ProSeries 2006 Case Study - Intuithttp-download.intuit.com/http.intuit/CMO/proseries/training/case... · 2 Use the Case Study to evaluate ProSeries ® software This Case Study involves

ProSeries 2006Case Study

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3/23/07

Use the Case Study to evaluate ProSeries® software

This Case Study involves preparing a Form 1040 return for taxpayers named Kevin and Anne Riley. Use the Case Study to get an overall understanding of ProSeries software, then investigate other aspects of the program that pertain to your practice.

1 - Enter firm and preparer information

Before you start entering data or examining the Rileys’ Form 1040 return, enter your firm and preparer information (if you haven’t already entered it).

Important: The ProSeries program normally requires that you enter your firm and preparer information before you start to print returns and file returns electronically. The evaluation version of the program doesn’t require this information to print returns, but it does require firm and preparer information to file returns electronically. For more information about these requirements, call 1-800-945-2820.

1 From HomeBase, go to the menu bar and select Tools, then select Options.

2 In the left side of the Options dialog box, select Firm/Preparer Info.

3 In the Firm/Preparer Info section in the right side of the Options dialog box, click the Edit button near the lower-right corner of the dialog box.

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4 In the Edit Firm Information dialog box, enter your firm’s name and address, then click OK.

5 When you return to the Options dialog box, enter all preparer information in the Preparer/

Electronic Return Originator (ERO) Information section. Be sure to complete the Preparer Code, Preparer Name, and Social Security # fields.

Tip: Use your initials as your Preparer Code. For more information about a field, right click the field, then select the About command in the pop-up menu.

The next figure shows how the Firm/Preparer Info section might appear after you enter your firm and preparer information.

Click here to see the Firm/Preparer Info section.

Click here to enter your firm’s name and address.

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Entering firm and preparer information. For detailed information about entering firm and preparer information, go to the toolbar, click the Help button, then select User’s Guide on the left side of the Help Center. When the User’s Guide opens in a browser window, select chapter 3, “Setting ProSeries Options,” then select “Firm/Preparer Information options.”

Tip: To open the User’s Guide quickly from HomeBase, go to HomeBase toolbar and click the User’s Guide button.

2 - Start the Rileys’ Form 1040 return

You can use either of the following methods to go through the Case Study, but we recommend that you start a new return, then enter the Case Study data yourself.

● Start a new return (as explained in Starting a new return for the Case Study next), then enter the Rileys’ data as you read the Case Study.

● Open the sample client file containing the Rileys’ return (as explained in Opening the Case Study sample return on page 5), then view the data on-screen as you read the Case Study.

The Case Study instructions assume that you are starting a new return and entering the data yourself.

Starting a new return for the Case Study

To start a new return so you can prepare the Rileys’ return yourself:

1 Go to the HomeBase toolbar and click the Start New Client File button.One federal product. If ProSeries/1040 is the only federal product installed, you’ll see the Federal Information Worksheet for Form 1040 returns shown at the start of 3 - Federal Information Worksheet on page 6. You won’t see any taxpayer data on the worksheet.Go to 3 - Federal Information Worksheet on page 6.More than one federal product. If you installed more than one federal product, you’ll see the

Select Type dialog box shown next. Continue with step 2.

Your firm’s name and address appear in the gray-shaded area.

Additional firm information

Information about preparers

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2 In the Select Type dialog box, select 2006 US Form 1040: Individual Income Tax Return, then click OK.You’ll see the Federal Information Worksheet for Form 1040 returns that’s shown at the start of 3 - Federal Information Worksheet on page 6. You won’t see any taxpayer data on the worksheet.

3 Go to 3 - Federal Information Worksheet on page 6.

Opening the Case Study sample return

If you prefer to view the Rileys’ Case Study sample return data on-screen, take the following steps:

1 Make sure that the current HomeBase view is Form 1040: Individuals.2 Go to the client file list area of HomeBase and double-click the line beginning with Riley, Kevin &

Anne. (That line includes riley-s.06i in the File Name column.)

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You’ll see the Rileys’ data on the Federal Information Worksheet.

3 Go to 3 - Federal Information Worksheet.

Tip: When you open the Rileys’ sample return, you might see a dialog box with the message “Taxpayer/Spouse/Joint (TSJ) indicators are available in ProSeries/1040.”

For the purpose of this Case Study, we recommend that you select the No, don’t enable the TSJ

indicators option. If you see this dialog box, click the Close button, then proceed to the next section, 3 - Federal Information Worksheet.

3 - Federal Information Worksheet

You’re ready to begin entering client information on the Federal Information Worksheet. If you’ve started a new return for the Case Study, the worksheet should resemble the following figure.

Menu bar

Toolbar

Help toolbar

Selected data field

Forms Bar

Scroll bar

You might want to check the box for this option.

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Case Data

Kevin and Anne Riley live in Texas and file a joint return. Kevin receives a salary. Anne owns a business that she operates as a sole proprietorship.

Here’s some additional information about the Rileys:

● Because Kevin was transferred during the year, they sold their house and moved.● They have a son, Keenan, who was born in 2002.● They adopted daughter Kira in 2006.● Both children were enrolled in child care facilities during the year.● They have a passive interest in a partnership.● They will itemize deductions as they have in prior years.

On the Federal Information Worksheet, enter the following case data.

Part I - Personal Information

Enter the following information in the Taxpayer and Spouse sections of Part I.

The Federal Information Worksheet should look like the following figure:

Menu bar

Toolbar

Help toolbar

Selected data field

Forms Bar

Scroll bar

In this fieldEnter this data for the Taxpayer

Enter this data for the Spouse

Last name Riley

First name Kevin Anne

Social security no. 333-22-1124 333-22-1125

Occupation Engineer Self-Employed

Date of birth 11/30/1961 04/14/1965

E-mail address [email protected] [email protected]

Work phone (555) 555-1124 (555) 555-1125

Home phone (555) 555-1126

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Enter the following information in the lower area of Part I.

Tip: After you enter the Rileys’ ZIP code, the program enters “Fort Worth” in the City field and “TX” in the State field.

The Federal Information Worksheet should look like the following figure:

After you enter a date of birth, the program automatically calculates the person’s age as of 1-1-2007.

In this field Check this box

Print phone number Home

In this field Enter this data

Address 1124 Main Street

ZIP code 76111

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Part II - Federal Filing Status

Scroll down to Part II - Federal Filing Status, then click the check box for the Rileys’ filing status.

Tip: After you select the Rileys’ filing status, you might see a dialog box with the message “Taxpayer/Spouse/Joint (TSJ) indicators are available in ProSeries/1040.”

After you enter the ZIP code, the program enters the appropriate city and state.

In this area Select

Federal Filing Status Married filing jointly

Click this check box in the Federal Filing Status section.

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For the purpose of this Case Study, we recommend that you select the No, don’t enable the TSJ

indicators option. You might want to check the Don’t show this dialog again option also. When you’re ready to proceed, click the Close button.

Part III - Dependent/Earned Income Credit/Child and Dependent Care Credit Information

Scroll down to Part III, then enter the following information about the Rileys’ dependents. As you select certain fields in the table, you’ll notice there’s a pick list for certain fields, such as the Relationship and Code fields. A pick list shows the data that can be entered in that field.

In this fieldEnter this data for the first dependent

Enter this data forthe second dependent

First name Keenan Kira

Last name Riley Riley

Social security number 333-22-1126 333-22-1127

Relationship Son Daughter

Date of birth 10/10/2002 01/07/2006

Code L L

Lived with taxpayer in U.S. (These are months.)

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Qualified child/dependent care expenses

2,500 2,700

Enter information about dependents in this section.

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Part V - Return Preparer and Third Party Designee Information

Scroll down past Part IV, Earned Income Credit Information, to Part V, Return Preparer and Third Party

Designee Information, then enter your Preparer Code.

Part VI - Electronic Filing of Tax Return Information

Scroll down to Part VI, Electronic Filing of Tax Return Information. You’re not going to enter any information in Part VI because you’re not going to file the Rileys’ sample return electronically, but note that this part of the worksheet is where you indicate that you will be filing a client’s federal return and, when applicable, state return(s) electronically.

