Tax Forms Guide · Form 8586* / Low-Income Housing CreditForm 8586* / Low-Income Housing Credit...

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Transcript of Tax Forms Guide · Form 8586* / Low-Income Housing CreditForm 8586* / Low-Income Housing Credit...

  • by HowardSoft®®®®

    Tax Preparer®®®®

    Tax Forms Guide2011 Edition

    (for preparing 2010 Form 1040 tax returnsand tax planning for 2011 and beyond)

    For a friendlier environment, HowardSoft manuals are printed on recycled paper. We areproud to be among the first in the industry, several years ago, to take this importantstep to help conserve our forests, and encourage you do the same wherever you can.

  • This guide and the associated software are based on information compiled and inter-preted by the staff of HowardSoft in late 2010 and January 2011, including the latestinformation from the IRS, but their complete accuracy cannot be guaranteed. NeitherHowardSoft nor Dr. J. E. Howard assumes any responsibility for any consequentialdamages resulting from their use. All customers are bound by the Customer Agree-ments that are printed on the next page and the separate Disk Packet.

    This guide and the associated software are copyrighted by HowardSoft and all rightsare reserved. This document may not, in whole or in part, be copied, photocopied, re-produced, translated, or reduced to any electronic medium or machine-readable formwithout prior written consent from Dr. J. E. Howard, President of HowardSoft.

    Copyright 2011 by HowardSoftP. O. Box 8432, La Jolla, CA 92038

    (HowardSoft® and Tax Preparer® are registered trademarks of HowardSoft.)

  • Customer Agreements

    CAREFULLY READ THE FOLLOWING TERMS AND CONDITIONS BEFOREOPENING THE DISK PACKET. OPENING THE DISK PACKET INDICATESYOUR ACCEPTANCE OF THESE TERMS AND CONDITIONS. IF YOU DO NOTAGREE WITH THEM, YOU SHOULD PROMPTLY RETURN THE ENTIREPACKAGE WITH THE DISK PACKET UNOPENED, AND YOUR MONEY WILLBE REFUNDED. HowardSoft provides this program and licenses its use in theUnited States and Puerto Rico. You assume responsibility for the selection ofthe program to achieve your intended results, and for the installation, use,and results obtained from the program.

    License. You may1. use the program on any machine that you personally own and use, and2. copy the program into any machine-readable or printed form for backup

    support of your use of the program on the machine.YOU MAY NOT USE, COPY, MODIFY, SUBLICENSE OR OTHERWISETRANSFER THE PROGRAM OR ANY COPY, MODIFICATION OR MERGEDPORTION, IN WHOLE OR IN PART, EXCEPT AS EXPRESSLY PROVIDED FORIN THIS LICENSE. IF YOU TRANSFER POSSESSION OF ANY COPY,MODIFICATION OR MERGED PORTION OF THE PROGRAM TO ANOTHERPARTY, YOUR LICENSE IS AUTOMATICALLY TERMINATED AND ANYATTEMPTED SUBLICENSE, ASSIGNMENT OR OTHER TRANSFER IS NULLAND VOID.

    Term. The license is effective until terminated. You may terminate it at anytime by destroying the program, together with all copies, modifications andmerged portions in any form. It will also terminate upon conditions set forthelsewhere in this Agreement or if you fail to comply with any term or condi-tion of this Agreement. You agree upon such termination to destroy the pro-gram together with all copies, modifications and merged portions in any form.

    Limited Warranty. This program is intended only as a computational aid andnot a professional advisor. HowardSoft does not represent itself as a tax, in-vestment, or legal advisor and is not responsible for decisions made on thebasis of data produced by the program. THE PROGRAM IS PROVIDED "ASIS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED,INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OFMERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THEENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PROGRAMIS WITH YOU. SHOULD THE PROGRAM PROVE DEFECTIVE, YOU (AND NOTHOWARDSOFT NOR ITS REPRESENTATIVE) ASSUME THE ENTIRE COST OFALL NECESSARY SERVICING, REPAIR OR CORRECTION. SOME STATES DONOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVEEXCLUSION MAY NOT APPLY TO YOU. THIS WARRANTY GIVES YOUSPECIFIC LEGAL RIGHTS AND YOU MAY ALSO HAVE OTHER RIGHTSWHICH VARY FROM STATE TO STATE. HowardSoft does not warrant thatthe functions contained in the program will meet your requirements nor thatthe operation of the program will be uninterrupted or error free. However,HowardSoft does warrant the diskette on which the program is furnished to

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    be free from defects in materials and workmanship under normal use for a pe-riod of ninety (90) days from the date of delivery to you as evidenced by acopy of your receipt.

    Limitations of Remedies. HowardSoft's entire liability and your exclusiveremedy shall be:

    1. the replacement of any diskette not meeting HowardSoft's warrantydescribed above and which is returned to HowardSoft with a copy ofyour payment receipt, or

    2. if HowardSoft is unable to deliver a replacement diskette which is freeof defects in material or workmanship, you may terminate this Agree-ment by returning the program and your money will be refunded.

    IN NO EVENT WILL HOWARDSOFT BE LIABLE TO YOU FOR ANY DAMAGES,INCLUDING ANY LOST PROFITS, LOST SAVINGS, OR OTHER INCIDENTALOR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITYTO USE SUCH PROGRAM EVEN IF HOWARDSOFT HAS BEEN ADVISED OFTHE POSSIBILITY OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANYOTHER PARTY. SOME STATES DO NOT ALLOW THE LIMITATION OREXCLUSION OF LIABILITY FOR INCIDENTAL OR CONSEQUENTIALDAMAGES, SO THE ABOVE LIMITATION OR EXCLUSION MAY NOT APPLYTO YOU.

    General. The Agreement will be governed by the laws of the State of Califor-nia. Should you have any questions concerning this Agreement, you may con-tact HowardSoft in writing at P. O. Box 8432, La Jolla, California 92038.YOU ACKNOWLEDGE THAT YOU HAVE READ THIS AGREEMENT,UNDERSTAND IT AND AGREE TO BE BOUND BY ITS TERMS ANDCONDITIONS. YOU FURTHER AGREE THAT IT IS THE COMPLETE ANDEXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US WHICHSUPERSEDES ANY PROPOSAL OR PRIOR AGREEMENT, ORAL OR WRITTEN,AND ANY OTHER COMMUNICATIONS BETWEEN US RELATING TO THESUBJECT MATTER OF THIS AGREEMENT.

  • * Included only in Premium Level software.** Included only in Standard and Premium Level software.

    Contents-1

    Table of Contents

    HINT: For a clickable on-screen version of this table of contents, view Book-marks. To search, press ctrl-F and enter the phrase you want to find in thebox near the top of the window, then press ctrl-G to find other occurrences.

    IntroductionTax Forms Guide vs. User's GuideTax Forms Guide vs. User's GuideTax Forms Guide vs. User's GuideTax Forms Guide vs. User's Guide ............................................................................................................................................................................................................................ 1111Paperwork Reduction Act NoticePaperwork Reduction Act NoticePaperwork Reduction Act NoticePaperwork Reduction Act Notice ........................................................................................................................................................................................................................................ 2222

    Chapter 1Highlights of Changes

    OverviewOverviewOverviewOverview ........................................................................................................................................................................................................................................................................................................................................................................................................ 1111Form by Form ChangesForm by Form ChangesForm by Form ChangesForm by Form Changes .................................................................................................................................................................................................................................................................................................... 8888Printouts and Form 1040 Tab SettingsPrintouts and Form 1040 Tab SettingsPrintouts and Form 1040 Tab SettingsPrintouts and Form 1040 Tab Settings................................................................................................................................................................................................ 16161616Recommended IRS PublicationsRecommended IRS PublicationsRecommended IRS PublicationsRecommended IRS Publications ................................................................................................................................................................................................................................ 19191919

