Calculations Not Supported by TurboTax for Tax Year 2010

TurboTax handles the most common tax calculations for individual tax filers.

However, there are certain calculations, listed below, that TurboTax programs do not support.

Some situations may require you to refer to IRS forms or publications.

You can get IRS forms and publications by calling 1-800-TAX-FORM (1-800-829-3676) or by visiting the IRS Internet Home Page at irs.gov.

1. Form W-2 and Code Z: If your Form W-2 has an amount with code Z in box 12 for non-qualified deferred compensation plans under code section 409A, see IRS Publication 15-A for the calculation of the additional tax that must be reported on Form 1040.
2. Form SSA-1099 / Form RRB-1099 Repayments: If repayments of social security benefits result in a negative amount in Box 5 on Form SSA-1099 or RRB-1099, you may be eligible to take a deduction for this amount. The program does not automatically calculate this deduction. See taking a deduction for more information.
3. State and Local Tax Refunds Entered Directly on Forms (not Interview Screen): If entering refund amounts directly on forms (not entering on TurboTax’s step-by-step interview screens), do not enter Form 1099-G, box 2, state and local income tax refunds on Form 1099-G; instead enter on the Federal Carryover Worksheet.
4. State and Local Income Tax Refunds From Years Prior to 2009: If you received a state or local income tax refund for years prior to 2009 during 2010, you will need to determine what portion (if any) of that refund is taxable. You can calculate this amount using the worksheets in Internal Revenue Service Publication 525, Taxable and Nontaxable Income. See the "Recoveries" section of the publication. Once determined, enter the taxable amount of the refund in column (d) of line 37 of the State and Local Income Tax Refunds Worksheet. The taxable amount will be reported on line 10 of Form 1040.
5. Nondeductible IRAs – Excess Reconversion (Form 8606): The calculation of an "excess reconversion" of a traditional IRA to a Roth IRA on or after November 1, 1998 is not supported by the program. This situation occurs when a taxpayer converts (conversion #1) a traditional IRA to a Roth IRA, then converts the amount back (re-characterizes) to a traditional IRA. The taxpayer then converts the same amount again (conversion #2) to a Roth IRA and then re-characterizes it again back to a traditional IRA. The taxpayer then converts the same amount a third time (conversion #3) to a Roth IRA. Conversion #3 -- if it was done on or after November 1, 1998 -- is called an "excess reconversion." When this occurs, the amount of conversion #2, not conversion #3, is the amount that must be included in gross income for 2010.
6. Nondeductible IRAs - Rollovers to Roth IRAs: The program does not support the preparation of more than one Part III per taxpayer or spouse. This situation occurs when both a qualified pension plan is rolled over into a Roth IRA and an in-plan rollover to a designated Roth account has been made. An in-plan Roth rollover (IRR) is a transfer from a participant’s non-Roth account into the participant’s designated Roth account in the same plan.
7. Sale of Qualified Small Business Stock and At-Risk Limitations: The program does not adjust your basis on Form 6198 by the gain on the sale of the qualified small business stock. You can manually enter the gain, if any, on line 3 of Form 6198.
8. At-Risk Limitations (Form 6198): For activities other than Schedule K-1s, the program does not calculate the amount of Alternative Minimum Tax At-Risk disallowed losses. You will need to track all At-Risk carryovers for AMT purposes separately.
9. Medicare Advantage Distribution (Form 8853) and High Deductible Health Plan: If there is an entry on Line H of the Medicare Advantage Distribution Smart Worksheet we assume that the Fair Market Value of the account assets at December 31, 2009 does not exceed 60% of the High Deductible Health Plan deductible and compute the related Line J amount accordingly. If this is not correct, you must use the worksheet in the IRS instructions to calculate the Line J amount and use the desktop version of the program to override the Line J amount.
10. Form 1099-MISC and Non-qualified Deferred Compensation: If a Form 1099-MISC has an amount in Box 15b for non-qualified deferred compensation plans under Code Sec. 409A, see IRS Publication 15-A for the calculation of the additional tax that must be reported on Form 1040.
11. Sale of Qualified Small Business Stock and Installment Sales (Form 6252): For sales of Qualified Small Business Stock, the program does not apply the Section 1202(b) gain limitation to the exclusion. If you have a gain in excess of the Section 1202(b) limit, you must split the disposition and enter it as two separate transactions. Check the "Yes" box on Line E of the Form 6252 General Information Smart Worksheet only for that portion of the sale that does not exceed the gain limitation.
12. Like-Kind Exchanges (Form 8824): Any loss on other property given up shown on line 14 is treated as either trade or business, or investment income depending on your entries in the smart worksheet for Additional Information Regarding Unlike-kind Property Given Up. Losses on personal use property, which must be limited to zero, are not supported.
    A "summary" Form 8824 is not automatically created when there is more than one Form 8824 in the tax return.
    Multi-asset exchanges where lines 12 through 18 are left blank and the correct amount is entered directly on line 19 is not supported.
    Form 8824 does not provide for any differences for alternative minimum tax (AMT) for gains reported on lines 14, 24, 35 and 36. Any AMT differences for these lines must be entered directly on Form 6251.
    If an exchange with a related party occurred in a prior year and the property has now been sold and line 24 must be reported as taxable in the current year, you may need to make entries directly on Form 4797 to correctly split the amount on line 24 of Form 8824 between ordinary income recapture and other reportable gain.
13. Dealers in Regulated Futures Contracts (Form 6781 – Straddles and Contracts): The program does not support all of the reporting required of dealers in regulated futures contracts. A dealer is someone who is licensed in securities and has an established place of business and regularly purchases securities for resale to customers. Among other requirements, dealers must report gain or loss on the sale of regulated futures contracts as self-employment income on Schedule SE.
14. Foreign Earned Income (Form 2555): The program does not automatically allocate any foreign earned income that may relate to another tax year or allocate any deductions that may or may not relate to foreign earned income.
15. Foreign Earned Income (Form 2555): The program does not automatically calculate a portion of rental income as foreign earned income regardless of the amount of personal services involved. The program does not consider any portion of Schedule C income to not be earned income regardless of the capital investment involved in the production of income. The program does not automatically allocate any moving expense reimbursement or allowance as relating to earned or unearned income.
16. Foreign Earned Income (Form 2555) and Farmers and Fishermen Income Averaging: When Schedule J, Income Averaging for Farmers and Fishermen, and Form 2555, Foreign Earned Income, are both part of the tax return the program does not support the Form 1040 Foreign Earned Income Tax Calculation.
17. Foreign Earned Income (Form 2555) and Tax for Certain Children (Form 8615): When Form 8615, Tax for Certain Children Who Have Investment Income, and Form 2555, Foreign Earned Income, are both part of the tax return the program does not support the Form 1040 Foreign Earned Income Tax Calculation.
18. Long Term Care Insurance Contracts (Form 8853) and Multiple Payees, Same insured: If multiple payees receive long term care benefit payments for the same insured person, the program cannot calculate the correct taxable amount. Refer to the IRS instructions for Form 8853 to calculate the taxable amount manually and enter the result on Form 8853, page 2, line 26.
19. Long Term Care Insurance Contracts (Form 8853) and Multiple Long Term Care Periods: If there are multiple payment periods during the year, the program cannot calculate the correct taxable amount. An example of multiple periods would be if the insurance company pays the first 30 days at one rate and the next 30 days at another rate. Two periods exist: a 30-day period and a 60-day period. Refer to the IRS instructions for Form 8853 to calculate the taxable amount manually and enter the result on Form 8853, page 2, line 26.
20. Short Sale Transactions: If you received a Form 1099-B for a short sale transaction that you began in 2010 by selling borrowed property but did not close in 2010 (by delivering property to the lender to replace the borrowed property previously sold), the program does not support reporting this in the manner prescribed by the IRS. An alternative work-around method of reporting your open short sale is to include the text “Open Short Sale” when entering the Company Name, enter the last day of the year as the date shares were purchased (or delivered), and enter the sales price as the total purchase price (as well as entering it as the net proceeds).
21. State and Local Tax Refund Recovery Exclusion: The program does not support the recovery exclusion if you had taxable income on your 2009 Form 1040, line 43, but no tax on your Form 1040, line 44, because of the 0% tax rate on net capital gain and qualified dividends. See the 2010 IRS Publication 525 for more information.
22. Form 1099-Q, Payments from Qualified Education Programs: If box 6 is checked on the form to indicate the recipient is not the designated beneficiary, the program does not compute the taxable distribution amount.
23. Form 2555 Foreign Earned Income Exclusion and Taxable Foreign Scholarships: The program does not support the scenario where a taxpayer has a taxable foreign scholarship on a W-2 that is eligible for the foreign earned income exclusion and enters the scholarship amount in the education expenses section. In addition, the program does not support the scenario where a taxpayer has a taxable foreign scholarship that is not on a W-2 and they want to indicate that the amount is for a scholarship on Line 7 of Form 1040 by inserting the text “SCH” next to line 7. The program does allow the user to enter these scholarship amounts in the foreign earned income section and exclude the amount on Form 2555 without the accompanying “SCH” text on Line 7 of Form 1040.
24. Form 1099-R -- Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.: A single Form 1099-R rolled into multiple types of retirement plans (IRA, Roth IRA, other qualified retirement plan, etc.) is not supported. In this situation you must determine the amount rolled into each type of plan. Then treat each part of the rollover as a separate distribution and enter on multiple 1099-R worksheets.