Important: If you plan to file a client’s return(s) electronically, be sure to complete Part VI of the Federal Information Worksheet.


Enter the Preparer Code from the Firm/Preparer Info (see Help)

The Preparer Code that you assigned yourself in the Firm/Preparer Info section of the Options dialog box

Enter your Preparer Code here.

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You’re not going to file any extension request forms for the Rileys electronically, nor are you going to request direct deposit of a refund or electronic funds withdrawal of an amount due, so scroll past the following parts of the Federal Information Worksheet:

● Part VII, Electronic Filing of Extension Information

● Part VIII, Direct Deposit/Electronic Funds Withdrawal Information

Tip: You might want to review the information about electronic filing in Parts VI and VII, and the information about financial institutions in Part VIII.

Part IX - Additional Federal Return Information

After you scroll to Part IX, Additional Federal Return Information, locate the Presidential Election Campaign Fund area, then complete that area of Part IX as follows:

If you plan to file a client’s federal return electronically, check the first box.

If you plan to file a client’s state return(s) electronically, check the second box, then select the applicable state(s) in the State(s) table.

If you’re participating in the IRS Practitioner PIN program and the client wants to use PINs, complete the appropriate fields in this area.

For this question Select

Does taxpayer want $3 to go to Presidential Election Campaign Fund? No

Does spouse want $3 to go to Presidential Election Campaign Fund? No


Part XI - Client Letter Information

We’re not going to prepare any state returns for the Rileys, so scroll down past Part X, Part-Year and

Nonresident State Return Filing Information Only, to Part XI, Client Letter Information. Enter the following information in Part XI:

Click the appropriate boxes for the Presidential Campaign Fund here.

For this question Enter

Taxpayer’s first name salutation Kevin

Spouse’s first name salutation Anne

Enter first name salutations for the client letter here.

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Tip: This last step isn’t necessary for the Rileys because the salutation names on their client letter will be the same as the first names that you entered in Part I of the Federal Information Worksheet. However, this is where you enter the names that you want to appear as a salutation on the client letter if those names will be different from the first names that appear on the tax return. For example, if you want the salutation on the client letter for Thomas and Katherine to be “Dear Tom and Kathy”, then you enter “Tom” and “Kathy” in the first two fields in Part XI.

This is all of the information that you need to enter on the Federal Information Worksheet for the Rileys.

For more information

Entering data. For detailed information about data entry, click the Help button on the toolbar, select User’s Guide in the Help Center, then select chapter 13, “Entering Data on Forms and QuickEntry Sheets” when the User’s Guide opens in a browser window.

Opening forms. For detailed information about opening forms, click the Help button on the toolbar, select User’s Guide in the Help Center, then select chapter 12, “Using Forms and QuickEntry Sheets” when the User’s Guide opens in a browser window.

4 - Save the Rileys’ sample data

You’ve entered data for the Rileys on the Federal Information Worksheet, so now is a good time to save that data in a client file on your computer’s hard disk.

1 Go to the toolbar and click the Save Client File button.The Save Tax Return dialog box opens. The first time you save a new client’s data, the program suggests a client file name that’s a combination of the client’s name and social security number. (For a business return, the program suggests a client file name that’s a combination of the business name and employer identification number.)

2 If you don’t want to store the client file in the suggested location, select a different location in the Save in field.

3 If you don’t want to use the suggested client file name, type a different name in the File name field.4 If you want to assign a password to the client file, enter that password in the Set Password field.

When you password-protect a client file, only the client’s name and file name are displayed in HomeBase.

5 Click Save. The program creates a client file for the Rileys’ data and adds information about the Rileys to HomeBase.

Important: As you enter data, remember to save it frequently by going to the toolbar and clicking the Save Client

File button. The program will immediately update the data in the Rileys’ client file.

The client file will be stored in this directory.

The program shows the suggested name for the client file here.

You can assign a password to the client file here.

Each client file has a three-character extension that identifies the tax year and type of return.

For the 2006 tax year, the extension for all individual return client files is .06I.



Saving client data. For detailed information about saving client data, click the Help button on the toolbar, then select User’s Guide in the Help Center. After the User’s Guide opens in a browser window, select chapter 6, “Preparing Returns,” then select “Saving a client’s data in a client file.”

5 - Tax Payments Worksheet

Now you’re going to use the Tax Payments Worksheet to record federal, state, and local estimated tax payments. You enter other payment information (for example, withholding amounts) on other worksheets such as the Form W-2 Worksheet (for wages), the Form 1099-R Worksheet (for pensions), and the Form 1099-G Worksheet (for unemployment compensation).

Go to the Forms Bar (on the left side of the ProSeries Client Data window) and scroll down to the Tax

Payments category heading. Click the Tax Payments heading to expand that category, then click the Tax Payments entry (which is directly below the Tax Payments category heading) to open the Tax Payments Worksheet.

Tip: If you don’t see the Forms Bar on the left side of the ProSeries Client Data window, go to the menu bar, select View, then select Forms Bar.

Case Data

Kevin and Anne made four federal estimated tax payments. Enter the following information in the Estimated Tax Payments for 2006 section of the worksheet.

Click the Tax Payments category heading to open that section, then click the Tax Payments entry to open the Tax Payments Worksheet.

In this field Enter this amount

Federal Amount column, 04/18/06 row 400




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6 - Form W-2 Worksheet

Next, you’re going to enter the Rileys’ Form W-2 information using the Form W-2 Worksheet.

1 Scroll up the Forms Bar to the Common Forms section, then click W-2 Wks (which is the third entry in the Common Forms section).

2 In the Select Form W-2 Worksheet dialog box, type “Expert Engineering” in the field below the Create new copy option, then click Create.

The Form W-2 Worksheet opens, as shown next.

The program shows the sum of the federal estimated tax payments here.

If you want to select an existing copy of the worksheet, click here.

If you previously created one or more copies of the Form W-2 Worksheet, the program lists the names that you assigned to those copies in this area.

If you want to create a new copy, click here...

...type a description here...

...then click here.


Important: Each copy of the Form W-2 Worksheet accommodates information from one W-2 form.

The first QuickZoom button at the top of the worksheet allows you to quickly add another copy of the Form W-2 Worksheet if your client has additional W-2 forms. The second QuickZoom button displays a summary of the Form W-2 Worksheets and the Form W-2G Worksheets.

Tip: When the Form W-2 information is for the spouse rather than the taxpayer, click the Spouse’s W-2 check box. When you want the program to calculate the social security and Medicare wages based on the client’s gross wages, click the Automatically calculate lines 3 through 6 and line 16 check box.

Case Data

1 Enter the following information about Kevin’s employer, Expert Engineering.

After you enter the employer’s ZIP Code, the program enters “Fort Worth” in the City field and “TX” in the State field.

2 Check the Automatically calculate lines 3 through 6 and line 16 check box above line 1.3 Enter the following Form W-2 information for Kevin.

Using the data that you entered on line 1, the program calculates lines 3 through 6 as follows:

The name of the client file and the active form appears here.

W-2 Wks is included in the Common Forms section.


Employer EIN 98-7654321

Street Address or P.O. Box 9876 Main Street

ZIP 76111


1 - Wages, tips, other compensation 84,700

2 - Federal income tax withheld 5,320

Box 13b - Check if retirement plan participant

X

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4 Scroll down the Form W-2 Worksheet, then enter the following information for Kevin.

Tip: After you enter “TX” in the Box 15 - State field then press the ENTER key, the program enters 84,700 in the Box 16 - State wages, tips, etc. field because you checked the Automatically calculate lines 3

through 6 and line 16 check box.

In this field The program enters

Line 3 - Social security wages 84,700

Line 4 - Social security tax withheld 5,251

Line 5 - Medicare wages and tips 84,700

Line 6 - Medicare tax withheld 1,228


Box 12 Code, first line P (for excludable reimbursement for moving expenses)

Box 12 Amount, first line 6,500

Box 12 Code, second line T (for employer-provided adoption benefits)

Box 12 Amount, second line 5,000

If Box 12 code is:P: Double click to link to Form 3903, line 4

Double-click the field.In the Select Form 3903 dialog box, go to the Create new copy to link section, type “Fort Worth TX” then click the Link button.