    Chapter 2Form by Form Details

    How to Use This ChapterHow to Use This ChapterHow to Use This ChapterHow to Use This Chapter ............................................................................................................................................................................................................................................................................................ 1111Where to Report Income and DeductionsWhere to Report Income and DeductionsWhere to Report Income and DeductionsWhere to Report Income and Deductions................................................................................................................................................................................ 3333Control FormControl FormControl FormControl Form ............................................................................................................................................................................................................................................................................................................................................................................ 6666Form 1040 / Main FormForm 1040 / Main FormForm 1040 / Main FormForm 1040 / Main Form.................................................................................................................................................................................................................................................................................................... 16161616Schedule A / Itemized DeductionsSchedule A / Itemized DeductionsSchedule A / Itemized DeductionsSchedule A / Itemized Deductions........................................................................................................................................................................................................................ 87878787Schedule B / Interest and Dividend IncomeSchedule B / Interest and Dividend IncomeSchedule B / Interest and Dividend IncomeSchedule B / Interest and Dividend Income ................................................................................................................................................ 109109109109Schedule C & C-EZ / Profit or Loss from BusinessSchedule C & C-EZ / Profit or Loss from BusinessSchedule C & C-EZ / Profit or Loss from BusinessSchedule C & C-EZ / Profit or Loss from Business........................................................................................................ 120120120120Schedule D / Capital Gains and LossesSchedule D / Capital Gains and LossesSchedule D / Capital Gains and LossesSchedule D / Capital Gains and Losses ........................................................................................................................................................................ 135135135135Schedule E / Supplemental Income and LossSchedule E / Supplemental Income and LossSchedule E / Supplemental Income and LossSchedule E / Supplemental Income and Loss ................................................................................................................................ 156156156156Schedule EIC / Earned Income CreditSchedule EIC / Earned Income CreditSchedule EIC / Earned Income CreditSchedule EIC / Earned Income Credit .................................................................................................................................................................................... 180180180180Schedule F / Profit or Loss from FarmingSchedule F / Profit or Loss from FarmingSchedule F / Profit or Loss from FarmingSchedule F / Profit or Loss from Farming ................................................................................................................................................................ 187187187187Schedule H / Household Employment TaxesSchedule H / Household Employment TaxesSchedule H / Household Employment TaxesSchedule H / Household Employment Taxes ........................................................................................................................................ 200200200200Schedule J / Income Averaging for Farmers & FishermenSchedule J / Income Averaging for Farmers & FishermenSchedule J / Income Averaging for Farmers & FishermenSchedule J / Income Averaging for Farmers & Fishermen.................................................... 208208208208Schedule L / Standard Deduction for Certain FilersSchedule L / Standard Deduction for Certain FilersSchedule L / Standard Deduction for Certain FilersSchedule L / Standard Deduction for Certain Filers ........................................................................................ 217217217217Schedule M / Making Work Pay CreditSchedule M / Making Work Pay CreditSchedule M / Making Work Pay CreditSchedule M / Making Work Pay Credit ................................................................................................................................................................................ 221221221221Schedule R / Credit for the Elderly or DisabledSchedule R / Credit for the Elderly or DisabledSchedule R / Credit for the Elderly or DisabledSchedule R / Credit for the Elderly or Disabled ........................................................................................................................ 227227227227Schedule SE / Self-Employment TaxSchedule SE / Self-Employment TaxSchedule SE / Self-Employment TaxSchedule SE / Self-Employment Tax ................................................................................................................................................................................................ 230230230230Form 1116** / Foreign Tax CreditForm 1116** / Foreign Tax CreditForm 1116** / Foreign Tax CreditForm 1116** / Foreign Tax Credit .................................................................................................................................................................................................................... 236236236236Form 1310* / Refund Due a Deceased TaxpayerForm 1310* / Refund Due a Deceased TaxpayerForm 1310* / Refund Due a Deceased TaxpayerForm 1310* / Refund Due a Deceased Taxpayer................................................................................................................ 254254254254Form 2106 & 2106-EZ / Employee Business ExpensesForm 2106 & 2106-EZ / Employee Business ExpensesForm 2106 & 2106-EZ / Employee Business ExpensesForm 2106 & 2106-EZ / Employee Business Expenses ................................................................................ 257257257257

  • * Included only in Premium Level software.** Included only in Standard and Premium Level software.

    Contents-2

    Form 2120* / Multiple Support DeclarationForm 2120* / Multiple Support DeclarationForm 2120* / Multiple Support DeclarationForm 2120* / Multiple Support Declaration .................................................................................................................................................... 273273273273Form 2210 & 2210-F / Underpayment of Estimated TaxForm 2210 & 2210-F / Underpayment of Estimated TaxForm 2210 & 2210-F / Underpayment of Estimated TaxForm 2210 & 2210-F / Underpayment of Estimated Tax ........................................................................ 275275275275Form 2350* / Application for Extension of Time to File U.S. IncomeForm 2350* / Application for Extension of Time to File U.S. IncomeForm 2350* / Application for Extension of Time to File U.S. IncomeForm 2350* / Application for Extension of Time to File U.S. IncomeTax ReturnTax ReturnTax ReturnTax Return................................................................................................................................................................................................................................................................................................................................................................................ 289289289289Form 2441 / Child and Dependent Care ExpensesForm 2441 / Child and Dependent Care ExpensesForm 2441 / Child and Dependent Care ExpensesForm 2441 / Child and Dependent Care Expenses.................................................................................................... 292292292292Form 2555 & 2555-EZ* / Foreign Earned IncomeForm 2555 & 2555-EZ* / Foreign Earned IncomeForm 2555 & 2555-EZ* / Foreign Earned IncomeForm 2555 & 2555-EZ* / Foreign Earned Income ................................................................................................................ 306306306306Form 2848* / Power of Attorney & Declaration of RepresentativeForm 2848* / Power of Attorney & Declaration of RepresentativeForm 2848* / Power of Attorney & Declaration of RepresentativeForm 2848* / Power of Attorney & Declaration of Representative.... 318318318318Form 3468 / Investment CreditForm 3468 / Investment CreditForm 3468 / Investment CreditForm 3468 / Investment Credit ............................................................................................................................................................................................................................................ 321321321321Form 3800 / General Business CreditForm 3800 / General Business CreditForm 3800 / General Business CreditForm 3800 / General Business Credit ............................................................................................................................................................................................ 329329329329Form 3903 / Moving ExpensesForm 3903 / Moving ExpensesForm 3903 / Moving ExpensesForm 3903 / Moving Expenses ............................................................................................................................................................................................................................................ 340340340340Form 4136* / Credit for Federal Tax Paid on FuelsForm 4136* / Credit for Federal Tax Paid on FuelsForm 4136* / Credit for Federal Tax Paid on FuelsForm 4136* / Credit for Federal Tax Paid on Fuels.................................................................................................... 343343343343Form 4137* / Social Security & Medicare Tax on Unreported Tip IncomeForm 4137* / Social Security & Medicare Tax on Unreported Tip IncomeForm 4137* / Social Security & Medicare Tax on Unreported Tip IncomeForm 4137* / Social Security & Medicare Tax on Unreported Tip Income ........ 359359359359Form 4255* / Recapture of Investment CreditForm 4255* / Recapture of Investment CreditForm 4255* / Recapture of Investment CreditForm 4255* / Recapture of Investment Credit .................................................................................................................................... 363363363363Form 4562 / Depreciation and AmortizationForm 4562 / Depreciation and AmortizationForm 4562 / Depreciation and AmortizationForm 4562 / Depreciation and Amortization ................................................................................................................................................ 367367367367Form 4684 / Casualties and TheftsForm 4684 / Casualties and TheftsForm 4684 / Casualties and TheftsForm 4684 / Casualties and Thefts................................................................................................................................................................................................................ 403403403403Form 4797 / Sales of Business PropertyForm 4797 / Sales of Business PropertyForm 4797 / Sales of Business PropertyForm 4797 / Sales of Business Property ............................................................................................................................................................................ 414414414414Form 4835 / Farm Rental Income and ExpensesForm 4835 / Farm Rental Income and ExpensesForm 4835 / Farm Rental Income and ExpensesForm 4835 / Farm Rental Income and Expenses.................................................................................................................... 437437437437Form 4868 / Automatic Extension of Time to FileForm 4868 / Automatic Extension of Time to FileForm 4868 / Automatic Extension of Time to FileForm 4868 / Automatic Extension of Time to File.................................................................................................................... 441441441441Form 4952** / Investment Interest Expense DeductionForm 4952** / Investment Interest Expense DeductionForm 4952** / Investment Interest Expense DeductionForm 4952** / Investment Interest Expense Deduction ........................................................................ 444444444444Form 4970* / Tax on Accumulation Distribution of TrustsForm 4970* / Tax on Accumulation Distribution of TrustsForm 4970* / Tax on Accumulation Distribution of TrustsForm 4970* / Tax on Accumulation Distribution of Trusts ........................................................ 450450450450Form 4972* / Tax on Lump-Sum DistributionsForm 4972* / Tax on Lump-Sum DistributionsForm 4972* / Tax on Lump-Sum DistributionsForm 4972* / Tax on Lump-Sum Distributions .................................................................................................................................... 459459459459Form 5329 / Additional Tax on Qualified Plans (IRAs, etc.)Form 5329 / Additional Tax on Qualified Plans (IRAs, etc.)Form 5329 / Additional Tax on Qualified Plans (IRAs, etc.)Form 5329 / Additional Tax on Qualified Plans (IRAs, etc.)................................................ 464464464464Form 5405** / First-Time Homebuyer Credit and Repayment of theForm 5405** / First-Time Homebuyer Credit and Repayment of theForm 5405** / First-Time Homebuyer Credit and Repayment of theForm 5405** / First-Time Homebuyer Credit and Repayment of theCreditCreditCreditCredit................................................................................................................................................................................................................................................................................................................................................................................................................ 479479479479Form 5695** / Residential Energy Efficient Property CreditForm 5695** / Residential Energy Efficient Property CreditForm 5695** / Residential Energy Efficient Property CreditForm 5695** / Residential Energy Efficient Property Credit ........................................ 489489489489Form 5884* / Work Opportunity CreditForm 5884* / Work Opportunity CreditForm 5884* / Work Opportunity CreditForm 5884* / Work Opportunity Credit .................................................................................................................................................................................... 496496496496Form 6198* / At-Risk LimitationsForm 6198* / At-Risk LimitationsForm 6198* / At-Risk LimitationsForm 6198* / At-Risk Limitations ............................................................................................................................................................................................................................ 500500500500Form 6251 / Alternative Minimum TaxForm 6251 / Alternative Minimum TaxForm 6251 / Alternative Minimum TaxForm 6251 / Alternative Minimum Tax ........................................................................................................................................................................................ 505505505505Form 6252 / Installment Sale IncomeForm 6252 / Installment Sale IncomeForm 6252 / Installment Sale IncomeForm 6252 / Installment Sale Income ............................................................................................................................................................................................ 514514514514Form 6478* / Alcohol and Cellulosic Biofuel Fuels CreditForm 6478* / Alcohol and Cellulosic Biofuel Fuels CreditForm 6478* / Alcohol and Cellulosic Biofuel Fuels CreditForm 6478* / Alcohol and Cellulosic Biofuel Fuels Credit........................................................ 522522522522Form 6765* / Credit for Increasing ResearchForm 6765* / Credit for Increasing ResearchForm 6765* / Credit for Increasing ResearchForm 6765* / Credit for Increasing Research........................................................................................................................................ 527527527527Form 6781* / Gains and Losses from Section 1256 Contracts andForm 6781* / Gains and Losses from Section 1256 Contracts andForm 6781* / Gains and Losses from Section 1256 Contracts andForm 6781* / Gains and Losses from Section 1256 Contracts andStraddlesStraddlesStraddlesStraddles........................................................................................................................................................................................................................................................................................................................................................................................ 534534534534Form 8283 / Noncash Charitable ContributionsForm 8283 / Noncash Charitable ContributionsForm 8283 / Noncash Charitable ContributionsForm 8283 / Noncash Charitable Contributions ........................................................................................................................ 543543543543Form 8332* / Release of Claim to Exemption for Child of DivorcedForm 8332* / Release of Claim to Exemption for Child of DivorcedForm 8332* / Release of Claim to Exemption for Child of DivorcedForm 8332* / Release of Claim to Exemption for Child of Divorcedor Separated Parentsor Separated Parentsor Separated Parentsor Separated Parents .................................................................................................................................................................................................................................................................................................... 544544544544Form 8379* / Injured Spouse Claim and AllocationForm 8379* / Injured Spouse Claim and AllocationForm 8379* / Injured Spouse Claim and AllocationForm 8379* / Injured Spouse Claim and Allocation................................................................................................ 548548548548Form 8396* / Mortgage Interest CreditForm 8396* / Mortgage Interest CreditForm 8396* / Mortgage Interest CreditForm 8396* / Mortgage Interest Credit.................................................................................................................................................................................... 556556556556Form 8582 / Passive Activity Loss LimitationsForm 8582 / Passive Activity Loss LimitationsForm 8582 / Passive Activity Loss LimitationsForm 8582 / Passive Activity Loss Limitations ........................................................................................................................................ 561561561561Form 8586* / Low-Income Housing CreditForm 8586* / Low-Income Housing CreditForm 8586* / Low-Income Housing CreditForm 8586* / Low-Income Housing Credit ............................................................................................................................................................ 570570570570

