4.19.7  IMF Automated Underreporter (AUR) Technical System Procedures (Cont. 1)

4.19.7.8 
Case Analysis Overview

4.19.7.8.7 
Information Returns

4.19.7.8.7.6 
Creating, Deleting, or Modifying Information Returns

4.19.7.8.7.6.1  (08-12-2011)
Creating Information Returns

  1. It may be necessary to create an IR for the completion of the computation windows.

  2. Before the system allows a created IR to be committed the following fields are required:

    • PAYEE TIN CD

    • DOCUMENT TYPE

    • INCOME TYPE

    • INCOME AMOUNT

    Note:

    In order to send a created IR on the notice, it must contain a payer name and EIN.

  3. In addition to the required fields listed above, the window contains the following fields:

    • PAYER NAME

    • PAYER STREET ADDR

    • PAYER CITY, ST, ZIP

    • PAYER EIN

    • ACCOUNT NUMBER

    • PGR/COD IND

    • INCM CODE

  4. To create an IR, take the following actions:

    1. Select Ca tools from the CASE ANALYSIS screen.

    2. Select Create ir from the drop-down menu. The CREATE IR window displays.

  5. To advance through the fields, take the following actions:

    Reminder:

    Entries must be made in required fields as outlined in (2) above.

    1. Enter the payer name.

    2. Enter the payer street address.

    3. Enter the payer city, state, and zip code.

    4. Enter the payer EIN.

    5. Enter the account number.

    6. Enter the payee TIN code: "P" for Primary, "S" for Secondary, or "E" for EIN.

    7. Enter the Program/Category of Distribution Code (PGR/COD) indicator (if applicable).

      Note:

      The PGR/COD indicator needs to be entered ONLY when the income is subject to the 10 percent, 15 percent, or 25 percent tax. See IRM 4.19.3, IMF Automated Underreporter (AUR), for a list of distribution codes (PGR/COD indicator).

    8. Enter the document type. To view a list of document types, press <F6>. Click on your selection and press <Enter> or click on "OK" and press <Enter>.

    9. Enter the income type or press <F6>.

      Note:

      If the income type you have entered does not match the document type displayed in the DOCUMENT TYPE field, the following message displays: "This is not a valid income type" .

    10. Enter the income amount.

    11. Enter the income identify code or press <F6>.

      Note:

      If multiple income types from the information document need to be entered, repeat steps 9 - 11 until all income types and their amounts have been entered.

    12. Press <F12> to commit and exit the window.

      Caution:

      If information returns are created for a worksheet computation and the worksheet has already been computed, you must add the IR to the applicable group, or ungroup the information returns so the worksheet can be recomputed.

4.19.7.8.7.6.2  (09-01-2013)
Correcting a Field on a Created Information Return

  1. When an entry has been input incorrectly or when you have continued to the next field without inputting an entry, you may correct the entry or return to a previous field by taking one of the following actions:

    1. Place the cursor in the field to be corrected.

      Note:

      If the cursor is in the AMOUNT field, you must make an entry and press <Enter> before you can return to a previous field.

    2. Press <F5> to clear the field.

    3. Correct the entry and complete any other necessary entries.

    4. Press <F12> to commit and exit the window.

4.19.7.8.7.6.3  (09-01-2013)
Deleting a Created Information Return

  1. Created IRs can be deleted in two ways depending on whether or not an EIN was entered.

  2. To delete a created IR that does not contain an EIN, take the following actions:

    1. Place the cursor in the IR CD field for the last income type of the created IR.

    2. Press <F3> to delete the record.

    3. Move the cursor upward to the IR CD field of the next income type on the IR.

    4. Repeat the above steps until all income types on the created IR are deleted.

      Note:

      The IR is completely removed from the CASE ANALYSIS screen.

  3. To delete a created IR, which includes an EIN, enter a status code "D" in the IR CD field.

4.19.7.8.7.6.4  (09-01-2013)
Modifying Information Returns

  1. Information returns can be modified to allow the system to correctly calculate the U/R amount. Before an IR can be modified the status code must be blank or an "X" .

  2. To modify an IR, take the following actions.

    1. Place the cursor on the IR to be modified.

    2. Select Ca tools from the CASE ANALYSIS screen.

    3. Select Modify ir from the drop-down menu. The MODIFY IR window displays. The cursor defaults to the TP field.

      Note:

      When the Modify ir option is selected, the selected IR displays in the top portion of the window. In the bottom portion of the window, you can make the necessary entries to modify the original IR.

    4. Press <F5> to clear any entries (if necessary).

      Note:

      You may change the payee information or split the income between the taxpayer and spouse by entering or changing the payee TIN type in the TP field. Valid TIN types are "P" for Primary, "S" for Secondary, and "E" for EIN.

    5. Enter/verify the appropriate payee TIN type.

    6. Press <Enter>. The cursor moves to the IND field.

    7. Enter the PGR indicator (if applicable).

      Note:

      You may enter or change the PGR indicator in the IND field as required for the computation of the 10 percent, 15 percent, or 25 percent tax. See IRM 4.19.3, IMF Automated Underreporter (AUR). If an indicator is required per IRM instructions, enter the appropriate indicator in the IND field.

    8. Press <Enter>. The cursor moves to the AMOUNT field with the total amount of the IR displayed.

    9. The income amount may be modified as required for specific computations. Press <F5> to clear. Enter the appropriate amount. The system automatically enters the balance of the IR when the next line is completed.

      Note:

      The total of the modified amounts must equal the original IR amount.

    10. Place the cursor in the INCM CODE field.

    11. Press <F5> to clear the entry.

    12. Enter the appropriate code or press <F6>.

    13. Press <Enter>. The original information appears in the TP field and Payer name fields on the next line.

    14. Repeat these steps until all modifications have been completed.

    15. Press <F12> to commit and exit the window.

  3. The modified IR(s) displays on the CASE ANALYSIS screen. The system enters an "X" in the IR CD field of the original IR.

    Note:

    The modified IR(s) cannot be sent to the taxpayer. Enter an "S" in the SEND field of the original IR when it is to be sent.

4.19.7.8.7.6.5  (08-12-2011)
Deleting a Modified Information Return

  1. To delete a modified IR, take the following actions:

    1. In the CASE ANALYSIS screen, place the cursor on the IR CD field of the original IR (code displays as an "X" ).

    2. Select Ca tools from the CASE ANALYSIS screen.

    3. Select Modify ir from the drop-down menu. The MODIFY INFORMATION RETURN window displays. The cursor defaults to the TP field.

    4. Press <Enter> until the cursor is in the IR CD field.

    5. Press <F3> in each IR CD field until all fields are deleted.

4.19.7.8.8  (09-01-2013)
Grouping Information Returns

  1. Certain income types are automatically grouped by the system to compute the worksheets associated with that type of income. The Group menu option is used to group information returns to determine a total money amount. The information returns may be grouped by:

    • Income type

    • payer Ein

    • payee Tin

    • iNcome code

    • Sales date

    • Description

  2. There are times when IRM 4.19.3, IMF Automated Underreporter (AUR), requires information returns be grouped in order to arrive at the correct U/R amount.

    Note:

    If you create an IR for a worksheet computation and the system has already completed that computation, you can either add the created IR to the group or ungroup and create a new group so the system can recompute the worksheet.

4.19.7.8.8.1  (09-01-2013)
Creating a Group

  1. To create a group, take the following actions:

    1. Place the cursor on an IR to be included in a group.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Create from the drop-down menu.

    4. Select one of the six options in the pull-right menu, listed in IRM 4.19.7.8.8 (1), Grouping Information Returns. The change group status window appears.

    5. After comparing the group total to the amount reported on the return, enter the appropriate status code for the group and press <Enter>. If a status code "U" is entered, the cursor moves to the REP AMT field.

    6. Enter the reported amount from the taxpayer’s return (if applicable).

  2. When Income type, payer Ein, payee Tin or Description are selected, all information returns of the same income type are grouped together; regardless of the income identify code. It may be necessary to delete an IR(s) from the group because of the income identify code.

    Note:

    The system groups only the information returns with the same income type when grouping by payer or payee identification number.

4.19.7.8.8.2  (08-12-2011)
Changing Group Status

  1. To change the group status code, take the following actions:

    1. Place the cursor on an IR in the group that needs the status code changed.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Status code from the drop-down menu. The CHANGE GROUP STATUS window displays with the cursor in the NEW STATUS CD field.

    4. Enter the new status and press <Enter>. If a status code "U" is entered, the cursor moves to the REP AMT field.

    5. Enter the reported amount from the taxpayer’s return (if applicable).

4.19.7.8.8.3  (08-12-2011)
Adding to a Group

  1. It may be necessary to add an IR to a group. For example, if information returns are grouped by income type (Non-Employee Compensation (NEC)) and it appears that a different income type (RENT) was included with the nonemployee compensation reported on the taxpayer’s return, add the RENT IR to the group taking the following actions:

    1. Place the cursor on the IR to be added.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Add from the drop-down menu. The ADD TO GROUP window displays with the cursor in the GROUP NO field.

    4. Enter the group number and press <Enter>. The group status code reverts to blank.

  2. Compare the new group total to the information shown on the taxpayer’s return and enter a new status code by taking the following actions:

    1. Place the cursor on an IR in the group.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Status code from the drop-down menu. The CHANGE GROUP STATUS window displays with the cursor in the NEW STATUS CD field.

    4. Enter the new status code and press <Enter>. If a status code "U" is entered, the cursor moves to the REP AMT field.

    5. Enter the reported amount from the taxpayer’s return (if applicable).

4.19.7.8.8.4  (08-12-2011)
Deleting Information Returns from a Group

  1. It may be necessary to delete a specific IR from a created group. To delete an IR from a group, take the following actions:

    1. Place the cursor on the IR to be deleted.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Delete from the drop-down menu. The group number is deleted from the IR and the IR is deleted from the group.