Box 15 - State TX


Important: After you enter Box 12 data, notice that the program recalculates lines 3 through 6 as follows:

7 - Schedule A, Itemized Deductions

The ProSeries program uses the client’s itemized deductions instead of the standard deduction when appropriate. The program carries information to Schedule A from several other forms, and carries information from Schedule A to other forms. It also automatically calculates the Itemized Deductions Worksheet to determine whether or not a client’s itemized deductions must be limited.

You can use the Medical Expenses Worksheet and the Miscellaneous Itemized Deductions Statement to support Schedule A when appropriate.

As you enter data into Schedule A, note that the right side of the status bar at the bottom of the screen indicates whether the cursor is on a Numeric Input, Text Input, Calculated Value, or QuickZoom field.

Go to the Common Forms section of the Forms Bar, then click Schedule A.

Case Data

Anne had $2,000 in unreimbursed medical and dental expenses that you want to report on the Medical Expenses Worksheet.

1 Click the QuickZoom icon for the “Medical and dental expenses” field above line 1 of Schedule A to go to the Medical Expenses Worksheet.

Double-click this field to link the Box 12 Code P amount to a copy of Form 3903.

In this field The program enters

Line 3 - Social security wages 89,700

Line 4 - Social security tax withheld 5,561

Line 5 - Medicare wages and tips 89,700

Line 6 - Medicare tax withheld 1,301

800-945-2820 19

2 Enter $2,000 on line 3, “Fees for doctors, dentists, etc.” of the Medical Expenses Worksheet.3 Go to the Forms In Use section or the Common Forms section of the Forms Bar and click Schedule

A to return to Schedule A.You’ll notice the program flowed the $2,000 that you entered on the Medical Expenses Worksheet to the “Medical and dental expenses” field near the top of Schedule A.

A deduction is available this year for state and local sales tax paid. The Rileys live in Texas, which doesn’t have a state income tax, so they will claim a deduction for state and local sales tax this year. They haven’t tracked their actual expenses, so you will use the Optional State Sales Tax tables to figure their state and local general sales tax deduction.

4 Scroll down to the State and Local Taxes Smart Worksheet for line 5, then select the field in column (d), “Enter Total Tax Rate” on the first line in the expanding table.

5 Enter “6.2500” in column (d), “Enter Total Tax Rate.”

Click this QuickZoom icon to go to the Medical Expenses Worksheet.


Notice that the program:• Flowed the Rileys’ state of residence (TX) along with the beginning (01/01/06) and ending

(12/31/06) dates of that residence from the Federal Information Worksheet to columns (a), (b), and (c) of the table.

• Used the IRS 2006 Optional State Sales Tax Tables to enter the appropriate rate (6.2500) in column (e), “State Tax Rate.”

• Calculated that the appropriate amount for column (g), “State Table Amount” is $1,136.• Completed the calculations in the State and Local Taxes Smart Worksheet.• Checked the “General sales taxes” box and entered “ST” and $1,136 on line 5 of Schedule A.

Tip: If you enter a rate in column (d), “Enter Total Tax Rate,” the program adjusts the rate in column (f), “Local Tax Rate” and column (h), “Local Sales Taxes” accordingly. If you enter combined state and local rates for one locality for a state in the Miscellaneous section of the Options dialog box, the program flows that information to column (d), “Enter Total Tax Rate” when appropriate.

Information about the sale of the Rileys’ former home and the purchase of their new home is reported on:

● A Form 1098 from Texas State Bank for the Rileys’ former main residence in Houston● A Form 1098 from First Interstate Bank in Fort Worth on the Rileys’ new main home● The closing statement from the Rileys’ new house

Following are the relevant amounts from those documents:

6 To enter the real estate taxes, click the field for line 6a, “Real Estate Taxes, On principal residence” in the Taxes Paid section of Schedule A.

The program calculates the amount in column (i) from the amounts in the other columns.

CategoryForm 1098 from Texas State Bank (former home)

Form 1098 from First Interstate Bank (new home)

Closing statement (new home)

Real estate taxes 1,200 2,420 150

Home mortgage interest

4,180 8,140

Points 2,120

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7 Click the Supporting Statement icon to the right of the entry field.8 In the Supporting Statements dialog box, enter the following descriptions and amounts for the

Rileys’ real estate taxes.

9 Click Close to return to Schedule A. Notice that the program copied the $3,770 total from the supporting statement to the field for line 6a, “Real Estate Taxes, On principal residence” in the Taxes Paid section.

Kevin and Anne paid $630 in auto registration fees for their vehicles.

10 Enter $630 in the field for line 7a, “Auto registration fees based on value of the vehicle, Personal use only vehicles” in the Taxes Paid section of Schedule A.

11 Scroll down to the Interest Paid section of Schedule A, then enter the remaining information about the Rileys’ real estate transactions in the Mortgage Interest and Points Smart Worksheet above line 10.

As you enter individual amounts, the supporting statement total appears here.

This is the total from the Real Estate Taxes supporting statement.

Enter the Rileys’ auto registration fees here.


The Rileys made cash contributions of $2,300 to First Church, and noncash donations of $400 to Goodwill.

12 Scroll down to the Gifts to Charity section, then enter the donation to First Church on the Cash Contributions Smart Worksheet.

CategoryForm 1098 from Texas State Bank (former home)

Form 1098 from First Interstate Bank (new home)

Home mortgage interest

4,180 8,140

Points 2,120

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13 Scroll down to the Noncash Contributions Smart Worksheet, then enter the donation to Goodwill.

Because the Rileys’ total itemized deductions ($22,676) exceed the allowable standard deduction ($10,300), the program carries the itemized deductions total from line 28 of Schedule A to line 40 of Form 1040.


Tip: If a client’s itemized deductions are limited, the program flows the allowable amount from line 12 of the Itemized Deductions Worksheet to line 28 of Schedule A.

8 - Schedule B, Interest and Ordinary Dividends

Now you’re ready to enter the Rileys’ interest and dividend income on Schedule B.

Go to the Common Forms section of the Forms Bar, then click Schedule B.

Case Data

Kevin and Anne received the interest income listed in the next table.

1 Enter the Rileys’ interest information on the Interest Income Smart Worksheet in Part I - Interest (Enter all interest income here) near the top of Schedule B.

Payer’s NameBox 1Regular or OID Interest

Box 3US Savings Bond / Treasury Obligations

Box 8Tax-exempt interest

Lone Star State Bank 1,850

Texas Savings and Loan 350

In-state municipal interest 150

U.S. savings bond 75

800-945-2820 25

Tip: When the state requires special handling for specific interest income, enter “M” in the Type Int. (Type of Interest) column.

Tip: The Type of Adj. (Type of Adjustment) and the Adjustment Amount columns are available for you to enter adjustment information when applicable. To enter additional information such as withholding amounts or foreign tax information, double-click the applicable payer line to open an Additional Information Worksheet.

2 Scroll down Schedule B and note each of the following sections:• Part I - Interest (Enter all interest income here) section, which includes the Interest Income

Smart Worksheet where you enter information about interest income• Part II - Ordinary Dividends (Enter all dividend income here), which includes the Dividend

Income Smart Worksheet where you enter information about dividend income• Part I - Interest, which is where the program copies the information that you enter in the

Income Interest Smart Worksheet• Part II - Ordinary Dividends, which is where the program copies the information that you enter

in the Dividend Income Smart Worksheet• Part III - Foreign Accounts and Trusts

Use these QuickZoom buttons to open the following worksheets:

• Seller-Financed Mortgage Interest Statement

• Interest and Dividend Summary

• Tax-Exempt Interest Summary


9 - Schedule C, Profit or Loss from Business

Next, you’re going to report information about Anne’s computer networking business on Schedule C.

Schedule C is available in multiple copies. It’s important to indicate ownership of the business (if it’s not solely owned by the taxpayer) on one of the first two lines of Schedule C. The program allocates the net profit or loss on line 31 of Schedule C to the taxpayer or spouse according to the ownership indicated on that copy of the form. The program prints the appropriate name and social security number at the top of each copy of Schedule C and on the corresponding Schedule SE.

The program also determines if you can report the business activity on Schedule C-EZ. If so, data flows from Schedule C to Schedule C-EZ. You can choose not to use Schedule C-EZ.