  • * Included only in Premium Level software.** Included only in Standard and Premium Level software.

    Contents-3

    Form 8594* / Form 8594* / Form 8594* / Form 8594* / Asset Acquisition Statement Under Section 1060Asset Acquisition Statement Under Section 1060Asset Acquisition Statement Under Section 1060Asset Acquisition Statement Under Section 1060 ........................ 574574574574Form 8606 / Nondeductible IRAsForm 8606 / Nondeductible IRAsForm 8606 / Nondeductible IRAsForm 8606 / Nondeductible IRAs ............................................................................................................................................................................................................................ 578578578578Form 8611* / Recapture of Low-Income Housing CreditForm 8611* / Recapture of Low-Income Housing CreditForm 8611* / Recapture of Low-Income Housing CreditForm 8611* / Recapture of Low-Income Housing Credit................................................................ 595595595595Form 8615 / Tax for Children Under Age 18Form 8615 / Tax for Children Under Age 18Form 8615 / Tax for Children Under Age 18Form 8615 / Tax for Children Under Age 18.................................................................................................................................................... 599599599599Form 8801* / Credit for Prior Year Minimum TaxForm 8801* / Credit for Prior Year Minimum TaxForm 8801* / Credit for Prior Year Minimum TaxForm 8801* / Credit for Prior Year Minimum Tax................................................................................................................ 607607607607Form 8812 / Additional Child Tax CreditForm 8812 / Additional Child Tax CreditForm 8812 / Additional Child Tax CreditForm 8812 / Additional Child Tax Credit ........................................................................................................................................................................ 617617617617Form 8814 / Election to Report Child's Interest and DividendsForm 8814 / Election to Report Child's Interest and DividendsForm 8814 / Election to Report Child's Interest and DividendsForm 8814 / Election to Report Child's Interest and Dividends ........................................................ 622622622622Form 8815* / Exclusion of Interest from Series EE and I U.S. SavingsForm 8815* / Exclusion of Interest from Series EE and I U.S. SavingsForm 8815* / Exclusion of Interest from Series EE and I U.S. SavingsForm 8815* / Exclusion of Interest from Series EE and I U.S. SavingsBonds Issued After 1989Bonds Issued After 1989Bonds Issued After 1989Bonds Issued After 1989 .................................................................................................................................................................................................................................................................................... 628628628628Form 8822* / Change of AddressForm 8822* / Change of AddressForm 8822* / Change of AddressForm 8822* / Change of Address ........................................................................................................................................................................................................................ 632632632632Form 8824* / Like-Kind ExchangesForm 8824* / Like-Kind ExchangesForm 8824* / Like-Kind ExchangesForm 8824* / Like-Kind Exchanges ............................................................................................................................................................................................................ 634634634634Form 8828* / Recapture of Federal Mortgage SubsidyForm 8828* / Recapture of Federal Mortgage SubsidyForm 8828* / Recapture of Federal Mortgage SubsidyForm 8828* / Recapture of Federal Mortgage Subsidy .................................................................... 640640640640Form 8829 / Business Use of Your HomeForm 8829 / Business Use of Your HomeForm 8829 / Business Use of Your HomeForm 8829 / Business Use of Your Home........................................................................................................................................................................ 645645645645Form 8834* / Qualified Electric Vehicle CreditForm 8834* / Qualified Electric Vehicle CreditForm 8834* / Qualified Electric Vehicle CreditForm 8834* / Qualified Electric Vehicle Credit................................................................................................................................ 651651651651Form 8839* / Qualified Adoption ExpensesForm 8839* / Qualified Adoption ExpensesForm 8839* / Qualified Adoption ExpensesForm 8839* / Qualified Adoption Expenses .................................................................................................................................................... 658658658658Form 8846* / Credit for Employer Social Security and MedicareForm 8846* / Credit for Employer Social Security and MedicareForm 8846* / Credit for Employer Social Security and MedicareForm 8846* / Credit for Employer Social Security and MedicareTaxes Paid on Certain Employee TipsTaxes Paid on Certain Employee TipsTaxes Paid on Certain Employee TipsTaxes Paid on Certain Employee Tips .................................................................................................................................................................................... 671671671671Form 8853* / Archer MSAs & Long-Term Care Insurance ContractsForm 8853* / Archer MSAs & Long-Term Care Insurance ContractsForm 8853* / Archer MSAs & Long-Term Care Insurance ContractsForm 8853* / Archer MSAs & Long-Term Care Insurance Contracts ........................ 673673673673Form 8859* / District of Columbia First-Time Homebuyer CreditForm 8859* / District of Columbia First-Time Homebuyer CreditForm 8859* / District of Columbia First-Time Homebuyer CreditForm 8859* / District of Columbia First-Time Homebuyer Credit .... 685685685685Form 8862* / Information to Claim Earned Income Credit After DisallowanceForm 8862* / Information to Claim Earned Income Credit After DisallowanceForm 8862* / Information to Claim Earned Income Credit After DisallowanceForm 8862* / Information to Claim Earned Income Credit After Disallowance............ 689689689689Form 8863 / Education CreditsForm 8863 / Education CreditsForm 8863 / Education CreditsForm 8863 / Education Credits ........................................................................................................................................................................................................................................ 695695695695Form 8880 / Qualified Retirement Savings Contributions CreditForm 8880 / Qualified Retirement Savings Contributions CreditForm 8880 / Qualified Retirement Savings Contributions CreditForm 8880 / Qualified Retirement Savings Contributions Credit ........ 701701701701Form 8885* / Health Coverage Tax CreditForm 8885* / Health Coverage Tax CreditForm 8885* / Health Coverage Tax CreditForm 8885* / Health Coverage Tax Credit............................................................................................................................................................ 703703703703Form 8889* / Health Savings Accounts (HSAs)Form 8889* / Health Savings Accounts (HSAs)Form 8889* / Health Savings Accounts (HSAs)Form 8889* / Health Savings Accounts (HSAs) ............................................................................................................................ 710710710710Form 8910** / Alternative Motor Vehicle CreditForm 8910** / Alternative Motor Vehicle CreditForm 8910** / Alternative Motor Vehicle CreditForm 8910** / Alternative Motor Vehicle Credit ........................................................................................................................ 719719719719Form 8917 / Tuition and Fees DeductionForm 8917 / Tuition and Fees DeductionForm 8917 / Tuition and Fees DeductionForm 8917 / Tuition and Fees Deduction........................................................................................................................................................................ 727727727727Form 8936* / Qualified Plug-in Electric Drive Motor Vehicle CreditForm 8936* / Qualified Plug-in Electric Drive Motor Vehicle CreditForm 8936* / Qualified Plug-in Electric Drive Motor Vehicle CreditForm 8936* / Qualified Plug-in Electric Drive Motor Vehicle Credit........................................ 730730730730Form 8941** / Credit for Small Employer Health Insurance PremiumsForm 8941** / Credit for Small Employer Health Insurance PremiumsForm 8941** / Credit for Small Employer Health Insurance PremiumsForm 8941** / Credit for Small Employer Health Insurance Premiums ............ 735735735735Form 8948** / Preparer Explanation for Not Filing ElectronicallyForm 8948** / Preparer Explanation for Not Filing ElectronicallyForm 8948** / Preparer Explanation for Not Filing ElectronicallyForm 8948** / Preparer Explanation for Not Filing Electronically.................................................... 742742742742Schedule D Tax WorksheetSchedule D Tax WorksheetSchedule D Tax WorksheetSchedule D Tax Worksheet ............................................................................................................................................................................................................................................................ 744744744744Form 1040-ES / Estimated Tax for IndividualsForm 1040-ES / Estimated Tax for IndividualsForm 1040-ES / Estimated Tax for IndividualsForm 1040-ES / Estimated Tax for Individuals .................................................................................................................................... 745745745745Form 1040X / Amended Income Tax ReturnForm 1040X / Amended Income Tax ReturnForm 1040X / Amended Income Tax ReturnForm 1040X / Amended Income Tax Return ................................................................................................................................................ 749749749749e-filee-filee-filee-file form** / Form 8453, 8879, etc. form** / Form 8453, 8879, etc. form** / Form 8453, 8879, etc. form** / Form 8453, 8879, etc. ........................................................................................................................................................................................................ 754754754754