1. Automobile used for Multiple Businesses: If you used an automobile in multiple business activities, the personal portion of property taxes transferring to Schedule A will be incorrect. In this situation, make any corrections on line 3b of the Tax and Interest Deduction Worksheet. You should enter the amount of property taxes remaining for that vehicle after reducing all portions of the property tax deducted for business purposes.
2. Business Vehicle Dispositions and Mixed Percentage of Use: The program does not handle dispositions when business use percentage changes from year to year. Please refer to tax help for these worksheets for more information.
3. Business Vehicle Like-Kind Exchange: The program does not automatically handle the like-kind exchange of a vehicle when the standard mileage method was used because the standard mileage method is considered an election out of MACRS. Only MACRS exchanges are supported on the Car and Truck Worksheets or the Form 2106 Vehicle Expense Worksheet.
4. Form 4562 - Depreciation and Amortization:
   

   The program does not automatically calculate the following depreciation items:

   • The General Asset Account election
   • Short year depreciation calculations
   • Calculation of the depreciation deduction under IRC section 168(f)(1) based on units of production
   • calculation of the depreciation deduction for railroad grading and tunnel bores
   • Qualified New York Liberty Zone leasehold improvements are not separately identifiable in TurboTax for purposes of applying the 5 year straight line /9 year ADR depreciation method and exclusion from the 30% special depreciation. You may use asset type "other" to work around this limitation.
   For more information about the above items, refer to Tax Help for Asset Entry Worksheet, Car and Truck Worksheet, or Vehicle Expense Worksheet.
5. Allowable Depreciation and Iowa tax return: The program does not support the required recomputation of allowable depreciation for Iowa purposes when 30% bonus depreciation was claimed for an asset on the Federal return after May 5, 2003 because there was a binding contract to acquire the asset before May 6, 2003. In this case the asset does not qualify for any bonus depreciation in Iowa. You must compute what the current year Iowa deduction would be for the asset without any basis adjustment for bonus depreciation, and then enter the difference between the current year’s Federal depreciation deduction and your recomputed current year Iowa depreciation deduction as an Iowa adjustment.
6. Taxable Income Limitation for Section 179 (Form 4562): If you have a trade or business loss subject to the at-risk limitation (Form 6198), the program uses the unlimited loss to compute the taxable income limitation for section 179 on Form 4562, line 11.
   This would affect your return only if you also had trade or business income from another activity. In this case you may need to adjust the taxable income on Form 4562: Depreciation Information, line 3b to reflect the limited loss.
7. Business Expenses Allocated to Schedule A: If there are any employee expenses deducted on Schedule A that are related to your wages, or Schedule C income where you have allocated your expenses, you can adjust the reportable self-employment net earnings on the Schedule SE Adjustments Worksheet.
8. Property Acquired by Like-kind Exchange or Involuntary Conversion (Form 4562): The program does not fully support the new regulations (1.168(i)-6T). These regulations require property acquired by like-kind exchange or involuntary conversion to be depreciated as two separate assets. The remaining basis of the old asset continues to be depreciated as if the disposition never happened. Any additional money paid is depreciated as new property.
   

