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Items addressed in this release of ProSeries Basic Edition/1040
Items addressed in previous releases of Basic Edition ProSeries/1040
Transfer of preferences and settings
What's new in ProSeries Basic Edition/1040
New ProSeries Basic Edition/1040 forms and worksheets
All forms in this release of ProSeries Basic Edition/1040 can be filed with the IRS.
The ability to create the on-line Application for transmittal to Refund Advantage has been added. The online transmittal will happen through the Refund Advantage tool. The Refund Advantage Bank Products Worksheet has been added to the product to support this. Review tax help for further information
Form 5695, Residential Energy Credits, has been enhanced to provide support for joint occupancy.
Schedule SE, Self Employment Tax, has been modified to print, under certain situations, with the tax return when the taxpayer has received a partnership K-1 and a credit has been calculated on Schedule M.
Form 1040X, Amended Return, has been modified to calculate the taxpayer's address from the current year's tax return.
The paragraph indicating that the estimated payments will be electronically withdrawn was missing in previous versions of the ProSeries Basic Edition/1040 filing instructions. This release of ProSeries Basic Edition/1040 product includes updated filing instructions which indicates that the estimated payments will be electronically withdrawn.
Tip: To see the client filing instructions for a client, open the client's federal return, go to the Tools menu, then select View Client Filing Instructions.
To update the client filing instructions file on your system take the following steps:
The program will replace the previous version of the client filing instructions file with the current version of the client filing instructions file.
The first time this year's ProSeries Basic Edition program starts, it transfers preferences and settings that you used with last year's ProSeries program if that information is on your system. If that occurs, you see the Prior Year Settings Transferred dialog box. If you click the OK button in that dialog box, the Options Setup Wizard begins so you can review (and edit) the current settings for various options.
For information on what's new in ProSeries Basic Edition/1040, open a 1040 return, go to the Help menu, choose Help Center, then select What's New This Year?
We've added the following forms and worksheets to ProSeries Basic Edition/1040 for the 2009 tax year:
Tip: For information about changes to existing forms, start or open a Form 1040 return, go to the Help menu, select Help Center, then select What's New This Year?
Charitable Cash Contributions for the Relief of Haiti Victims
The Worker, Homeownership, and Business Assistance Act of 2009
American Recovery and Reinvestment Act of 2009
Heroes Earnings Assistance and Relief Tax Act of 2008
Heartland, Habitat, Harvest, and Horticulture Act of 2008
Housing Assistance Tax Act of 2008
Emergency Economic Stabilization Act of 2008
An Act to Accelerate the Income Tax Benefits for Charitable Cash Contributions for the Relief of Victims of the Earthquake in Haiti (H.R. 4462) was signed into law by the President on January 22, 2010 (P.L. 111-126).
The bill allows individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return (instead of having to wait until next year to claim the deductions on their 2010 tax return). The election applies only to Haitian relief contributions made in cash after Jan. 11, 2010, and before Mar. 1, 2010. If the election is made, Haiti relief donations are deductible on the 2009 return, not the 2010 return.
The bill also relieves recordkeeping requirements for Haitian relief contributions. For these contributions, a telephone bill satisfies the Code Sec. 170(f)(17) recordkeeping requirements if it shows the name of the donee organization, the date of the contribution, and the amount of the contribution. Thus, for example, in the case of a charitable contribution made by text message and chargeable to a telephone or wireless account, a bill from the telecommunications company containing the relevant information will satisfy the recordkeeping requirement.
The Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) was signed into law by the President on November 6, 2009 (P.L. 111-92). This is a brief summary of the tax provisions of the Act.
0.2 Percent FUTA Surtax: The Act extends from 2009 through June 30, 2011, the overall 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA). This tax consists of the 6% permanent tax rate and the temporary 0.2% surtax rate. The Act delays the repeal of the temporary surtax. Effective for wages paid after December 31, 2009.