    Chapter 3Laser and Windows Graphic Printing

    What Is RequiredWhat Is RequiredWhat Is RequiredWhat Is Required ................................................................................................................................................................................................................................................................................................................................................ 1111How to InstallHow to InstallHow to InstallHow to Install ............................................................................................................................................................................................................................................................................................................................................................................ 3333Operating HintsOperating HintsOperating HintsOperating Hints............................................................................................................................................................................................................................................................................................................................................................ 5555If You Have TroubleIf You Have TroubleIf You Have TroubleIf You Have Trouble ................................................................................................................................................................................................................................................................................................................................ 8888

  • * Included only in Premium Level software.** Included only in Standard and Premium Level software.

    Contents-4

    Chapter 4Electronic Filing (e-file)

    The BasicsThe BasicsThe BasicsThe Basics................................................................................................................................................................................................................................................................................................................................................................................................ 1111How to InstallHow to InstallHow to InstallHow to Install ............................................................................................................................................................................................................................................................................................................................................................................ 2222Operating HintsOperating HintsOperating HintsOperating Hints............................................................................................................................................................................................................................................................................................................................................................ 4444If You Have TroubleIf You Have TroubleIf You Have TroubleIf You Have Trouble ................................................................................................................................................................................................................................................................................................................................ 7777

    List of FiguresFigure 1-1. Tabs for ALL HowardSoft forms: Facsimile, Laser-Figure 1-1. Tabs for ALL HowardSoft forms: Facsimile, Laser-Figure 1-1. Tabs for ALL HowardSoft forms: Facsimile, Laser-Figure 1-1. Tabs for ALL HowardSoft forms: Facsimile, Laser-