   The following items in the regulations are not supported:

   1. The regulations are not supported for vehicles. Instead, only the election out of the regulations is supported. The election out treats the entire cost of the new vehicle as new property.
   2. The use of the optional MACRS tables to compute depreciation for the new property. Only the computation method is supported.
   3. Computing depreciation on the new property when the old property was also acquired by like-kind exchange or involuntary conversion.
9. Section 179 Recapture (Form 4797): Recapture amounts under section 179 and 280F(b)(2) do not automatically flow to the appropriate forms. You must manually enter these amounts as other income on the appropriate activities.
10. Disposition of Non-depreciable Personal Property Used in a Trade or Business: According to the IRS, if you have a gain or loss from the disposition of non-depreciable personal property (i.e., a collectible) used in a trade or business, the gain or loss should be taxed at the 28 percent rate.
    Additionally, if you sell your interest in a partnership, S corporation or estate/trust and part of the gain on the sale is due to unrealized appreciation from collectibles, this should be treated as gain from the sale of the collectible, taxed at the 28 percent rate.
    These types of dispositions cannot be associated with a particular activity in the program. If the activity is not subject to the passive activity rules, then enter the gain or loss on Schedule D. If the activity is subject to the passive activity rules, the program does not support this calculation.
11. Passive Losses (Form 8582): The program does not support the calculation of allowable loss when the installment method of reporting the disposition of an entire interest in a passive activity is used and the activity has an overall loss.
    

    Note: If you do not elect the installment method to report the gain on disposition, the overall loss is deductible in full in the year of the disposition.

    The program does not support reporting self-charged interest income or expense related to a passive activity as either passive activity gross income or passive activity deduction unless the self-charged interest is reported on a form or schedule marked as a passive activity. See the IRS Instructions for Schedule K-1 for more information.

    The program does not support reporting the following items as passive activity income or loss or deduction: Commercial revitalization deductions (except those that are reported on a Partnership or an S Corporation Schedule K-1) or casualty gain or losses reported on Form 4684.

    If you are a real estate professional, you materially participated in a PTP (Publicly Traded Partnership), and you have passive activities that are reported on Form 8582 (Passive Activity Loss Limitations), verify that the modified adjusted gross income on Form 8582, line 7, is correct and modify if necessary.

12. Canceled Debt and Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) (Form 982): When a canceled debt is excluded from 2010 income you may have to take into account a reduction of tax attributes or elect or reduce the basis of depreciable property for your client. The program does not automatically perform the reduction nor does it automatically carry forward any adjusted amounts due to the reduction of tax attributes from discharge of debt. For more details please refer to IRS publication 4681 (Canceled Debts, Foreclosures, Repossessions and Abandonment's), IRS publication 225 (Farmers Tax Guide) and publication 525 (Taxable and Nontaxable Income).
13. At-Risk Limitations (Form 6198): For activities other than Schedule K-1s, the program does not calculate the amount of Alternative Minimum Tax At-Risk disallowed losses. You will need to track all At-Risk carryovers for AMT purposes separately.
    The program does not adjust your basis on Form 6198 by the gain on the sale of the qualified small business stock. You can manually enter the gain, if any, on line 3 of Form 6198.
14. Net Operating Loss: If after completing your tax return you have a negative amount on Form 1040, line 41, and you had a loss from a business activity such as those reported on Schedules C, E, F, or resulting from dispositions on Form 4797, or sustained a casualty loss, you may have a Net Operating Loss (NOL). The program does not calculate the amount of NOL to be carried back or forward to another year.
    
    To determine your NOL, if any, refer to Form 1045, Schedule A (not included with this program). You will probably also benefit by reviewing IRS Publication 536 for details about the NOL calculation.
     
15. Farming Activities: If a taxpayer has a Schedule F or Form 4835 farming activity (or is the recipient of a Schedule K-1 from a partnership or S corp with a farming activity) that receives certain Title I farm subsidies or has a Schedule C that processes a farm commodity and generates a net loss greater $300,000, the excess amount of the net loss may be limited. This is referred to as the Excess Farm Loss Limitation. The program will not automatically compute the Excess Farm Loss Limitation.
    
    The loss is limited to the greater of $300,000, or the prior five years of net income. It does not include any losses due to fire, storm, other casualty, or disease or drought involving any farming business in the calculation of the Excess Farm Loss limitation. In the event you meet these conditions, you will need to use the worksheets provided in the IRS Schedule F instructions to calculate and possibly reduce the reported losses manually on the Schedule F, Form 4835, from a Schedule K-1, or a Schedule C. You will also need to keep track of the amount of the Excess Farm Loss that was limited as it becomes a deduction in future years.
16. Self-Employed Health Insurance Deduction and related Health Coverage Credit: If an entry is made for self-employed health insurance premiums on Schedule C (Profit or Loss from Business), Schedule F (Profit or Loss from Farming), or Schedule K-1 for Partnerships (Box 13, Code M for Amounts paid for Medical insurance), the program will calculate the Self-Employed Health Insurance Deduction for these premiums. If Form 8885, Health Coverage Tax Credit, is being claimed for these same medical insurance premiums, a double benefit is received (a credit and a deduction) which is not allowed. Only the credit OR the deduction can be claimed. Either do not enter these premiums on Schedule C, Schedule F or Schedule K-1 for Partnerships OR do not enter them on Form 8885, Health Coverage Tax Credit.
17. Form 8881 linked to Schedule C, Schedule F, or Form 4835: If a Credit for Small Employer Pension Plan StartUp Costs is claimed from two or more different business activities (for example, from a Schedule K-1 for a Partnership and from a Schedule C, Profit or Loss from Business), and the credit before limitation is greater than $500, the deduction for pension plan startup costs on the business activity may be reduced by too large of a credit amount. This occurs only if the Form 8881 is linked to a Schedule C (Profit or Loss from Business), Schedule F (Profit or Loss from Farming) or Form 4835 (Farm Rental Income and Expenses).
    
