Update for 2001 TaxCut Windows Federal Edition

Job Creation and Worker Assistance Act of 2002

The Federal update supports the major retroactive tax law changes enacted in the Job Creation and Worker Assistance Act of 2002. Click Here to learn more about this new legislation and how it may impact your tax return.

Update Changes, Workarounds, and Other Important Filing Information

The Federal update also includes any changes we've made to the TaxCut program and to the draft versions of forms that were not finalized by the IRS at the time we originally shipped TaxCut.

To update your copy of TaxCut for the 2001 tax year, open TaxCut and choose Update TaxCut from the Tools menu. The program does the rest.

If you are unable to download your update through our Auto-Update feature, or you are attempting to update federal version 5607, you can download the update directly from our Web site at the 2001 Federal Windows update instructions page.

If you have a question about installing an update, check the  Updates Q&A section on our Web site: http://www.taxcut.com/updates/updates_faq.html

Click on a link below to review the changes included in this update and to view workarounds for other problems.

• Final IRS Forms and Instructions
• TaxCut Worksheets
• Filing Deadlines
• Electronic Filing Information
• Important TaxCut Alerts
• Workarounds and Other Problems

Click here for information on updates for the TaxCut Windows state programs.

This update includes final versions of all forms and instructions.

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This update includes final versions of all worksheets.

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Filing Deadlines

IRS tax return and payment deadline (no extension): postmarked midnight April 15, 2002 
2001 IRS electronic filing and payment deadline:  midnight ET April 15, 2002   
2001 IRS electronic filing deadline with extension(s): midnight ET October 15, 2002 

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Electronic Filing Information

Here are some helpful hints and reminders to make electronic filing easy.

1. We recommend printing and reviewing your return before filing it electronically. This will allow you time to ensure that you have entered all the information prior to filing your taxes.
2. If you need to resubmit your return for any reason, you will only be charged upon acceptance of your return.
3. Because of constant tax law changes, we strongly recommend updating the federal TaxCut program before sending your return.
4. Because of IRS rules and regulations, not every tax return can be filed electronically. Also, not every form that may be included in your return can be filed electronically.

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Important TaxCut Alerts

• Itemized Lists Created Before Updating TaxCut Must be Reviewed
• Home Mortgage Interest: Calculating Points
• Home Mortgage Interest: Definition of a Second Home
• Child with Investment Income: Form 8615, line 18
• Interview: Child with Investment Income

• 1099-R Worksheet with Distribution Code "P" or "D"
• Updating TaxCut Federal Version 5607 to Version 6001
• Taxpayers Who Were Directly Affected by the September 11 Terrorist Attacks and Owe an Underpayment Penalty
• Keogh/SEP/SIMPLE Worksheet 
• Rate Reduction Credit And Offset of Advance Payments
• TaxCut version 4301 fails to update IRS Publications
• Updating IRS Publications
• Microsoft Money 2002 Import: Summary List Display
• Screen Display of Microsoft Money 2001 Capital Gains Report
• "Review Your Entries" Report
• Electronic Filing: Contributing to Express IRA or Express Investor Account
• Importing Microsoft Money 2001 or 2002 File

Users Affected: You are affected by this problem if you (and/or your spouse, if married filing jointly) received a 2001 Form 1099-R with distribution code "P" or "D" in box 7.
Note: Code P covers certain distributions that are taxable in 2000 and code D covers certain distributions that are taxable in 1999.

Problem: The taxable amount from Form 1099-R, box 2a may be included incorrectly on the wages line of your return (Form 1040, line 7; Form 1040A, line 7; or Form 1040EZ, line 1).

Solution: If the wages line of your return incorrectly includes the taxable amount from box 2a of Form 1099-R, follow the steps listed below to correct the problem:

1. On the Forms menu in TaxCut, select Open Forms.
2. Select the Non-W2 Wages Worksheet.
3. On line 8 of the Worksheet, select the column for "You" or "Spouse" (as appropriate).
4. Subtract the amount shown in box 2a of the corresponding Form 1099-R from the amount shown on line 8 of the Non-W2 Wages Worksheet.
5. On line 8 of the Non-W2 Wages Worksheet, override the amount with the difference.
   Note: This will not prevent you from e-filing.
6. Click Close Form and click Close Window to close Forms Central.