    graphic, and Windows-graphic Form 1040graphic, and Windows-graphic Form 1040graphic, and Windows-graphic Form 1040graphic, and Windows-graphic Form 1040 ........................................................................................................................................ 17171717Figure 1-2. Tabs for IRS-printed Form 1040 ONLYFigure 1-2. Tabs for IRS-printed Form 1040 ONLYFigure 1-2. Tabs for IRS-printed Form 1040 ONLYFigure 1-2. Tabs for IRS-printed Form 1040 ONLY ................................................................................................................ 18181818Figure 1-3. Tabs for IRS-printed Form 1040 AlternateFigure 1-3. Tabs for IRS-printed Form 1040 AlternateFigure 1-3. Tabs for IRS-printed Form 1040 AlternateFigure 1-3. Tabs for IRS-printed Form 1040 Alternate ........................................................................................ 18181818Figure 2-1. Optional Text for LettersFigure 2-1. Optional Text for LettersFigure 2-1. Optional Text for LettersFigure 2-1. Optional Text for Letters ........................................................................................................................................................................................................ 14141414Figure 2-2. Dependents' WorksheetFigure 2-2. Dependents' WorksheetFigure 2-2. Dependents' WorksheetFigure 2-2. Dependents' Worksheet ................................................................................................................................................................................................................ 26262626Figure 2-3a. W-2 Worksheet, Screen 1Figure 2-3a. W-2 Worksheet, Screen 1Figure 2-3a. W-2 Worksheet, Screen 1Figure 2-3a. W-2 Worksheet, Screen 1 ........................................................................................................................................................................................ 31313131Figure 2-3b. W-2 Worksheet, Screen 2Figure 2-3b. W-2 Worksheet, Screen 2Figure 2-3b. W-2 Worksheet, Screen 2Figure 2-3b. W-2 Worksheet, Screen 2 ........................................................................................................................................................................................ 33333333Figure 2-3c. W-2 Worksheet, Screen 3Figure 2-3c. W-2 Worksheet, Screen 3Figure 2-3c. W-2 Worksheet, Screen 3Figure 2-3c. W-2 Worksheet, Screen 3 ........................................................................................................................................................................................ 35353535Figure 2-3d. W-2 Worksheet, Screen 4Figure 2-3d. W-2 Worksheet, Screen 4Figure 2-3d. W-2 Worksheet, Screen 4Figure 2-3d. W-2 Worksheet, Screen 4 ........................................................................................................................................................................................ 36363636Figure 2-3e. W-2 Worksheet, Screen 5Figure 2-3e. W-2 Worksheet, Screen 5Figure 2-3e. W-2 Worksheet, Screen 5Figure 2-3e. W-2 Worksheet, Screen 5 ........................................................................................................................................................................................ 38383838Figure 2-4a. 1099-R Worksheet, Screen 1Figure 2-4a. 1099-R Worksheet, Screen 1Figure 2-4a. 1099-R Worksheet, Screen 1Figure 2-4a. 1099-R Worksheet, Screen 1 ........................................................................................................................................................................ 43434343Figure 2-4b. 1099-R Worksheet, Screen 2Figure 2-4b. 1099-R Worksheet, Screen 2Figure 2-4b. 1099-R Worksheet, Screen 2Figure 2-4b. 1099-R Worksheet, Screen 2 ........................................................................................................................................................................ 45454545Figure 2-4c. 1099-R Worksheet, Screen 3Figure 2-4c. 1099-R Worksheet, Screen 3Figure 2-4c. 1099-R Worksheet, Screen 3Figure 2-4c. 1099-R Worksheet, Screen 3........................................................................................................................................................................ 48484848Figure 2-5a. W-2G Worksheet, Screen 1Figure 2-5a. W-2G Worksheet, Screen 1Figure 2-5a. W-2G Worksheet, Screen 1Figure 2-5a. W-2G Worksheet, Screen 1 ................................................................................................................................................................................ 53535353Figure 2-5b. W-2G Worksheet, Screen 2Figure 2-5b. W-2G Worksheet, Screen 2Figure 2-5b. W-2G Worksheet, Screen 2Figure 2-5b. W-2G Worksheet, Screen 2 ................................................................................................................................................................................ 55555555Figure 2-6. Sales Tax WorksheetFigure 2-6. Sales Tax WorksheetFigure 2-6. Sales Tax WorksheetFigure 2-6. Sales Tax Worksheet ............................................................................................................................................................................................................................ 95959595Figure 2-7. Mortgage Interest WorksheetFigure 2-7. Mortgage Interest WorksheetFigure 2-7. Mortgage Interest WorksheetFigure 2-7. Mortgage Interest Worksheet ............................................................................................................................................................ 101101101101Figure 2-8. Seller-Financed WorksheetFigure 2-8. Seller-Financed WorksheetFigure 2-8. Seller-Financed WorksheetFigure 2-8. Seller-Financed Worksheet ............................................................................................................................................................................ 111111111111Figure 2-9. 1099-INT WorksheetFigure 2-9. 1099-INT WorksheetFigure 2-9. 1099-INT WorksheetFigure 2-9. 1099-INT Worksheet................................................................................................................................................................................................................................ 112112112112Figure 2-10. 1099-DIV WorksheetFigure 2-10. 1099-DIV WorksheetFigure 2-10. 1099-DIV WorksheetFigure 2-10. 1099-DIV Worksheet........................................................................................................................................................................................................................ 116116116116Figure 2-11a. Short-term Gain/Loss WorksheetFigure 2-11a. Short-term Gain/Loss WorksheetFigure 2-11a. Short-term Gain/Loss WorksheetFigure 2-11a. Short-term Gain/Loss Worksheet .................................................................................................................... 137137137137Figure 2-11b. Long-term Gain/Loss WorksheetFigure 2-11b. Long-term Gain/Loss WorksheetFigure 2-11b. Long-term Gain/Loss WorksheetFigure 2-11b. Long-term Gain/Loss Worksheet ........................................................................................................................ 138138138138Figure 2-12. Schedule K-1 Gain/Loss WorksheetFigure 2-12. Schedule K-1 Gain/Loss WorksheetFigure 2-12. Schedule K-1 Gain/Loss WorksheetFigure 2-12. Schedule K-1 Gain/Loss Worksheet ............................................................................................................ 142142142142Figure 2-13a. Rental/Royalty Worksheet, Screen 1Figure 2-13a. Rental/Royalty Worksheet, Screen 1Figure 2-13a. Rental/Royalty Worksheet, Screen 1Figure 2-13a. Rental/Royalty Worksheet, Screen 1 ................................................................................................ 159159159159Figure 2-13b. Rental/Royalty Worksheet, Screen 2Figure 2-13b. Rental/Royalty Worksheet, Screen 2Figure 2-13b. Rental/Royalty Worksheet, Screen 2Figure 2-13b. Rental/Royalty Worksheet, Screen 2 ................................................................................................ 162162162162Figure 2-13c. Rental/Royalty Worksheet, Screen 3Figure 2-13c. Rental/Royalty Worksheet, Screen 3Figure 2-13c. Rental/Royalty Worksheet, Screen 3Figure 2-13c. Rental/Royalty Worksheet, Screen 3 ................................................................................................ 163163163163Figure 2-14. Partnerships and S Corps WorksheetFigure 2-14. Partnerships and S Corps WorksheetFigure 2-14. Partnerships and S Corps WorksheetFigure 2-14. Partnerships and S Corps Worksheet.................................................................................................... 168168168168Figure 2-15. Estates and Trusts WorksheetFigure 2-15. Estates and Trusts WorksheetFigure 2-15. Estates and Trusts WorksheetFigure 2-15. Estates and Trusts Worksheet........................................................................................................................................................ 174174174174Figure 2-16. REMICs WorksheetFigure 2-16. REMICs WorksheetFigure 2-16. REMICs WorksheetFigure 2-16. REMICs Worksheet................................................................................................................................................................................................................................ 178178178178Figure 2-17. State Fund Contributions WorksheetFigure 2-17. State Fund Contributions WorksheetFigure 2-17. State Fund Contributions WorksheetFigure 2-17. State Fund Contributions Worksheet ........................................................................................................ 206206206206Figure 2-18a. Foreign Source Worksheet, Screen 1Figure 2-18a. Foreign Source Worksheet, Screen 1Figure 2-18a. Foreign Source Worksheet, Screen 1Figure 2-18a. Foreign Source Worksheet, Screen 1 ............................................................................................ 246246246246

  • * Included only in Premium Level software.** Included only in Standard and Premium Level software.