Extension and Modification of First-Time Homebuyer Credit: The Act expands the first-time homebuyer credit by extending the December 1, 2009, expiration date of the first-time homebuyer credit to taxpayers who enter into a written binding contract to purchase a home before May 1, 2010, and who close before July 1, 2010. Thus, taxpayers have until April 30, 2010 (June 30, 2010 to close) to purchase a home and receive the first-time homebuyer credit. Further, the Act increases the income limitations from $75,000 to $125,000 for individuals, and from $150,000 to $225,000 for joint filers. The Act continues to allow taxpayers to elect to treat a home purchase as having occurred in the year prior to the year of purchase in order to expedite any refund. The Act also expands the first-time homebuyer definition to include homebuyers who are long-time residents of the same principal residence. The Act allows for a $6,500 ($3,250 for married filing separately) credit for homebuyers who have been in their current residence for five consecutive years out of the last eight years and who purchase another residence. The Act also places a limit on the purchase price of the home to $800,000 for either the first-time homebuyer credit or its expanded version for long-time residents. The Act places limitations on who is eligible for the credit. Pursuant to the Act, individuals who can be claimed as a dependent of another taxpayer for the taxable year that the credit is claimed are ineligible for the credit. Also, the Act requires that the taxpayer or the taxpayer's spouse be 18 or over to claim the first-time homebuyer credit. The Act also waives the current recapture rules for individuals on qualified official extended duty, including members of the military, foreign services, and intelligence community employees. The Act allows military personnel (including Foreign Service members and intelligence community members) serving outside the United States for at least 90 days in 2009 or before May 1, 2010, one additional year to qualify for the credit. Thus, pursuant to the Act, taxpayers who are members of military, intelligence community, or Foreign Service have until May 1, 2011, to purchase a house and until July 1, 2011, to close. The application of the expanded homebuyer credit, the change in the income limitations, the $800,000 purchase price limit, and the age and dependent limits are effective for purchases after Nov. 6, 2009. The extension of the credit, the binding contract exception, and the extension of the credit for military personnel are effective for purchases after Nov. 30, 2009. The recapture rules regarding individuals on official extended duty are effective for dispositions after Dec. 31, 2008.
Five-Year Carryback of Net Operating Losses (NOL): The Act extends the NOL carryback period from two to up to five years for tax years beginning in or ending in 2009. The American Recovery and Reinvestment Act of 2009 (2009 ARRA) extended the NOL carryback period from two to up to five years for tax years beginning in or ending in 2008. However, the 2009 ARRA extension only applied to small businesses with gross receipts of $15 million or less. The Act allows all businesses to carryback NOLs for up to five years for losses incurred in taxable years beginning after December 31, 2007 and beginning before January 1, 2010, but can only elect for one taxable year, not two. Pursuant to the Act, businesses are able to offset 50% of the available income from the fifth taxable year preceding the loss, and 100% of all income in the remaining four carryback years. Pursuant to the Act, eligible small businesses that previously elected to carryback an applicable 2008 NOL (please keep in mind that under 2009 ARRA taxpayers were given the election to carry back NOLs for taxable years that began or ended in 2008, but not both) under 2009 ARRA are allowed to elect to carry back the applicable 2008 NOL and are not limited to the 50% limitation applicable to the fifth taxable year preceding the loss with respect to the applicable 2008 NOL. The Act imposes special rules for life insurance company net operating losses, and the alternative tax net operating loss deduction. The Act also provides an exception to these provisions for TARP recipients. Effective for net operating losses occurring after December 31, 2007.
Exclusion from Gross Income of Qualified Military Base Realignment and Closure Fringe: The Act clarifies that payments made under the Military Homeowner Assistance Program (HAP) are tax-exempt. The 2009 ARRA expanded the HAP program (which provides tax-exempt payments to military personnel who sell their home that declined in value) due to a base closure. While the 2009 ARRA expanded the program to include payments made due to permanent reassignments and certain other purposes, it did not provide that those payments are tax-exempt. The Act makes all HAP payments tax-exempt. Effective for payments made after February 17, 2009.