  2. Compare the new group total to the information shown on the taxpayer’s return and enter a new status code by taking the following actions:

    1. Place the cursor on an IR in the group.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Status code from the drop-down menu. The CHANGE GROUP STATUS window displays with the cursor in the NEW STATUS CD field.

    4. Enter the new status code and press <Enter>. If a status code "U" is entered, the cursor moves to the REP AMT field.

    5. Enter the reported amount from the taxpayer’s return (if applicable).

4.19.7.8.8.5  (08-12-2011)
Ungrouping Information Returns

  1. There may be times when it is necessary to ungroup. The Ungroup option removes all of the information returns from a specific group. To ungroup, take the following actions:

    1. Place the cursor on any IR in the group.

    2. Select Group from the CASE ANALYSIS screen.

    3. Select Ungroup from the drop-down menu. The system removes the group number and the status code from all the information returns in that group.

  2. If the issue has a corresponding worksheet (i.e., SITR, W/H, etc.), it must be recomputed to result in the system considering the issue as reported.

4.19.7.8.9  (08-12-2011)
Search Function

  1. Use the search function to search for specific information returns to compare with income reported on the taxpayer’s return.

  2. Information returns may be searched by:

    • Payer name

    • Payer EIN

    • Money amount (minimum and/or maximum)

    • Document type

    • Income type

    • Group number

    • Payee

    • Send indicator

    • Account number

    • Source code

    • Payer Agent

    • Sales Date (to and/or from)

    • Description

    Note:

    When searching by Sales Date or Description, the results of the search appear in ascending order. Check the "Descending" box for results of the search to appear in descending order.

  3. To access the Search menu option, take the following actions:

    1. Select Ca tools from the CASE ANALYSIS screen.

    2. Select Search from the drop-down menu. The SEARCH window displays with the cursor in the PAYER NAME field.

    3. Type the appropriate information such as payer name, EIN, money amt, etc. in the corresponding field or press <F6> for a list of options.

      Note:

      To move from field to field you can use the <Tab>, <Enter>, or up and down arrows or click in the field.

      Note:

      When pressing <F6>, the FIND window displays showing a list of options on top of the SEARCH window. The asterisk indicates the position of the cursor on the CASE ANALYSIS screen. Use the mouse or the up and down arrow keys to make a selection.

    4. After completing the entries for the search requirements, press <F12> to commit and exit the window. The CASE ANALYSIS screen displays ONLY the information returns for that search. A message appears at the bottom of the CASE ANALYSIS screen showing a search is active.

4.19.7.8.10  (09-01-2012)
Clearing a Search

  1. To clear a search and restore the CASE ANALYSIS screen to show the original information returns, take the following actions:

    1. Select Ca tools from the CASE ANALYSIS screen.

    2. Select Search from the drop-down menu. The SEARCH window displays with the search requirements displayed.

    3. Place the cursor in all fields that have an entry.

      Note:

      To move from field to field you can use the <TAB>, <Enter>, or up and down arrows or click in the field.

    4. Press <F5> to delete individual entries or <F7> to clear all entries.

    5. Press <F12> to exit the window. The CASE ANALYSIS screen is restored to display all information returns.

4.19.7.8.11  (09-01-2013)
Case Notes and Information Return Notes

  1. The Case Note and Information Return Note windows are used to leave notes pertaining to a case and/or an IR. Notes can be up to 2,000 characters. If more than 2,000 characters are needed, you must create a new note.

    Caution:

    Case notes and IR notes remain a part of the official case file These notes can be viewed by other areas such as the United States Tax Court (in the event the taxpayer petitions the court), or by taxpayers through the Freedom of Information Act (FOIA), etc. Caution should be used when case notes and IR notes are written.

4.19.7.8.11.1  (08-12-2011)
Creating Information Return Notes

  1. There are two methods to create an IR note. To create an IR note from the IR in Case Analysis, take the following actions:

    1. Place the cursor in the IR NOTE field of the IR where the note applies and using the left mouse button click once. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

      Note:

      If there is an existing IR note, use the arrow key or click in the next available (empty) TEXT field.

    2. Press <Enter> or click in the text box. The CREATE/EDIT NOTE window displays with the cursor in the TEXT field.

    3. Type your note or select from the standard case notes listed in IRM 4.19.7.8.11.2 (3), Creating a Case Note. Capitalization and punctuation are not necessary. Abbreviate when possible using common abbreviations that can be understood by the next user.

    4. Click <Spellcheck>. The system checks for any misspelled words in the note.

    5. After <Spellcheck> is complete, click on <OK> to complete the note. The DISPLAY NOTE window displays with your UID, date the note was created and the note.

    6. Press <F8> or click on exit to exit the window. The FORMS window displays.

    7. Click on "Yes" or press <Enter> to save the note. Click "No" if you decide the note is not needed and the changes have not been committed. Click "Cancel" if you decide the note needs to be changed before being committed.

      Note:

      An "N" displays in the NOTE field of the IR when a note has been saved.

  2. The DISPLAY NOTE window can also be accessed by taking the following actions:

    1. Place the cursor in the IR CD field of the IR where the note applies.

    2. Select Ca tools from the CASE ANALYSIS screen.

    3. Select ir Note from the drop-down menu. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

      Note:

      If there is an existing IR note, use the arrow key or click in the next available (empty) TEXT field.

    4. Press <Enter> or click in the text box. The CREATE/EDIT NOTE window displays with the cursor in the TEXT field.

    5. Type your note or select from the standard case notes listed in IRM 4.19.7.8.11.2 (3), Creating a Case Note. Capitalization and punctuation are not necessary. Abbreviate when possible using common abbreviations that can be understood by the next user.

    6. Click <Spellcheck>. The system checks for any misspelled words in the note.

    7. After <Spellcheck> is complete, click on <OK> to complete the note. The DISPLAY NOTE window displays with your UID, date the note was created and the note.

    8. Press <F8> or click on exit to exit the window. The FORMS window appears.

    9. Click on "Yes" or press <Enter> to save the note. Click "No" if you decide the note is not needed and the changes have not been committed. Click "Cancel" if you decide the note needs to be changed before being committed.

      Note:

      An "N" displays in the NOTE field of the IR when a note has been saved.

4.19.7.8.11.2  (09-01-2013)
Creating a Case Note

  1. There are two methods to create a case note. To create a case note from the CASE ANALYSIS screen, take the following actions:

    1. Place the cursor in the "NOTE" field (under SUBFILE field on the CASE ANALYSIS screen).

    2. Using the left mouse button click. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

      Note:

      If there is an existing case note, use the arrow key or click in the next available (empty) TEXT field.

    3. Press <Enter> or click in the text box. The CREATE/EDIT NOTE window displays with the cursor in the TEXT field.

    4. Type your note or select from the standard case notes listed in (3) below. Capitalization and punctuation are not necessary. Abbreviate when possible using common abbreviations that can be understood by the next user.

    5. Click <Spellcheck>. The system checks for any misspelled words in the note.

    6. After <Spellcheck> is complete, click on <OK> to complete the note. The DISPLAY NOTE window displays with your UID, date the note was created and the note.

    7. Press <F8> or click on exit to exit the window. The FORMS window appears.

    8. Click on "Yes" or press <Enter> to save the note. Click "No" if you decide the note is not needed and the changes have not been committed. Click "Cancel" if you decide the note needs to be changed before being committed.

      Note:

      An "N" displays in the NOTE field in the entity section (under the SUBFILE field) when a note has been saved.

  2. The DISPLAY NOTE window can also be accessed by taking the following actions:

    1. Select reF tools from the CASE ANALYSIS screen.

    2. Select case Note from the drop-down menu. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

      Note:

      If there is an existing case note, use the arrow key or click in the next available (empty) TEXT field.

    3. Press <Enter> or click in the text box. The CREATE/EDIT NOTE window displays with the cursor in the TEXT field.

    4. Type your note or select from the standard case notes listed in (3) below. Capitalization and punctuation are not necessary. Abbreviate when possible using common abbreviations that can be understood by the next user.

    5. Click <Spellcheck>. The system checks for any misspelled words in the note.

    6. After <Spellcheck> is complete, click on <OK> to complete the note. The DISPLAY NOTE window displays with your UID, date the note was created and the note.

    7. Press <F8> or click on exit to exit the window. The FORMS window appears.

    8. Click on "Yes" or press <Enter> to save the note. Click "No" if you decide the note is not needed and the changes have not been committed. Click "Cancel" if you decide the note needs to be changed before being committed.

      Note:

      An "N" displays in the NOTE field in the entity section (under the SUBFILE field) when a note has been saved.

  3. There are 20 standard notes available in the DISPLAY NOTE window. Instead of creating your own note, you may select one of the "standard notes" from the table below. To view the standard case notes click in the "text" box. To select a standard case note click on the note number and <Enter>.