    Contents-5

    Figure 2-18b. Foreign Source Worksheet, Screen 2Figure 2-18b. Foreign Source Worksheet, Screen 2Figure 2-18b. Foreign Source Worksheet, Screen 2Figure 2-18b. Foreign Source Worksheet, Screen 2 ............................................................................................ 248248248248Figure 2-19a. Vehicle Expense Worksheet, Screen 1Figure 2-19a. Vehicle Expense Worksheet, Screen 1Figure 2-19a. Vehicle Expense Worksheet, Screen 1Figure 2-19a. Vehicle Expense Worksheet, Screen 1 .................................................................................... 266266266266Figure 2-19b. Vehicle Expense Worksheet, Screen 2Figure 2-19b. Vehicle Expense Worksheet, Screen 2Figure 2-19b. Vehicle Expense Worksheet, Screen 2Figure 2-19b. Vehicle Expense Worksheet, Screen 2 .................................................................................... 269269269269Figure 2-20. Eligible Person WorksheetFigure 2-20. Eligible Person WorksheetFigure 2-20. Eligible Person WorksheetFigure 2-20. Eligible Person Worksheet ............................................................................................................................................................................ 274274274274Figure 2-21. Care Provider WorksheetFigure 2-21. Care Provider WorksheetFigure 2-21. Care Provider WorksheetFigure 2-21. Care Provider Worksheet .................................................................................................................................................................................... 297297297297Figure 2-22. Qualifying Person WorksheetFigure 2-22. Qualifying Person WorksheetFigure 2-22. Qualifying Person WorksheetFigure 2-22. Qualifying Person Worksheet ........................................................................................................................................................ 299299299299Figure 2-23. Prior-Year Qualifying Person WorksheetFigure 2-23. Prior-Year Qualifying Person WorksheetFigure 2-23. Prior-Year Qualifying Person WorksheetFigure 2-23. Prior-Year Qualifying Person Worksheet................................................................................ 303303303303Figure 2-24. Tax Home WorksheetFigure 2-24. Tax Home WorksheetFigure 2-24. Tax Home WorksheetFigure 2-24. Tax Home Worksheet ................................................................................................................................................................................................................ 309309309309Figure 2-25. U.S. Income WorksheetFigure 2-25. U.S. Income WorksheetFigure 2-25. U.S. Income WorksheetFigure 2-25. U.S. Income Worksheet ................................................................................................................................................................................................ 310310310310Figure 2-26. U.S. Home Maintained WorksheetFigure 2-26. U.S. Home Maintained WorksheetFigure 2-26. U.S. Home Maintained WorksheetFigure 2-26. U.S. Home Maintained Worksheet ........................................................................................................................ 311311311311Figure 2-27. Travel Abroad WorksheetFigure 2-27. Travel Abroad WorksheetFigure 2-27. Travel Abroad WorksheetFigure 2-27. Travel Abroad Worksheet.................................................................................................................................................................................... 312312312312Figure 2-28. Fuel Use WorksheetFigure 2-28. Fuel Use WorksheetFigure 2-28. Fuel Use WorksheetFigure 2-28. Fuel Use Worksheet ........................................................................................................................................................................................................................ 347347347347Figure 2-29. Fuel Sale WorksheetFigure 2-29. Fuel Sale WorksheetFigure 2-29. Fuel Sale WorksheetFigure 2-29. Fuel Sale Worksheet .................................................................................................................................................................................................................... 350350350350Figure 2-30. Unreported Tips WorksheetFigure 2-30. Unreported Tips WorksheetFigure 2-30. Unreported Tips WorksheetFigure 2-30. Unreported Tips Worksheet .................................................................................................................................................................... 360360360360Figure 2-31. ITC Recapture WorksheetFigure 2-31. ITC Recapture WorksheetFigure 2-31. ITC Recapture WorksheetFigure 2-31. ITC Recapture Worksheet ................................................................................................................................................................................ 364364364364Figure 2-32. Section 179 WorksheetFigure 2-32. Section 179 WorksheetFigure 2-32. Section 179 WorksheetFigure 2-32. Section 179 Worksheet.................................................................................................................................................................................................... 372372372372Figure 2-33. MACRS/ACRS WorksheetFigure 2-33. MACRS/ACRS WorksheetFigure 2-33. MACRS/ACRS WorksheetFigure 2-33. MACRS/ACRS Worksheet ................................................................................................................................................................................ 383383383383Figure 2-34. Sec. 168(f)(1) WorksheetFigure 2-34. Sec. 168(f)(1) WorksheetFigure 2-34. Sec. 168(f)(1) WorksheetFigure 2-34. Sec. 168(f)(1) Worksheet ........................................................................................................................................................................................ 387387387387Figure 2-35. Depreciation WorksheetFigure 2-35. Depreciation WorksheetFigure 2-35. Depreciation WorksheetFigure 2-35. Depreciation Worksheet ........................................................................................................................................................................................ 389389389389Figure 2-36. Listed Property WorksheetFigure 2-36. Listed Property WorksheetFigure 2-36. Listed Property WorksheetFigure 2-36. Listed Property Worksheet ............................................................................................................................................................................ 395395395395Figure 2-37. Vehicle Info WorksheetFigure 2-37. Vehicle Info WorksheetFigure 2-37. Vehicle Info WorksheetFigure 2-37. Vehicle Info Worksheet .................................................................................................................................................................................................... 398398398398Figure 2-38. Amortization WorksheetFigure 2-38. Amortization WorksheetFigure 2-38. Amortization WorksheetFigure 2-38. Amortization Worksheet ........................................................................................................................................................................................ 401401401401Figure 2-39. Casualty and Theft WorksheetFigure 2-39. Casualty and Theft WorksheetFigure 2-39. Casualty and Theft WorksheetFigure 2-39. Casualty and Theft Worksheet.................................................................................................................................................... 405405405405Figure 2-40. Casualty or Theft SummaryFigure 2-40. Casualty or Theft SummaryFigure 2-40. Casualty or Theft SummaryFigure 2-40. Casualty or Theft Summary ................................................................................................................................................................ 413413413413Figure 2-41. Gain/Loss WorksheetFigure 2-41. Gain/Loss WorksheetFigure 2-41. Gain/Loss WorksheetFigure 2-41. Gain/Loss Worksheet ................................................................................................................................................................................................................ 420420420420Figure 2-42. Schedule K-1 Gain/Loss WorksheetFigure 2-42. Schedule K-1 Gain/Loss WorksheetFigure 2-42. Schedule K-1 Gain/Loss WorksheetFigure 2-42. Schedule K-1 Gain/Loss Worksheet ............................................................................................................ 422422422422Figure 2-43a. Gain/Recapture Worksheet, Screen 1Figure 2-43a. Gain/Recapture Worksheet, Screen 1Figure 2-43a. Gain/Recapture Worksheet, Screen 1Figure 2-43a. Gain/Recapture Worksheet, Screen 1 ........................................................................................ 430430430430Figure 2-43b. Gain/Recapture Worksheet, Screen 2Figure 2-43b. Gain/Recapture Worksheet, Screen 2Figure 2-43b. Gain/Recapture Worksheet, Screen 2Figure 2-43b. Gain/Recapture Worksheet, Screen 2 .................................................................................... 432432432432Figure 2-44. Section 1256 ContractsFigure 2-44. Section 1256 ContractsFigure 2-44. Section 1256 ContractsFigure 2-44. Section 1256 Contracts .................................................................................................................................................................................................... 537537537537Figure 2-45. Losses from StraddlesFigure 2-45. Losses from StraddlesFigure 2-45. Losses from StraddlesFigure 2-45. Losses from Straddles ........................................................................................................................................................................................................ 538538538538Figure 2-46. Gains from StraddlesFigure 2-46. Gains from StraddlesFigure 2-46. Gains from StraddlesFigure 2-46. Gains from Straddles................................................................................................................................................................................................................ 540540540540Figure 2-47. Unrecognized GainsFigure 2-47. Unrecognized GainsFigure 2-47. Unrecognized GainsFigure 2-47. Unrecognized Gains .................................................................................................................................................................................................................... 541541541541Figure 2-49. Passive Activity WorksheetFigure 2-49. Passive Activity WorksheetFigure 2-49. Passive Activity WorksheetFigure 2-49. Passive Activity Worksheet ........................................................................................................................................................................ 565565565565Figure 2-50. Line 2 Worksheet for 8611Figure 2-50. Line 2 Worksheet for 8611Figure 2-50. Line 2 Worksheet for 8611Figure 2-50. Line 2 Worksheet for 8611.................................................................................................................................................................................... 597597597597Figure 2-51. Student WorksheetFigure 2-51. Student WorksheetFigure 2-51. Student WorksheetFigure 2-51. Student Worksheet ................................................................................................................................................................................................................................ 629629629629Figure 2-52. Plug-in Electric Vehicle WorksheetFigure 2-52. Plug-in Electric Vehicle WorksheetFigure 2-52. Plug-in Electric Vehicle WorksheetFigure 2-52. Plug-in Electric Vehicle Worksheet ................................................................................................................ 653653653653Figure 2-53a. Adoption Expense (Screen 1)Figure 2-53a. Adoption Expense (Screen 1)Figure 2-53a. Adoption Expense (Screen 1)Figure 2-53a. Adoption Expense (Screen 1) ................................................................................................................................................ 660660660660Figure 2-53b. Adoption Expense (Screen 2)Figure 2-53b. Adoption Expense (Screen 2)Figure 2-53b. Adoption Expense (Screen 2)Figure 2-53b. Adoption Expense (Screen 2) ................................................................................................................................................ 662662662662Figure 2-53c. Adoption Expense (Screen 3)Figure 2-53c. Adoption Expense (Screen 3)Figure 2-53c. Adoption Expense (Screen 3)Figure 2-53c. Adoption Expense (Screen 3).................................................................................................................................................... 665665665665Figure 2-53d. Adoption Expense (Screen 4)Figure 2-53d. Adoption Expense (Screen 4)Figure 2-53d. Adoption Expense (Screen 4)Figure 2-53d. Adoption Expense (Screen 4) ................................................................................................................................................ 666666666666

  • * Included only in Premium Level software.** Included only in Standard and Premium Level software.