Delay in Application of Worldwide Allocation of Interest: The Act delays the effective date of worldwide interest allocation rules for seven years, until taxable years beginning after December 31, 2017. Pursuant to the Act, the required dates for making the worldwide affiliated group election and the financial institution group election are changed accordingly. The Act also eliminates the special phase-in rule that applies in the case of the first taxable year to which the worldwide interest allocation rules apply.
Certain Tax Return Preparers Required to File Returns Electronically: The Act requires electronic filing by specified tax return preparers. Pursuant to the Act, “specified tax return preparers” are all return preparers except those who reasonably expect to file 10 or fewer individual income tax returns in a calendar year. The Act also defines the term “individual income tax return” to include returns for estates and trusts as well as individuals. Effective for tax returns filed after December 31, 2010.
The American Recovery and Reinvestment Act of 2009 (the Recovery Act) was signed into law by the President on February 17, 2009. Highlights of the American Recovery and Reinvestment Act include:
Making Work Pay Credit. This new credit is allowed for eligible taxpayers for 2009 and 2010 and is the lesser of 6.2% of an individual's earned income or $400 ($800 for a married filing joint return). Earned income includes net earnings from self-employment, as well as combat pay that is excluded from gross income. The credit is phased out between $75,000 ($150,000 married filing joint) and $95,000 ($190,000 married filing joint). Also, the credit is reduced by any payments received by the new $250 refundable credits allowed to recipients of social security, SSI, railroad retirement, veterans’ disability, and certain federal and state government retired persons.
Special credit of $250. A payment of $250 will be sent by the US Treasury this spring to persons receiving social security or railroad retirement benefits and to disabled veterans who are receiving VA benefits. Also, certain federal and state pensioners who are not eligible for social security benefits will receive this $250 payment.
Refundable child tax credit. The Recovery Act modifies the earned income formula for the determination of the $1,000 refundable child credit for each qualifying child under the age of 17 to apply to 15% of earned income in excess of $3,000 for tax years beginning in 2009 and 2010. (This was previously $12,550 for 2009).
Earned income credit. The earned income tax credit for families of three or more qualifying children will increase to 45% for 2009 and 2010.
Education tax credits. The Hope credit has been revised and renamed the American opportunity tax credit. It is now $2,500 each year for the first four years of post-secondary education in a degree or certified program for each student. The new credit is 100% of the first $2,000 of qualified tuition and expenses (which now includes course materials) and 25% of the next $2,000. This credit is phased out for modified AGI between $80,000 and $90,000 ($160,000 and $180,000 married filing joint) and is allowed to be claimed against AMT tax. Unless the taxpayer is a child subject to the kiddie tax, 40% of the credit is refundable.
529 Plan education expenses. Purchases of computers, internet access and related software qualify as education expenses under QTPs if they are used by the QTP beneficiary or family any year that the beneficiary is enrolled at an eligible education intuition.
First-time Homebuyer Credit. The First-time Homebuyer Credit has been increased to $8,000 maximum (or 10% of purchase price) for homes purchased on or after January 1, 2009 and before December 1, 2009. Also, the recapture of the credit for these purchases has been removed, unless the taxpayer disposes of the home within 36 months from the date of purchase. The maximum credit is still $7,500 for homes purchased after April 8, 2008 and before January 1, 2009. That credit must still be repaid.
Unemployment Compensation. Up to $2,400 of unemployment compensation benefits will be excluded from income per recipient in 2009.
Sales and excise taxes on new car purchase. For qualified motor vehicle purchases on or after February 17, 2009 and before January 1, 2010, a deduction is allowed for motor vehicle taxes. The deduction is allowed as an itemized deduction or is added to the standard deduction. The deduction for qualified motor vehicle taxes is not available to a taxpayer who elects to deduct state and local sales and use tax instead of income taxes as an itemized deduction. The total taxes deducted are limited to the tax on a cost of qualified motor vehicle not exceeding $49,500 ($24,750 married filing separately) and is phased out for modified AGI between $125,000 and $135,000 ($250,000 and $260,000 married filing joint). A qualified motor vehicle is a (1) passenger automobile, light truck or motorcycle, the gross vehicle rating of which is not more than 8,500 pounds and (2) a motor home whose original use must be with the taxpayer.