    In this situation, unlink the activity (Schedule C, F or Form 4835) from the Form 8881, and enter the pension plan startup costs from the activity directly onto line 1 on Form 8881 and on the first line of Pension Plan Startup Costs Smart Worksheet on the activity form (Schedule C, F or Form 4835). Determine the amount of credit that is being allowed from the activity after taking into account the credit claimed on the Schedule K-1. Then on the activity form (Schedule C, F or Form 4835) Pension Plan Startup Costs Smart Worksheet, enter the amount of the credit on Form 8881 relating to the costs from this activity on the second line.

1. Schedule C - Clergy Housing Expenses: For members of the clergy who have a housing allowance, the program does not automatically allocate expenses on Schedule C associated with only the taxable portion of your income. You must manually allocate the clergy expenses that are applicable to your taxable income and enter those amounts on Schedule C. If you are subject to self-employment tax, the remainder of your expenses is entered in Part II, line 5c of the Schedule SE Adjustments Worksheet.
2. Reporting Rentals on Schedule C: Reporting rental activities as qualified joint ventures on Schedule C is not supported.
3. Self-Employed Ministers: Self-employment earnings on the Schedule SE Adjustments Worksheet may also need to be adjusted for ministers who are self-employed. The program flows the earnings reportable for income tax purposes and any housing allowance entered on Schedule C or the Form W-2 Wage and Tax Statement.
4. Home Sale with Current Year Office in the Home Depreciation: If you sold your main home and during the year of the sale you deducted depreciation for an office in the home on Form 8829, Expenses for Business Use of Your Home, for Schedule C, Profit or Loss from Business, and the main home is eligible for the home sale exclusion, no gain on the sale of the office will be included in the calculations for At-Risk Limitations or Passive Activity Limitations.

1. Rental Property Subject to Limitations under IRC 280A: If a rental property (other than a vacation home) is subject to limitations under IRC 280A, such as property that is not being rented at fair market value, and the rental expenses are more than the rental income, the entire loss may not be allowed. You may wish to refer to IRS Publication 527 (Residential Rental Property) which has a worksheet to calculate the amount of the expenses that may be deducted. The program does not automatically limit the expenses; you must enter the limited expenses on the Schedule E Worksheet. Keep track of any additional expenses to be carried over as rental expenses to the following year.
2. Office in the Home at Vacation Home: If you operated an office-in-the-home in a vacation home that was rented out, use the Schedule E Worksheet to determine the amount of personal qualified mortgage interest, qualified mortgage insurance premiums, and real estate taxes. Enter the qualified mortgage interest in the "Allocated to Personal Use" column on a copy of the Home Mortgage Interest Worksheet and link Form 8829 to the Home Mortgage Interest Worksheet. Enter the real estate taxes and qualified mortgage insurance premiums from the "Allocated to Personal Use" column on the Form 8829 as an indirect expense. You will also need to use the override feature to delete the amount on line 5a of the Tax and Interest Worksheet.
3. Rent a Room in Your Home to Your Employer: If you rent a room in your home to your employer, you must report the rental income you receive, but you are only allowed to deduct expenses that would otherwise be deductible on Schedule A, such as the rental portion of mortgage interest and real property tax. The program does not automatically limit expenses under this situation.
4. Vacation Home Used Personally: In 2010, if you are paying qualified mortgage insurance on a vacation home that you use personally more than the greater of 14 days or 10% of the days rented, the amount allowed as a deduction on Schedule E may not be correctly limited. To be qualified mortgage insurance on Schedule E, the insurance contract must have been first purchased in 2007 or later and the property must qualify as your second residence.
5. Joint Venture Rental Activities: Reporting rental activities as qualified joint ventures on Schedule C is not supported.
6. Real Estate Professionals: The election for real estate professionals to aggregate their activities under IRC 469(c) (7) is not supported.
7. Casualty Loss on Rental Property: If you incur a casualty loss on a rental property that is also used as a residence, the allowed casualty loss must be allocated between Schedule A, Itemized Deductions, and Schedule E, Supplemental Income and Loss. The program does not do this allocation automatically. Read the instructions for Worksheet 5-1 in IRS Publication 527, Residential Rental Property, for how to complete Form 4684, Casualties and Thefts in this situation.
8. Investment Interest Expense from Royalties: The program does not automatically include interest expense from royalties entered on Schedule E as part of the total investment interest expense on Form 4952. Enter those amounts on Form 4952 Worksheet, line 2. If your investment interest is limited, you will need to adjust the royalty interest expense on Schedule E as part of the total expense on Form 4952. To do this go to the "Select Topics or Forms" tab, type in and select Royalty, and hit the "Go." If your investment interest is limited, you will need to adjust the royalty interest expense on Schedule E. To do this use the Income tab at the top of the screen to take you to the appropriate Schedule E.

1. Partnership Loss, Self-Employment Income, and At-Risk Limitations: If you have partnership losses subject to at-risk limitations, the program does not automatically make adjustments to self-employment (SE) income. You must enter any applicable adjustments on the Schedule SE Adjustments Worksheet.
2. Partnership Loss Greater than Adjusted Basis: You may not claim your share of a partnership loss (including a capital loss) to the extent that it is greater than the adjusted basis of your partnership interest at the end of the partnership's tax year. The program does not compute the adjusted basis of your partnership interest. Accordingly, do not enter losses on the Schedule K-1 worksheets which exceed your adjusted basis.
3. Passive Activity Self-charged Interest Income/Expenses: The program does not support reporting self-charged interest income or expense related to a passive activity as either passive activity gross income or passive activity deduction. See the IRS Instructions for Schedule K-1 for more information.
4. Income/Deductions/Credit Not on K-1: The program does not automatically flow through the tax return any specific income, deduction or credit items that are not identified on the K-1 worksheets or included as part of the TurboTax Interview.
5. Partnership K-1 Foreign Income: If you received a Partnership K-1 that shows you received foreign income, you may need to make manual entries on Form 2555 and Form 1116. You need to make entries directly on Form 2555 and Form 1116 if:
   • You received a K-1 from a partnership that shows that you received foreign income in the Foreign Income and Taxes section (Line 16), AND that foreign income was earned income (i.e., income that you had to work to receive - such as wages), AND that foreign earned income is eligible to be excluded on Form 2555, Foreign Earned Income, AND you claim either the foreign earned income exclusion and/or the foreign housing exclusion or deduction on Form 2555 for this foreign earned income, AND you're claiming a foreign tax credit on Form 1116 for foreign taxes paid on the K-1 foreign earned income.
      