    Contents-6

    Figure 2-54. Long-Term Care WorksheetFigure 2-54. Long-Term Care WorksheetFigure 2-54. Long-Term Care WorksheetFigure 2-54. Long-Term Care Worksheet .................................................................................................................................................................... 683683683683Figure 2-55. Address WorksheetFigure 2-55. Address WorksheetFigure 2-55. Address WorksheetFigure 2-55. Address Worksheet ............................................................................................................................................................................................................................ 693693693693Figure 2-56. Other Person WorksheetFigure 2-56. Other Person WorksheetFigure 2-56. Other Person WorksheetFigure 2-56. Other Person Worksheet............................................................................................................................................................................................ 694694694694Figure 2-57. American Opportunity Credit WorksheetFigure 2-57. American Opportunity Credit WorksheetFigure 2-57. American Opportunity Credit WorksheetFigure 2-57. American Opportunity Credit Worksheet ............................................................................ 697697697697Figure 2-58. Lifetime Learning Credit WorksheetFigure 2-58. Lifetime Learning Credit WorksheetFigure 2-58. Lifetime Learning Credit WorksheetFigure 2-58. Lifetime Learning Credit Worksheet ............................................................................................................ 699699699699Figure 2-59. Alternative Vehicle Information WorksheetFigure 2-59. Alternative Vehicle Information WorksheetFigure 2-59. Alternative Vehicle Information WorksheetFigure 2-59. Alternative Vehicle Information Worksheet ............................................................ 721721721721Figure 2-60. Qualifying Student WorksheetFigure 2-60. Qualifying Student WorksheetFigure 2-60. Qualifying Student WorksheetFigure 2-60. Qualifying Student Worksheet ................................................................................................................................................ 727727727727Figure 2-61. Plug-in Electric Drive WorksheetFigure 2-61. Plug-in Electric Drive WorksheetFigure 2-61. Plug-in Electric Drive WorksheetFigure 2-61. Plug-in Electric Drive Worksheet ................................................................................................................................ 732732732732Figure 2-62. Health Insurance WorksheetFigure 2-62. Health Insurance WorksheetFigure 2-62. Health Insurance WorksheetFigure 2-62. Health Insurance Worksheet............................................................................................................................................................ 737737737737Figure 4-1. Printout Menu with Figure 4-1. Printout Menu with Figure 4-1. Printout Menu with Figure 4-1. Printout Menu with e-filee-filee-filee-file .................................................................................................................................................................................................................... 4444

    List of TablesTable 1-1. IRS Forms in 1040 EditionTable 1-1. IRS Forms in 1040 EditionTable 1-1. IRS Forms in 1040 EditionTable 1-1. IRS Forms in 1040 Edition ................................................................................................................................................................................................................ 4444Table 1-2. Supporting Data Entry Worksheets in 1040 EditionTable 1-2. Supporting Data Entry Worksheets in 1040 EditionTable 1-2. Supporting Data Entry Worksheets in 1040 EditionTable 1-2. Supporting Data Entry Worksheets in 1040 Edition ........................................ 6666Table 1-3. IRS Worksheets Built into CalculationsTable 1-3. IRS Worksheets Built into CalculationsTable 1-3. IRS Worksheets Built into CalculationsTable 1-3. IRS Worksheets Built into Calculations ........................................................................................................................ 7777Table 1-4. Standard Deduction SchedulesTable 1-4. Standard Deduction SchedulesTable 1-4. Standard Deduction SchedulesTable 1-4. Standard Deduction Schedules .................................................................................................................................................................... 9999Table 1-5. Thresholds for Phaseout of ExemptionsTable 1-5. Thresholds for Phaseout of ExemptionsTable 1-5. Thresholds for Phaseout of ExemptionsTable 1-5. Thresholds for Phaseout of Exemptions ................................................................................................................ 9999Table 1-6. Tax Rate SchedulesTable 1-6. Tax Rate SchedulesTable 1-6. Tax Rate SchedulesTable 1-6. Tax Rate Schedules.................................................................................................................................................................................................................................................... 9999Table 1-7. Recommended IRS PublicationsTable 1-7. Recommended IRS PublicationsTable 1-7. Recommended IRS PublicationsTable 1-7. Recommended IRS Publications........................................................................................................................................................ 21212121Table 2-1. Where to Report Income (by type of income)Table 2-1. Where to Report Income (by type of income)Table 2-1. Where to Report Income (by type of income)Table 2-1. Where to Report Income (by type of income) ............................................................................ 3333Table 2-2. Where to Report Income (by IRS form received)Table 2-2. Where to Report Income (by IRS form received)Table 2-2. Where to Report Income (by IRS form received)Table 2-2. Where to Report Income (by IRS form received)........................................................ 4444Table 2-3. Where to Report DeductionsTable 2-3. Where to Report DeductionsTable 2-3. Where to Report DeductionsTable 2-3. Where to Report Deductions ........................................................................................................................................................................................ 5555Table 2-4. Abbreviations for Address EntryTable 2-4. Abbreviations for Address EntryTable 2-4. Abbreviations for Address EntryTable 2-4. Abbreviations for Address Entry ........................................................................................................................................................ 21212121Table 2-5. Official State CodesTable 2-5. Official State CodesTable 2-5. Official State CodesTable 2-5. Official State Codes ........................................................................................................................................................................................................................................ 21212121Table 2-6. Deductible Medical and Dental ExpensesTable 2-6. Deductible Medical and Dental ExpensesTable 2-6. Deductible Medical and Dental ExpensesTable 2-6. Deductible Medical and Dental Expenses........................................................................................ 89898989Table 2-7. Deductible Interest ExpensesTable 2-7. Deductible Interest ExpensesTable 2-7. Deductible Interest ExpensesTable 2-7. Deductible Interest Expenses............................................................................................................................................................................ 99999999Table 2-8. Deductible ContributionsTable 2-8. Deductible ContributionsTable 2-8. Deductible ContributionsTable 2-8. Deductible Contributions ................................................................................................................................................................................................ 103103103103Table 2-9. Miscellaneous DeductionsTable 2-9. Miscellaneous DeductionsTable 2-9. Miscellaneous DeductionsTable 2-9. Miscellaneous Deductions........................................................................................................................................................................................ 108108108108Table 2-10. Codes for Principal Agricultural ActivityTable 2-10. Codes for Principal Agricultural ActivityTable 2-10. Codes for Principal Agricultural ActivityTable 2-10. Codes for Principal Agricultural Activity .................................................................................... 188188188188Table 2-11. Limitations on CarsTable 2-11. Limitations on CarsTable 2-11. Limitations on CarsTable 2-11. Limitations on Cars................................................................................................................................................................................................................................ 272272272272Table 2-12. Type of Use for Nontaxable Uses of FuelTable 2-12. Type of Use for Nontaxable Uses of FuelTable 2-12. Type of Use for Nontaxable Uses of FuelTable 2-12. Type of Use for Nontaxable Uses of Fuel ................................................................................ 348348348348Table 2-13. Straight-Line Recovery PeriodsTable 2-13. Straight-Line Recovery PeriodsTable 2-13. Straight-Line Recovery PeriodsTable 2-13. Straight-Line Recovery Periods ................................................................................................................................................ 387387387387Table 2-14. Limitations on Passenger VehiclesTable 2-14. Limitations on Passenger VehiclesTable 2-14. Limitations on Passenger VehiclesTable 2-14. Limitations on Passenger Vehicles ........................................................................................................................ 400400400400Table 2-15. Recovery Periods for Office in HomeTable 2-15. Recovery Periods for Office in HomeTable 2-15. Recovery Periods for Office in HomeTable 2-15. Recovery Periods for Office in Home................................................................................................................ 650650650650Table 2-16. Forms Allowed for Electronic FilingTable 2-16. Forms Allowed for Electronic FilingTable 2-16. Forms Allowed for Electronic FilingTable 2-16. Forms Allowed for Electronic Filing .................................................................................................................... 766766766766Table 2-17. Overflow supporting statements allowedTable 2-17. Overflow supporting statements allowedTable 2-17. Overflow supporting statements allowedTable 2-17. Overflow supporting statements allowed ............................................................................ 768768768768Table 3-1. Laser Printer CompatibilityTable 3-1. Laser Printer CompatibilityTable 3-1. Laser Printer CompatibilityTable 3-1. Laser Printer Compatibility .................................................................................................................................................................................................... 2222

  • Introduction

    Tax Forms Guide vs. User's GuidePaperwork Reduction Act Notice

  • (This page intentionally blank.)

  • Introduction

    intro-1

    Tax Forms Guide vs. User's GuideTax Forms Guide for timely information. Because the tax forms and their in-structions are changed annually by the IRS, this Tax Forms Guide is revisedannually, based on the information we receive annually from the IRS:

    Chapter 1. Highlights of Changes. A review of the important tax lawchanges for the year and how they affect the software.

    Chapter 2. Form by Form Details. A detailed reference for every taxform in the software. This is the bulk of the guide, and containsdetails on nearly every line of each form and schedule that it covers.

    Chapter 3. Laser and Windows Graphic Printing. Instructions for thegraphic printing of forms for both Windows and non-Windows print-ers.

    Chapter 4. Electronic Filing (e-file). Instructions for generating files forelectronic filing and submitting them for transmission to the IRSusing Standard Level or Premium Level versions of Tax Preparer.

    When you get an update each year, you should leave the User's Guide in theHowardSoft binder, and

    Replace the ENTIRE Tax Forms Guidewith this new version.

    However, we strongly recommend that you also

    SAVE the expired Tax Forms Guidesin a separate binder

    for later help in producing records for an audit or preparing an amended re-turn. (You can purchase from HowardSoft grey stitched binders and blackslipcases to hold your new and expired manuals.)