    Note Number Definition
    1 TP requested additional time to respond to CP 2000. Advised the extension was granted. Systemic extension done.
    2 TP requested additional time to respond to CP 2000. Advised they have additional 30 days. Did not allow systemic extension.
    3 TP requested additional time to respond to CP 2501. Advised TP to respond within 45 days from date of notice. Did not allow systemic extension.
    4 ID Theft. Advised TP of needed documentation.
    5 GAMBL: TP stated they had gambling losses, adjusted Schedule A as applicable.
    6 Payoff amount provided to TP.
    7 Explained AUR notice/letter received and how to respond.
    8 STOCK: TP will submit Sch D, was advised to address any change to carryover losses, if applicable.
    9 A copy of the AUR notice/letter, tax return, schedule and/or form was sent per TP request.
    10 TP agrees, but cannot pay. Advised TP to check the agree box, sign and complete Form 9465, Installment Agreement Request, and submit with response.
    11 ID Theft: Appropriate ID theft transaction code present, closed case.
    12 DBTCN: Insolvency - Told TP to submit breakdown of assets and liabilities.
    13 Fax received, forwarded to clerical.
    14 IA to Coll.
    15 Merchant Card - Advise taxpayer that their call will be transferred to the site that issued the notice. (Transfer the call to #92243)
    16 PC 67: TP full paid and agrees with amount owed, closing PC 67.
    17 PC 87: TP full paid before issuance of Stat Notice, agrees with amount owed, closing PC 87.
    18 POA/TIA forwarded to CAF.
    19 Ogden MERCH Case - This case is part of the Ogden MERCH inventory. Any taxpayer calls should be transferred to application 843. DO NOT attempt to close this case.
    20 No 5498 to justify rollover.
  4. If you are leaving a case note for a case originating from another campus, and you are requesting an action to be taken, click on the "Action Required" box. This ensures that the case appears on the report generated at the originating campus so the action can be taken. Only use the action required box when it is necessary for the originating site to take an action on a case.

  5. Case notes and IR notes are listed in chronological order, with the most current note displaying first. The system tracks the identity of users who enter a note by posting the UID number with the note. The UID displayed also includes the users campus ID/location number, e.g., 28XXXX for Philadelphia, 29XXXX for Ogden, etc.

4.19.7.8.11.3  (08-12-2011)
Adding to or Editing an Existing Note

  1. You can add to or edit a note YOU created ONLY after it has posted. Use this option to add information to an existing note to clarify its meaning or to include related supplemental information.

  2. To add to or edit an existing case note, take the following actions:

    1. Select reF tools from the CASE ANALYSIS screen.

    2. Select case Note from the drop-down menu. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

    3. Click in the TEXT field of the note being added to or edited. The note displays.

    4. Enter the additional text or edit existing text.

    5. Click <Spellcheck>. The system checks for any misspelled words in the note.

    6. After <Spellcheck> is complete click on <OK> to complete the note.

    7. Press <F8> or click on exit to leave the window. The FORMS window appears.

    8. Click on "Yes" or press <Enter> to save the note. Click "No" if you decide the note is not needed and the changes have not been committed. Click "Cancel" if you decide the note needs to be changed before being committed.

  3. To add to or edit an existing IR note, take the following actions:

    1. Select Ca tools from the CASE ANALYSIS screen.

    2. Select ir Note from the drop-down menu. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

    3. Click in the TEXT field of the note being added to or edited. The note displays.

    4. Enter the additional text or edit existing text.

    5. Click <Spellcheck>. The system checks for any misspelled words in the note.

    6. After <Spellcheck> is complete click on <OK> to complete the note.

    7. Press <F8> or click on exit to leave the window. The FORMS window appears.

    8. Click on "Yes" or press <Enter> to save the note. Click "No" if you decide the note is not needed and the changes have not been committed. Click "Cancel" if you decide the note needs to be changed before being committed.

4.19.7.8.11.4  (08-12-2011)
Deleting a Note

  1. You can only delete a note YOU created and ONLY after it has posted.

  2. To delete a Case note, take the following actions:

    1. Select reF tools from the CASE ANALYSIS screen.

    2. Select case Note from the drop-down menu. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

    3. Place the cursor in the box directly to the left of the TEXT field of the note you want to delete.

    4. Press <F3> to delete the note. The DELETE NOTE window appears.

    5. Click on "Yes" to delete the note.

    6. Press <F8> or click on exit to leave the window. The FORMS window appears.

    7. Click on "Yes" to save the changes.

  3. To delete an existing IR note, take the following actions:

    1. Select Ca tools from the CASE ANALYSIS screen.

    2. Select ir Note from the drop-down menu. The DISPLAY NOTE window appears with the cursor in the box directly to the left of the TEXT field.

    3. Place the cursor in the box directly to the left of the TEXT field of the note you want to delete.

    4. Press <F3> to delete the note. The DELETE NOTE window appears.

    5. Click on "Yes" to delete the note.

    6. Press <F8> or click on exit to leave the window. The FORMS window appears.

    7. Click on "Yes" to save the changes.

4.19.7.8.12  (09-15-2014)
Computing Worksheet Windows

  1. The following are worksheet windows to assist with screening and recomputing tax on cases:

    • SELF EMPLOYMENT TAX

    • IRA

    • WITHHOLDING

    • EXCESS SST/RRT

    • ADDITIONAL MEDICARE TAX

    • ADDITIONAL MEDICARE TAX WITHHELD

    • COMPUTE SITR CHANGE

    • SSA/RRB CHANGES

    • SST ON TIPS

    • LUMP SUM TAX

    • SEP ADJUSTMENT

    • DEPENDENT CARE BENEFITS

    • ADOPTION BENEFITS

    • SAVINGS BOND EXCLUSION

    • ADDITIONAL FICA TAX

    • FICA TAX ADJUSTMENT

    • COMPUTE SCHEDULE D LOSS

    • MISC ADJ/SCH C EXP

    • STUDENT LOAN INTEREST DEDUCTION

    • TUITION AND FEES DEDUCTION

    • FORM 8903

    Note:

    Refer to the hint text line displayed at the bottom of the AUR screen for specific line numbers.

4.19.7.8.12.1  (11-12-2010)
Adjusted Gross Income Window

  1. The ADJUSTED GROSS INCOME window appears at various phases of Case Analysis if the information is needed to compute a subsequent window. When it appears, verify the tax return values. Once the window is verified use the <F12> (next window function) to exit the window. The window does not display again unless it is selected from the menu.

4.19.7.8.12.2  (09-01-2012)
Self-Employment Tax

  1. The SELF EMPLOYMENT TAX window is used to compute or recompute self-employment tax. There are specific fields for computing/recomputing self-employment tax for the primary and/or the secondary taxpayer.

  2. There are various situations where the SE Tax must be computed/recomputed, (3) - (8) below describe the required information for different situations. Be sure to follow the actions outlined for the situations affecting your case.

  3. Whenever it is necessary to compute or recompute SE tax, access the SELF EMPLOYMENT TAX window and take the following actions:

    Note:

    Be sure to input or verify all fields in every worksheet window. Make sure that you don't just "Enter" through the fields.

    Caution:

    Be sure to enter the information for each taxpayer (primary and/or secondary), in the appropriate fields.

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Se tax from the drop-down menu. The SELF EMPLOYMENT TAX window displays with the cursor in the PRIMARY SE TAX NOW field.

      Note:

      To allow the system to recompute the self-employment tax, the PRIMARY and/or SECONDARY SE TAX NOW field(s) must be blank. If an amount is entered, the system uses the amount entered. During responses, a zero must be entered in the primary and/or secondary SE TAX NOW field(s), as applicable, when computing FICA tax in lieu of self-employment tax.

    3. Press <Enter> to move to the PRIMARY and/or SECONDARY SE TAX PER RETURN field(s).

    4. Enter/verify the amount(s) from Schedule SE, Self-Employment Tax, for the PRIMARY and/or SECONDARY SE TAX PER RETURN field(s).

    5. Enter/verify the amount(s) of total self-employment income from Schedule SE in the PRIMARY and/or SECONDARY REPORTED SE INCOME field(s).

      Note:

      This amount must be verified, even if the optional method is used. Negative amounts are entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME fields(s) in the SELF EMPLOYMENT TAX window. This amount should include (but is not limited to) the net totals of Schedule C and Schedule F, Profit or Loss From Farming.

      Note:

      The amount(s), shown in the SCHEDULE C EXPENSE WINDOW PRIMARY and/or SECONDARY SCHEDULE C EXPENSE CHANGE, automatically carries to the SELF-EMPLOYMENT TAX WINDOW.

    6. Enter/verify the amount(s) from Schedule SE as reported or corrected, in the PRIMARY and/or SECONDARY SS/RR WAGES/TIPS field(s) including U/R social security/railroad retirement wages.

      Note:

      Do not include any U/R Social Security/Railroad Retirement (SS/RR) allocated tips, any unreported tips from Form 4137, Social Security and Medicare Tax on Unreported Tip Income, or SE income identified in responses as being subject to FICA tax; the system adds these amounts automatically.

    7. Enter/verify the amount(s) from Schedule SE in the PRIMARY and/or SECONDARY CHURCH WAGES field(s).

    8. Enter self-employment income reported elsewhere on the return, on which self-employment tax has not been paid and is not included in the other fields, in the PRIM and/or SEC REPRTD SE INC NOT ON SCH SE field.

      Note:

      Include amounts from Schedule C or F (net profit) that were not previously subject to SE Tax since the total was less than $400. Do not enter a negative amount.

    9. After entering/verifying the appropriated entries, click on "COMPUTE" (to view the changes before committing) AND press <F12> to commit the changes and exit.

  4. To compute/recompute self-employment tax, when the taxpayer used the optional method, take the following actions:

    Note:

    Be sure to enter the information for each taxpayer (primary and/or secondary) in the appropriate field(s).

    1. Enter "Y" in the OPTIONAL METHOD INDICATOR field(s).

    2. Enter the total reported net farm income from Schedule F and/or Schedule K-1 in the PRIMARY and/or SECONDARY NET FARM P/L field(s).

    3. Enter the total reported gross farm income from Schedule F and/or Schedule K-1 in the PRIMARY and/or SECONDARY GROSS FARM INCOME field(s).

