TaxSlayer Issues and Work-arounds

TaxSlayer does not handle every situation required to prepare a correct tax return properly. Below are several tips to aide in federal return preparation. Please let the National Tax Training Committee know through a OneSupport Request if you have identified additional tips or have other suggestions. As TaxSlayer continues to evolve, some of these tips will no longer be applicable.

Also, see the latest “Tips” document.

THIS PAGE NOT YET UPDATED FOR TY2017

Income

Form 1040 line 10 taxable state and local refunds

WORKS PROPERLY FOR MOST TAXPAYERS

Does not test against negative taxable income or unused credits If taxable income is negative, use the Taxable Refund and Recovery  Calculator
Form 1099-R Simplified Method

WORKS PROPERLY FOR MOST TAXPAYERS

Does not deduct contribution exclusion before public safety officer exclusion

Does not calculate age

If the resulting taxable income is 0, use the Annuity/Pension Exclusion Calculator instead.
Sale of home Worksheet does not include sale on 8949 when 1099-S has been issued and the sale is not taxable. Does not show code “E” for selling expenses. Do not use sale of home worksheet. Enter as a capital gain/loss with adjustments as needed.
Form 1099-MISC TaxSlayer asks the Counselor to create a Form 1099-MISC and it then directs income in a specific box to a default schedule or 1040 line. The TaxSlayer defaults are not always correct The Counselor must determine where on the tax return the income should be reported and enter it into the field on the 1099-MISC entry page that directs it there. More information is in NTTC Modified Pub 4012

Deductions/Credits

Schedule A sales tax deductions TaxSlayer uses the zip code to determine the local A/B/C table to use without additional options (i.e. county).

Table indexing error on 10,000 boundaries.

See the discussion on changing the local A/B/C table and use the TaxSlayer worksheet.

Alternatively, use the General Sales Tax Deduction Income Worksheet in the NTTC-revised Pub 4012 or the Sales Tax Worksheet

Child and Dependent Care Credit The amount of the employment-related expenses that may be taken into account is limited to $3,000 if there is one qualifying individual and $6,000 if there are two or more qualifying individuals. The limits are for the number of qualifying individuals, not the amounts spent for each. However, if there are expenses for only one individual, TaxSlayer reduces the allowable amount to $3,000. In this case, enter $1 for the individual with no expenses and the balance for the other individual.
Tax credits for unclaimed dependent (education and retirement savings) An unclaimed dependent cannot claim their own exemption deduction, but they are allowed credits for education (AOC or LLC) and retirement savings. TaxSlayer will not allow either credit and there is no way to manually fix this Estimate the amount and advise taxpayer to go to a paid preparer (or to come back later in the season to see if TaxSlayer has fixed it).
Retirement savings credit When one spouse works and contributes to a retirement account and the other is retired and receives either a pension or a distribution from a retirement account, TaxSlayer correctly applies the Forms 1099-R as a distribution from a retirement account and subtracts the distribution from the contribution amounts. If the distribution is a military pension an exception applies and the distribution should not be subtracted. In the Form 8880 entry page, enter a negative amount equal to the military pension in the box labeled “qualifying distribution.” This will negate the military Form 1099-R and allow the credit.
Earned Income Credit

When taxpayer1 can be claimed as the qualifying relative of another taxpayer, taxpayer1 can still claim EIC if they have a qualifying child. An example is a young mother, Betty, supported by her parents but not living with them. Betty can be claimed as her parents’ qualifying relative (but not as their qualifying child because they do not live together). Betty can claim EIC with her qualifying child. TaxSlayer cannot yet handle this situation.

A paper return may be needed.

Rollover with Withholding  If a taxpayer received a qualified retirement distribution with federal tax withheld and then decides to roll it over into another account, TaxSlayer does not allow the rollover of the entire amount because of the income tax withheld.  Complete the Form 1099-R entry page with $0 taxable, no withholding, code G and the rollover of the

full amount and enter the tax withheld as Other Federal Withholding under Payments & Estimates.