   • You cannot claim a foreign tax credit (Form 1116) on income that is excluded through the foreign earned income exclusion (Form 2555).
      
   • In this situation, enter the information on the partnership K-1 Worksheet as it is shown on your K-1 and link the foreign tax to a Form 1116, including which column of Form 1116 the information should flow to. Then go to Schedule K-1 Partnership Additional Info Worksheet 1, Box 16, Foreign Transactions and check the box on Line 6c that says "If also filing Form 2555, Foreign Earned Income Exclusion, check if earned income from this activity is already entered on Form 2555." Next, manually enter the foreign income and deduction information directly on Form 2555 and complete Form 2555. Once you have completed Form 2555 and determined your foreign earned income exclusion and/or foreign housing exclusion or deduction, go to the Form 1116 Computation Worksheet you linked the K-1 to. On that worksheet, check the "general limitation" box at the top of the worksheet and in the column that you linked the K-1 to , in the "Income Excluded on Form 2555 Smart Worksheet," select which copy of Form 2555 the income was excluded on. Enter the country name and any deductions related to this income that were not excluded on Form 2555 as well as the date the foreign tax was paid or accrued and check the "paid" or "accrued" box. Also complete line 12 for any of the foreign taxes that are allocable to the income excluded on Form 2555.

1. Mortgage Interest Reduced by Mortgage Credit: When reducing deductible mortgage interest by any mortgage interest credit claimed on Form 8396, the program reduces line 10 of Schedule A (mortgage interest reported on Form 1098). It does NOT reduce line 11 (mortgage interest NOT reported on Form 1098). If you have mortgage interest NOT reported on Form 1098, you will need to make sure that the amount on Schedule A line 11 is reduced by any mortgage interest credit you claimed on Form 8396 for that mortgage. You may need to override amounts on lines 5d and 5e on the Tax and Interest Deduction Worksheet to remove the amount of mortgage interest credit claimed on Form 8396. You may also need to enter the amount of your mortgage interest NOT reported on Form 1098 (reduced by the mortgage interest credit from Form 8396) on line 6a of the Tax and Interest Deduction Worksheet.
2. Automobile used for Multiple Businesses: If you used an automobile in multiple business activities, the personal portion of property taxes transferring to Schedule A will be incorrect. In this situation, make any corrections on line 3b of the Tax and Interest Deduction Worksheet. You should enter the amount of property taxes remaining for that vehicle after reducing all portions of the property tax deducted for business purposes.
3. Noncash Charitable Contributions (Form 8283): TurboTax does not group similar donated items for which a deduction of more than $5,000 is claimed for Section B of Form 8283. In this case, separate Section Bs of Form 8283 must be completed for each donee organization.
4. Charitable Contributions Carryover: Schedule A does not limit charitable contributions carryover when an NOL (Net Operating Loss) carryover from a prior year exists. Refer to IRS Publication 526 for details on calculating your charitable contributions carryover from a prior year in this situation. You can enter this information on the Carryover Worksheet. To do this select the Deductions and Credits tab and choose the charitable donations carryover. The Interview screens will take you to where you can enter the appropriate donation carryovers.
5. Office in the Home at Vacation Home: If you operated an office-in-the-home in a vacation home that was rented out, use the Schedule E Worksheet to determine the amount of personal qualified mortgage interest, qualified mortgage insurance premiums, and real estate taxes. Enter the qualified mortgage interest in the "Allocated to Personal Use" column on a copy of the Home Mortgage Interest Worksheet and link Form 8829 to the Home Mortgage Interest Worksheet. Enter the real estate taxes and qualified mortgage insurance premiums from the "Allocated to Personal Use" column on the Form 8829 as an indirect expense. You will also need to use the override feature to delete the amount on line 5a of the Tax and Interest Worksheet.
6. Mortgage Interest Deduction Limits: If the total amount of all your mortgages (first, second, home equity, etc.) is more than either $1 million or the fair market value of your home, or you have more than $100,000 in home equity loans, there may be limits on the amount of interest you can deduct (these limits are $500,000 and $50,000 respectively if your filing status is married filing separate).

   TurboTax does not automatically limit your deductible interest, so you'll need to manually calculate your deductible interest and enter it in the program. To calculate your deductible interest refers to IRS Publication 936, which explains these limits and the best way to go about calculating your deduction.

7. Multiple State Sales Tax: If you and your spouse live in different states, the IRS has not released guidance for the computation of the sales tax deduction using the State Sales Tax Tables. The program does not handle this situation.
8. Qualified Conservation Contributions: The program does not support the calculation for Qualified Conservation Contributions or the charity limits for these types of contributions. For details refer to the IRS instructions for Form 8283.
9. Charitable Miles Subject to 30% Limitation: Schedule A does not provide a field for charitable miles subject to the 30% limitation. If the taxpayer drove any miles for charitable purposes subject to the 30% limitation, enter the miles multiplied by .14 directly into the Cash Contributions Smart Worksheet expanding table for cash contributions and indicate in the description area, 'Charitable miles subject to 30% limitation' and choose 'B' as the type of contribution.
10. Social Security Repayments: If repayments of social security benefits result in a negative amount in Box 5 on Form SSA-1099 or RRB-1099, you may be eligible to take a deduction for this amount. The program does not automatically calculate this deduction. See taking a deduction for more information.
11. Performing Artists: Performing artists only: The program does not test if related performing-arts business expenses are more than 10% of gross income from performance of those services. This is a requirement for taking these expenses as a deduction against Adjusted Gross Income (AGI) instead of taking them as a miscellaneous itemized deduction on Schedule A. Be sure the expenses qualify before claiming them as a deduction for AGI. Program diagnostics test for all other requirements.
12. Theft Loss Related to Ponzi-Type Investment Schemes: Form 4684 - Statement by Taxpayer Using the Procedures in Rev. Proc. 2009-20 to Determine a Theft Loss Related to a Fraudulent Investment Arrangement is not supported in the program. The IRS has issued Revenue Ruling 2009-9, 2009-14 I.R.B. 735, and Revenue Procedure 2009-20, 2009-14 I.R.B. 749, to assist taxpayers who are victims of losses from Ponzi-type investment schemes.