    4. Enter the total reported net nonfarm income from Schedule C, Schedule C-EZ and/or Schedule K-1 in the PRIMARY and/or SECONDARY NET NONFARM P/L field(s).

    5. Enter the total reported gross nonfarm income from Schedule C, Schedule C-EZ and/or Schedule K-1 in the PRIMARY and/or SECONDARY GROSS NONFARM INCOME field(s).

      Note:

      Verify PRIMARY and/or SECONDARY REPORTED SE INCOME field(s) with amounts from Schedule SE.

    6. Click on "COMPUTE" (to view the changes before committing) AND press <F12> to commit and exit.

  5. To compute/recompute self-employment tax, when the taxpayer used the optional method but no longer qualifies for the optional method, take the following actions:

    Note:

    Be sure to enter the information for each taxpayer (primary and/or secondary) in the appropriate field(s).

    1. If present, clear the amount(s) in the applicable PRIMARY and/or SECONDARY SE TAX NOW field(s).

    2. Enter the reported net self-employment income in the applicable PRIMARY and/or SECONDARY SE INC NOT ON SCH SE field(s).

    3. If present, remove the "Y" from the PRIMARY and/or SECONDARY OPTIONAL METHOD IND field(s), leaving the field(s) blank.

    4. If present, remove any amount(s) from the PRIMARY and/or SECONDARY NET FARM P/L field(s), leaving field(s) blank.

    5. If present, remove any amount(s) from the PRIMARY and/or SECONDARY GROSS FARM INCOME field(s), leaving field(s) blank.

    6. Click "COMPUTE" (to view the changes before committing) AND press <F12> to commit and exit.

  6. If the taxpayer reports NEC income on Form 1040 or Form 1040A, line 7 and attaches a Form 8919, Uncollected Social Security and Medicare Tax on Wages, to assess the employee share of FICA, the taxpayer is indicating that he/she is NOT LIABLE for SET on NEC because he/she is an employee. Unless an employment status determination has been rendered by the SS-8 group to identify if the taxpayer is an independent contractor or employee, SE Tax must be assessed. To ensure that credit is given for the tax paid on Form 8919:

    1. Do not change the Income Identify Code.

    2. Input the reported NEC amount in the primary/secondary reported SE INCOME NOT ON SCHEDULE SE field. Adjust the primary/secondary SS/RR wages (if necessary) so it does not include the NEC amount from Form 8919.

    3. Click "COMPUTE" (to view the changes before committing) AND press <F12> to commit and exit.

    4. In TAX COMPUTATIONS screen, select the TOTAL OTHER TAXES window and on the Other Miscellaneous Taxes line Per Return, enter the FICA Tax paid on Form 8919, on the Recomputed side, enter 0.

  7. The negligence and reasonable cause columns display ONLY if the Accuracy Penalty Indicator shows that a penalty computation is required. If it is determined that there is NO CHANGE to the currently assessed SE tax, enter the amount from the PRIMARY and/or SECONDARY SE TAX NOW field(s). When SE tax is the only issue and the negligence penalty applies, enter the amount from the PRIMARY and/or SECONDARY SE TAX PER RETURN field.

  8. Leave the PRIMARY and/or SECONDARY SE TAX NOW field(s) blank to allow the system to compute the reasonable cause portion of the SE tax by taking the following actions:

    1. Enter/verify the amount from the PRIMARY and/or SECONDARY REPORTED SE INCOME field(s), less reported SE income included in this field on which SET has not been paid and reasonable cause has not been established.

    2. Enter/verify the amount from the PRIMARY and/or SECONDARY SS/RR WAGES/TIPS field(s), less the portion of U/R SS/RR wages included in this field on which reasonable cause has not been established.

    3. Click on "COMPUTE" (to view changes before committing) AND press <F12> to commit and exit the window.

4.19.7.8.12.3  (09-01-2013)
IRA Contributions

  1. The IRA window is used to compute/recompute the allowable amount of IRA deduction that the taxpayer is entitled to.

  2. Select the IRA window only after all other required windows have been computed.

  3. The taxpayer must meet certain qualifications in order to claim an IRA deduction. There are AGI limits which can affect whether the taxpayer is entitled to claim a full, partial or no deduction. Whether or not the taxpayer is covered by a pension plan is also considered when determining eligibility. Consider the taxpayer or spouse covered by a pension plan when:

    1. The attached Form W-2Pension or deferred compensation box is checked.

    2. The attached Form(s) W-2 includes an amount for contributions in Box 12, with a code D, E, F, or S with a corresponding contribution amount.

    3. No Form W-2 is attached to the return and wage income reported on the return is unidentified.

    4. An attached Form W-2 or a W-2 IR is from a federal, state, or local government, including any political subdivision.

    5. The Form W-2 is not attached to the return and the IND field on the W-2 IR is other than blank and/or, contains the literal "DC" .

    6. The taxpayer Filing Status is (FS) 3 or 6 and no indication the taxpayers lived apart.

    7. The taxpayer takes a deduction for a Keogh, SIMPLE Plan, or SEP on Form 1040.

    8. The taxpayer is a postal worker.

  4. Whenever it is necessary to compute or recompute the IRA deduction, the IRA window can be accessed in two ways. To access the IRA window from the IR, take the following actions:

    1. Enter a status code "U" . The IRA window displays.

      Note:

      The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

    2. Enter "P" for primary taxpayer, "S" for spouse, or "B" for both in the PENSION PLAN field. Leave the field blank if unable to determine. See (3) above for when to consider taxpayer covered.

    3. Filing Status 3 or 6 only: Enter "Y" or "N" to indicate if the taxpayer lived with spouse in the LIVED WITH SPOUSE field. If no indication, enter "Y" . For any other filing status, leave blank.

    4. Enter the total reported amount of the primary and/or secondary taxpayer’s earned income in the PRIMARY and/or SECONDARY COMPENSATION field. Include taxable alimony, separate maintenance payments, and net earnings/profit from SE income. If a loss exists on Schedule C or F, see IRM 4.19.3, IMF Automated Underreporter (AUR).

    5. Enter the primary and/or secondary taxpayer’s IRA deduction amount from Form 1040 in the IRA ADJUSTMENT PER RETURN field.

  5. To access the IRA window using the menu options, take the following actions:

    Note:

    The cursor must be located on an IR for IRA contributions to access the Ira window.

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Ira from the drop-down menu. The IRA window displays.

      Note:

      The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

    3. Enter "P" for primary taxpayer, "S" for spouse, or "B" for both in the PENSION PLAN field. Leave the field blank if unable to determine. See (3) above for when to consider taxpayer covered.

    4. Filing Status 3 or 6 only: Enter "Y" or "N" to indicate if the taxpayer lived with spouse in the LIVED WITH SPOUSE field. If no indication, enter "Y" . For any other filing status, leave blank.

    5. Enter the total reported amount of the primary and/or secondary taxpayer’s earned income in the PRIMARY and/or SECONDARY COMPENSATION field. Include taxable alimony, separate maintenance payments, and net earnings/profit from SE income. If a loss exists on Schedule C or Schedule F, see IRM 4.19.3, IMF Automated Underreporter (AUR).

    6. Enter the primary and/or secondary taxpayer’s IRA deduction amount from Form 1040 in the IRA ADJUSTMENT PER RETURN field.

      Note:

      If there are entries in PRIMARY/SECONDARY SEP/KEOGH field, see (6) below.

    7. Press <F12> to commit and exit the window.

  6. If the taxpayer has taken a SEP/Keogh deduction, the SEP/Keogh deduction amount from Form 1040 should display in the PRIMARY/SECONDARY SEP/KEOGH field of the IRA window. If the filing status is 2, and it can be determined that both taxpayers contributed to a Keogh or SEP retirement plan, take the following actions:

    1. Enter the amount contributed by the primary taxpayer in the PRIMARY SEP/KEOGH field.

    2. Enter the amount contributed by the secondary taxpayer In the SECONDARY SEP/KEOGH field.

      Note:

      Enter the total SEP/Keogh deduction amount reported on Form 1040, in the PRIMARY SEP/KEOGH field, when unable to determine a breakdown of the amount.

    3. Press <F12> to commit and exit the window.

  7. The REQUEST FOR ADDL DEDUCTION field is used, only during the Response phase. Enter "Y" , if the taxpayer submits a response requesting additional IRA deduction amounts that were not originally taken.

    Note:

    An IR must be created for the verified additional IRA deduction amount.

4.19.7.8.12.4  (09-15-2014)
Withholding (W/H)

  1. The WITHHOLDING window is used to compute or recompute the allowable amount of federal W/H.

  2. Whenever it is necessary to compute or recompute W/H, the WITHHOLDING window can be accessed in two ways.

    Note:

    When wages are U/R and W/H is discrepant, select the WITHHOLDING window after all wage IRs are analyzed.


    To access the WITHHOLDING window from the IR, take the following actions:

    1. Enter a status code "U" . The WITHHOLDING window displays with the cursor in the EXCESS SST/RRT field.

    2. Enter/verify the amount of excess Social Security Tax/Railroad Retirement Tax (SST/RRT) claimed by the taxpayer in the EXCESS SST/RRT field and press <Enter>. The cursor moves to the MEDICARE TAX WITHHELD field.

    3. Enter/verify the amount of medicare tax withheld claimed by the taxpayer in the MEDICARE TAX WITHHELD field and press <Enter>. The cursor moves to the W/H VERIFIED INDICATOR field.

    4. Enter a "Y" in the W/H VERIFIED INDICATOR field to override a system computed change to W/H and allow an entry in the VERIFIED WITHHOLDING field. This field is used when the verified W/H amount differs from the W/H per return amount (i.e., additional W-2s, rounding, etc.). If the W/H per return is correct, leave these fields blank.