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

• You are running TaxCut federal version 5607. To determine the TaxCut version number, select Help from the main menu, and then select About TaxCut; and
• When you check for a program update from within TaxCut, you receive a message indicating that you are running the latest federal version.

Problem: Some users running TaxCut federal version 5607 may incorrectly receive a message indicating that they are running the most current version of TaxCut federal edition. However, a program update is available that updates TaxCut federal version 5607 to version 6001.
Note: This problem does not affect TaxCut state editions.

Solution: Complete the following steps to correct this problem:

1. To determine the TaxCut federal version number, select Help from the main menu, and then select About TaxCut.
2. If the federal version is not 6001, click here and follow the instructions to download and install the update from our Web site.

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

• You owe a penalty for underpaying your estimated tax;
• You calculated your penalty using the Regular Method described in Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, and you did not use the Short Method;
• You checked the box at the top of TaxCut's Form 2210 indicating that you were directly affected by the September 11, 2001, terrorist attacks;
  Note: Taxpayers who were directly affected by the attacks are described in the IRS instructions to Form 2210 and include victims, relief workers, taxpayers whose principal residence or place of employment is in one of the covered disaster areas, and taxpayers whose records were maintained in a covered disaster area.
• You had Federal income tax withheld or excess social security or railroad retirement tax ("withheld tax"); and
• You did not check box 1c at the top of Form 2210 electing to have your withheld tax treated as paid on the dates it was actually withheld.

Problem: For purposes of calculating the penalty in Section B of Part IV of Form 2210, TaxCut treats your withheld tax as being paid 25% on April 15, 2001, 25% on June 15, 2001, and 50% on January 15, 2002. TaxCut should treat your withheld tax as being paid 25% on April 15, 2001, 25% on June 15, 2001, 25% on September 24, 2001, and 25% on January 15, 2002. TaxCut's approach can result in an underpayment penalty that is too high.

Solution: If you do not need to file Form 2210, follow one of these steps:

• Wait for the IRS to determine the penalty for you. The IRS strongly encourages this. To have the IRS determine the penalty, go to line 71 of Form 1040 (line 46 of Form 1040A) and override the amount shown there so that the line is blank. File your return by April 15, 2002, to avoid interest on the penalty.

-OR-

• Recalculate your underpayment penalty following the IRS instructions to Form 2210. Enter the correct amount of the underpayment penalty on line 71 of Form 1040 (line 46 of Form 1040A).

If you need to file Form 2210, follow these steps:

1. Recalculate your underpayment penalty following the IRS instructions to Form 2210.
2. Enter the correct amounts in Part IV, Section B of Form 2210.
3. Make sure that the penalty amount from line 37 of the corrected Form 2210 appears on line 71 of Form 1040 (line 46 of Form 1040A).

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Users Affected:You are affected by this problem if you used TaxCut version 4301 to enter any of the plans below for yourself and your spouse:

• Keogh Defined Benefit plan
• SIMPLE plan
• more than one Keogh Profit-Sharing plan
• more than one Keogh Money Purchase plan
• more than one SEP-IRA plan
• any combination of multiple plans

Note: To determine the TaxCut version number, select Help from the main menu, and then select About TaxCut.

Problem: The information entered for the Keogh/SEP/SIMPLE plans using TaxCut version 4301 may not appear after updating TaxCut.

Solution: Once you have updated TaxCut, follow these steps to correct this problem:

1. Manually recalculate the deductible contribution to the Keogh/SEP/SIMPLE Plan(s) for yourself and your spouse.
2. Use the Take Me To... button to return to the Keogh, SEP, and SIMPLE Contributions interview topic.
3. Re-enter the data and Plan amounts for yourself and your spouse.
   Note: Be sure to select "More than one plan or type of plan" on the Number of Plans interview screen.

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

• You are using the Forms method to prepare your return in TaxCut;
• You are completing line 6 on the Background Worksheet -- Advance Payment Check From IRS (Rebate Check); and
• All or a part of your advance payment was used by the IRS to pay back taxes, student loans, child support, or other obligations.

