Ran into a couple scenarios that I want to see how other Wisconsin-filers are handling. They're somewhat similar in how much does Federal income need to be recalc'ed for WI purposes:
1) Difference in depreciation between Fed & WI on a Sch C -- stems from taking the 50% bonus depreciation in 04. Last year's return from a new client -- the preparer not only calculated the difference in depreciation and properly recorded that on Sch I, but then also calculated how much different the deduction for 1/2 of Self-Employment Tax would have been and included that difference on Sch I. I was not aware of any need to recalculate the 1/2 Self-Employment Tax deduction -- is that supposed to be done / does anyone else do that?
2) Tuition for out-of-state school. Entered this on the Tuition/Fees Deduction for Federal; this deduction resulted in client now qualifying for Earned Income Credit. Backed out T/F Deduction on Sch I, and did not do a Form 1 line 11 subtraction since it was out-of-state. But this resulted in client qualifying for EIC on WI (4% of the Federal EIC - 1 child). Are we supposed to recalculate what the Federal EIC would have been without the T/F Deduction (which WI does not recognize and therefore is a Sch I adjustment), or do we just blindly take the Fed EIC and multiply by 4%?
Any insights or cites would be welcome!
Bill
1) Difference in depreciation between Fed & WI on a Sch C -- stems from taking the 50% bonus depreciation in 04. Last year's return from a new client -- the preparer not only calculated the difference in depreciation and properly recorded that on Sch I, but then also calculated how much different the deduction for 1/2 of Self-Employment Tax would have been and included that difference on Sch I. I was not aware of any need to recalculate the 1/2 Self-Employment Tax deduction -- is that supposed to be done / does anyone else do that?
2) Tuition for out-of-state school. Entered this on the Tuition/Fees Deduction for Federal; this deduction resulted in client now qualifying for Earned Income Credit. Backed out T/F Deduction on Sch I, and did not do a Form 1 line 11 subtraction since it was out-of-state. But this resulted in client qualifying for EIC on WI (4% of the Federal EIC - 1 child). Are we supposed to recalculate what the Federal EIC would have been without the T/F Deduction (which WI does not recognize and therefore is a Sch I adjustment), or do we just blindly take the Fed EIC and multiply by 4%?
Any insights or cites would be welcome!
Bill
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