Tip: You report depreciation and car and truck expenses, when applicable, on separate worksheets that are linked to Schedule C.

Case Data

1 Go to the Common Forms section of the Forms Bar and click Schedule C.2 In the Select Schedule C dialog box, type “Consulting” in the field below Create new copy, then

click Create.

Information that you enter in the Interest Income Smart Worksheet flows to this section of Schedule B.

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3 Because Anne is listed as the spouse on this return, check the first box on Schedule C to indicate that this is her business. She uses her own name as the business name, so check the fourth box also.

4 For line B, enter “541510” as the principal business code.To see all the principal business codes, click the QuickZoom button.

5 Anne doesn’t have an employer identification number, and her business has no inventory. Use the following information to complete lines E, F, and G.• Anne operates the business from an office at 167 Main Street, Fort Worth, TX 76111.• She uses the cash method of accounting.• She materially participates in the operation of the business.

If you want to select an existing copy of the schedule, click here. If you previously created one

or more copies of Schedule C, the program lists the names that you assigned to those copies in this area.

If you want to create a new copy, click here...

...type a description here...

...then click here.

When you check the “Operated by Spouse” box, the program enters Anne’s name and Social Security Number on this line.


Next, you’re going to enter Anne’s business income information in the Income section of Schedule C and the Form 1099-MISC Worksheet.

Anne’s business received $48,000 that wasn’t reported on a Form W-2 or on a Form 1099-MISC. Her business also received a Form 1099-MISC from the Major Corporation that reported nonemployee compensation of $10,000.

6 Enter $48,000 in the field titled “Enter other gross receipts or sales (not reported on 1099).” This is the first field in the Income section of Schedule C.

7 Click the first QuickZoom button in the Income section of Schedule C to open the Form 1099-MISC Worksheet.

8 In the Select Form 1099-MISC Worksheet dialog box, type “Major Corporation” in the field below the Create new copy option, then click Create.

9 In the “Payer 1” column, click the “Check if spouse” box, then enter “Major Corporation” as the Payer’s name.

10 Enter the amount of compensation ($10,000) on line 7, then double-click the “Link to Schedule C” field on the line below line 7.

800-945-2820 29

11 In the Select Schedule C dialog box, click “Consulting” to highlight it, then click the Link button.

Tip: Nonemployee compensation can flow to Schedule C, Schedule F, or the Wages, Salaries, & Tips Worksheet. Rents and royalties can flow to Schedule C, Schedule E, or to Form 4835. To link the Form 1099-MISC Income Worksheet to the appropriate form, double-click the appropriate field under line 2, 3, or 7 on the worksheet. If the information flows to Schedule E, you will also be asked to select the appropriate property.

12 To return to Anne’s Schedule C, go to the Common Forms section of the Forms Bar and click Schedule C.

13 In the Select Schedule C dialog box, select “Consulting,” then click Select.You’ll notice the program flowed the $10,000 that you entered on the Form 1099-MISC Income Worksheet to the “Income transferred from Form 1099-MISC worksheet or W-2 income worksheet” field just above line 1.

Next, you’re going to enter Anne’s business expenses in the Expenses section of Schedule C.

14 Enter the following data in the appropriate fields in the Expenses section of Schedule C.

Double-click this field to link this nonemployee compensation to Anne’s Schedule C.

Click here to link the nonemployee compensation on line 7 of the worksheet to the “Consulting” copy of Schedule C.


Important: Always enter the total expenses for meals and entertainment. The program limits the deduction appropriately.

Anne wants to itemize her utility expenses, which consist of $2,700 in cellular telephone expenses, $90 in pager bills, $550 for her 800 telephone line, and $2,960 in electric bills.

15 Go to the “Utilities” field on line 25, then click the Supporting Statement icon to the left of the entry field.

16 In the Supporting Statements dialog box, enter the utility expense details shown next.


Line 8 - Advertising 2,300

Line 10 - Commissions & Fees 3,000

Line 15 - Insurance: Self-employed health insurance 5,000

Line 17 - Legal and professional services 1,400

Line 18 - Office expense 5,400

Line 20b - Rent or lease - Other (land, etc.) 8,400

Line 21 - Repairs/maintenance 3,200

Line 22 - Supplies (not included in Part III) 3,500

Line 23 - Taxes and licenses 150

Line 24b - Meals and entertainment (Subject to 50% limit)

850

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After you enter all the supporting data, the supporting statement total should be $6,300.17 Click Close. Notice that the $6,300 total in the “Utilities” field of Schedule C is purple, which

indicates that there is supporting data for that amount.

Now you’re ready to complete Anne’s Schedule C.

18 Scroll down to Part V, “Other Expenses,” click the first line in the expanding table below the Pension Plan Startup Costs Smart Worksheet, then enter “Postage” as the description and “2,150” as the amount.

19 Scroll up to the Expenses section. You should see 2,150 on line 27, “Other expenses (from line 48).”


“

Tip: The numbers that you see on line 28, “Total expenses before expenses for business use of home,” line 29, “Tentative profit (loss),” and line 31, “Net profit or (loss)” depend on whether you started a new return or you opened the Rileys’ sample client file.

These numbers are different at the moment because the return in the sample client file includes the depreciation information for Anne’s business, but you haven’t entered that information yet if you opened a new return and you’re entering the Rileys’ data yourself.

10 - Asset Entry Worksheet

Next, you’re going to use the Asset Entry Worksheet to enter information about the depreciable assets for Anne’s business. You’ll use a separate worksheet for each depreciable asset. The program flows information from the worksheet to the appropriate form or schedule, and to the applicable Form 4562.

Tip: Don’t enter asset information directly on Form 4562.

Case Data

Anne has a desk and a fax machine that she purchased for the business in prior years. She took the section 179 election to expense the desk, and has been depreciating the fax machine. She made no further acquisitions until 2006, when she purchased a $2,800 computer. All of the assets were used 100% for business. She sold the fax machine in 2006.

Asset 1 - Desk

We’ll start with Anne’s desk.

1 Click the first QuickZoom button in the Expenses section of Schedule C.

Schedule C line If a new return If the sample client file

Line 28 $36,225 $39,073

Line 29 $21,775 $18,927

Line 31 $21,775 $18,927

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2 In the Select Asset Entry Wks dialog box, enter “Desk” in the Create new copy section, then click Finish.

3 Enter the following information about the desk that Anne uses for her business.

The program calculates “0” as the depreciation deduction.

If you scroll to the Detail Asset Information section near the bottom of the worksheet, you’ll see that the program also calculated the following information:

Type “Desk” here.


Date placed in service 10/10/2001

Cost or basis 1,270

Type of asset E - 7/10 Office furniture/Farm equip/ etc.

Section 179 deduction 1,270

The program checks the “No” box on the Gulf Opportunity Zone-Qualified Property line.

The depreciation deduction is $0 because Anne took a section 179 deduction for the entire cost of the desk.


Asset 2 - Fax machine

Next, you’re going to enter information about Anne’s fax machine.

1 Press CTRL+F6 to access another copy of the Asset Entry Worksheet.2 In the Select Asset Entry Wks dialog box, click the Create new copy option, type “Fax Machine”

as the description of the asset, then click Finish.3 On the new copy of the Asset Entry Worksheet, enter the following information about Anne’s fax

machine.

4 Scroll to the bottom of the worksheet to see that the program calculated the following information:

In this field The program entered

Depreciation type MACRS

Asset class 7

Depreciation method 200DB

MACRS convention HY

Year of depreciation 6

Recovery period 7.0

Depreciable basis 0

The program completes this section of the worksheet using the data that you enter in the first two sections.



Cost or basis 500

Type of asset D - 5/6 Typewriter/calculator/copier/etc.

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5 Scroll back up to the Asset Information section and enter the following amounts.4

Note that the program computes the 2006 depreciation deduction as $96.

6 Anne sold the fax machine in 2006 for $200. Scroll down to the Dispositions section, then enter the following information for the fax machine.

In this field The program entered

Depreciation type MACRS

Asset class 5

Depreciation method 200DB

MACRS convention HY

Year of depreciation 3

Recovery period 5.0

Depreciable basis 500


Prior depreciation (Regular Tax) 260

Prior depreciation (AMT) 203


Date of disposition 06/01/2006

Asset sales price 200

The program enters “Trade or business” automatically after you enter the sales price.