Problem: The text of line 6 does not explicitly state that the amount, if any, to be entered is the amount of the advance payment before it was used by the IRS to pay the back taxes, student loans, child support, etc

Solution: Enter on line 6 of the Background Worksheet the amount of your advance payment before it was used by the IRS to pay back taxes, student loans, child support, etc. You may consult the Rebate Check (Rate Reduction Credit) topic of the Interview for more information. You may also call the IRS automated telephone tax line at (800) 829-4477 to find out about advance payments.

Users Affected: You are affected by this problem if you are a Deluxe user who is updating version 4301.

Problem: Updating TaxCut version 4301 does not also update IRS Publications. When IRS Publications are updated separately, you may not be prompted to restart your systemr to view updated IRS Publications.

Solution: Complete the following instructions to  update your IRS publications within TaxCut:

1. Be sure you have the most recent program update. From the Tools menu, select Update TaxCut. Follow the onscreen instructions to complete the update.
2. From the Tools menu, select Update Publications. Follow the onscreen instructions to complete the update.
3. Restart your system even if the Restart dialog box does not appear. Note: You will not be able to view updated publications without restarting your system.
4. Open TaxCut.
5. To verify the publications Update, click Help and then click IRS Publications.
6. Select "Publication 17, Your Federal Income Tax". If IRS Publications have been successfully updated, "Publication 17 - 2001 Tax Year" should display. If the Publication 17 for 2001 does not display, return to Step 2.

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Users Affected: You are affected by this problem only if you are a Deluxe version user attempting to review a 2001 IRS publication.

Problem: Not all IRS publications were finalized at the time we released this update.

Solution: You must update your IRS publications from the Windows Start menu (Start->Programs->TaxCut 2001->Update IRS Publications). This will give you the most recent versions of publications.

However, the following publications were not finalized at the time we released this update:

• Publication 551, Basis of Assets
• Publication 583, Starting a Business and Keeping Records

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

1. You are a Windows 95 user;
2. You imported Microsoft Money 2002 account information; and
3. You imported  more than six accounts.

Problem: If you are importing information from more than six accounts, the scroll bar in the Select Your Accounts window, which lists all the accounts, will not allow you to scroll through the entire list. Because of this, you may not be able to see or access accounts at the bottom of the list.

Solution: All your account information will be successfully imported. The accuracy of your return is not affected in any way.

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Users Affected: You are affected by this problem only if you imported capital gains information from Microsoft Money 2001.

Problem: The Review Import Report does not correctly display the imported information; however, all the information is carried over successfully and the report prints accurately.

Solution: Since this is a display issue only, it does not in any way affect the printing or accuracy of your return. You will be able to review and edit any information as you complete the Capital Gains and Losses Interview.  

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Users Affected: You are affected by this problem only if your return includes more than 15 forms.

Problem: The Review Your Entries Report will display and print blank fields.

Solution: Print and review your tax return to verify that the amounts you entered are correct.  

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

• You are filing your tax return electronically; and
• You are funding an Express IRA or Express Investor account for an amount identical to your tax refund.

Problem: TaxCut stops you from filing electronically, asking you to enter information about your bank account which is not needed to process your return.

Solution: The update corrects this problem.

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Users Affected: You are affected by this problem if you are importing information from Money 2001 or Money 2002.

Problem: If you start TaxCut without first opening Money, and then import your 2001 tax information, your tax information from 2002 may be imported instead of information from 2001.

Solution: Follow these steps to correct this problem. To import your 2001 tax information from Money:

1. Close TaxCut, if it is open.
2. Open Money.
3. If you are using Money 2002, go to Money's Taxes menu and select Export to TaxCut.
                                                                   OR
   If you are using Money 2001, go to Money's Taxes menu, choose TaxCenter, and from this screen select Export to TaxCut.
4. Choose the tax year 2001 on the first screen, then check the categories you want to import on the second screen.
5. With Money open, start TaxCut as you normally would (from the Start menu or the TaxCut shortcut icon).
6. Go through the Welcome to TaxCut Interview. If you need to go to this Interview, click the Take Me To … button, scroll to the top of the list, and click Welcome to TaxCut.
7. If you need to load a tax return file from last year, follow the instructions on the Load Last Year’s Data screen.
8. From the Import Financial Information screen, follow the steps to import your financial information from Money.

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