    These losses are deductible as theft losses of income-producing property on your tax return for the year the loss was discovered. If you qualify to use Revenue Procedure 2009-20 and choose to follow those procedures, you must complete this statement manually and then manually report the deductible theft loss on line 10 of that manually prepared statement on Line 32 in Section B of Form 4684 page 2 and add "Revenue Procedure 2009-20" across the top of Form 4684 page 2.

    For more information, see the above revenue ruling and revenue procedure.

13. Net Operating Loss and Casualty Loss: If after completing your tax return you have a negative amount on Form 1040, line 41, and you had a loss from a business activity such as those reported on Schedules C, E, F, or resulting from dispositions on Form 4797, or sustained a casualty loss, you may have a Net Operating Loss (NOL). The program does not calculate the amount of NOL to be carried back or forward to another year.

    To determine your NOL, if any, refer to Form 1045, Schedule A (not included with this program). You will probably also benefit by reviewing IRS Publication 536 for details about the NOL calculation.

14. Damage to Corrosive Drywall: The special procedure under which you may be able to claim a casualty loss deduction for amounts you paid to repair damage to your home and household appliances that resulted from corrosive drywall is not supported by the program. For details, see the IRS Pub. 547, Casualties, Disasters, and Thefts.
15. Restricted Stock Donations: The valuation of stock donated with restrictions to a qualified charitable organization and determination of the related deduction are not supported.

1. Education Tuition and Fees: Automatic Education Optimizer does not support the following scenarios:
   • More than 5 students.
   • Distribution from Coverdell Education Savings Account (ESA) reported on Form 1099-Q.
   • Distribution from Section 529 Qualified Tuition Plan (QTP) reported on Form 1099-Q.
   • Proceeds from series EE and I U.S. savings bonds used to pay education expenses reported on Form 8815.
2. Performing artists only: The program does not test if related performing-arts business expenses are more than 10% of gross income from performance of those services. This is a requirement for taking these expenses as a deduction against Adjusted Gross Income (AGI) instead of taking them as a miscellaneous itemized deduction on Schedule A. Be sure the expenses qualify before claiming them as a deduction for AGI. Program diagnostics test for all other requirements.
3. Employer contributions to Medical Savings Account (Form 8853): If an employer makes contributions to your MSA, the program will not compute the amount of any excess employer contribution or any applicable penalty. Overrides of the appropriate fields on Form 8853 may be necessary.
4. Medical Savings Account (Form 8853): Split of limitation between spouses: For married individuals, whether filing a separate or joint return, the MSA contribution limitation calculation under the Family Coverage rules may be divided any way agreed to by the two spouses. The MSA Contributions Limitation Worksheet only allows the limit to be divided evenly (50% to each spouse). For any other division, overrides of the appropriate fields on Form 8853 or the MSA Contribution Limits Worksheet are necessary.
5. Keogh, SEP, and SIMPLE Contributions: Contributions to more than one retirement plan are not supported by the program. For more information and suggestions for accommodating multiple-plan situations, see the Tax Help for the Keogh, SEP, and SIMPLE Contribution Worksheet.

   Note that for purposes of the Keogh/SEP self-employment income calculation, farm optional income, nonfarm optional income, church employee wages when no social security wages are reported on W-2 and the following categories included on the Schedule SE Adjustments Worksheet: other SE farm profit or loss, SE exempt farm profit or loss, other SE income reported on Form 1040, line 7, clergy Form W-2 wages, clergy housing allowance from Form W-2 Worksheet, clergy business deductions, other SE nonfarm profit or loss, SE exempt nonfarm profit or loss, notary public income are not included.

   Elective deferrals to an Individual 401(k) plan must be coordinated with any other elective deferrals to ensure that the total for the year does not exceed $16,500 ($22,000 if age 50 or older). Other elective deferrals include deferrals to employer provided retirement plans shown in Box 12 of Form W-2 and any contributions to a SIMPLE plan. Review all your elective deferrals for the year to be sure you have not exceeded the maximum. The program does not perform this limitation.

   Contributions to self-employed retirement plans must be limited to net self-employment income aggregated for all businesses owned by the taxpayer. The program does not perform this limitation for defined benefit or SIMPLE plans.

6. Domestic Production Activities Deduction (Form 8903) and W-2 Safe Harbor Methods: There are two safe harbor methods for determining the W-2 wage amount that is allocatable to Domestic Production Gross Receipts (DPGR). These methods are not automatically supported in the program. If the activity that is generating the deduction is a Schedule C or a Schedule F, enter the allocated W-2 amount in the Domestic Production Activities Smart Worksheet on that Schedule. If the activity is a Schedule K-1 (partnership) or a Schedule K-1 (S corporation) and the information is reported using box 13, code T for partnerships (box 12, code P for S corporations), enter the allocated W-2 amount on the Schedule K-1 Additional Information worksheet.
7. Domestic Production Activities Deduction (Form 8903) and Asset dispositions, basis, passive activity or at-risk limitations: The calculation in the program for Qualified Production Activities Income (QPAI) does not take into account asset dispositions, basis, passive activity or at-risk limitations. Manually enter any adjustments needed for asset dispositions, basis, passive activity or at-risk limitations in the adjustment fields provided.
8. Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent: In certain cases you need to attach a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, that was not prepared by TurboTax to your own return. You can e-file your return, then mail in the Form 8332 with Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return. Check the box on Form 8453 indicating you are mailing in Form 8332.
9. Self-Employed Health and Long-Term Care Insurance Deduction: The program does not support using the optional method on Schedule SE, Section B, line 4b, to determine the amount of income from a trade or business used to limit the self-employed health deduction.

