Caliofornia - Teacher Retention Credit
Users Affected: You are affected by this problem if you are taking the teacher retention credit calculated on FTB Form 3505.

Problem: The teacher retention credit is excluded incorrectly from the tax amount on Section A, line 1 and Section B, line 1.

Solution: To correct this problem, follow these steps:

• On the Tools menu in TaxCut, select Update TaxCut to download and install the CA update.
• Open your California return in TaxCut. The program will automatically recalculate your California teacher retention credit and carry it to Form 540 or Form 540NR.

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Iowa - Student Loan Interest Deduction

Users Affected: You are affected by this problem if you meet both of the following conditions:

• Your filing status for Iowa income tax purposes is married filing separately on a combined Iowa income tax return.
• You claimed a student loan interest deduction on your federal Form 1040, line 24 or Form 1040A, line 17.

Problem: TaxCut misstates the Iowa student loan interest deduction reported on the Mini-Worksheet for Other Adjustments, line n and included on Form IA-1040, line 24.

Solution: The Iowa update corrects this problem. To update, follow these steps:

1. From the Tools menu in TaxCut, select Update TaxCut to download and install the Iowa update.
2. Once you have installed the update, TaxCut will automatically recalculate your Iowa student loan interest deduction.

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Massachusetts -- Understated Taxable Roth Conversion Distributions
Users Affected: You are affected by this problem if you meet all of the following conditions:

• You received a Roth IRA conversion distribution in 1998.
• You elected four-year averaging for such distribution on your 1998 federal return.
• Your federal taxable IRA distributions reported on your 2001 Form 1040, line 15b, or your 2001 Form 1040A, line 11b includes income from your 1998 Roth IRA conversion distribution.
• At least some portion of the amount reported on your 2001 federal Form 8606 was not previously taxed by Massachusetts.

Problem: TaxCut only includes 25% of your Massachusetts taxable 1998 Roth IRA conversion distributions in determining your 2001 Massachusetts taxable income. Your Massachusetts taxable income should include the full amount of the 2001 portion of your 1998 Roth IRA conversion distribution, less any amount previously taxed by Massachusetts.

Solution: To correct this problem, follow these steps:

1. From the Tools menu in TaxCut, select Update TaxCut to download and install the Massachusetts update.
2. Once you have installed the update, you can complete your Massachusetts return.

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Massachusetts -- Exception error causing program termination
Users Affected: You are affected by this problem if you are reporting employee business expenses on federal Form 2016-EZ.

Problem: Reporting employee business expenses on federal Form 2106-EZ causes a TaxCut Execution error and the TaxCut Massachusetts state program to terminate.

Solution: To correct this problem, follow these steps:

1. From the Tools menu in TaxCut, select Update TaxCut to download and install the Massachusetts update.
2. Once you have installed the update, you can complete your Massachusetts return.

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Massachusetts -- Error calculation of the Child and Disabled Dependent/Spouse Care Expense Deduction
Users Affected: You are affected by this problem if you meet both of the following conditions:

• You received dependent/spouse care benefits from your employer reported to you in box 10 of your 2001 W-2 form(s); and
• You reported these benefits in Part III of your federal Form 2441, Child and Dependent Care Expenses.

Problem: TaxCut miscalculates the Massachusetts child or disabled dependent/spouse care expense deduction for taxpayers who received dependent/spouse care benefits from their employer(s).

Solution: To correct this problem, follow these steps:

• From the Tools menu in TaxCut, select Update TaxCut to download and install the Massachusetts update.
• Once you have installed the update, TaxCut will automatically recalculate your Massachusetts Child and Disabled Dependent/Spouse Care Expense deduction.

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Michigan - Form MI-1040 Estimated Income Tax Vouchers

Users Affected: You are affected by this problem if you are using the 2002 MI-1040ES Estimated Individual Income Tax Vouchers.

Problem: TaxCut prints the incorrect due date for calendar year filers on the vouchers.

Solution: To correct this problem, follow these steps:

1. From the Tools menu in TaxCut, select Update TaxCut to download and install the Michigan update.
2. Once you have installed the update, print your return.

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Nebraska - Interest and/or Dividend Income Overstated on Nebraska Schedule III

Users Affected: You are affected by this problem if you meet both of the following conditions:

• You are filing a Nebraska Nonresident or Part-year return; and
• You have interest or dividends from Nebraska sources.

