TaxCut 2000 Windows Calculation Alerts

Earned Income Credit and Lump-Sum Distribution
Users Affected: You are affected by this problem if you meet all of these conditions:

1. You (or your spouse, if you are married filing jointly) received a Form 1099-R showing a lump-sum distribution from a retirement plan; and
2. There is an amount in Box 3 (Capital gain) of the 1099-R; and
3. You are claiming, or would like to claim, the Earned Income Credit [EIC].

Problem: In certain circumstances, the amount of modified adjusted gross income that is used to calculate your EIC may not be correct.
Solution: The update corrects this problem.*

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Earned Income Credit and Dependent Born in 2000
Users Affected: You are affected by this problem if you meet both of these conditions:

1. You have a dependent who was born in 2000; and
2. You are claiming, or would like to claim, the Earned Income Credit [EIC].

Problem: TaxCut does not enter the dependent's year of birth on the Schedule EIC. This may result in an incorrect calculation of your EIC.
Solution: The update corrects this problem.*

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Amended Return With Alternative Minimum Tax
Users Affected: You are affected by this problem if you meet all of these conditions:

• You have filed a return for the year 2000 on Form 1040 or Form 1040A
• You are using Form 1040X to amend the 2000 Return
• The amended version of the 2000 Return will include an amount for the Alternative Minimum Tax (AMT)

Problem: Line 9(C) of Form 1040X incorrectly includes the Alternative Minimum Tax. The Alternative Minimum Tax is already included on line 6(C) and should not also be included on line 9(C).
Solution: If the 2000 Return was filed on Form 1040, you must change line 9(C) on Form 1040X so that it equals the sum of lines 52 through 56 of Form 1040 plus any amount shown to the left of line 57 of Form 1040. Follow the steps below to correct this problem:

1. Open the TaxCut Federal program and click the Forms button.
2. In the forms list, double-click Form 1040 and go to line 52.
3. Add together the amounts shown on lines 52, 53, 54, 55, 56, and any amount shown to the left of line 57 of Form 1040.
4. Click the Forms button, and double-click Form 1040X.
5. Go to column C on line 9 and click the Entry Info icon (the green button to the left of the field).
6. In the Entry Info dialog box, check the Override box.
7. In the space just below the Override checkbox enter the amount you calculated in step 3. If the amount you calculated in step 3 was zero, enter "0".
8. Click the OK button.

Open the TaxCut Federal program and click the Forms button.
1. In the forms list, double-click Form 1040A and go to line 34 (advanced earned income credit payments from Form W-2) .
2. Make a note of the amount, if any, that appears on line 34.
3. Click the Forms button, and double-click Form 1040X.
4. Go to column C on line 9 and click the Entry Info icon (the green button to the left of the field).
5. In the Entry Info dialog box, check the Override box.
6. In the space just below the Override checkbox enter the amount you noted in step 3. If the amount you noted in step 3 was zero, enter "0".
7. Click the OK button.

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"Married Filing Separate" Taxpayers With Child/Dependent Care Expenses
Users Affected: You are affected by this problem if you meet all of these conditions:

1. Your filing status is "married filing separately";
2. You are filing Form 1040 (rather than Form 1040A or Form 1040EZ);
3. You entered information about child/dependent care expenses in the Child/Dependent Care Expenses topic of TaxCut's Interview or on the Child/Dependent Care Worksheet; and
4. You are not considered to be unmarried for purposes of the Child/Dependent Care Credit.

NOTE: You are considered to be "unmarried" for purposes of the Child/Dependent Care Credit if you lived apart from your spouse during the last six months of 2000, the person for whom care was provided lived in your home for more than half of 2000, and you provided over half the cost of keeping up your home.

Problem: TaxCut may incorrectly permit you to claim the Child/Dependent Care Credit. Taxpayers who are "married filing separately" and who are not treated as unmarried cannot claim the Child/Dependent Care Credit.
Solution:

1. Open TaxCut.
2. Click the Forms button, and double-click Form 2441.
3. Go to line 9. If the amount shown here is greater than zero, override it and change the amount to zero by completing the remaining steps. If the amount shown here is zero, this problem does not affect you.
4. Click on the rightmost entry field for line 9, and then click the Entry Info icon (the green button to the left of the field).
5. In the Entry Info dialog box, check the Override box.
6. Enter "0" in the space just below the Override checkbox, then click the OK button.

NOTE: Overriding this amount will prevent you from e-filing your federal return.

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Child Tax Credit and Additional Child Tax Credit
Users Affected: The IRS changed the Child Tax Credit form after we shipped Federal TaxCut. Therefore, you are affected by this problem only if you (or your spouse, if married filing jointly) took a child tax credit (or additional child tax credit) and also had a foreign tax credit.
Problem: We were not reducing your child tax credit by your foreign tax credit on line 10 or line 12 of the Child Tax Credit Worksheet.
Solution: The update corrects this problem.*

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Adoption Credit (or Mortgage Interest Credit) and Child Tax Credit
Users Affected: You are affected by this problem only if you are taking a child tax credit in addition to one or both of the following credits:

1. A "limited" adoption credit (on Form 8839), or
2. A "limited" mortgage interest credit (on Form 8396)

NOTE: An adoption credit is limited if the amount on line 14a of Form 8839 is less than the amount on line 14c. A mortgage interest credit is limited if the amount on line 10 of Form 8396 is less than the amount on line 7.