      Note:

      When there is a change to the additional Medicare tax withheld, see IRM 4.19.7.8.12.21, Additional Medicare tax Withheld, for additional information.

    5. Enter/verify the correct amount of allowable W/H.

    6. Press <F12> to commit and exit the window.

  3. To access the WITHHOLDING window using the menu options, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Withholding from the drop-down menu. The WITHHOLDING window displays with the cursor in the EXCESS SST/RRT field.

      Note:

      It is not necessary to change the status code of a group to recompute the W/H.

    3. Enter/verify the amount of excess SST/RRT claimed by the taxpayer in the EXCESS SST/RRT field and press <Enter>. The cursor moves to the MEDICARE TAX WITHHELD field.

    4. Enter/verify the amount of medicare tax withheld claimed by the taxpayer in the MEDICARE TAX WITHHELD field and press <Enter>. The cursor moves to the W/H VERIFIED INDICATOR field.

    5. Enter a "Y" in the W/H VERIFIED INDICATOR field to override a system computed change to W/H and allow an entry in the VERIFIED WITHHOLDING field. This field is used when the verified W/H amount differs from the W/H per return amount (i.e., additional W-2s, rounding, etc.). If the W/H per return is correct, leave these fields blank.

      Note:

      When there is a change to the additional Medicare tax withheld, see IRM 4.19.7.8.12.21, Additional Medicare tax Withheld, for additional information.

    6. Enter/verify the correct amount of allowable W/H.

    7. Press <F12> to commit and exit the window.

4.19.7.8.12.5  (08-12-2011)
Excess Social Security Tax and Railroad Retirement Tax (SST/RRT)

  1. The EXCESS SST/RRT window is used to compute excess SST/RRT.

  2. Whenever it is necessary to compute or recompute excess SST/RRT, the EXCESS SST/RRT window can be accessed in two ways. To access the EXCESS SST/RRT window from the IR, take the following actions:

    1. Enter a status code "U" . The EXCESS SST/RRT window displays with the cursor in the EXCESS SST/RRT field.

    2. Enter/verify the amount of excess SST/RRT claimed by the taxpayer in the EXCESS SST/RRT field and press <Enter>. The cursor moves to the VERIFIED INDICATOR field.

    3. Enter a "Y" in the VERIFIED INDICATOR field to override a system computed change to excess SST/RRT and allow an entry in the VERIFIED EXCESS SST/RRT field. If the excess SST/RRT per return is correct, leave these fields blank.

    4. Enter/verify the correct amount of allowable excess SST/RRT.

    5. Press <F12> to commit and exit the window.

  3. To access the EXCESS SST/RRT window using the menu options, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Excess sst/rrt from the drop-down menu. The EXCESS SST/RRT window displays with the cursor in the EXCESS SST/RRT field.

    3. Enter/verify the amount of excess SST/RRT from Form 1040 in the EXCESS SST/RRT field.

    4. Enter a "Y" in the VERIFIED INDICATOR field to override a system computed change to excess SST/RRT and allow an entry in the VERIFIED EXCESS SST/RRT field.

    5. Enter/verify the correct amount of allowable excess SST/RRT.

    6. Press <F12> to commit and exit the window.

  4. To change a field entry (only if it can be identified as Uncollected Tax (UT) from the dotted portion of the total tax line on Form 1040), take the following actions:

    Note:

    The TIER 1 TIP TAX fields seldom require an entry.

    1. Enter only the UT amount from the Form 1040 dotted portion of the total tax line that is also reported on Form(s) W-2, and identified with a letter code of "A" or "M" in the PRIMARY TIER 1/SS TIP TAX field.

    2. Enter only the UT amount from the Form 1040 dotted portion of the total tax line that is also reported on Form(s) W-2, and identified with a letter code of "A" or "M" in the SECONDARY TIER 1/SS TIP TAX field.

    3. Enter the correct amount of allowable excess SST/RRT as filed or adjusted in the VERIFIED EXCESS SST/RRT field.

    4. Press <F12> to commit and exit the window.

    Note:

    Excess Tier 2 Railroad Retirement tax cannot be claimed as a credit on the Form 1040. The taxpayer must use Form 843, Claim For Refund and Request for Abatement.

    Note:

    Be aware of tax preparation software problems that may lead to reporting inconsistencies on ELF returns. For example, ELF Form W-2, box 12 shows Code "A" amount, but the occupation is not TIPS related; or the ELF Form W-2, box 12 Code "A" or "M" amount matches another item (such as deferred compensation). Follow campus direction to resolve excess SST discrepancies due to ELF reporting inconsistencies.

4.19.7.8.12.6  (09-01-2013)
State and Local Income Tax Refunds (SITR)

  1. The COMPUTE SITR CHANGE window is used to compute the taxable portion of SITR.

  2. The COMPUTE SITR CHANGE window automatically displays when status code "U" is entered for any SITR IR.

  3. The COMPUTE SITR CHANGE window can also be accessed by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select siTr from the drop-down menu.

      Note:

      When SITR is to be computed, the ADJUSTED GROSS INCOME window may display, if so, verify the entries.

  4. To compute or recompute SITR, take the following actions:

    1. Access the COMPUTE SITR CHANGE window as outlined in (2) or (3) above.

      Note:

      The prior year SITR information displays in the PRIOR YEAR section of the window. Only change, if the displayed value(s) is incorrect.

    2. Enter/verify the amount of SITR from Form 1040, line 10, in the REPORTED SITR field.

    3. Enter/verify the sum of state and local income taxes withheld from the taxpayer’s income, as reported on attached Form(s) W-2, in the STATE/LOCAL W/H field.

      Note:

      Leave blank if the Form W-2 are not attached.

    4. Enter the amount from the current year Schedule A, line 5, in the STATE/LOCAL TAX DED field.

      Note:

      Leave this field blank when there is no current year deduction. Do not enter "0" (zero).

    5. Enter the total number of age and blind exemptions for taxpayer and spouse, as reported on Form 1040 in the AGE/BLIND COUNT field.

    6. If the taxpayer has been claimed as a dependent on someone else’s return enter "Y" in the CLAIMED ON ANOTHER’S RETURN? field.

    7. If the Married Filing Separate and Spouse Itemized Deduction/Dual Status box on Form 1040 is checked, enter a "Y" in the FS3/ITEMIZED OR ALIEN field.

    8. Press <F12> to commit and exit the window.

      Note:

      When status code "D" or "N" is input on a SITR IR, you must use the Ungroup option to change the SITR IR status code to any other applicable status code.

4.19.7.8.12.7  (09-01-2013)
Social Security and Railroad Retirement Benefits (SSA/RRB)

  1. The SSA/RRB CHANGES window is used to compute the taxable amount of SSA/RRB.

  2. "LSE" annotated to the left of the SSA/RRB benefit line on Form 1040 is an indication the taxpayer computed taxable SSA/RRB using the Lump Sum Election method. For further information, see IRM 4.19.3.7.17.2, Social Security/Railroad Retirement Benefits Miscellaneous.

  3. The window automatically appears when IR code "U" is entered for any SSA/RRB IR.

  4. The SSA/RRB CHANGES window can also be accessed by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select ssa/rrB from the drop-down menu. The SSA/RRB CHANGES window displays with the cursor in the GROSS SSA/RRB BENEFITS field.

      Note:

      When SSA/RRB is computed the ADJUSTED GROSS INCOME window may display prior to the SSA/RRB window, if so, verify the entries.

  5. To compute or recompute SSA/RRB, take the following actions:

    1. Access the SSA/RRB CHANGES window as outlined in (2) or (3) above.

    2. Enter/verify the gross SSA/RRB amount from Form 1040 in the GROSS SSA/RRB BENEFITS field.

    3. Enter/verify the taxable SSA/RRB amount from Form 1040 in the TAXABLE SSA/RRB BENEFITS field.

    4. Enter/verify the tax-exempt interest amount from Form 1040, in the TAX-EXEMPT INTEREST field.

    5. Press <F12> to commit and exit the window.

  6. Additional actions are required if the filing status is 3 or 6. If filing status 3 or 6, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select ssa/rrB from the drop-down menu.

      Note:

      When SSA/RRB is computed the ADJUSTED GROSS INCOME window may display, if so, verify the entries.

    3. Enter/verify the gross SSA/RRB amount from Form 1040 in the GROSS SSA/RRB BENEFITS field.

    4. Enter/verify the taxable SSA/RRB amount from Form 1040 in the TAXABLE SSA/RRB BENEFITS field.

    5. Enter/verify the tax-exempt interest amount from Form 1040, in the TAX-EXEMPT INTEREST field.

    6. Enter "N" (or a "Y" on an ELF return) in TP LIVED WITH SPOUSE? field, if the taxpayer did NOT live with spouse during the tax year. If there is no indication that the taxpayer did not live with spouse, leave this field blank (not zero).

      Note:

      A "D" annotated to the left of the SSA/RRB benefit line is an indication the taxpayer did not live with his/her spouse during the tax year.

    7. Press <F12> to commit and exit the window.

4.19.7.8.12.8  (09-01-2013)
Social Security Tax (SST) on Tips

  1. The SST ON TIPS window is used to compute the social security tip tax for both the taxpayer and spouse. It displays, when SST on unreported tip income is included on the return, if allocated tip income is present or when selected.

  2. To compute or recompute the SST ON TIPS window, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select sst On tips from the drop-down menu. The SST ON TIPS window displays with the cursor in the PRIMARY UNREPORTED TIP TAX field.

      Note:

      The section for reasonable cause displays only if a computation is required for the Accuracy Related Penalty Due to Negligence.