COBRA premium 65% subsidy. Employees who have been involuntarily terminated between September 1, 2008 and December 31, 2009 qualify for a 65% subsidy for COBRA premiums for nine months. Their income must not exceed $125,000 for individual and $150,000 for families to qualify.
AMT changes. The Recovery Act allows AMT tax relief by increasing the AMT exemption amounts, allows personal nonrefundable credits to offset AMT and regular tax, and interest on qualifying private activity bonds issued in 2009 or 2010 isn't treated as an AMT preference.
Energy tax credit changes.
Estimated tax payments. For tax years beginning in 2009, for "qualified individuals", the computation of the annual required payment means the lesser of 90% of the tax shown on the return for the tax year, or 90% of the preceding tax year tax. A qualified individual is one whose AGI for the preceding year is less than $500,000 ($250,000 married filing separately) and they certify that at least 50% of the gross income for the preceding year was from a small business. A small business must have fewer than 500 employees.
Depreciation changes. Additional 50% bonus depreciation has been extended to include qualified property placed in service in 2009. Also, for vehicles purchased and placed in service in 2009, the first year depreciation limit for passenger autos is increased by $8,000. Lastly, the Section 179 expense limit is increased to $250,000 and the investment amount increased to $800,000.
NOL carryback changes. Small businesses may elect to increase the NOL carryback period for a 2008 NOL from two years to 3, 4 or 5 years.
Deferral of debt discharge. For debt discharges in tax years beginning in 2009, a taxpayer can elect to have debt discharge income from the reacquisition of an applicable debt instrument after December 31, 2008, and before January 1, 2011, included in gross income ratably over five tax years beginning with (1) for repurchases occurring in 2009, the fifth tax year following the tax year in which the repurchase occurs, and (2) for repurchases occurring in 2010, the fourth tax year following the tax year in which the repurchase occurs.
Qualified Small Business Stock Exclusion. For QSBS acquired after February 17, 2009 and before January 1, 2011, the exclusion percent is increased to 75%.
Highlights of the Heroes Earnings Assistance and Relief Tax Act of 2008 include:
Economic stimulus payments. The law allows military personnel (regular and reserve) whose spouse does not have a valid social security number to qualify for the economic stimulus payment if they file a joint tax return.
Earned Income Credit. The law makes permanent the prior temporary legislation that allowed military personnel to treat tax-free combat pay as earned income for purposes of the Earned Income Credit. (This provision was in the Working Families Tax Relief Act of 2004.)
Military reservists. The law makes permanent the treatment of military reservists called to active duty for more than a short term, the ability to make penalty-free withdrawals from IRAs, 401(k)s and other arrangements. These provisions, which were under the Pension Protection Act of 2006, require a reservist to have been called to active duty after September 11, 2001 and before December 31, 2007.
Death benefits. This law allows individuals receiving military death benefits to start a Roth IRA with the full amount of these death benefits and to disregard the Roth IRA dollar limitations. These provisions also apply to contributions to Coverdell Educational Savings Accounts with military death benefits.
Voluntary differential wage payments. This law allows voluntary differential wage payments made by an employer to represent the difference between an employee’s regular salary and their military pay. The law allows voluntary differential wage payments to be treated as wages for withholding, IRA contributions, and in-service qualified retirement plan distribution purposes. This provision applies to payments made after 2008.
This law includes an increase in and indexing of the thresholds for optional methods of computing net earnings from self-employment for tax years beginning after December 31, 2007. It also extends a number of the Gulf Opportunity (GO) Zone tax breaks to the Kiowa, Kansas Presidential disaster area.
