This article will help you:
- Clear diagnostic reference #54055.
- Understand what applying the CARES Act provisions changes on your tax returns.
- Find clients’ returns that you previously filed who may benefit from amending their return to apply the new provisions.
Apply the CARES Act provisions ref. 54055
The following e-file critical diagnostic will generate on all individual tax returns:
"The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. To apply the provisions of that law, check the "CARES Act provisions" box in the Miscellaneous Information screen. Ref. #54055"
You’ll need to check this box for every tax return you file going forward to ensure the return is accurate and using the latest tax laws. This feature allows you to only apply the CARES Act provisions to returns you file after the law’s passage, and prevent calculations from changing on returns you previously filed without your knowledge.
This checkbox will apply three key changes to the tax return:
- Suppress Form 461, so business losses are not limited by it.
- If Form 8990 is part of the return, a diagnostic will generate alerting you that the 50% limitation is not yet implemented in the program.
- Apply the latest net operating loss calculations.
How to identify clients affected by the CARES Act in Lacerte
You can now use the Tax Law Impact view to identify returns that may need to be amended due to the Act. You can find the CARES Act Tax Law Impact View on the left side of your Clients list in Lacerte. This tool can search through all of your clients - even those with locked returns - to check whether they’re affected by:
- Net operating loss changes (Individual and Corporate modules),
- Excess business loss changes on Form 461,
- Prior year minimum tax credit changes on Form 8827,
- Business interest expense limitation changes on Form 8990, or
- Depreciation of qualified improvement property changes.