The program completes the Dispositions section.

Asset 3 - Computer1 Press CTRL+F6 to access another copy of the Asset Entry Worksheet.2 In the Select Asset Entry Wks dialog box, click Create new copy, type “Computer” as the

description of the asset, then click Finish.3 On this copy of the Asset Entry Worksheet, enter the following information about the computer

that Anne purchased on July 1, 2006 for $2,800.

When you enter the disposition information, the program recomputes the depreciation deduction to $48.



Cost or basis 2,800

Type of asset A - 5/5 Computer and equipment

Section 179 deduction 2,800

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4 Go to the Forms In Use section of the Forms Bar and click Schedule C (Consulting).5 After Schedule C for Anne’s business opens, notice that the program entered $2,848 on line 13,

“Depreciation and section 179 expense deduction (not included in Part III).”

11 - Self-Employed Health and Long-Term Care Insurance Deduction Worksheet

Next, let’s look at the Self-Employed Health and Long-Term Care Insurance Deduction Worksheet. Anne qualifies for this deduction because she is self-employed and had a net profit for the year.

Tip: A person who is a general partner in a partnership, or who receives wages from an S corporation in which they are more than a 2% shareholder, also qualifies for the self-employed health and long-term care insurance deduction worksheet.

Taxpayers who qualify may be able to deduct up to 100% of the amount they paid for health insurance on behalf of themselves, their spouses, and their dependents. This amount is included as an adjustment on line 29 of Form 1040.

To open the Self-Employed Health Insurance Deduction Worksheet, go to the top of Schedule C, then click the third QuickZoom button.

Case Data

Anne Riley paid $5,000 to cover herself under a medical insurance policy established under her consulting business. Kevin does not have an option to cover her under his employer’s plan. You may recall that you entered $5,000 in the “Self-employed health insurance” field for line 15 on the Schedule C for Anne’s consulting business. The program flowed that amount to line A of the Self-Employed Health and Long-Term Care Insurance Deduction Worksheet.

Scroll to the bottom of the worksheet. You’ll see that the program calculated a self-employed health insurance deduction of $5,000 on line 10. The program flows that amount to line 29 of Form 1040.

The program checks the “No” boxes on the Gulf Opportunity Zone-Qualified Property line and the Qualified Property for Special Depreciation Allowance line.

It also computes a depreciation deduction of $0 (because Anne elected to take the full section 179 deduction).


12 - Schedule K-1 Worksheets

Now that you’ve entered information about Anne Riley’s business, you’re ready to enter information about a partnership in which the Rileys have an investment.

With ProSeries software, you enter the information from each Schedule K-1 on a copy of the Schedule K-1 Worksheet for Partnerships, Schedule K-1 Worksheet for S Corporations, or Schedule K-1 Worksheet for Estates and Trusts. Data then flows automatically from the worksheets to the appropriate forms.

The line numbers on the Schedule K-1 Worksheets correspond to the line numbers on the Schedules K-1. If a Schedule K-1 has information on a line that is not on the worksheet, you enter that information directly on the form or schedule that is appropriate for your client’s tax situation.

Tip: The questions concerning passive activity, active rental participation, and disposition near the top of the Schedule K-1 Worksheet for Partnerships control the passive activity loss limitation calculations. When appropriate, you can QuickZoom to Form 6198 and the Publicly Traded Partnership Worksheet.

Case Data

Kevin and Anne received a Schedule K-1 from a Form 1065 filed by Southwest Partnership, a limited partnership.

1 Go to the Common Forms section of the Forms Bar, then click K-1 Partner.2 In the Select Sch K-1 Wks-Partnerships dialog box, type “Southwest Partnership, Copy 1” as the

partnership name, then click Create.3 Enter the following information on the Schedule K-1 Worksheet for Partnerships.

The program calculates this amount.


Partnership’s Employer Identification Number 42-1111111

Ownership: Joint X

General Partner or LLC manager X

Line 1 - Ordinary business income (loss) 1,550

Line 5 - Interest income 85

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In addition to ordinary income from trade or business, the Rileys’ Schedule K-1 from Southwest Partnership reports a net loss from rental real estate. You need to report this information on a separate copy of the Schedule K-1 Worksheet for Partnerships.

4 Go to the top of this copy of the Schedule K-1 Worksheet for Partnerships, then click the QuickZoom button on the line titled “QuickZoom to another copy of Schedule K-1.”

5 In the Select Sch K-1 Wks-Partnerships dialog box, click the Create new copy option, type “Southwest Partnership, Copy 2” as the partnership name, then click Create.

6 Enter the following information on the second copy of the Schedule K-1 Worksheet for Partnerships.


Partnership’s Employer Identification Number 42-1111111

Ownership: Joint X

General Partner or LLC manager X

Line 2 - Net rental real estate income (loss) -3,500


13 - Tax Summary

To quickly see a tax summary of the return with the data you’ve entered so far, go to the toolbar and click the Tax Summary button.


For detailed information about the Tax Summary and other ProSeries features, go to the Help Center, select User’s Guide on the left side of the Help Center, then select chapter 16, “Examining a Client’s Tax Situation.”

These numbers are based on the data that you’ve entered.

As you enter more data, the program updates these amounts.

Click here to close the Tax Summary dialog box.

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14 - Form 3903, Moving Expenses

You may recall that Kevin was transferred in 2006 and the Rileys moved to a new home. Next, you’re going to use Form 3903 to claim the moving expense deduction. All taxpayers must meet two tests in order to deduct moving expenses.

Distance test: Calculate the number of miles from the former residence to the new job, and the number of miles from the former residence to the old job. To meet the distance test, the difference between these two numbers must be at least 50 miles.

Time test: You can deduct moving costs only if the taxpayer (or spouse, if married) works as a full-time employee at the new location for at least 39 weeks in the 12-month period following arrival.

Expenses for moving household goods and personal effects, plus the cost of traveling to the new location, are deductible. Lodging is included as a travel expense, but meals are not allowed. The standard mileage rate allowed for moving expenses is eighteen cents per mile.

Case Data

1 Scroll down the Forms Bar to the Adjustments category heading, click the Adjustments heading to expand that category, then click Form 3903.

2 Because you entered moving expense reimbursements on the Form W-2 Worksheet, one Form 3903 (“Fort Worth TX”) is pre-selected in the Select Form 3903 dialog box. Click Select.

3 Enter the following information in the General Information Smart Worksheet near the top of Form 3903.

4 Scroll down Form 3903, then enter the following information in the Moving Expenses Smart Worksheet.

Notice that the program flowed the $6,500 employer reimbursement that you entered on Kevin’s Form W-2 Worksheet to line 4 of Form 3903.

The program calculates a moving expense deduction of $111 on line 5.


Line C - Number of miles from your old home to your new workplace

268

Line D - Number of miles from your old home to your old workplace

15


Line A - Transportation expenses for this move 6,500

Line C - Travel expenses for this move 26

Line D - Lodging expenses for this move 85


15 - Form 2441, Child and Dependent Care Expenses

Next, you’re going to enter the Rileys’ child and dependent care expenses on Form 2441.

In general, taxpayers can take a credit for child and dependent care expenses if they meet following tests:

● The filing status on the return is not married filing separate.● Care was provided for the qualified individual so that the taxpayer (and spouse, if married) could

work, look for work, or attend school as a full-time student for at least five months during the year.● The taxpayer (and spouse, if married) has earned income.● The taxpayer (and spouse, if married) paid over half the cost of maintaining a home in which the

taxpayer and the qualifying individual(s) lived.● The care provider was not the taxpayer’s spouse or dependent.

Case Data

1 Go to the Credits category heading in the Forms Bar, click the Child-Related subcategory heading, then click Form 2441.

2 Enter the following information in Part I of Form 2441.

Care provider’s name AddressIdentifying number

Amount paid

ABC Child Care 1234 BroadwayHouston, TX 77075

95-0987654 1,500

123 Child Care 1234 Main StreetFort Worth, TX 76075

95-4567890 3,700

800-945-2820 43

Both of the Rileys’ children are qualifying children. The program carries the amount paid for each child from the Federal Information Worksheet to Form 2441, Part II, Credit for Child and Dependent Care Expenses. The program calculates a credit of $1,040 on line 11 of Form 2441, then carries that amount to line 48 of Form 1040.