Highlights of the Housing Assistance Tax Act of 2008 include:
First-Time Homebuyer Tax Credit. This law gives first-time home-buyers a refundable tax credit. The credit is 10% of the purchase price of the home, up to $7,500 ($3,750 for married filing separate). The credit phases out at adjusted gross income of $75,000 - $95,000 ($150,000 - $170,000 for married filing joint) and is effective for homes purchased on or after April 9, 2008 and before July 1, 2009. However, this credit must be repaid in equal installments over 15 years, beginning two years after the home is purchased, making it an interest-free loan. A first-time homebuyer is someone who had no ownership interest in a principal residence during the three year period before the new home is purchased.
Property Tax Deduction for Non-Itemizers. Taxpayers who do not itemize now can take a limited deduction for state and local real estate taxes by increasing their standard deduction. This is the lesser of the amount of real property taxes paid or $500 ($1,000 for married filing joint).
Low-Income Housing Tax Credit. The law gives state and local housing agencies the ability to issue tax credits for the acquisition, rehabilitation, or construction of lower-income rental housing. This credit is claimed over a 10-year period.
Reduced Home Sale Exclusion. Home sales after December 31, 2008 cannot exclude gain from the sale of a principal residence for any period that the home was not used as a principal residence. This 'non-qualifying use' applies to any period on or after January 1, 2009. The gain allocated to the non-qualified use prorated against the total period owned by the taxpayer is the percentage of the gain that is not Section 121 excludable.
Highlights of the Emergency Economic Stabilization Act of 2008 include:
2008 AMT Patch. Under this law, the Alternative Minimum Tax (AMT) exemption amounts are now $69,950 (married filing joint and surviving widow(er), $46,200 (single and head of household), and $34,975 (married filing separate).
Homeowners Exclusion Extended. The Mortgage Forgiveness Debt Relief enacted in 2007 is extended from the end of 2009 through 2012.
Tax Extenders. The law extends the following provisions:
Refundable Child Tax Credit. The law increases the refundable child tax credit to a maximum of 15% of earned income in excess of $8,500 (previously $12,500).
Nonrefundable Personal Credits. The law extends the allowing of personal credits, such as the dependent and child care credit, and the education credit, against the AMT through 2008.
Incentive Stock Options. The law abates the AMT liability arising from the exercise of incentive stock options before 2008, and is effective for any unpaid tax liability on October 3, 2008, and includes any interest and penalties. Also, anyone who paid their AMT liabilities can accelerate the refund of the minimum tax by increasing the minimum tax credit by 50% of any interest and penalties paid by October 3, 2008.
Energy Tax Incentives. The law extends the residential energy efficient property credit through December 31, 2016 and adds incentives for residential small wind investment and geothermal heat pumps. The law allows the credit to offset AMT tax. The law also extends the credit for producing qualified wind facilities through December 31, 2009 and producing electricity through biomass and other qualifying renewable sources through September 30, 2016. Also, the credit for solar energy, fuel cell, and microturbine property is extended through December 31, 2016.
Energy Property Credit. For 2009, the law reinstates the energy property credit, which allowed a credit of up to $500 for eligible improvements, such as insulation, exterior windows, skylights, and exterior doors.
Disaster Relief Provisions. The law provides tax relief to victims of the storms, tornadoes, and flooding that affected the Midwest in 2008, to victims of Hurricane Ike in Texas, and generally for victims of natural disasters in presidentially-declared disaster areas in tax years beginning after December 31, 2007.
Midwestern Disaster Area. The Midwestern Disaster Area includes presidential-declared disaster areas in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, and Wisconsin between May 20, 2008 and before August 1, 2008. These tax incentives include expensing for demolition, environmental remediation, clean-up costs, increased depreciation for qualified disaster property, education, housing tax benefits, and a higher standard mileage rate for charitable use of vehicles.
Hurricane Ike Disaster Area. The Hurricane Ike Disaster Area includes presidentially-declared disaster areas in parts of Louisiana and Texas. These tax incentives include temporary tax-exempt bond financing and low-income housing tax relief.