    3. Enter/verify the original primary/secondary unreported total tip tax amount from Form 4137in the PRIMARY/SECONDARY UNREPORTED TIP TAX field(s) and press <Enter>.

    4. Enter/verify the original primary/secondary unreported tips subject to Medicare tax from Form 4137, line 6, amount in the PRIMARY/SECONDARY ALLOCATED TIPS field(s) and press <Enter>.

      Note:

      If the Form 4137, line 4 amount is less than the amount of tips that have been reported on Form 1040 (usually in the wage line), recompute the Form 4137 line 6 amount using the amount of tips that were actually reported on Form 1040 instead of Form 4137, line 4 amount. Use this recomputed Form 4137, line 6, amount in the above field.

    5. Enter/verify the primary/secondary reported wages and tips having social security/railroad retirement (Tier 1) tax withheld from Form W-2 or Form 4137 line 8 plus any U/R SS/RR wages in the PRIMARY/ SECONDARY SS/RR WAGES/TIPS field(s).

      Note:

      If Form 4137 was NOT used, this amount can be taken from the wage line on Form 1040. Correct this amount if necessary. Add to this amount, any U/R SS/RR wages. Do not include unreported tips from Form 4137 or SE income identified in responses as being subject to FICA tax. (The system includes these amounts.)

    6. Enter/verify the original primary/secondary Form 4137, line 10 amount in the PRIMARY/SECONDARY UNREPORTED SS TIPS field(s). If the Form 4137, line 6 amount has been recomputed for the PRIMARY/SECONDARY ALLOCATED TIPS field(s), use this recomputed line 6 amount in recomputing the line 10 amount. Use the recomputed line 10 amount, in this field.

    7. Enter/verify the amount from Form 4137, line 6 in the PRIMARY/ SECONDARY MEDICARE-ONLY TIPS field(s). If the Form 4137, line 6 amount has been recomputed, use the recomputed line 6 amount.

    8. Press <F12> to commit and exit the window.

  3. If reasonable cause criteria has been met, make entries in the reasonable cause section of the window by taking the following actions:

    1. Enter/verify the amount from the PRIMARY/SECONDARY SS/RR WAGES/TIPS field(s), less any U/R SS/RR wages included on which reasonable cause has not been established.

    2. Enter/verify the amount from the PRIMARY/SECONDARY MEDICARE-ONLY TIPS field(s), less any U/R Medicare-only tips on which reasonable cause has not been established.

    3. Press <F12> to commit and exit the window.

4.19.7.8.12.9  (11-12-2010)
Lump Sum Tax

  1. The LUMP SUM TAX window is used to compute or recompute the Tax on Lump Sum Distributions for the taxpayer and/or spouse and to add it to the Tax on Accumulation Distribution of Trusts for a recomputed additional tax amount.

  2. If the Lump Sum Tax does not need to be recomputed, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Lump sum avg from the drop-down menu.

    3. Enter/verify the lump sum tax from Form 4972, Part III in the PRIMARY and/or SECONDARY LUMP SUM TAX field(s). No other entries are required.

      Note:

      When the Lump Sum Tax is to be recomputed, DO NOT make an entry in these fields (must be blank, not zero). When recomputing the Lump Sum Tax, address all other fields in the Primary and/or Secondary sections, as applicable.

    4. Press <F12> to commit and exit the window.

  3. If the Lump Sum Tax does need to be computed/recomputed, make entries in the PRIMARY and/or SECONDARY LUMP SUM TAX section of the window, take the following actions:

    1. Enter the averaging method: 2 for Part II only, 3 for Part III only.

    2. Enter capital gain from Form 4972, Part II or the amount that qualifies from Form(s) 1099-R.

    3. Enter ordinary income from Form 4972, Part III or the amount that qualifies from Form(s) 1099-R.

    4. Enter the death benefit exclusion from Form 4972, Part III. Do not make an entry if the death benefit exclusion has already been deducted from the amount entered in the ORDINARY INCOME field.

    5. Enter the current actuarial value from Form 4972, Part III, line 11.

    6. Enter the Federal Estate Tax from Form 4972, Part III, line 18.

    7. Enter a "Y" in the MULTIPLE RECIPIENT IND field if Form 4972 is for multiple recipients; otherwise, leave blank.

    8. Enter the multiple recipient percentage from box(es) 8 and/or 9 of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., or the percentage indicated from the taxpayer’s response. It must be entered as a decimal amount (e.g., .10).

    9. Enter the partial tax attributable to the accumulation distribution amount(s) from Form 4970, Tax on Accumulation Distribution of Trusts.

    10. Press <F12> to commit and exit the window.

  4. The recomputed tax displays in the ADDITIONAL TAXES RECOMPUTED field on the TOTAL OTHER TAXES window in the TAX COMPUTATIONS screen.

4.19.7.8.12.10  (11-12-2010)
Simplified Employee Pension (SEP)/Keogh Deduction

  1. The SEP ADJUSTMENT window is used to compute the allowable amount of self-employed SEP deduction for each taxpayer. To select this menu option, the cursor must be located on a 5498 IR with an income type of SEP or SIMPL.

  2. The window automatically displays, when status code "U" is entered for any SEP/Keogh/SIMPLE IR.

  3. The SEP ADJUSTMENT window can also be accessed by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select sep Keogh from the drop-down menu. The SEP ADJUSTMENT window displays with the cursor in the PRIMARY SE INCOME field.

  4. To compute or recompute the SEP deduction, take the following actions:

    1. Access the SEP ADJUSTMENT window as outlined in (2) or (3) above.

    2. Enter/verify the total net profit amount(s) from the primary taxpayer’s Schedule C and Schedule F or from Schedule SE, Section A or B in the PRIMARY SE INCOME field and press <Enter>.

      Note:

      If the filing status is 2 and it is determined that both taxpayers contributed to a SEP, Keogh, or SIMPLE retirement plan enter/verify both the Primary and Secondary fields in the window.

    3. Enter/verify the SEP/Simple/Qualified Plan amount from Form 1040 in the PRIMARY and/or SEP/KEOGH/SIMPLE DED field.

      Note:

      If you are unable to determine a breakdown of the amount reported on Form 1040, enter the total SEP/KEOGH/ SIMPLE deduction in the PRIMARY SEP/KEOGH/SIMPLE DED field.

    4. Response phase only, enter a "Y" if the taxpayer requests an additional deduction.

    5. Response phase only, enter the primary taxpayer’s adjusted contribution rate, if other than the maximum, in the PRIMARY CONTRIBUTION RATE field.

    6. Response phase only, enter the secondary taxpayer’s adjusted contribution rate, if other than the maximum, in the SECONDARY CONTRIBUTION RATE field.

    7. Press <F12> to commit and exit the window.

4.19.7.8.12.11  (09-01-2013)
Dependent Care Benefits (DCB)

  1. The DEPENDENT CARE BENEFITS window is used to compute/recompute DCB when there is a change to the taxpayer’s earned income.

    Note:

    The ADJUSTED GROSS INCOME window may display when the DEPENDENT CARE BENEFITS window is accessed, if so, verify the entries.

  2. The window automatically displays, when status code "U" is entered, for any DCB IR.

  3. The DEPENDENT CARE BENEFITS window can also be accessed using menu options by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select dependent Care from the drop-down menu. The DEPENDENT CARE BENEFITS window displays with the cursor in the REPORTED DEP CARE BENEFITS field.

  4. To compute or recompute DCB, take the following actions:

    1. Access the DEPENDENT CARE BENEFITS window as outlined in (2) or (3) above.

    2. Enter/verify the DCB amount from Form 2441, Child and Dependent Care Expenses, in the REPORTED DEP CARE BENEFITS field.

    3. Enter/verify the total amount of DCB as reported by the payer(s) on the IR(s) minus the amount forfeited benefits from Form 2441, in the DEPENDENT CARE BENEFITS field.

    4. Enter/verify the qualified expenses amount from Form 2441 in the QUALIFIED EXPENSES field. If the amount is zero, enter "$1" .

    5. Enter/verify the primary taxpayer’s original earned income in the PRIMARY EARNED INCOME field. If negative, enter "0" (zero).

      Caution:

      When earned income is from self employment, enter the amount shown on Schedule SE, line 3.

    6. Enter/verify the secondary taxpayer’s original earned income in the SECONDARY EARNED INCOME field. If negative, enter "0" (zero).

    7. Enter/verify the amount of DCB reported by the taxpayer on the Form 1040wage line in the REPORTED TAXABLE BENEFITS field.

    8. Press <F12> to commit and exit the window.

4.19.7.8.12.12  (09-01-2013)
Employer-Provided Adoption Benefits (EPAB)

  1. The ADOPTION BENEFITS window is used to compute/recompute EPAB when there is a change to the taxpayer's AGI.

    Note:

    The ADJUSTED GROSS INCOME window may display when the ADOPTION BENEFITS window is accessed, if so, verify the entries.

  2. The window automatically displays, when status code "U" is entered for any EPAB IR.

  3. The ADOPTION BENEFITS window can also be accessed using menu options by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select the epAb from the drop-down menu. The ADOPTION BENEFITS window displays with the cursor in the NUMBER OF ADOPTED CHILDREN LISTED ON FORM 8839 PART III field.

  4. To compute or recompute EPAB, take the following actions:

    1. Access the ADOPTION BENEFITS window as outlined in (2) or (3) above.

    2. Enter/verify the total number of adopted children Form 8839, Part I. If Form 8839 is not attached, enter "0" (zero).

    3. Enter/verify the total amount from Form 8839, line 18 (all three columns), in the FORM 8839, LINE 18 PER RETURN field. If Form 8839 is not attached, enter "0" (zero).