    User's Guide for other information. Unlike the tax forms, the structure andoperation of the software are stable, and change little from year to year. As aresult, the separate User's Guide is revised only once every few years asneeded. You will use this guide for years to come for help with general oper-ating procedures. First-time users can benefit from the tutorial on how toprepare and print a return. But the rest of the guide is an important referencefor everyone. It includes keyboard charts, trouble-shooting hints, and com-plete details on translating prior-year returns into current-year returns, printinga graphic return for filing, program setup, and custom settings. The most re-cent revision of the User’s Guide was April, 2009. It was updated to includeoperating instructions for the floating Tax Preparer Control Panel and newerWindows operating systems, including Windows Vista and 64-bit Vista.

  • HowardSoft

    intro-2

    Paperwork Reduction Act NoticeLegal requirement. The IRS requires that computer-generated forms containthe phrase "For Paperwork Reduction Act Notice, see instructions" and thatwe provide you with a copy of the notice. The following quote does not re-duce paper, but it does meet the IRS requirements:The Privacy Act of 1974 and Paperwork Reduction Act of 1980 say that when weask you for information, we must first tell you our legal right to ask for the infor-mation, why we are asking for it, and how it will be used. We must also tell youwhat could happen if we do not receive it, and whether your response is voluntary,required to obtain a benefit, or mandatory under the law.

    This notice applies to all papers you file with us, including this tax return. It alsoapplies to any questions we need to ask you so we can complete, correct, or proc-ess your return; figure your tax; and collect tax, interest, or penalties.

    Our legal right to ask for information is Internal Revenue Code 6001, 6011, and6012(a) and their regulations. They say that you must file a return or statementwith us for any tax you are liable for. Your response is mandatory under these sec-tions. Code section 6109 and its regulations say that you must show your socialsecurity number on what you file. This is so we know who you are, and can proc-ess your return and papers. You must fill in all parts of the tax form that apply toyou. But you do not have to check boxes for the Presidential Election CampaignFund.

    You are not required to provide the information requested on a form that is subjectto the Paperwork Reduction Act unless the form displays a valid OMB controlnumber. Books or records relating to a form or its instructions must be retained aslong as their contents may become material in the administration of any InternalRevenue law. Generally, tax returns and return information are confidential, as re-quired by Code section 6103.

    We ask for tax return information to carry out the tax laws of the United States.We need it to figure and collect the right amount of tax.

    We may give the information to the Department of Justice and to other Federalagencies, as provided by law. We may also give it to states, the District of Colum-bia, and U. S. commonwealths or possessions to carry out their tax laws. And wemay give it to foreign governments because of tax treaties they have with theUnited States.

    If you do not file a return, do not provide the information we ask for, or providefraudulent information, you may be charged penalties and be subject to criminalprosecution. We may also have to disallow the exemptions, exclusions, credits,deductions, or adjustments shown on the tax return. This could make the taxhigher or delay any refund. Interest may also be charged.

    Please keep this notice with your records. It may help you if we ask you for otherinformation. If you have questions about the rules for filing and giving information,please call or visit any Internal Revenue Service office.

  • Chapter 1

    Highlights of Changes

    OverviewIRS Forms Built into Software

    Printouts and Form 1040 Tab SettingsForm by Form Changes

    Recommended IRS Publications

  • (This page intentionally blank.)

  • Highlights of Changes (2011 Edition)

    1-1

    OverviewFour major tax bills in 2010. In addition to previously-scheduled changes fromprior bills, many changes in the forms for the 2010 tax year stem from fourtax bills enacted in 2010: the HIRE Act, the Health Care Reform Act, theSmall Business Jobs Act, and the year-end Tax Relief Act. Highlights of theenacted bills appear here, with their impact on the new forms detailed in thelater section on Form by Form Changes.

    Hiring Incentives to Restore Employment (HIRE) Act. Signed into law onMarch 18, 2010, this bill includes:♦ New credits for hiring new employees and keeping them. For new hires

    that were formerly unemployed, the bill exempts the employer frompaying its share of social security taxes from February 4, 2010 throughDecember 31, 2010, which can result in a savings as high as $6,621for each qualified employee. And for such new hires that are retainedfor at least 52 weeks, an additional credit up to $1,000 is provided

    ♦ Extension of ceiling on section 179 depreciation. The $250,000 ceilingwas set to drop to $125,000 for tax year 2010, but the bill extends thehigher ceiling for another year. (See the Small Business Jobs Act, later,for a further increase that applies to tax year 2010.)

    Patient Protection and Affordable Care Act and Health Care and EducationReconciliation Act of 2010. Signed into law on March 23 and March 30,2010, respectively, these two bills combined form the massive health carebill. While most provisions of the bill don't start taking effect until 2013 orlater, there are a couple that will affect returns for 2010:♦ A small employer tax credit. Qualified small employers qualify for a tax

    credit as high as 35% of their cost for health care. "Small" in this con-text means no more than 25 employees. Employers with no more than10 employees and average wages no more than $25,000 get the fullcredit. The credit is phased out as average wages approach $50,000and the number of employees approaches 25. (This credit is claimed onthe new Form 8941, which is included in the Standard and PremiumLevel versions of Tax Preparer.)

    ♦ A sweetening of the adoption credit. The adoption credit is turned into arefundable credit and the exemption level is raised to $13,170 (up from$12,150 for 2009). Moreover, the credit, which was set to expire atthe end of 2010, is extended to the end of 2011. (The changes simplifyForm 8839 because the credit is no longer limited to tax liability.)

    Small Business Jobs Act of 2010. Signed into law on September 27, 2010,the bill includes a number of provisions not related to Form 1040 returns,such as the loosening of restrictions on small business loans, expansion ofcredit and low-income refinancing for small businesses, help with small busi-ness exports, and regulatory relief. However, a number of significant benefitsfor individual taxpayers is also included, especially in depreciation benefits.Highlights that apply to tax returns for 2010 include:

  • HowardSoft

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    ♦ Maximum section 179 expensing increased and extended. For 2010,the new maximum is $500,000 (up from $250,000 from the HIRE Actand $125,000 from prior law). The phaseout for large total expensesnow starts at $2,000,000 (up from $800,000). And the new limits ap-ply to 2011 as well. (The bill also extends section 179 expensing to cer-tain real property not previously qualified, but the maximum for thisproperty is $250,000, not $500,000.)

    ♦ 50% bonus depreciation extended for one more year. Bonus deprecia-tion expired at the end of 2009, but it has been reinstated retroactivelyto all of 2010 (2011 for certain transportation property and certainproperty with a 10-year recovery period or longer). The first-year limiton automobile depreciation is raised by $8,000 to allow for bonus de-preciation. This is the most costly benefit of the bill, losing the govern-ment more than $40 billion of revenue in 2011. (The government gainsrevenue in subsequent years because of the reduction of depreciationbasis by any bonus depreciation claimed.)

    ♦ Cell phones no longer subject to listed property restrictions. For 2010 andlater years, cell phones are not listed property. As a result, strict substantia-tion rules no longer apply, cell phones provided by employers are not taxableas income, and section 179 expensing and bonus depreciation are allowedeven when business use for the phone is less than 50%.

    ♦ Start-up expensing liberalized. For 2010, the limit on start-up expens-ing is doubled to $10,000.

    ♦ Self-employed health insurance reduces income for the self-employment tax. For 2010 alone, health insurance deducted on Form1040 line 29 reduces income for the purposes of Schedule SE.

    ♦ Rollovers of certain retirement plans into Roth IRAs allowed. The newlaw brings the rollover rules for elective deferral plans into compliancewith those for traditional IRAs, including the option to pay the tax onthe rollover with the taxpayer’s 2011 and 2012 returns (half each year)rather than payiong the entire tax with the 2010 return.

    Tax Relief, Unemployment Insuance Reauthorization, and Job Creation Act of2010. Signed into law on December 17, this bill includes the long anticipatedAMT patch and extension of several popular deductions and credits. It notonly saved several deductions and credits from extinction, but it also savedseveral forms from the extensive redesigns evident in earlier advance draftsfrom the IRS. Provisions relevant to tax year 2010 include:♦ AMT patch. The exemption levels for 2010 were set to drop precipi-

    tously, but the AMT patch brings them back up to slightly more than2009 levels for both 2010 and 2011. In addition, the allowance of non-refundable personal credits against the AMT is extended to 2010 and2011. This change affects Form 6251 for 2010.

    ♦ Estate tax refief. Prior law phased out the