Form 8283 Non-Cash Donations  Although the IRS does not require the when, how

acquired or cost information for a non-cash donation of $500 or less, TaxSlayer requires that information.

Enter a best guess after discussing with the taxpayer.

Health Insurance

ACA – Executive order of Jan 20, 217 The executive order does not affect how Tax-Aide will prepare tax returns. We need to wait for Congress or Treasury to change the law or regulations. Counselors can remind taxpayers subject to a shared responsibility payment of the option to petition the marketplace for a hardship exemption; but, it remains the taxpayer’s decision.
ACA – Affordability exemption TaxSlayerdoes not ask for the amount of any premium that is paid through a salary reduction arrangement (pre-tax medical) which affects the affordability threshold. Also does not account for changing circumstances during the year. use the ACA Affordability Calculator
ACA – Dependent’s MAGI for SRP Currently, TaxSlayer does not include the dependent’s income and there is no way to add it; SRP may be a bit lower (or not). Delay finalizing the return until TaxSlayer corrects the situation.
ACA – Dependent’s MAGI for household income filing threshold exemption (F8965 L 7) Currently, TaxSlayer does not include the dependent’s income and there is no way to add it. Delay finalizing the return until TaxSlayer corrects the situation.
PTC full repayment with no cap when all APTC must be repaid, TaxSlayer will improperly apply the cap (e.g. not an applicable taxpayer or lost marketplace safe harbor); no way to fix input the APTC amount only (not the LCBP or SLCSP) and file anyway; advise the taxpayer that IRS may send a bill.
PTC full repayment with no cap when unclaimed dependent enrolled themselves with APTC, all APTC must be repaid; no way to fix and TaxSlayer will not print F8962 input the APTC amount only (not the LCBP or SLCSP) and file anyway; advise the taxpayer that IRS may send a bill.

Other

Estimated Taxes Use the Estimated Tax Worksheet
Form 1040-A or Form 1040-EZ Select Form 1040 in the print package so that it is the form printed. To force a long Form 1040 for both printing and e-file purposes, add $1 to Other Income captioned “To force Form 1040” and then add a negative $1 to Other Income captioned “To force Form 1040 offset.”
Form 8453 It is not necessary for volunteers to mail copies of taxpayer documents to the IRS. Scan and attach the documents as a pdf file to the return if the site has scanning capability. If no scan capability, provide copies and instructions for the taxpayer to retain them in the event the IRS requests them.
Preview Return To preview the state return, use the Preview Return button found on the Summary/Print screen. The Preview buttons on the detail return screens preview the federal return only.
RRB-1099-R on State returns RR benefits (not taxable by any state) are automatically backed out of state income in some states by TaxSlayer. enter the calculated taxable amount from the federal return in State/Subtractions/Other. For description, use RRB1099R INCOME NOT TAXED.

NOTE: This is not a complete solution for Colorado. Ordinary retirement exclusion needs to be recalculated as well. See the RRB Worksheet.

Waiver for Failure to Take RMD

TaxSlayer does not permit a request to waive the 50% additional tax for failure to take a required minimum distribution (RMD).

 E-file the return without Form 5329 or the 50% additional tax. You can complete a fillable Form 5329 from irs.gov and use Notepad for the required statement that explains why the RMD was missed, that it has now been taken and the steps taken to ensure that future RMDs will be taken as required. The taxpayer will need to mail the paper Form 5329 with the statement to the same address as their normal Form 1040 IRS address.

Amended Returns

1040X

A voucher prints with the Form 1040X, but do not use it for anything.

The Form 1040X is the voucher if a balance is due. The taxpayer should simply enclose a check with it.
CO 104X Payments and credits lines are not totaling correctly. Although this seems to have been fixed, other calculations have been reported in error. No known workaround at this time.

CHECK ALL CO 104X CALCULATIONS CAREFULLY BEFORE HAVING THE CLIENT MAIL THE RETURN