    4. Enter/verify the amount from Form 8839, line 24, as filed or previously adjusted, in the ADOPTION EXCLUSION PER RETURN field. If Form 8839 is not attached, enter "0" (zero).

    5. Enter/verify the amount from Form 8839, line 25 as filed or previously adjusted, in the TAXABLE BENEFITS PER RETURN field. If Form 8839 is not attached, enter "0" (zero).

    6. Press <F12> to commit and exit the window.

4.19.7.8.12.13  (09-01-2013)
Savings Bond Exclusion

  1. The SAVINGS BOND EXCLUSION window is used to compute/recompute the savings bond exclusion when there is a change to the taxpayer's AGI.

  2. The SAVINGS BOND EXCLUSION window can be accessed by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select sav bond eXcl from the drop-down menu.

      Note:

      The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

    3. Enter/verify all fields in the ADJUSTED GROSS INCOME window including: the Sch B, Line 3 amount in the EXCLUDED SAVINGS BOND field.

      Note:

      If the taxpayer placed their total interest on the wrong line or the total interest amount was included in the AGI total, a correction must be made to the ADJUSTED GROSS INCOME window in order to eliminate the savings bond exclusion window from displaying.

    4. Press <F12> to commit and exit the window. The SAVINGS BOND EXCLUSION window appears.

    5. Enter/verify the amount from Form 8815, line 8, in the MODIFIED SAVINGS BOND INTEREST field.

    6. Press <Enter>. The recomputed savings bond exclusion amount appears in the SAVINGS BOND EXCLUSION window.

      Note:

      Only change the amount in the RECOMPUTED SAVINGS BOND EXCLUSION field if overriding the system computed exclusion, due to rounding. If the amount entered, is outside of the system computed tolerance range, the entry is disallowed and a message displays, showing the allowable tolerance range.

    7. Press <F12> to commit and exit the window.

    Note:

    A warning message "Change below tolerance. Recomputed exclusion is set equal to original exclusion" may appear. Click on <OK> or press <Enter> to acknowledge the message.

4.19.7.8.12.14  (09-01-2013)
FICA Tax

  1. The ADDITIONAL FICA TAX and FICA TAX ADJUSTMENT windows are used to compute the employee’s share of FICA tax, when the taxpayer is actually an employee and not subject to self-employment tax on U/R nonemployee compensation (NEC). See IRM 4.19.3.20.6, Partially Agreed Responses.

  2. To access the ADDITIONAL FICA TAX window, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Fica tax from the drop-down menu.

      Note:

      If the SE TAX window is being changed to FICA tax, a zero must be entered in the primary and/or secondary SE TAX NOW field(s). The REASONABLE CAUSE fields display, only if a computation is required for the Accuracy Related Penalty Due to Negligence.

    3. Enter the primary/secondary total reported and U/R NEC subject to FICA tax in the PRIMARY/SECONDARY NEC SUBJECT TO FICA field(s).

    4. Enter the primary/secondary total reported and U/R social security wages, tips, and railroad retirement compensation subject to FICA tax in the PRIMARY/SECONDARY SS/RR WAGES/TIPS field(s).

    5. In the reasonable cause fields, enter the portion of any U/R amount meeting reasonable cause criteria.

    6. Press <F12> to commit and exit the window.

  3. Once the steps in (2) above have been completed the FICA TAX ADJUSTMENT window displays with the following fields computed:

    • PRIMARY SOCIAL SECURITY INCOME

    • PRIMARY MEDICARE INCOME

    • PRIMARY ADDITIONAL SS TAX

    • PRIMARY ADDL MEDICARE TAX

    • SECONDARY SOCIAL SECURITY INCOME

    • SECONDARY MEDICARE INCOME

    • SECONDARY ADDITIONAL SS TAX

    • SECONDARY ADDL MEDICARE TAX

4.19.7.8.12.15  (09-01-2013)
Schedule D Loss

  1. The COMPUTE SCHEDULE D LOSS window is used to calculate the U/R capital gain amount when a capital loss has been limited.

  2. The window displays when status code "U" is entered for a CG or STOCK IRs.

    Note:

    The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

  3. The SCHEDULE D LOSS window can be accessed using the menu option by taking the following actions:

    1. Place the cursor on a CG or STOCK IR.

    2. Select ca Tax comp from the CASE ANALYSIS screen.

    3. Select schedule D loss from the drop-down menu.

      Note:

      In the response phase in order to consider the correct loss amount at least one of the U/R CG or STOCK IRs must be rescreened.

    4. Enter a "0" (zero) in the SCHEDULE D LOSS field, during screening. During the Response phase, enter the loss from Schedule D, in the SCHEDULE D LOSS field. It must be a negative amount. If it is a positive amount, leave blank.

    5. Enter a "0" (zero) in the CAPITAL GAIN/LOSS field during screening, IF A LOSS. During the Response phase, enter the Capital Gain or (loss) amount from Form 1040 in the CAPITAL GAIN/LOSS field. Enter a loss as a negative amount.

    6. Press <F12> to commit and exit the window.

  4. The system limits the loss to $3,000 ($1,500 for Filing Status 3 or 6). If it is necessary to compute a negative U/R amount to allow a greater Schedule D loss, enter the original reported amount PLUS any INCREASE to the sales price as the reported amount on the CASE ANALYSIS screen. A negative amount cannot be entered in the RETURN AMOUNT field of the DISPLAY NOTICE SUMMARY screen.

4.19.7.8.12.16  (09-01-2013)
Miscellaneous Adjustment/Schedule C Expense

  1. The MISC ADJ/SCH C EXP window has two sections. The miscellaneous adjustment section is used to correct initial processing errors or changes to the AGI, that cannot be corrected using specific windows for income types. The Schedule C expense section is used to adjust expenses claimed on Schedule C.

  2. To access the MISC ADJ/SCH C EXP window, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Misc adj/c exp from the drop-down menu.

    3. Enter the original amounts, as shown on the return or as adjusted during original processing, in the MISC ADJUSTMENT PER RETURN field.

    4. Enter the new, correct amount, in the MISC ADJUSTMENT NOW field. The MISC ADJUSTMENT CHANGE field displays the computer generated adjustment, to correct the AGI.

  3. When Earned Income Credit (EIC) is not an issue, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Misc adj/c exp from the drop-down menu.

    3. Enter the total expenses amount from Schedule C in the PRIMARY and/or SECONDARY SCHEDULE C EXPENSE PER RETURN field.

    4. Enter the correct amount, including "0" (zero), in the PRIMARY and/or SECONDARY SCHEDULE C EXPENSE NOW field. The PRIMARY and/or SECONDARY SCHEDULE C EXPENSE CHANGE field displays the computer generated adjustment.

    5. Press <F12> to commit and exit the window.

  4. The amount in the:

    1. MISC ADJUSTMENT/SCHEDULE C CHANGE box automatically carries to the TOTAL AGI CHANGE box on the CASE ANALYSIS screen.

    2. PRIMARY and/or SECONDARY SCHEDULE C EXPENSE CHANGE box automatically carries to the SELF-EMPLOYMENT TAX window.

  5. A MISC ADJ/SCH C EXP PRESENT box appears in the lower left corner of the CASE ANALYSIS screen when this window has been used.

    Note:

    Rework any windows, that may be affected by the MISC ADJ/SCH C EXP window.

4.19.7.8.12.17  (09-01-2013)
Student Loan Interest Deduction (SLID)

  1. The STUDENT LOAN INTEREST DEDUCTION window is used to calculate the U/R SLID when there is a change to the taxpayer's AGI.

  2. The window appears, when status code "U" is entered for any SLID IR.

    Note:

    The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

  3. To compute or recompute the STUDENT LOAN INTEREST DEDUCTION window using the menu option, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select the stuDent loan int from the drop-down menu.

    3. Enter/verify the SLID amount from Form 1040.

    4. Press <F12> to commit and exit the window.

4.19.7.8.12.18  (09-01-2013)
Tuition and Fees (TUTFE)

  1. The TUITION AND FEES DEDUCTION window is used to calculate the allowable tuition and fees deduction when the AGI has been changed.

  2. The window appears, when status code "U" is entered for any TUTFE IR.

    Note:

    The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

  3. The window can also be accessed using the menu options by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select the tuition/feeZ from the drop-down menu.

  4. To compute the TUTFE deduction, take the following actions:

    1. Access the window as outlined in (2) or (3) above.

    2. Enter/verify the TUTFE deduction amount from Form 1040, Form 1040A.

    3. Enter a "Y" in the CLAIMED ON ANOTHER RETURN field if the taxpayer can be claimed on another return.

    4. Enter a "Y" in the EDUCATION CREDIT CLAIMED field if Education Credits were taken for the same student as a deduction.

    5. Press <F12> to commit and exit the window.

4.19.7.8.12.19  (09-01-2013)
Domestic Production Activity Deduction (DPAD)

  1. The FORM 8903, Domestic Production Activities Deduction, window is used to calculate the allowable DPAD when the AGI has been changed.

  2. The window appears, when status code "U" is entered for any DPAD IR.

    Note:

    The ADJUSTED GROSS INCOME window may display, if so, verify the entries.

  3. The window can also be accessed using the menu options by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select the dpad from the drop-down menu.

