1. You (and/or your spouse, if your filing status is married filing jointly) received a distribution from a Roth IRA during 1998; and
2. You (or your spouse) were under age 59-1/2 when the distribution was received.

Problem: In March 1999, the IRS revised the formula for calculating the amount of distributions from Roth IRAs that may be subject to an additional 10% early distribution penalty tax. As a result, the amount shown on line 1 of Form 5329 (Additional Taxes Attributable to IRAs, Other Qualified Retirement Plans, Annuities, Modified Endowment Contracts, and MSAs) may be incorrect.

Click here to view the IRS's Supplemental Instructions to Form 8606.

Solution: This problem does not require an update. Complete the following steps.

1. On the Prepare tab, click the Forms button.
2. Open the copy of Form 5329 belonging to the affected person (you or you spouse).
3. If you were under age 59-1/2 on January 1, 1999:

1. Go to line b of the Mini-Worksheet For Line 1 on Form 5329.
2. Using the override function, delete the amount in this field and enter the smaller of these amounts:
   • the amount on line 20 of the affected person's Form 8606 (Nondeductible IRAs), or
   • the sum of the amounts on lines 16 and 25 of the affected person’s Form 8606.

4. If you included early distributions from Roth IRAs on line d of the Mini-Worksheet For Line 1 on Form 5329:

1. Subtract the amount of those early Roth IRA distributions from line d.
2. Add the smaller of these amounts to line d:
   • the amount on line 20 of the affected person’s Form 8606, or
   • the sum of the amounts on lines 16 and 25 of the affected person’s Form 8606.

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Form 8615 -- Child with Investment Income
Users Affected: This problem affects you only if you meet all of the following conditions:

1. You complete the Child with Investments interview or Form 8615 for a child who does not need to file the form because his or her investment income (Form 8615, line 1) is under $1,400; AND
2. The child described in (1) has a sibling or siblings who need to file Form 8615, AND
3. You use the Worksheet for Form 8615 for the child described in (1) to complete the Form(s) 8615 of the sibling(s) described in (2).

Problem: TaxCut may calculate a negative net capital gain for the child who doesn't need Form 8615. This amount also appears on line 3a of the child's Worksheet for Form 8615. If you enter the negative number from line 3a of the worksheet on line 9a of a sibling's Form 8615, that sibling's Form 8615 will not calculate correctly.
Solution: Do not use a child's Worksheet for Form 8615 to prepare a sibling's Form 8615 unless line 1 on the child's Form 8615 is over $1,400.

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Treasury Form TD F 90-22.1
Users Affected: This problem affects you only if you need to file Treasury Form TD F 90-22.1 to report foreign bank or financial accounts.

Problems:

1. Box 1 doesn't print the current tax year (1998).
2. Box 23, Account Number or Other Designation, doesn't accept the entry of many account numbers.

Solutions: This problem doesn't require an update. Complete the following steps.

• Problem 1: Complete the form, but leave box 23 blank.
• Problem 2: Print the form, and hand-write "1998" in box 1 and the account number in box 23.

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Form 1040EZ -- Student Loan Interest
Users Affected: You are affected only if both of the following conditions apply to you:

1. You are filing Form 1040EZ; and
2. You are claiming deductible student loan interest on Form 1098-E.

Problem: TaxCut does not tell you that the student loan interest deduction cannot be claimed on Form 1040EZ.
Solution: Please complete the following steps to fix this problem. It does not require an update.

1. Click the Prepare tab and then click the Forms button.
2. Open the "Do You Need Form 1040? Worksheet."
3. Under the heading "Choose one below," check Form 1040A.

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Earned Income Credit -- Second Qualifying Child is a Student or Disabled
Users Affected: This problem affects you only if you meet all of the following conditions:

1. You are claiming the earned income credit (EIC);
2. You have two or more qualifying children; and
3. The SECOND qualifying child about whom you are reporting information is either (i) over age 18 and under age 24, and a student, or (ii) over age 18, and permanently and totally disabled.

Problem: TaxCut does not check the appropriate box on Schedule EIC to indicate that the second qualifying child is a student or disabled. As a result, your earned income credit will be too low.
Solution: The update corrects this problem. If you have already completed the Earned Income Credit interview, go through this Interview again and review your answers. If you used the Forms method to complete Schedule EIC, review your entries on this form.

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Depreciation Worksheet -- Loading Last Year's Data
Users Affected: This problem affects you only if you meet both of the following conditions:

1. You created a 1998 tax return by "loading last year's data;" and
2. Your 1997 TaxCut return contained a Depreciation Worksheet for a current asset with TaxCut "depreciation code" of 18, 19, 20, 21, or 22.

Problem: When loading depreciation data from last year's tax return into your 1998 return, TaxCut doesn't transfer the number of years over which the asset is being depreciated (Depreciation Worksheet, line 13).
Solution: This problem doesn't require an update. Follow the steps below.

1. On the Prepare tab, click the Forms button.
2. Open the Depreciation Worksheet (listed under Form 4562), and display the copy of the worksheet for the asset.
3. Scroll to line 13 and enter the number of years over which the asset is being depreciated.
4. Repeat steps 1 through 3 for any other asset with a depreciation code of 18, 19, 20, 21, or 22.

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Electronic Filing -- Error Message: Reached Electronic Return Filing Limit
Users Affected: Electronic filers who attempt to file a federal return while a TaxCut state edition is open.
Problem: If both the Federal and State editions of TaxCut are open when you attempt to file a federal return electronically, TaxCut displays the message, "You have reached the IRS limit for e-filed returns," and prevents you from sending the return.
Solution: The update corrects this problem.

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Electronic Filing Payment Options
Users Affected: Electronic filers who owe tax.
Problem: The two electronic filing payment options, automatic withdrawal of the payment from your bank account (ACH Debit) and payment by the credit card, were disabled when we shipped the Federal Edition of TaxCut.
Solution: The update corrects this problem.

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Electronic Filing -- E-Mail Address with an Underscore Disqualifies Return
Users Affected: Electronic filers who have an e-mail address that contains an underscore.
Problem: TaxCut disqualifies your return from electronic filing if your e-mail address contain an underscore. Example:   joe_smith@aol.com
Solution: The update corrects this problem.

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Capital Gains and Losses Worksheet -- Reporting Sale of Stock Held More than Twelve Months
Users Affected: This problem only affects you if you are reporting the sale of stock that was acquired at various dates and held for more than 12 months.
Problem: TaxCut doesn't allow entry of the code "var-l" to indicate this type of sale.
Solution: The update corrects this problem.

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