California MCTR

[jerry]

BettyJo, this is for you.

Now that the IRS has issued its decision on CA MCTR being non-taxable to Federal, we need revised, *Lacerte-specific* instructions on how to handle the 1099-MISC forms that CA sent out.   If we enter on Sch 1 line 8z, and then back out on 8z, Lacerte will not print a Sch 1, showing the income and subtraction.  Will it still be sent to the IRS?  If not, how do we memorialize that we received a 1099-MISC, but it is not taxable?

We need to avoid CP 2000 letters, and so far I haven't seen anything from Lacerte on this.  TurboTax (and I assume ProSeries) clearly show it being added and subtracted on Sch 1.

[George4Tacks]

For what it is worth I do the following

Screen 14 - Alimony & Other Income > Other Income > FTB - MCTR with the amount

Screen 24 - Other Adjustments - Other (Ctrl +E) - FTB - MCTR - General Welfare Exclusion with the amount

This puts both on Schedule 1 - One at line 8z and the other at line 24z

I am even doing this when there is no 1099. 

[abctax55]

@George4Tacks 

That's my M.O. too, except I don't think I'm going to bother unless there's a F 1099-Misc.  Under $ 600, I'm going to ignore as the IRS wasn't notified.  That 'ass-u-mes' my clients do remember to give me the F 1099-Misc 😉

@jerry - as the IRS ruling came out last Friday around 5:00 p.m. - I wouldn't expect Intuit to have changed any programming that fast.  Unless, maybe (?) it's in today's update.  I'm not holding my breath... especially since the IRS has said you are safe to just ignore it.  Not that I believe them, thus the work-around for matching purposes that me & George (and, a lot of other tax pros) are doing.

[jerry]

I certainly wasn't expecting a program fix, but direction from Lacerte would be very valuable.

I'm not entering MCTR without a 1099-MISC either, but a lot of my clients got a 1099-MISC.

I have heard that an entry on 24z is likely to provoke a letter.  I don't want to do that.

For now, I'm offsetting all but $1 on 8z, to force generation of Sch 1, but that looks messy to me.  If Lacerte could assure me that 8z netting to zero still transmits to the IRS, I'd feel much more comfortable with this approach.

Lacerte????

[abctax55]

@jerry 

You can review the > E-File > e-file support tools > View e-file to see what is actually sent.  You do have to go all the way thru "validate" to generate this info, just back out before you actually send the return.

Not sure who "they" might be, but the IRS did suggest exactly the same process for dealing with F 1099-K issues.  So I don't think the an entry on line 24z is likely to provoke a letter.  YMMV

[Strongsilence-CPA]

Saturday morning. I haven't seen an update. 

[Strongsilence-CPA]

do you enter a negative number on Screen 24?

[abctax55]

No...it's already an adjustment so the 'minus' isn't needed

[Strongsilence-CPA]

thank you.

Then, on Schedule CA, the MCTR will not be subtracted.  That seems okay.  The FTB will see the MCTR treatment on the 1040 and, I hope, have no questions or issues.

Edit: just looked at Schedule CA.

Those MCTR amounts (from the federal input) appear and I think will be another possible glitch for the FTB computer. I hope this crap gets fixed soon.  I'm tempted to not input any amounts for this, even if the clients gets a 1099!

[A11]

I entered the 1099 misc amount in other income and put in the same amount in the adjustment noting it is a non-taxable MCTR.  That zeroes it out and gives me a statement.  However, what do I do with CA schedule CA under the item: mctr? If i put in the amount, it will subtract it but since it has been already taken as an adjustment, that will make it a double deduction, right?

[George4Tacks]

Nothing.

Right.

[abctax55]

@A11 - it's an in/out for Federal AGI.  California starts with Fed AGI, and Lacerte doesn't 'back it out' again on the California Sch CA - column B or C.

[Strongsilence-CPA]

LC puts it in Col B, Line z.  

Currently, what I am seeing, is that the MCTR doesn't appear as income for federal.  Therefore, I don't want the MCTR to be subtracted. I have the latest update, AFAIK.

[abctax55]

@Strongsilence-CPA 

I'm putting in on S-14/other income as CA MCTR, then out on S 24 as an adjustment to income (CA MCTR N/T Gen'l Welfare.

Where are you putting it?

[George4Tacks]

One it is gone from the 1040, as described by @abctax55  - DO NOT ENTER AGAIN in Screen 54, 5th up from Adjustments to Income 

I SURE HOPE THIS IS THE END OF THIS DISCUSSION!!!!!!!!!!!!!