How many others out there have been affected by this? Lacerte software made a huge error. Unfortunately has affected one of my clients. Wondering how many others are having to deal with this issue? I WILL BE HAVING WORDS WITH LACERTE.
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What was the problem?JG -
here's a synopsis:
I've had one instance of a problem here. Worse is now we have to really watch out for these errors and correct them going forward.
Here is the issue:
2009 Lacerte Tax's Calculation of Form 8801 line 28 and the resulting impact on the 1040 line 70, in regards to assumptions made about "MTC Carryforwards to 2007 reported on 2006 Form 8801, line 26."
Situation
Some returns prior to the installation of the Internet Update dated March 11th, 2009 that possessed a Form 8801, defaulted line 28 on page 2 to "Yes." Line 28 reads as follows:
Individuals: Did you have a minimum tax credit carryforward to 2007 (on your 2006 Form 8801, line 26) or pay any interest or penalties before October 3, 2008, on alternative minimum tax attributable to the exercise of incentive stock options, for 2007 or any prior year?
No. Leave line 28 and 29 blank and go to line 20.
Yes. Complete Part IV of Form 8801 to figure the amount to enter.
Solution
With the Internet Update dated March 11th, 2010, Lacerte correctly defaults this line to 'NO', which then correctly leaves line 28 and 29 blank. However, even though line 29 is blank and the 8801, Page 4, Part IV is not generated, Lacerte was still completing Part IV with an amount on line 61 and that amount was erroneously flowing to the 1040 Line 70.
This error resulted in a mismatch between Form 1040 line 70 "Credits from Form 8801" and Form 8801 line 29. This reject is detailed below:
Error Code 0426: Form 1040 - Other Payments must equal the total of the following fields: Tax Paid by Regulated Investment Company from Form 2439, Total Income Tax Credit Amount from Form 4136, Current Year Refundable Credit from Form 8801, plus positive amounts only of Health Coverage Tax Credit from Form 8885."
There were two possible ways to resolve the Rejection post installation of the Internet Update dated March 11th, 2010.
* The Tax Preparer could use Screen 39 entitled "EIC, Residential, Other Credits," under the section entitled "Minimum Tax Credit (8801)" on the line entitled "Refundable Credit [O]" (Code 335) to override the credit that was erroneously flowing to the 1040 page 2 line 70. Note: This would have necessitated the manual calculation/completion of the Form 8801 and a paper filing of the return.
* The Tax Preparer could also use, if the situation was applicable, Screen 39, under the section entitled "Minimum Tax Credit (8801)" the check box which reads "Taxpayer had MTC carryforward to 2007 reported on the 2006 form 8801, line 26" (Code 336). Doing so will check the "Yes" box on Form 8801, page 2, line 28, and complete lines 28 and 29 of that form, resolving the mismatch with the 1040 line 70.
On March 17th, a correction was released with the Web Download of Release 5. This download works as follows:
* Form 8801, page 2, line 28 continues to correctly default to "No."
* Form 8801, page 2, line 28 and 29, are not completed by default.
* Form 8801, page 4, continues to fill out, but does not generate.
* Form 8801's calculations of line 61 on page 4 have stopped flowing to the Form 1040 line 70, thus eliminating the rejection error.
Any rejects from March 11th update, that have not already been resubmitted should be resubmitted after verification of program update.
After the March 17th download of Release 5, if the tax preparer needs to answer the box on form 8801 page 2 line 28 "Yes," then will need to put a check in the box on Screen 39, under the section entitled "Minimum Tax Credit (8801)" the check box which reads "Taxpayer had MTC carryforward to 2007 reported on the 2006 form 8801, line 26" (Code 33Comment
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