News, Forms & Procedures - March 2, 2016

1040 program changes

IP PIN: New UltraTax CS Critical diagnostics have been added for Identity Protection Personal Identification Number (IP PIN) input on Form IDAuth {2B} in the Electronic Filing folder when the prior year and current year IP PINs are the same (IP PINs are unique to each year) and for when an IP PIN was present in the prior year but not entered in the current year.

Failure to include the correct IRS- issued IP PIN in any of the required fields will result in the return being rejected.

Starting with the 2016 processing year, the IRS requires the use of Identity Protection PINs for all Social Security numbers with an IP PIN requirement, regardless of whether the SSN is entered for a primary, spouse, or dependent/qualifying individual. Entry of an IP PIN will be required for any SSN with an IP PIN requirement on the following Forms/Schedules:

  • Form 1040, Individual Income Tax Return, series
  • Form 2441, Child and Dependent Care Expenses
  • Schedule EIC, Earned Income Credit.

Marketplace SE Health Insurance: By default, ExacTax automatically calculates any net marketplace premiums in excess of the calculated premium tax credit (PTC) and self-employed health insurance deduction (if applicable), and reports the net remainder on Schedule A, Itemized Deductions, line 1, Medical and dental expenses. A new zip box 16, Net marketplace premiums reported on Schedule A (Force), has been added to Form PTC {64C}. An entry in this field, including a zero, will be utilized in place of the calculated net marketplace premiums TO Schedule A, when applicable.

EFiling Amended Returns

The IRS does not allow amended (superseded) electronic filing for 1040 returns. Form 1040X, Amended U.S. Individual Income Tax Return, cannot be filed electronically. While the IRS Modernized e-File (MeF) system does allow amended (superseded) electronic filing of certain business returns, the IRS prevents this for individual electronic filing as explained in Publication 4164, Modernized e-file Guide for Software Developers and Transmitters, Section 1.6.10 Form 1040 Exclusions.

2013 - 2015 Amended returns can be eFiled for Forms 1041, 1065, 1120 and 990.

EFiling Prior year Returns

ExacTax supports electronic filing of tax year 2013 and 2014 (prior-year) original returns. The IRS intends to support electronic filing of the 2014 tax year in the 2017 processing year, and the 2015 tax year in 2017, and 2018 processing years.

Checking Refund Status

The IRS Publication 2043, IRS Refund Information Guidelines for the Tax Preparation Community, directs taxpayers to their Where's My Refund site. See the IRS page http://www.irs.gov/Refunds for additional guidance.

Review All Diagnostics

There are two types of diagnostics that may come back with the printed copy of each return. There is the UltraTax diagnostics page that comes with the Accountant’s Copy. There also will be an ExacTax Diagnostics page that comes up front and may contain additional diagnostics not found in the UltraTax diagnostics. Please review both for important information.

Common Areas of Input Errors

Input errors slow the processing of your returns and may incur procedure charges or require the return to be rerun. Below are some common areas to watch for:

  1. Form {2B}: If you are entering the six-digit IP PIN in zip 11 or 12 in the IDAuth section, DO NOT make any entries in the IDTheft section to apply for an IP PIN. If you want to enter the optional Identity Authentication in zips 1 – 10 you must complete all of the zips for the taxpayer or the spouse; i.e. don’t enter ‘1’ for driver’s license and not fill out the other 4 zips with the license number date, location etc. Incomplete entries will disqualify from eFile.
  2. Always complete the Medicare zips 32 and 34 on the W2 {20}. The total wages will fill these by default.
  3. When a Code ‘W’ is present in W2, Box 12, (zip 47) for employer contributions to an HSA plan, in most cases California wages should be higher. Be sure to review and enter the correct amount of California wages when Code W is present.
  4. When entering interest income, zip 1, Form {21A}, the field for Interest Income should hold the total interest taxable on Form 1040. If any portion is from US obligations, enter the dollar amount or percentage, but not both, in the field for US Oblig. This amount is only used for state purposes.

    When entering tax exempt interest, the field for Tax Exempt should contain all interest tax exempt on the federal return. If any of that total contains municipal bond interest that is non-taxable to the state, enter the dollar amount or percent (but not both) in the In-state Muni field. This is only used for state purposes.

    In no case should the US Oblig field ever be larger than the Interest Income or the In-state Muni be larger than the Tax Exempt field.

    The same rules apply to dividends with regard to Ordinary Dividends, which is the total and Qualified Dividends, which are included in the total; Cap Gain is the total gain and 1250 + 1202 + 28% cap gain are the amounts included in the total Cap Gain; US Oblig is the amount included in Ordinary; Tax Exempt is the total non-taxable to the federal and In-state Muni is the amount included in Tax Exempt that is non-taxable to the state.

  5. When entering an IRA contribution there are two fields each on Form IRA {26C} for traditional and Roth IRAs:

    a. How much to contribute for the year (taxpayer: zip 3 or 5 or 27 or 29  for Roth) and
    b. How much has already been contributed, if any (zip 7 traditional or 30 for Roth).

    Only zips 3 or 5 are used to compute the IRA contribution. Zip 7 is used only for the client letter to enter how much, if any, has already been contributed. The letter uses this to indicate how much additional should be contributed or withdrawn by the due date.