.00 $0
    2007 Lexus GS45h $1,550 $ 775 $387.50 $0

3.11.6.7.6  (01-01-2008)
Other Taxes (Line 9)

  1. Taxpayers use Line 9 to report additional taxes owed.

  2. Refer to CIS/AM if the taxpayer is amending any of the following:

    1. Form 4137, Social Security and Medicare Tax on Unreported Tip Income

    2. Form 5329, Additional Taxes on Qualified Plans (Including IRA's) and Other Tax Favored Accounts -- with Parts III - VII completed

    3. Form 8919, Uncollected Social Security and Medicare Tax on Wages

    4. Advanced Earned Income Credit (AEIC)

    5. Schedule H, Household Employment Taxes

3.11.6.7.6.1  (01-01-2008)
Additional Tax on Early Distribution-Form 5329/1099-R (Line 9)

  1. Taxpayers use Form 5329 or Form 1099-R to report the amount and the penalty for early withdrawal/distribution or an excess contribution of their IRA. Taxpayers may explain they are claiming this amount in lieu of submitting Form 5329 or Form 1099-R

  2. When a taxpayer submit Form 5329, only process claims that have Part I or Part II of Form 5329 completed. Refer to CIS/AM any Form 5329 with entries in Parts III through VII. Use the following Reason Codes when processing:

    1. RC 016 for the IRA distribution

    2. RC 048 for the 10% penalty

  3. If the taxpayer used Form 1099-R instead of Form 5329 to report the amount, process only those claims that have a Distribution Code of "1" or "7" . Refer as CIS/AM any Form 1099-R with a Distribution Code other than a 1 or 7.

    1. For Distribution Code 1, the taxpayer is generally subject to the 10% penalty for early withdrawal and should report the penalty on Line 9 of Form 1040X as "Other Taxes" .

      Note:

      If the Distribution Code of Form 1099-R is "1" and the taxpayer did not include the 10% penalty and no Form 5329 is attached, refer to CIS/AM.

    2. For Distribution Code 7, the taxpayer is not subject to any penalty. This distribution is a "Normal Distribution" from Education Accounts.

      Note:

      If the taxpayer does not provide a Form 1099-R, research IDRS using CC IRPTR to determine the distribution code. Prior year data will be available; however current year data will not be available until mid-year.

  4. If the taxpayer is reporting that they are not subject to the 10% penalty, Form 5329 must be attached with an Exception Code 01 through 11, listed on Line 2 of Form 5329. Lines 1 and 2 of Form 5329 should show the entire distribution amount with a breakdown of the amount that is not listed to the penalty; otherwise refer as CIS/AM.

3.11.6.7.6.2  (01-01-2008)
Self-Employment (SE) Tax (Line 9)

  1. Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. Taxpayers can also deduct half of their SE tax when figuring adjusted gross income (AGI), SE tax is figured using Schedule SE and is reported on Line 9 of Form 1040X.

  2. Taxpayers must pay SE tax if they had net-earnings ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ from a non-exempt trade or business. The Social Security Administration (SSA) uses the information from Schedule SE to figure the taxpayer's benefits under the social security program.

  3. Earnings from one of the following occupations may be subject to SE tax:

    Note:

    This is not an all-inclusive list.

    • Retired or former insurance agent

    • Fishing crew member

    • Newspaper carrier or distributor

    • Newspaper or magazine vendor

    • Public official

    • Real estate agent or direct seller

    • Dealer in securities

    • Executor or administrator

    • Minister, Christian Science practitioner; or member of a religious order

    • Member of recognized religious group

    • Trader in security

    Exception:

    Native American Tribal income is not subject to SE Tax.

  4. SE income is reported on Schedules C, C-EZ, E, F or as Other Income on Form 1040, Line 21 (e.g. Form 1099–MISC)

    Note:

    When making an SE Tax adjustment, use the appropriate reason code for the source of SE income.

  5. Take the following action based on the chart below:

    IF AND THEN
    Form 1099-MISC ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is attached No Schedule SE is attached Refer to Exam
    • Indicate "Questionable SE income" on routing slip
    Form 4361 is attached, research ENMOD 1. MIN-SE present

    2. MIN-SE is not present     		1. Refer to CIS/AM

    2. Mail to PSPC
    • Input a TC 971, AC 016
    • PSPC Drop Point 8630
    There is an indication of partnership (i.e. Schedule E) SE Tax is based off this income Refer to CIS/AM
    The Optional Method in Section II of Schedule SE was used to calculate SE tax   Refer to CIS/AM
    Both taxpayers have self-employee income Taxpayers combined their SE Tax onto one Schedule SE Correspond
    • Request that both taxpayers file a separate Schedule SE
    On a joint return, both taxpayers have SE Tax You are unable to determine which taxpayer's account to adjust Correspond
    • Request which taxpayer's account needs to be adjusted

  6. The adjustment to the account will be the difference between the amounts shown on TXMOD (if any) to the amended return.

    1. Always use the primary taxpayer's account when you research, even if the change is to the secondary taxpayer's account.

    2. Verify the requested change against the posted information on TXMOD/RTVUE.

    3. Do not decrease any posted amounts to less than zero.

    4. Adjust the taxpayer's SE Tax, SE Social Security, and SE Medicare as appropriate.

3.11.6.7.6.2.1  (01-01-2008)
Adjusting SE Tax

  1. In addition to SE tax, Line 9 is used to report various "other taxes" (e.g. changes to Form 5329). Do not include these amounts when adjusting SE tax. To verify Line 9 is only composed of SE tax, compare the posted total of SE tax "SET>" on TXMOD to Line 9, Column A.