  4. To compute DPAD, take the following actions:

    1. Access the window as outlined in (2) or (3) above.

    2. Enter/verify Form 8903, line 10b in the QUAL PROD ACT INCOME field.

    3. Enter/verify Form 8903, line 18 in the WAGES PAID TO OTHERS field.

    4. Enter/verify Form 8903, line 23 in the 99 PATR DPAD field.

    5. Enter/verify Form 8903, line 24 in the EXPAND AFFIL GRP ALLOCAT field.

    6. Enter/verify Form 8903, line 25 in the DOM PROD DED PER RETURN field.

    7. Enter the manually computed DPAD, if applicable, in the MANUAL DOM PROD ACT DED field.

    8. Press <F12> to commit and exit the window.

4.19.7.8.12.20  (09-15-2014)
Additional Medicare Tax

  1. The Additional Medicare Tax, window is used to calculate the Medicare wages that may be subject to the additional 0.9 percent Medicare tax.

  2. The window can be accessed using the menu options by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select the admtx from the drop-down menu.

  3. To compute additional Medicare tax, take the following actions:

    1. Access the window as outlined in (2) above.

    2. Enter/verify Form 8959, Additional Medicare Tax, line 1 in the MEDICARE WAGES AND TIPS field.

    3. Enter/verify all Form 4137, line 6 amounts in the UNREPORTED TIPS FROM 4137 field.

    4. Enter/verify all Form 8919, line 6 amounts in the WAGES FROM 8919 field.

      Note:

      The system populates the SELF-EMPLOYMENT INCOME field and can not be changed by the user.

    5. Enter/verify Form 8959, line 14 plus any amounts from Form W-2, box 14 identified as RRTA in the RRTA COMPENSATION & TIPS field.

    6. Press <F12> to commit and exit the window.

4.19.7.8.12.21  (09-15-2014)
Additional Medicare Tax Withheld

  1. The Additional Medicare Tax Withheld window is used to calculate the additional Medicare tax withheld.

  2. The window appears, when status code "U" is entered for any MCTXW IR.

  3. The window can also be accessed using the menu options by taking the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select the admtx from the drop-down menu.

  4. To compute additional Medicare tax withheld, take the following actions:

    1. Access the window as outlined in (2) or (3) above.

      Note:

      See IRM 4.19.3.15.1.4 (9) and (10) , Additional Medicare Tax (Withholding Reconciliation), for additional information on the VERIFIED INDICATOR filed.

    2. Enter/verify Form 8959, line 19 in the MEDICARE TAX WITHHELD WAGES field.

    3. Enter/verify Form 8959, line 23 amounts in the MEDICARE TAX WITHHELD RRTA field.

    4. Enter/verify Form 8959, line 24 amounts in the MEDICARE TAX WITHHELD PER RETURN field.

    5. Enter/verify total amount of Medicare tax withholding in the VERIFIED MEDICARE TAX WITHHOLDING field.

    6. Press <F12> to commit and exit the window.

4.19.7.8.13  (09-01-2013)
Return Value Menu Option

  1. Any case that is above tolerance and requires a notice to be issued has to have the tax computations completed in order for the notice/recomputed notice to generate. When the Return Value menu option is selected, the TAX COMPUTATIONS screen displays. Therefore, it is necessary to access the TAX COMPUTATIONS screen when working a case. There are various tax and credit computation screens that are accessible within the TAX COMPUTATIONS screen.

4.19.7.8.13.1  (09-15-2014)
Tax Computations

  1. To display the TAX COMPUTATIONS screen, take the following actions:

    1. Select ca Tax comp from the CASE ANALYSIS screen.

    2. Select Return value from the drop-down menu.

      Note:

      Various warning messages may appear to alert users to conditions on the case. Follow system prompts and take the appropriate actions.

  2. The TAX COMPUTATIONS screen displays the appropriate window(s) used to enter/verify necessary information when <F12> is pressed.

  3. Take the following actions to move through the fields:

    1. Enter/verify filing status, as filed or adjusted, in the FILING STATUS field.

    2. Enter/verify the number of exemptions as filed or previously adjusted in the EXEMPTIONS PER RETURN field.

    3. Enter/verify the number of exemptions as filed, previously adjusted, or being changed in the Exemptions Now field.

    4. Enter/verify AGI, as filed or previously adjusted, in the AGI PER RET field.

    5. Compare the taxable income amount in the TXI field to Form 1040, for any below tolerance adjustments made during original processing.

    6. Enter/verify the amount from Form 1040, base tax or previously adjusted in the BASE TAX PER RET field.

      Note:

      Base tax is the tax that has been computed on the total taxable income.

    7. Enter/verify any miscellaneous adjustment to the taxable income in the MISC TXI ADJ PER RETURN and MISC TXI ADJ NOW fields. The hint text for these fields should read: SEE IRM FOR FURTHER INSTRUCTIONS IF CCF OR F8814 PRESENT. OTHERWISE LEAVE BLANK.

    8. Enter the manual interest, when applicable, in the MANUAL INTEREST field.

      Note:

      This amount may also be entered on the DISPLAY NOTICE SUMMARY screen.

    9. Enter the amount of payments received (RESPONSE PHASE ONLY) in the AMOUNT PREVIOUSLY PAID field.

      Note:

      This amount may also be entered on the DISPLAY NOTICE SUMMARY screen.

    10. Enter Net Operating Loss (NOL), as filed or adjusted, in the NET OPERATING LOSS field.

  4. The required computation window(s) displays automatically when you press <F12> if transaction data is present for the case. Window(s) must be selected from the menu if form(s) or schedule(s) are included on the original return or Form 1040X, Amended U.S. Individual Income Tax Return, and the corresponding windows do not automatically appear.

    Note:

    It may be necessary to manually access computation windows using rV tax comp from the menu options shown in the TAX COMPUTATIONS screen.

  5. The rV tax comp menu option allows you to select screens/windows needed to compute and/or recompute schedules, forms, deductions, credits, other taxes, and penalties. The following table describes the rV tax comp menu options.

    Menu Item Action
    Tax computation Allows the user to compute and/or recompute
    • Schedule A

    • Standard deduction

    • Form 8615, Tax for Certain Children Who Have Unearned Income

    • Schedule D

    • Form 8814

    • Schedule J, Income Averaging For Farmers and Fishermen

    Credit Allows the user to compute and/or recompute
    • Child care credit

    • Credit for the elderly/disabled

    • Education credits

    • Retirement savings credit

    • Child tax credit

    • Other credits

    Other tax Allows the user to compute and/or recompute
    • Alternative minimum tax

    • Net investment tax

    • Other taxes

    Payments Allows the user to compute and/or recompute
    • Earned Income credit

    • Additional Child Tax credit

    • First Time Homebuyer credit

    • Adoption credit

    pEnalties Allows the user to enter
    • IDRS computed Estimated Tax penalty

    • Fully or partially abate the system computed Late Filing penalty

    • SS Tip Tax penalty

    • Negligence penalty

    • Substantial Understatement penalty

  6. When all required windows in the TAX COMPUTATIONS screen have been completed, exit the screen by clicking on the Exit menu option, or press <F8> and acknowledge subsequent message.

4.19.7.8.13.2  (11-12-2010)
Form 1040A/1040EZ Window

  1. A window displays if a menu option is selected to compute a form(s) or schedule(s) not normally associated with a Form 1040A or Form 1040EZ and if the tax return is Form 1040A or Form 1040EZ. This window displays the first time only.

  2. Enter override indicator "Y" to verify this calculation is necessary. Click on "OK" or press <Enter>.

4.19.7.8.13.3  (09-15-2014)
Schedule A Deductions

  1. The SCHEDULE A window is used to calculate changes to Schedule A, Itemized Deductions.

  2. To access the Schedule A window, take the following actions:

    1. Select rV tax comp in the TAX COMPUTATIONS screen.

    2. Select Tax computation from the drop-down menu.

    3. Select schedule A from the pull-right menu.

  3. When a Schedule A is present, the amounts must be verified by taking the following actions:

    1. Enter/verify the medical and dental expense amount from Schedule A, line 1, in the GROSS MEDICAL field.

    2. Enter/verify the total taxes paid amount from Schedule A, line 9, in the TOTAL TAXES PAID field.

    3. Enter/verify the amount of home mortgage interest and points reported on Schedule A, line 10, in the MORTGAGE INTEREST PER RETURN field.

    4. Enter/verify the amount of qualified mortgage insurance premiums from Schedule A, line 13, in the MORTGAGE INSURANCE PREMIUMS PER RETURN field.

    5. Enter/verify the investment interest amount from Schedule A, line 14, in the INVESTMENT INTEREST DED field.

    6. Enter/verify the amount of total interest from Schedule A, line 15, in the TOTAL INTEREST DED field.

    7. Enter/verify the amount of gifts to charity from Schedule A, line 19, in the GIFTS TO CHARITY field.

    8. Enter/verify the casualty and theft loss amount from Form 4684, Casualties and Thefts, line 20 in the GROSS CASUALTY AND THEFT LOSS field.

    9. Enter/verify the total amount of Job Expenses and Most Other Miscellaneous Deductions from Schedule A, line 24, in the GROSS JOB AND MISC EXPENSE field.

    10. Enter/verify the amount of gambling deduction from Schedule A, line 28, in the GAMBLING LOSS OF OTHER MISC field.

    11. Enter/verify the amount of non-gambling deduction from Schedule A, line 28, in the NON-GAMBLING OTHER MISC DEDS field.

    12. Follow the hint text to verify/enter the sum of the total lines on Schedule A in the NON-LIMITED ITEMIZED DEDS PER RETURN field. If the Schedule A was not limited, enter the total itemized deduction amount from Schedule A.

      Note:

      If the Schedule A has not been limited, the amounts on TOTAL LIMITED ITEMIZED DEDS and NON-LIMITED ITEMIZED DEDS fields must be the same. Correct if necessary.

    13. Enter the amount of total itemized deductions from Schedule A, line 29, in the TOTAL ITEMIZED DEDUCTIONS PER RETURN field.

    14. Press <F12> to commit and exit the window.


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