16 - Form 8839, Qualified Adoption Expenses

Next, you’re going to enter information about adoption expenses incurred by the Rileys. Taxpayers can qualify for a nonrefundable tax credit for adoption expenses that were incurred and paid for in taxable years beginning after December 31, 1996. The credit is up to $10,960 per eligible child adopted. The credit is phased out ratably for taxpayers with modified AGI above $164,410, and is fully phased out at $204,410 of modified AGI.

Taxpayers can also exclude from income up to $10,960 of qualified adoption expenses paid by an employer. This limit is per child, and is also subject to an AGI phase-out. The taxpayer may qualify for both the credit and the exclusion if their employer pays up to $10,960 for the same adoption, and if the taxpayer pays additional amounts for different expenses associated with the adoption.

Case Data

Kevin and Anne adopted Kira Riley in October of 2006. Kira was born in January of 2006. She is not a child with special needs or a foreign child.

1 Go to the Credits category heading in the Forms Bar, then click Form 8839 (which is just below Form 2441 in the Child-Related subcategory).

2 Because you entered the adoption expense reimbursement on the W-2 Worksheet, one Form 8839 (“Copy 1”) is pre-selected in the Select Form 8839 dialog box. Click Select.

3 In Part I of Form 8839, enter the following adoption information on the line for Child 1.

Form 2441 is an entry in the Child-Related subcategory of the Credits category.


Line 1(a) - Child’s name, First Kira

Line 1(a) - Child’s name, Last Riley

Line 1(b) - Child’s year of birth 2006

Line 1(f) - Child’s identifying number 333-22-1127


4 The adoption became final in 2006. In Part II of Form 8839, check the following boxes near the top of the Qualified Adoption Expenses Smart Worksheet - Line 5.

5 The Rileys paid all of the adoption expenses in 2006. Enter the following adoption expense information in the Child 1 column of the Qualified Adoption Expenses Smart Worksheet - Line 5.

The adoption expenses that you entered on lines A, B, and C total $12,000. Kevin’s employer-provided adoption benefit program reimbursed $5,000 of that amount. You previously entered that $5,000 on the Form W-2 Worksheet. The program flowed that amount to the Qualified Adoption Expenses Smart Worksheet - Line 5, then calculated that the adoption expenses less the employer reimbursement equals $7,000.

6 Scroll down to Part III of Form 8839.7 The Rileys didn’t receive any employer-provided adoption benefits in prior years, so go to line 20,

“Did you receive employer-provided adoption benefits for a prior year for the same child?” and click the “No” box.

8 Notice that line 31 in Part III indicates $5,000 of Kevin’s employer’s reimbursement is taxable income. The program adds that amount to the total on line 7 of Form 1040, and enters “AB” in the text field on line 7 of Form 1040 per the IRS instructions.

9 Scroll up to line 18 in Part II to see that the Rileys’ adoption credit for 2006 is $7,000. The program flows $7,000 to line 54 of Form 1040.

10 Scroll up the Forms Bar to the Forms In Use edits section, then click Form 1040.11 Scroll down Form 1040 to line 54 to see the $7,000 that the program flowed from line 18 of Form

8839.

For this line Check this box

Was Child 1 (non-foreign) adoption final before 2006? No

Was Child 1 (non-foreign) adoption final in 2006? Yes


Line A - Reasonable and necessary adoption fees 6,500

Line B - Court costs 1,200

Line C - Attorney fees 4,300

Form 8839 is an entry in the Child-Related subcategory of the Credits category.

800-945-2820 45

17 - Review the Rileys’ sample return

You’ve just about completed the Rileys’ tax return, so let’s review what the ProSeries program has done to help you with this task.

1 Go to the menu bar, select Forms, then select Forms In Use.2 Scroll through the list in the Open Forms dialog box.3 Notice that the list includes forms, worksheets, statements, and reports that you haven’t seen or

edited. The program completed these forms for you automatically, based on information you entered on other forms. Among these forms are:• Schedule E, Supplemental Income & Loss• Schedule SE, Self-Employment Tax• Form 4562, Depreciation & Amortization• Form 4797, Sales of Business Property• Form 8582, Passive Activity Loss Limitations


4 Notice that Schedule B and Form 8839 are followed by “(INCOMPLETE).”(INCOMPLETE) means the program has determined that you must enter some additional information in each of these forms before the form is complete. The ProSeries Final Review helps you locate and complete (INCOMPLETE) forms.

5 Click OK to close the Open Forms dialog box.

Tip: The Forms In Use section at the top of the Forms Bar presents information that’s similar to the information in the Forms In Use view of the Open Forms dialog box. However, note the following differences between these two sources of information:

● The form, schedule, and worksheet descriptions in the Forms In Use section of the Forms Bar are less complete than they are in the Forms In Use view of the Open Forms dialog box.

● The Forms In Use section of the Forms Bar presents more information about an incomplete form than does the Forms In Use view of the Open Forms dialog box. It shows the number of errors on the incomplete form (in red text) instead of showing an “(INCOMPELETE”) message.

● When you click the red “error” text after that name of a form in the Forms In Use section of the Forms Bar, the program takes you to the field(s).

Final Review

The ProSeries Final Review feature can help you check each return for potential problems. For example, the Final Review feature identifies the forms that are marked (INCOMPLETE) in the Open Forms dialog box (and that show one or more errors in the Forms In Use section of the Forms Bar), and indicates the additional information that’s required to complete those forms.

The ProSeries program does the following types of review checks when you run Final Review.

Schedule B is marked INCOMPLETE.

If you scroll down, you’ll see that Form 8839 is also marked INCOMPLETE.

This procedure Does this

Errors and Omissions Checks the return for incomplete information, inconsistent entries, estimated values, and incorrectly-completed fields. The client’s specific tax situation determines whether an error alert requires action.

Electronic Filing Identifies data field items that violate strict formatting rules and errors that could preclude electronic filing.

TSJ Tag Errors Identifies fields where a Taxpayer/Spouse/Joint indicator tag is set to either “S” or “J” and the filing status is no longer married filing jointly.

Diagnostics Evaluates the return for required attachments for filing, inconsistent entries, advisory messages regarding program decisions, tax treatment of items that may not be immediately apparent, and additional computations that may be required.

800-945-2820 47

Important: Final Review does not guarantee that a return is accurate or complete. You and your clients are responsible for entering all information required by the IRS or the state taxing authority, and for reviewing each return to ensure that it is correct.

Case Data

Next, you’re going to review any errors or omissions in the Rileys’ return.

1 Go to the toolbar and click the Final Review button.2 In the Final Review Choices dialog box, click Review.

3 When you see the window titled For Your Information, Errors and Omissions, click the Start button.

List of Notes Lists entries to which you have attached notes.

List of Overrides Shows all fields that you have overridden.

Missing Client Information Shows information that you entered in the Missing Client Information

dialog box (if the Show during Final Review box is checked in the General section of the Options dialog box).

This procedure Does this

Instructions, information, and identified errors are presented in this area.

Use buttons in this area to navigate through the Final Review.

Correct reported errors on the forms in this area.


As you proceed through the Final Review, use the following information to correct those errors. If you’ve entered the Rileys’ data exactly as instructed in the Case Study, the program should identify the following three errors.

The program displays the errors and takes you to the exact data fields in question.

4 After you correct the first error, click Next to move to the next error.5 When all errors appear to be corrected, proceed through other parts of the Final Review, such as

Diagnostics.

Tip: Review the Diagnostics part of Final Review to see any suggestions the program has regarding the Rileys’ return.

6 When you reach the end of Final Review, you’ll see the Recheck button if there are uncorrected errors in the return. Click Recheck so you can correct those remaining errors.

Tip: The changes that you made during Final Review might have introduced new errors into the return.

For this form

This error is reportedUse this information to correctthe reported error

Form 8839 (Copy 1)

Qualified Adoption Assistance Program CheckBoxes-1 must be entered.