1. Residential Energy Credits (Form 5695): We do not support the situation when a married couple owns and occupies a house with either another married couple or a single filer.
2. Additional Child Tax Credit (Form 8812): If you worked for a railroad as an employee representative and your employer reported in box 14 of your Form W-2, 12.4% Tier 1 tax and 2.9% Tier 1 Medicare tax, you must calculate and enter in box 14 only 6.2% Tier 1 tax and 1.45% Tier 1 Medicare tax. This ensures that the amount transferring to line 10 on Form 8812 is correct.
3. Qualified Adoption Expenses (Form 8839): If you and another person (other than your spouse if married filing jointly) each paid qualifying adoption expenses or each received employer-provided adoption benefits to adopt the same child, the program does not support dividing the $13,170 limit between the two of you.
4. Credit for Small Employer Health Insurance Premiums (Form 8941): The program does not automatically calculate the following items:
   • Qualifying employees
   • Full-time equivalent employees
   • Average wages of your full-time equivalent employees
   • Qualifying premiums paid

   For more information on the above items refer to the IRS Instructions for Form 8941.

5. General Business Credits from Publicly Traded Partnerships: If you have a general business credit that has been reported to you on a Schedule K-1 from a publicly traded partnership, you may need to do a separate calculation to determine how much of the credit is allowable. A listing of which credits are general business credits is shown on line 1 of Form 3800. Prepare a separate Form 8582-CR: Passive Activity Credit Limitations, using only the income from the publicly traded partnership. Add the total amount of the credit from the Schedule K-1 to line 3 of Form 3800, General Business Credits, and the allowable portion of the credit from line 37 of Form 8582-CR that you prepared should be added to line 5 of Form 3800. For more information, see the "Credits from PTPs" section in the Government Instructions.
6. Current Year General Business Credits Treated as Eligible Small Business Credits: The program will treat all current year general business credits on line 1 of Form 3800 as eligible small business credits (ESBC.) If you have a current year general business credit that is not an ESBC, you may need to do a separate calculation to determine how much of the credit is eligible. Enter the eligible amounts on lines B through D of the Line 8 Adjustment for Eligible Small Business Credits Smart Worksheet. For more information, see "Line 8 Eligible small businesses claiming ESBCs" in the Government Instructions.
7. Carry Forward of General Business Credits: If you used the transfer feature and have carried back any portion of a disallowed credit from 2009, you will need to adjust the amount that was transferred to 2010. If Form 3800 was not included in the 2009 federal income tax return, enter any carryover of general business credit from any of the individual credits that make up the General Business Credit. If you have any carry forward of general business credits, other than on Form 3800, Part I, enter the carry forward directly on the applicable form. This would include carry forwards to Form 8586 and Form 3468, Part III.

   The individual business credits are not tracked separately. The credit carryfoward for any credit that is being recaptured must be reduced by the amount being recaptured. The credit carryfoward must also be reduced by any credit that has reached its maximum carryfoward life.

8. Passive Activity Credit Limitations (Form 8582CR): Credits claimed on a Publicly Traded Partnership K-1 are not limited by the passive activity credit limitations.
9. Foreign Tax Credit (Form 1116): If you had foreign source qualified dividends or had a gain on line 13 of your Form 1040 and any part of that gain was derived from foreign source capital gains or losses, the program does not calculate the amount of foreign source qualified dividends or foreign source capital gain or loss that will go to Form 1116.

   To correct the situation, you may need to do some manual calculations. See the IRS instructions for Form 1116 to determine whether you need to make some adjustments to your dividends or capital gain or loss amount.

   Gross income from all sources is automatically calculated by the program. However, in certain instances, you may need to modify this amount. The program includes in gross income the amounts reported on a Schedule K-1 for "gross income from all sources" in the foreign transaction section of the K-1. If there isn't an amount in that section, the program includes in gross income the amounts that flow to Schedule E, page 2, income columns. These amounts as reported on Schedule E, page 2, are NET amounts (income minus related expenses) rather than GROSS amounts (income without being reduced by related expenses). Therefore, you may need to adjust your gross income from all sources to include your Schedule K-1 GROSS income rather than the NET income. There is an enterable field on Form 1116 above line 3e for you to enter an adjustment amount.

   Other manual calculations may also be necessary in certain circumstances. For example, the program does not automatically calculate the following:

   • The required reduction of taxes on income excluded on Form 2555 (Foreign Earned Income Exclusion).
   • If any foreign earned income is excluded on Form 2555, allocation of the deductions related to foreign source income.

   The program does not calculate separate Forms 1116 for categories of income Section 901(j) or "Income re-sourced by treaty." If more than one copy of Form 1116 is completed using either of these categories of income, the second and all additional copies will be identified as "Statements" and only one Form 1116 with each of these categories of income will have Part III completed.

   The program completes Part IV (Summary of Credits from Separate Parts III) of the FIRST Form 1116 that is completed. It does not complete the Part IV Summary on the Form 1116 with the highest amount on Line 21.

   If there is passive category income that is treated as general category income because it is high taxed (HTKO), you must read the IRS Form 1116 instructions for line g and lines 2-5 and 13 on how to enter this income and the related foreign tax. Amounts automatically calculated on these lines must be overridden.

   The program does not calculate the Additional Foreign Tax Credit on U.S. Income Worksheet provided in Publication 514.

10. Credit for Prior Year Minimum Tax (Form 8801): The program does not support the calculation on line 9 for a child under age 24. Refer to IRS instructions for Form 8801 for details on calculating line 9.
11. Tax Credit Bond Holders: The Credit to Holders of Tax Credit Bonds, Form 8912, such as Build America Bonds, is not supported by the program. To claim the credit, complete Form 8912 from the IRS website and enter the allowed credit from Form 8912, line 18, on Form 1040, line 53.

