Line 20a New

[Brad Imsdahl]

Perhaps the mandatory inclusion of total SS on line 20A has something to do with
means testing for Medicare part B?

Disclaimer: My opinion, not the company’s view…..

Just kidding…I think…

Perhaps there is a growing failure to report taxable benefits. The $25,000 for single / $32,000 MFJ tax free threshold for Social Security benefits is one of those dollar amounts that is NOT adjusted for inflation annually. Social Security benefits are adjusted for inflation.

That means as time goes on, a greater percentage of Social Security recipients will have their benefits subject to tax. It could be that many who never had to include their benefits in income are now all of a sudden in that category. And IRS wants to get everyone into the habit of reporting their benefits regardless of whether or not they are taxable.

And I appreciate everyone letting me be myself on the board. I’m not the marketing guy in this organization, so please allow me to put my non-marketing foot in my mouth from time to time…

[DonPriebe]

It will be a help in NY

New York offers seniors a discount on their school taxes that is a function of household income. The local (township) property tax assessors require a copy of the income tax return and documentation of all other income not shown on the return. If we show SS on line 20a they are satisfied; if not they want the 1099 from the SSA. The new 20a reporting will mean one less thing we have to worry about.

[ecb34691]

Where is this new requirement to report on line 20a? The current 2006 Pub 17, page 77 says "if none of your SS is taxable, do not report anything on your return."

[Brad Imsdahl]

Where is this new requirement to report on line 20a? The current 2006 Pub 17, page 77 says "if none of your SS is taxable, do not report anything on your return."

The 2006 Form 1040 instructions, the worksheet for line 20 of Form 1040, line 1 of of the worksheet, says to enter gross Social Sectuiry Benefits on line 20a.

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf

The 2005 Form 1040 instructions, line 20 worksheet did not say that.

Sometimes the Pubs are not updated for the instruction changes.

[sea-tax]

I guess you miss a lot when you are gone for 1 day. Well Brad I do not want nor think that you should stop posting. Your answers to questions as well as BEES KNEES answers were and are wonderful. You both give the broad a certain amount of authority and professionalism. And because of this, I made my earlier comments, it seemed as though it was a little out of character for you. Please do not reead anymore into it than that.

To that Merry Xmas to all and happy new year.

[Scarecrow]

Where is this new requirement to report on line 20a? The current 2006 Pub 17, page 77 says "if none of your SS is taxable, do not report anything on your return."

Interesting change in the Social Security Benefits Worksheet.

2005 Worksheet, line 1 says: “Enter the total amount from box 5 of all your Forms SSA-1099 and
Forms RRB-1099”

Line 9 says: “Is the amount on line 8 less than the amount on line 7? No. None of your social security benefits are taxable. You do not have to enter any amounts on line 20a or 20b of Form 1040.”


2006 Worksheet, line 1 says: “Enter the total amount from box 5 of all your Forms SSA-1099 and
Forms RRB-1099. Also, enter this amount on Form 1040, line 20a .”

Line 9 says: “Is the amount on line 8 less than the amount on line 7?
No. None of your social security benefits are taxable. Enter -0- on Form 1040, line
20b.”

A similar difference in the instructions appear for line 18 of the worksheet. The worksheet change definitely wants us to put Social Security Benefits on line 20a and the taxable amount on 20b even if 20b is zero.

Interesting that IRS did not update the 2006 Pub 17 for this.

[Snaggletooth]

Software

If we were to collect the usages from various board members, we would probably settle on about 6-7 different software packages in major use.

Wonder how many of these softwares have picked up on this subtle and ambiguous change on line 20a?

[Gene V]

Wonder how many of these softwares have picked up on this subtle and ambiguous change on line 20a?

Snaggletooth,
I use Lacerte, received the program a month ago, they did line 20a per instruction.
(Included the SS total, even if not taxable)

[DonPriebe]

ATX also showing gross amount on 20a

They always did have an option on their worksheet to show the gross amount even if none is taxable, but this year it is the default condition.

[Brad Imsdahl]

Apparently it is not so subtle and ambiguous as two major software companies picked up on the change along with TTB.

It is an obvious change to anyone who uses the current 2006 Form 1040 instructions when updating their product. The IRS releases the new instructions for the upcoming tax season every year around the first week of November, specifically so that software developers and book publishers can get the latest information incorporated into their products.

[DonPriebe]

Three for three - TaxAct also picked it up

(Just downloaded their free 1040 program - the professional version has always used the same engine.)

[Black Bart]

20A & 20B

I've been filling in 20A for years on the theory that IRS auditors at first may not have immediate access to all relevant info when looking at a potential audit candidate. And if that's so, they might take into consideration that the victim had sufficient SSA money to live on even if their biz shows a lousy $2K profit.

Also, since I ask the client to bring it in, I feel like I should do something with that form. And going over the 1040 with them, I can say "Well, you had so-and-so dollars of social security" this year and it sounds like I've been paying attention to their financial affairs -- sort of a psychological effect, I think.

[sea-tax]

I've been filling in 20A for years on the theory that IRS auditors at first may not have immediate access to all relevant info when looking at a potential audit candidate. And if that's so, they might take into consideration that the victim had sufficient SSA money to live on even if their biz shows a lousy $2K profit.

Also, since I ask the client to bring it in, I feel like I should do something with that form. And going over the 1040 with them, I can say "Well, you had so-and-so dollars of social security" this year and it sounds like I've been paying attention to their financial affairs -- sort of a psychological effect, I think.

BB great point . I also would attach it for the same reasons as well as the ones that I stated earlier.