Employer-provided adoption benefits were paid under a qualified adoption assistance program.

Form 8839 (Copy 1)

Line 3 Box must be entered. A Form 8839 was not filed for a prior year.

Schedule B State ID - interest-3 must be entered. This interest was earned in Texas.

The error is explained in the Final Review window.

The relevant field is highlighted on the form below the Final Review window.

800-945-2820 49

7 When you finish the Final Review, click Finish to close the Final Review window.

8 Go to the menu bar, select Forms, then select Forms In Use again.If you corrected the errors identified by Final Review, Schedule B and Form 8839 should no longer be followed by “(INCOMPLETE).”

9 Click OK to close the Open Forms dialog box.

Tip: None of the forms in the Forms In Use section of the Forms Bar should have red text indicating there are 1 or more errors on that form.

10 If Form 1040 isn’t already on your screen, scroll toward the top of the Forms Bar, then click Form

1040 in the Forms In Use section or the Common Forms section.

The number of remaining errors is shown here.

The Recheck button appears here.


11 As you scroll down the Rileys’ Form 1040, compare your results to the following information.

Form 1040 Amount

Line 22, Total income 105,995

Line 37, Adjusted gross income 99,547

Line 43, Taxable income 63,671

Line 63, Total tax 2,674

Line 73, Amount overpaid 5,012

800-945-2820 51

Total income on line 22 is $105,995.

Taxable income on line 43 is $63,671.


12 When you near the end of page 2 of Form 1040, you’ll see that the program entered firm and preparer information in the Paid Preparer’s Use Only section.You’ll notice the program also entered the appropriate mailing address in the Filing Address Information section.

Tip: If you had prepared the Rileys’ return for electronic filing, you would see “Electronically Filed - See EF Filing Instructions” in the Filing Address Information section, rather than the appropriate mailing address.

The amount overpaid on line 73 is $5,012.

In this area, the program enters information about the filing method that you’re using for the return – either mail or electronic filing.

800-945-2820 53


For detailed information about Final Review, click the Help button on the toolbar, select User’s Guide on the left side of the Help Center, then select chapter 15, “Reviewing a Client’s Return.”

18 - Client Letter

Now you’re ready to review the client letter for the Rileys. The ProSeries program automates the preparation of the client’s cover letter and filing instructions by reading applicable data from the client’s return and flowing that data to the locations specified in the letter.

Each ProSeries federal product includes a standard client letter that you can use for your clients who are filing that type of return. If necessary, you can modify a standard client letter to suit the needs of your practice. You can also create a custom letter for a client when you want to send a letter that differs from the standard client letter. For each client, you can print the standard client letter, a custom client letter, or both.

Case Data

You want to review the Rileys’ client letter before you print it.

To view the Rileys’ letter, open their Form 1040 return (if it isn’t already open), then follow these steps:

1 Go to the menu bar, select Tools, then select Letters.2 In the Letters menu, select View Client Letter.3 When the Rileys’ letter opens in the Preview window, go to the toolbar and click Zoom In so you

can read it.4 Use the scroll bar to see all of page 1.

5 Go to the toolbar and click Next Page to see page 2.

Click here to see the next page.

Click here to magnify the letter.

Use the scroll bar to see the entire page.


6 When you finish viewing the letter, go to the toolbar and click Close.

Let’s assume that you’re satisfied with the Rileys’ letter, but you want to see what the standard client letter looks like in the Letter Editor. To do so:

1 Go to the menu bar, select Tools, select Letters, then select Edit Client Letter.2 In the Edit Letter dialog box, select Standard Client Letter, then click Edit.

When the letter opens in the Letter Editor, you’ll notice that it contains trigger codes and data value codes in addition to text.

● Trigger codes determine whether the information that follows is included in the printed or viewed letter. Trigger codes appear aqua and are in the format [@FDIXxxxxx].

● Data value codes are replaced by specific data when you print or view the letter. Data value codes appear blue and are in the format <@FDIXxxxxx>.

The first line of the letter is:

[@FDIFirmName]<@FDIFirmName>

[@FDIFirmName] is a trigger code and <@FDIFirmName> is a data value code.

If the data field that a trigger code represents is blank or zero in the program or the client’s return, the paragraph that the data value code represents isn’t printed in the letter for that client.

In this example, the Firm Name paragraph is printed if there’s a firm name in the Firm/Preparer Info section of the Options dialog box.

Click here to see the previous page.

Click here to close the letter.

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You can use the Letter menu, Letter toolbar, and Insert Bar to edit and format client letters.

If you want to insert a code or paragraph from the Insert Bar, click the location in the letter where you want to insert the code or paragraph, then double-click the code or paragraph in the Insert Bar. When you double-click a paragraph, it appears in the letter. When you double-click a code, the Use Insert

Code As dialog box opens so you can indicate whether the code should be used as a trigger code or a data value code.

To close the client letter, go to the File menu and select Exit Letter.


Client and recipient letters. For detailed information about client and recipient letters, click the Help button on the toolbar, select User’s Guide on the left side of the Help Center, then select chapter 18, “Client and Recipient Letters.”

19 - Itemized Invoice

Now you’re ready to prepare an invoice based on the forms you prepared for the Rileys. The ProSeries program can prepare an invoice based on:

● Flat rate fees● Time you spent preparing the return● Forms you prepared

Trigger codes act as a trigger for conditional paragraphs that follow. They appear aqua and are in the format [@FDIXxxxxx].

Data value codes merge data. They appear blue and are in the format <@FDIXxxxxx>.

This is the Insert Bar.

Click the tabs below the Insert Bar to see federal codes or federal paragraphs. If at least one applicable state product is installed, you’ll see tabs for state codes and state paragraphs to the right of the federal tabs.


● Any combination of these billing methods

The program can also include the following on each invoice:

● Miscellaneous fees and adjustments● A discount● A sales tax amount● Previously-paid amounts

First, set up the global billing options that you want to use for all client invoices. To use different billing options for a specific client, you set up client-specific billing options for that client.

Case Data

To prepare a sample invoice for the Rileys, you’ll:

● Select the Per Form Charges option in the Global Billing Options section of the Options dialog box● Enter charge amounts for a few forms on the Rates Per Form dialog box● Select the Per Form Charges option on the Custom Billing Options worksheet

1 Go to the menu bar, select Tools, select Billing, select Set Billing Options, then select Global Billing

Options.The Options dialog box opens with Global Billing Options selected.

2 Scroll down to Option 3, “Per Form Charges.”3 Click the check box for Option 3, “Per Form Charges” to include charges by form and schedule.

The first part of the Global Billing Options section of the Options dialog box is for flat fees.

The second part is for hourly charges.

800-945-2820 57

4 Click the check box on line 3d, “List only forms charged for in return and include the charges” to list just the forms that you charged for and include the charge amount for those forms on the invoice.

5 Click OK to close the Options dialog box and save your billing instructions.6 Go to the menu bar, select Tools, select Billing, then select Rates Per Form.

7 Enter the following form charges in the Rates Per Form dialog box.

Click here to select Per Form Charges.

Click here to list the forms charged for in the return with the charge amounts on invoices.

Every form, schedule, and worksheet for the current type of return is listed here.

Use the scroll bar to see all the forms in the list.

Normally, you would enter a rate for many forms.

For this form Enter this amount

Form 1040 Individual Income Tax 70.00

Schedule A Itemized Deductions 25.00

Schedule B Interest & Ordinary Divs 10.00

Schedule C Business Profit & Loss 20.00


8 Click Save.

Normally, you would have set up your global billing options before you began preparing returns. (You would also have entered charges for all forms, not just for the forms that are included in the Rileys’ return.) If you had already set up your global billing options, you could view the Rileys’ completed invoice now.

For the purposes of this Case Study, however, you prepared the Rileys’ tax return before you set up the global billing options. Therefore, you need to select the Per Form Charges option on the Rileys’ Custom Billing Options worksheet before you view the completed invoice.

9 Go to the menu bar, select Tools, select Billing, select Set Billing Options, then select Client-Specific Billing Options.

10 In the 1040 Client-Specific Billing Options worksheet, scroll down to Option 3, “Per Form Charges.”

11 Check the check box on line 3d, “List only forms charged for in return and include the charges.”

Now you’re ready to view the invoice for the Rileys.