Problem: TaxCut overstates the interest and/or dividend amounts on Nebraska Schedule III.

Solution: The Nebraska update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the Nebraska update.

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Nebraska - Additional Tax Overstated on Nebraska Schedule III

Users Affected: You are affected by this problem if you meet both of the following conditions:

• You are filing a Nebraska Nonresident or Part-year return; and
• You are subject to additional tax from the Additional Tax Rate Schedule.

Problem: TaxCut overstates the amount of additional tax on Nebraska Schedule III.

Solution: The Nebraska update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the Nebraska update.

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New York - Nongovernmental Pension Exclusion
Users Affected: You are affected by this problem if you meet all of the following conditions:

• You are filing Form IT-201 or IT-203.
• You or your spouse (if filing jointly) received pension income in 2001 from a source other than New York state, local New York governments, or the United States government.
• You or your spouse (if filing jointly) were born between 4/19/1941 and 6/30/1942 inclusive.

Problem: TaxCut is incorrectly showing users born between 4/19/1941 and 6/30/1942 as not being eligible for the pension exclusion.

Solution: To correct this problem, follow these steps:

• On the Tools menu in TaxCut, select Update TaxCut to download and install the New York update.
• The Update will correct this issue.

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Oregon - Itemized & Standard Deduction, Form 40 Lines 21, 26, & 27.

Users Affected: You are affected by this problem if you meet all of the following conditions:

• You are filing with a married filing separate status on your Oregon return;
• You or your spouse itemized your deductions on your Federal Form 1040, US Individual Income Tax Return; and
• Your Oregon itemized deductions are less than your Oregon standard deduction.

Problem: TaxCut incorrectly uses your Oregon standard deduction on Form 40, line 27.

Solution: The update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the Oregon update.

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Oregon - 2001 Federal Tax Liability

Users Affected: You are affected by this problem if you meet both of the following conditions:

• You filed Form 40, Oregon Individual Income Tax Return; and
• You received a Federal Rate Reduction Credit on Federal Form 1040, line 47, or Form 1040A, line 30.

Problem: TaxCut does not add back the federal rate reduction credit when calculating your federal tax liability on Oregon Form 40, line 13.

Solution: The update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the Oregon update.

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Oregon - Federal Pension Subtraction

Users Affected: You are affected by this problem if you meet both of the following conditions:

• You filed Form 40, Oregon Individual Income Tax Return; and
• You have a subtraction on Oregon Form 40, line 17 for your Federal Pension Income.

Problem: TaxCut incorrectly calculates a Retirement Income Credit on Oregon Form 40, line 36 when there is a pension subtraction on line 17.

Solution: The update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the Oregon update.

To verify that the correct Retirement Income Credits has been calculated, follow these steps:

1. From the Forms Menu, select Open Forms.
2. Select Form 40 and click Open Form.
3. Scroll to the Retirement Income Credit Mini-Worksheet above line 36.
4. Verify the entries in the Mini-Worksheet.

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South Carolina - Federal Taxable Income not Carried to Form SC1040-ES, Line 1

Users Affected: You are affected by this problem if you meet both of the following conditions:

• You are filing South Carolina SC1040-ES, Individual Declaration of Estimated Tax; and
• You did not complete the federal Tax Payment Planning Worksheet.

Problem: TaxCut may not carry federal taxable income to line 1 of Form SC1040-ES.

Solution: The South Carolina update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the South Carolina update.

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South Carolina - Form SC1040-ES Date Format Error

Users Affected: You are affected by this problem if you meet both of the following conditions:

• You are filing South Carolina SC1040-ES, Individual Declaration of Estimated Tax; and
• You entered your information directly on the form.

Problem: As you complete Form SC1040-ES, you will receive a date format error message.

Solution: The South Carolina update corrects this problem. From the Tools menu in TaxCut, select Update TaxCut to download and install the South Carolina update.

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Virginia - City of Alexandria
Users Affected: You are affected by this problem if you entered Alexandria as your city of residence.

Problem: TaxCut indicates that Alexandria is not a valid city.

Solution: To correct this problem, follow these steps:

• On the Tools menu in TaxCut, select Update TaxCut to download and install the Virginia update.
• Once you have installed the update, select the File tab and follow the instructions to file your return.

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