  2. Compute the difference between the posted SE tax on TXMOD (SET>) to the amended Schedule SE. On Schedule SE this is:

    • Line 5 (short Schedule SE)

    • Line 12 (long Schedule SE)


      Use Reference Number (RN) 889for changes only to SE Tax and Reason Code 044.

  3. When the taxpayer adjusts SE tax on Line 9 they should have included as a deduction to Line 1 (AGI) an amount equal to 1/2 of the SE tax change from Line 9, column B. Verify the taxpayer included this amount by comparing the correlating lines from Form 1040 on RTVUE. If not considered, recompute the tax using 1/2 SE tax deduction included into Line 1.

    1. If the difference in line 10, column B is within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust the account using the taxpayer's figures.

    2. If the difference in line 10, column B is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust the account using the recomputed figures and set a math error. See IRM 3.11.6.6.6

3.11.6.7.6.2.2  (01-01-2008)
SE Social Security

  1. The self-employment tax rate is 15.3% and consists of two parts: 12.4% for social security (old-age survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

  2. Only a portion of the taxpayer's SE income is subject to the social security part of SE tax. See the table below for the maximum amounts for the tax year. The adjustments for the 878 or 879 cannot exceed this amount.

    If Tax Year is: Maximum amount subject to SE Social Security
    2007 $97,500
    2006 $94,200
    2005 $90,000
    2004 $87,900

  3. When adjusting SE social security, use:

    1. RN 878 to identify the primary taxpayer (PRIM-SE-INCM)

    2. RN 879 to identify the secondary taxpayer (SECND-SE-INCM)

  4. For each taxpayer whose SE Social Security is changing, compute the difference between the original posted total on TXMOD to the amended Schedule SE. On the Schedule SE, this is:

    • Line 4 (short Schedule SE)

    • Smaller of line 6 or line 9 (long Schedule SE)

3.11.6.7.6.2.3  (01-01-2008)
SE Medicare

  1. All of the taxpayer's SE income is subject to the 2.9% Medicare portion of SE tax, even if the entire SE Social Security portion has been met.

  2. When adjusting SE Medicare, use:

    1. RN 895 to identify the primary taxpayer (PRIM-MEDICARE-INC)

    2. RN 896 to identify the secondary taxpayer (SECND-MEDICARE-INC)

  3. For each taxpayer whose SE Medicare is changing, compute the difference between the original posted total on TXMOD to the amended Schedule SE. On the Schedule SE, this is:

    • Line 4 (short Schedule SE)

    • Line 6 (long Schedule SE)

3.11.6.7.7  (01-01-2008)
Total Tax (Line 10)

  1. Line 10 is used to indicate the taxpayer's total tax liability. Total tax liability is the sum of:

    • Initial tax assessed (based on taxable income)

    • Minus any non-refundable credits from Line 7

    • Plus any additional "other taxes" from Line 9

      Note:

      Unless otherwise indicated, any reference to "tax change" is referring to Line 10 of Form 1040X.

  2. If the amount on Line 10, Column B, is from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, move the amount to Line 15.

  3. All processable claims require either a Transaction Code (TC) 290 or 291:

    Use TC 290 for
    • An increase on Line 10
    • No change to Line 10 (zero tax change)
    Use TC 291 for
    • A decease on Line 10

  4. Always verify the Line 10, Column A entry to TXMOD/IMFOL prior to making an adjustment. See IRM 3.11.6.6.4.

  5. Use the following table for using TC 290 & 291:

    If And Then
    The Line 10, Column B, amount is a valid blank or "no change"   Use TC 290 for .00.
    The amount on Line 10, Column B, is an increase   Use TC 290 for the amount in Column B.
    The amount on Line 10, Column B is a decrease   Use TC 291 for the amount in Column B.
    The amount on Line 19, Column B is a decrease Line 10, Column A is less than the amount in Column B Use TC 291 for the amount shown in Column A.

    Note:

    Never adjust Line 10 below zero; regardless of what the taxpayer has indicated.

3.11.6.7.8  (01-01-2008)
Federal Income Tax Withholding/Excess Social Security & Railroad Retirement Tax Act (RRTA) (Line 11)

  1. Taxpayers use Line 11 to report their Federal income tax withheld and/or any excess Social Security/Railroad Retirement Tax Act (RRTA) Tier 1.

  2. If the amount on Line 11, Column B, is from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital -Gains, move the amount to Line 15.

  3. Never adjust Line 11 below zero; regardless if what the taxpayer has indicated.

  4. Use the following table for making adjustments to Federal Income tax withheld:

    If Then
    The amount on Line 11, Column B is an increase Use CRN 806 for the amount in Column B.
    The amount on Line 11, Column B is a decrease Use CRN 807 for the amount in Column B

    Note:

    Use Reason Code 051 for the change to withholding

  5. When a taxpayer has had too much social security or Tier 1 RRTA withheld they may be eligible to claim the excess withholding as a refundable credit against their income tax liability (total tax).

  6. To process an excess social security/RRTA claim the individual taxpayer (see following chart for the wage base limit for the year):

    • must report wages from more than one employer

    • their total wages must exceed the wage base limit for the tax year

    • the social security/RRTA tax withheld must exceed the maximum amount required for the tax year

    Excess Social Security/Medicare* and Railroad Retirement Benefits Tax Act (RRTA)
     
    Year Maximum SS and RRTA Tier 1 (Wages) Maximum SS and RRTA Tier 1 (Tax Limit -- 6.2%)  
     
    2007 $97,500 $6,045.00  
    2006 94,200 5,840.00  
    2005 90,000 5,580.00