Problem: The credits are not being calculated properly.
Solution: To solve this problem, you must change line 11i on TaxCut's Child Tax Credit Worksheet. Follow the steps below to correct the problem:

1. Start TaxCut, and access TaxCut's Child Tax Credit Worksheet by searching on "Child tax credit" and selecting "Child tax credit worksheet".
2. Figure the amount of any of the following credits you are claiming. Use the amount shown on line 11h of TaxCut's Child Tax Credit Worksheet when you are asked to enter the amount from Form 1040, line 47 or Form 1040A, line 30.
• Adoption credit, Form 8839
• Mortgage interest credit, Form 8396
• District of Columbia first-time buyer home buyer credit, Form 8859
3. Enter the total of the following amounts on line 11i of TaxCut's Child Tax Credit Worksheet:
• Form 8839, line 14
• Form 8396, line 11
• Form 8859, line 11
4. Recalculate your tax return.

For more information, see IRS Publication 972. This publication is available on the IRS Web site.

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Form 3903 Moving Expenses
Users Affected: You are affected by this problem only if you (or your spouse, if married filing jointly) received employer-provided moving expenses and claimed a moving expense deduction or excluded employer-provided moving expenses from taxable income.
Problem: If you entered a Code P amount on line 13 of Form W-2 but then changed that amount, line 4a of Form 3903 was not reflecting that change.
Solution: The update corrects this problem.*

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Sale of Home Worksheet
Users Affected: You are affected by this problem only if you had a taxable gain on line 15 and depreciation on line 11.
Problem: We did not instruct you how to enter your unrecaptured Section 1250 gain on Schedule D.
Solution: The update corrects this problem.* See the note after line 15 on the form, or revisit the interview topic.

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Rental Properties That Are Owned With Others
Users Affected: You are affected by this problem if you (and/or your spouse, if married filing jointly) meet all of these conditions:

1. You were part-owner of a rental real estate property during 2000. You are considered to be a part-owner if you owned at least a portion, but less than 100%, of a rental property.
2. When entering your rental income and expenses, you chose to have TaxCut multiply each income and expense item by your percentage ownership in the property.
3. Your rental expenses included property taxes and/or other taxes.

Problem: Line 6 of Schedule A (Form 1040) includes property taxes attributable to the portion of the rental property that you did not own. Also, line 8 of Schedule A may include other taxes attributable to the portion of the rental property that you did not own.
Solution:

1. Open TaxCut.
2. Click the Forms button, and double-click the Rentals and Royalties Worksheet. Click the tab on top of the form for the appropriate copy.
3. In the note for "Part owners" (immediately preceding Part V), uncheck the box to "Multiply income/expenses by percentage ownership." Check the box to "Do not multiply income/expenses by percentage ownership."
4. Revise your entries in the Income/Expense column of Part V, so that each entry reflects your percentage ownership.

Example: Suppose that you owned 40% of a rental property on which a total of $1,000 in property taxes and $300 in utilities was paid in 2000. When you originally completed the Rentals and Royalties topic in the Interview or filled out the Rentals and Royalties Worksheet in the Forms view, you entered $1,000 for property taxes and $300 for utilities and directed TaxCut to multiply each of these amounts by your percentage ownership of 40%. Now, instead of $1,000 for property taxes, you should enter $400 (40% x $1,000), and instead of $300 for utilities, you should enter $120 (40% x $300). Also, make sure to check the box above Part V directing TaxCut to not multiply income/expenses by percentage ownership.

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Contributions to Multiple Keogh Retirement Plans
Users Affected: You are affected by this problem if you (and/or your spouse, if you are married filing jointly) meet all of these conditions:

1. You had self-employment income during 2000;
2. You have made (or will make) contributions for yourself to multiple Keogh retirement plans for 2000; and
3. You are using the Interview to enter information about your contributions.

Problem: TaxCut does not enter the deductible portion of contributions to multiple Keogh retirement plans as an adjustment on Form 1040, resulting in taxable income being overstated.
Solution:

1. Open TaxCut.
2. Click the Forms button, and double-click the Keogh/SEP/SIMPLE Worksheet. Click the tab on top of the form for the appropriate copy.
3. On line 1, click the box at the bottom for contributing to more than one plan or type of plan.
4. Go to line 7 and enter your (or your spouse's) deductible contributions.
5. Click the Close Form button.

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Social Security Income and Form 1040A
Users Affected: You are affected by this problem if you meet both of these conditions:

1. You (or your spouse, if you are married filing jointly) received social security benefits in 2000, some or all of which may be taxable; and
2. You are filing your return on Form 1040A (rather than Form 1040 or Form 1040EZ).

Problem: The amount of modified adjusted gross income used to calculate the taxable portion of your benefits does not include capital gain distributions from line 10 of Form 1040A.
Solution: The update corrects this problem.*

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* To download the Federal update, start the TaxCut program and click Update TaxCut on the Tools menu, and the program will do the rest. Or, if you prefer to download the update now, click here. If you are unable to update the TaxCut program and you need detailed workaround steps to correct an issue, please contact us via Submit A Question.