1. Form 1099-MISC and Nonqualified Deferred Compensation: If a Form 1099-MISC has an amount in Box 15b for nonqualified deferred compensation plans under Code Sec. 409A, see IRS Publication 15-A for the calculation of the additional tax that must be reported on Form 1040.
2. Alternative Minimum Tax (Form 6251): The program does not recalculate the computation of foreign tax credit in determining alternative minimum tax by farmers and fishermen using income averaging. This provision is expecting an IRS technical correction provision. Review line 34 of Form 6251 and make any adjustments necessary.

   The program does not support the at-risk loss limitation calculation for non-passive activities. In this situation, the amount of loss limitation should be entered on line 20 of Form 6251. Form 6251, line 17 also needs to be reduced by the depreciation adjustment for this activity.

   The program does not automatically calculate the related adjustments on line 27 for Section 179 expense, expenses for business or rental use of home, SE health insurance, etc.

   AMT adjustments related to the disposition of property resulting from refiguring casualty gain or loss to business or income-producing property reported on Form 4684, Casualties and Thefts are not automatically supported by the program. Any required adjustment should be entered directly on Form 6251.

   The program does not recalculate the computation of Form 8615, Tax for Certain Children Who Have Investment Income, for exclusion of the parent's Schedule J tax, for the purposes of Alternative Minimum Tax. If the parent's tax return included a Schedule J, the parent's tax return should be recalculated without Schedule J, and then Form 8615 recalculated with the resulting revised amounts.

3. Tax for Certain Children Who Have Investment Income (Form 8615) and Annualizing Income: Filers wanting to annualize income for purposes of calculating underpayment penalties must manually calculate and enter the tax for line 12 of Form 2210, Schedule AI. Remember to annualize the income of parents and siblings in determining the amount to enter.
4. Underpayment Penalty (Form 2210): Form 2210 does not support the calculation of relief from underpayment penalty granted by the IRS due to disasters. Taxpayers affected by a disaster where the IRS provides relief should calculate the relief granted for the specific disaster and request a waiver on Form 2210.
5. Form W-2 and Code Z: If your Form W-2 has an amount with code Z in box 12 for nonqualified deferred compensation plans under code section 409A, see IRS Publication 15-A for the calculation of the additional tax that must be reported on Form 1040.
6. Tax on Lump-Sum Distributions (Form 4972): If a person receives a lump-sum distribution from his or her own retirement plan and, in the same year, another lump-sum distribution as a beneficiary of an employee who died, and both distributions qualify for special averaging on Form 4972, only one distribution can be reported on Form 4972 for the year. Normally this situation would need to be reported on two Forms 4972. However, the program only supports one Form 4972 for the taxpayer and one for the spouse. The second Form 4972 can be prepared manually, and the tax from that form can be entered on Form 1040 on line D of the Tax Smart Worksheet above line 44.
7. Transactions with Foreign Trusts/Tax on Accumulation Distribution: If you are subject to tax on an accumulation distribution from a foreign or domestic trust, you must obtain Form 3520 and/or Form 4970 from the IRS. Any tax you owe as a result of completing these forms must be added to line E on the Smart Worksheet for line 60 of Form 1040.

1. Change of Address (Form 8822): In some circumstances the IRS may require you to send this form (with slight modifications) to more than one IRS Service Center. If this applies to you, you may need to open a new tax file and create a separate Form 8822; the program does not automatically generate one for you. Generally a separate Form 8822 is required to be sent to the IRS if the taxpayer changes both his/her home address and his/her business address or location. Opening a new tax file will allow you to save each copy of the form you file. See Form 8822 Help for more information about where you will need to file this form.
2. Direct Deposit of Refund to More Than One Account (Form 8888): Form 8888 will not support splitting your refund between direct deposit and getting a check. The user will only be allowed to choose direct deposit or get a check for any portion of their refund not used to purchase bonds on Form 8888.
3. W-4 Worksheet: The program does not calculate withholding to exceed 80% of salary. In that situation, make supplemental estimated tax payments if you are in this situation.
4. Importing data from a W-2, 1099, or 1098: Be aware that amounts larger than 9,999,999.99 will not import. Be sure that you review your imported data carefully.
5. Large number calculations: The program does not handle the rare event of the entry of numbers greater than $9,999,999.99 or intermediate calculations that require more than 9 digits.
6. Community property: The program does not automatically support the community property reporting requirements for individuals who are married filing separately or who are registered domestic partners and have community property. These requirements are listed in IRS Publication 555, Community Property.
   The program does not support the IRA deduction calculation or other specialized calculations for RDP/California same-sex spouses. See IRS Publication 555, Community Property.
7. Changing filing status from MFJ: The program does not automatically support changes required to carryover items when an individual is married filing jointly in one year and then changes to a different filing status in the next year. Examples of carryover items that may be impacted are capital loss carryovers, passive loss carryovers, taxability of a state tax refund, and carryovers of any other deduction or credit.
8. Other unsupported situations: The program does not support any specific income, deduction or credit items that are not identified on a form or worksheet or included as part of the TurboTax Interview.
9. Filing Status of State Returns: TurboTax doesn't automatically optimize filing status for non-community property state returns. We will select by default the same filing status as your federal return.
10. Federal and State Interaction: TurboTax does not make recommendations based on optimizing across both the federal and state returns. The recommendations are specific to the return being prepared.

1. To import your data, you must track your financial data in Quicken 2009 or later, or QuickBooks 2009 or later. If you have an earlier version of Quicken, you can import using TXF. If you have the multiuser version of the QuickBooks program, note that only the QuickBooks Administrator can import QuickBooks data to TurboTax. QuickBooks must also be in single-user mode.
2. Car and truck expenses: You may import Quicken data to only one Car and Truck Expense Worksheet per activity.
3. If you had short sales in Quicken, use the TXF import. Review your Schedule D carefully.
4. Some capital gain transactions with a net gain of zero may not import. Review your Schedule D carefully.
5. The transactions that you are importing must be in US dollars. TurboTax does not support foreign currency.
6. Tips and Education Expenses are no longer supported for import. You will need to enter these manually.

Important

• Be aware that amounts larger than 9,999,999.99 will not import. Be sure that you review your imported data carefully.
• You can import up to 3,000 transactions using a desktop version of TurboTax and 500 transactions using TurboTax Online.