12 Go to the toolbar, then click View Invoice.13 When the Rileys’ invoice opens in the Preview window, go to the toolbar and click Zoom In so you

can read it.

Schedule K-1 Partnership 10.00

Schedule SE Self-Employment Tax 10.00

Form 2441 Child & Dependent Care Exp 20.00

Form 3903 Moving Expenses 15.00

Depreciation Asset Entry Worksheet 10.00

Form 4797 Sales of Business Property 30.00

Form 8839 Qualified Adoption Expenses 25.00

For this form Enter this amount

The total per form charge for the Rileys’ federal return is $275.00.

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14 Click Close to close the invoice.

Important: After you set up your global billing options, the program uses that information to create invoices for all subsequent client returns. If you want to adjust the billing information for a specific client, you can customize that client’s invoice using the Client-Specific Billing Options worksheet.


Billing and invoicing. For detailed information about the billing and invoicing, click the Help button on the toolbar, select User’s Guide on the left side of the Help Center, then select chapter 17, “Billing and Invoicing.”

20 - Print the Rileys’ sample return

You’re now ready to print the Rileys’ return. The ProSeries program tax forms print in a format that is approved for filing by the IRS and relevant state agencies.

You can print a client’s federal and state returns while the returns are open. From HomeBase, you can print a specific client’s federal and state returns, and you can print the returns for a batch of clients that you select. In each instance, you can print tax returns for filing, tax returns for the client’s records, and tax returns for your records. In addition, you can print any number of copies of each return.

Set print options

The Print Center dialog box includes selections for general printing options, printer setup, options for printing extras like the letter and invoice, and options for printing the government forms, schedules, and worksheets.

Before you print anything for the first time, verify the printing options.

1 From HomeBase, open the Rileys’ return (if it isn’t already open).2 Go to the menu bar, select File, then select Print Options.3 If an Information dialog box opens, read the message, then click OK.

The Print Center dialog box opens with Control Which Forms Print selected.In the example shown here, 2006 Federal Form 1040: Individual is selected in the Select Return

Type list. (The Select Return Type list includes all installed federal and state products.) In addition, the Government Forms (filed with return) heading has been expanded. You’ll note that there are separate controls for the Filing Copy, the Client Copy, and the Preparer Copy.)

Click here to magnify the invoice.

Use the scroll bar to see the entire page.


4 Click each printing selection on the left side of the Print Center dialog box and verify that the settings for each print option are appropriate for your needs.

Tip: If you want the program to print the standard client letter or the itemized invoice with returns, select Print with Return, then check the appropriate boxes for Standard Client Letter or Client Invoice.

5 Click the Print Functions tab at the bottom of the left side of the Print Center dialog box to see the print commands.(If want to close the Print Center dialog box, click OK instead.)

Print

For the purposes of this Case Study, we recommend that you print the client copy of the Rileys’ return. When you select Client Copy, the program prints every form in use for that return. After that, you might want to print the filing copy so you can see how the program prints only those forms that should be filed with the IRS.

To print the client copy of the Rileys’ federal return, take the following steps while their federal return is open.

1 If the Print Center dialog box is still open and the Print Functions tab is selected, go to step 3.If the Print Center dialog box is still open and the Print Functions tab isn’t selected, click the Print

Functions tab at the bottom of the left side of the Print Center dialog box, then go to step 3.If the Print Center dialog box isn’t open, continue with step 2.

2 Go to the menu bar, select File, then select Print.3 In the Print Center dialog box, select Print This Client (below From within a return).4 In the Print area near the top of the Print Center, make sure there’s a check mark in the Printer

check box.5 Deselect the Filing Copy check box, select the Client Copy check box.6 Next, make sure Federal Return (below Client Copy) is selected.7 Enter the number of copies of the federal return that you want.

Use the Select Return Type list to select the type of return that you want to customize.

Use these controls to change the print conditions for a form.

Click here to see the print commands in the Print Center.

Click here if you want to restore the default print conditions for the selected return type and print type.

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The options that you previously selected in the Print Center dialog box (along with the information in the Rileys’ return) determine exactly what is printed.

Tip: If you want to see the forms, schedules, worksheets, and other items that will be printed, select the Print

Preview button toward the lower-left corner of the Print Center. The left side of the Print Preview windows lists the forms, schedules, worksheets, and other items. The right side of the Print Preview window shows the form, schedule, worksheet, or other item that’s selected in the left side of the window.

8 Click Print when you’re ready to print the return.9 If you started a new return and entered the Rileys’ data yourself, you see the Return Authorization

dialog box shown next.

10 If you see the Return Authorization dialog box, click the Authorize button and continue with step 11.If you don’t see the Return Authorization dialog box, proceed to step 12.

11 If you see the second Return Authorization dialog box shown next, click the Authorize button so the program will process the pay-per-return payments that you’ve authorized.

You can print a Filing Copy, a Client Copy, a Preparer Copy, or any combination of those returns.

The State/City option is available only if you’ve prepared a state return for the client.

Make sure there’s a check mark in the Printer check box.

You won’t see this dialog box if you’re printing the Rileys’ return from the sample client file that was provided (riley-s.06i) because the sample client files have been pre-authorized for your convenience.


12 You’ll see the ProSeries Printing Status dialog box while the Rileys’ Form 1040 return is being printed.

13 When the program finishes printing the return, you’ll see the ProSeries Printing Message Log dialog box.

14 Click Close when you’re ready to close the ProSeries Printing Message Log dialog box.

Important: The ProSeries program normally requires your firm’s name and address in order to print and electronically file returns. However, the evaluation version of the program allows you to print returns without first having entered firm and preparer information. If you have questions about your firm and preparer information in the program, call ProSeries Sales at 1-800-945-2820 from 9:00 a.m. to 8:00 p.m. (ET), Monday through Thursday, or 9:00 a.m. to 6:00 p.m. (ET), Friday.

Tip: If you use all $100 in your complimentary pay-per-return account and want to add additional funds, just call a ProSeries representative at 1-800-945-2820 from 9:00 a.m. to 8:00 p.m. (ET), Monday through Thursday, or 9:00 a.m. to 6:00 p.m. (ET), Friday.


Print options and printing. For detailed information about print options or printing, go to the toolbar, click the Help button, select User’s Guide in the left side of the Help Center, then select chapter 3, “Setting ProSeries Options,” or chapter 19, “Printing.”

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21 - Finish the Rileys’ tax return

Take a few minutes to examine the printed copy of the Rileys’ tax return. You’ll see that their tax return is complete, even though this is the first time that you have seen many of the forms.

Important: The program completes most of the fields on Form 1040 based on the information that you enter on other forms, schedules, and worksheets. However, you do enter the data for some fields directly on Form 1040. To see information about a specific field on any form, select it, then click the Help button on the toolbar.

When you’re ready to return to HomeBase, click the HomeBase button on the toolbar. You’ll be prompted to save the Rileys’ file.

When the HomeBase screen opens, you should see two entries for Riley, Kevin & Anne.

● The file name for the sample file that is included on the Evaluation CD is riley-s.06i.● The file name for the file that you created is rile1124.06i.


Explore ProSeries software further

We encourage you to explore the ProSeries program further with your own data. Try entering the data for some complicated returns to see how easy it is to prepare returns with ProSeries software.

If you have any questions, please call our technical support department at 1-800-434-6818. You can also access additional product and support information from our ProSeries.com Web site on the Internet. The address for ProSeries.com is http://www.proseries.com.

Tip: When you go to ProSeries.com, select “Training & CPE” from the navigation bar near the top of the page to learn more about the Webinars and Teleseminars that you can attend without leaving your office. You can also learn about Seminars that are held in cities across the country.

We’re already working on next year’s products, and they’re going to be better than ever. Call 1-800-945-2820 to order your ProSeries products today. We look forward to hearing from you.

Line 4 shows information for a new Riley client file.

Line 5 shows information for the Riley sample client file.

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Documents

ProSeries 2006 Case Study - Intuithttp-download.intuit.com/http.intuit/CMO/proseries/training/case... · 2 Use the Case Study to evaluate ProSeries ® software This Case Study involves