Natural Disasters after December 31, 2007 and before January 10, 2010. These tax incentives may include increased expensing for qualified disaster expenses, special depreciation for qualified disaster property, and increased NOL carryback.
For more information, go to http://www.proseries.com/support or http://www.irs.gov.
For more information about what's new in ProSeries Basic Edition/1040:
As of April 23, 2007, Intuit offers ProSeries customers a guarantee of on-time submission of tax returns. If an e-filed return is late, Intuit will reimburse you for any applicable e-file fees that you paid and will reimburse the taxpayer for any assessed late-filing fees that the taxpayer paid. Note that specific conditions apply. Here's the exact wording of the guarantee:
"If any ProSeries customer is unable to submit to Intuit any federal or state tax return before the applicable filing deadline or Intuit fails to file ProSeries customer-submitted returns with the appropriate tax agency before the applicable deadline and the lack of submission or filing is due to a failure of Intuit's electronic filing system, Intuit will refund any applicable electronic filing fees, and reimburse the taxpayer for any resulting penalties and interest levied and paid to the tax agency, upon submission of documentation reasonably acceptable to Intuit. Intuit is not responsible for any failure by ProSeries customers to submit, or Intuit's failure to file, any federal or state return due to reasons beyond its commercially reasonable control, including but not limited to internet outages or any deficiencies in the actual federal or state returns that prevent filing."
The IRS requires that you use Practitioner PINs and taxpayer PINs when you e-file Form 1040 returns. When you use a Practitioner PIN and taxpayer PINs, you don't need to file Form 8453 with the IRS (unless the client is required to submit to the IRS one or more of the specified forms or supporting documents listed on Form 8453) but you do need to retain a copy of Form 8879.
If you are offering bank products through MetaBank (META), it is very important that you transmit the check status information back to META after you print a bank product check.
The IRS clarified the following issues concerning electronic filing of Form 2106 and Form 2106-EZ.
ProSeries Basic Edition/1040: If a federal return is being filed electronically, the ProSeries Basic Edition/1040 software allows one copy of Form 2106 or one copy of Form 2106-EZ for the taxpayer. If the filing status for the return is Married Filing Joint, the software also allows one copy of Form 2106 or one copy of Form 2106-EZ for the spouse. However, the ProSeries Basic Edition/1040 software does not support two copies of page 2 of Form 2106 with just one copy of page 1 of Form 2106. With ProSeries Basic Edition/1040 software:
California Civil Code section 1798.85 addresses the disclosure of Social Security Numbers in certain mailed materials. If you think California Civil Code section 1798.85 (or a similar regulation) might apply to materials that you send to your clients, we suggest you check with your attorney or other advisor.
To suppress the printing of a Social Security Number on a particular form or worksheet, (1) select the Social Security Number field, (2) go to the Edit menu and choose Override, then (3) press the Delete key to remove the Social Security Number from the field.
ProSeries Basic Edition doesn't enter Social Security Numbers on the following reports:
To use the Quicken Import feature to import data into ProSeries Basic Edition, you must use Quicken 2008, 2009, or 2010. To upgrade your version of Quicken, call 1-800-446-8848 or go to http://www.quicken.intuit.com
Be sure to open Quicken before using Quicken Import to import Quicken information into a client's return.
Important: Electronic filing functionality is available in this release of ProSeries Basic Edition/1040.
For electronic filing procedures and information, you can click the EF clients tab (if HomeBase is on the screen) or the EF Clients button on the toolbar (if a return is on the screen) to go to the EF Clients view. The Steps to E-File section on the right side of the EF Clients view summarizes the steps that you take when you file a client's return(s) electronically.
To perform electronic filing functions, select the File Electronically Step button to e-file the return(s) for the client whose return is currently open on the screen. If you prefer, go to the EF Center and highlight the return(s) that you want to e-file for a specific client. Next, go to the E-File menu, select Electronic Filing, then select the appropriate command from the Electronic Filing menu.
The commands on the Electronic Filing menu are:
End of ProSeries Basic Edition/1040 ReadMe file