Calculations Not Supported by TurboTax 2009

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

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

In some of these cases, customers are given instructions how to do the calculations on their own and then enter them in TurboTax 1040 products.

Below is a list of the calculations not currently supported by TurboTax, and where appropriate, instructions on how to do certain calculations and enter them.

Job Creation and Worker Assistance Act of 2002

TurboTax does not support certain provisions of the Job Creation and Worker Assistance Act of 2002. The provisions
deal with the following:

• Up to $35,000 IRC Section 179 expense deduction limit for qualified New York Liberty Zone property placed in service after September 10, 2001.
• The election statement required when electing out of the special depreciation allowance for New York Liberty Zone
  property.
• 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.

Schedule A - Itemized Deductions

1. 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. 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. 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.
4. 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.
5. 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).

What should I do if I'm affected?

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

Form W-2

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.

Form SSA-1099 / Form RRB-1099

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.

Home Sale Worksheet

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.

Schedule C - Clergy 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 are entered in Part II, line 5c of the Schedule SE Adjustments Worksheet.

Schedule C - Reporting Rentals on Schedule C

Reporting rental activities as qualified joint ventures on Schedule C is not supported.

Schedule E Worksheet (Rentals)

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.

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.

In 2009, 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.

Reporting rental activities as qualified joint ventures on Schedule C is not supported.

The election for real estate professionals to aggregate their activities under IRC 469(c)(7) is not supported.

Schedule SE - Adjustments to Income

If you have partnership losses subject to at-risk limitations, the program does not automatically make adjustments to self-employment income. You must enter any applicable adjustments on the Schedule SE Adjustments Worksheet.

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. 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.

Net Operating Loss (NOL)

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.

If you have an NOL, you may elect to carry the loss back to previous years. Caution: If you decide to forgo this election (and carry the loss forward to future years) you will need to send a statement confirming this with your tax return. The program Does support the Election To Forgo the Carryback Period for Net Operating Loss. If the NOL Election statement is not filed on time, you may forfeit your right to forgo the carryback period. See IRS Publication 536 for details.

Asset Entry & Car and Truck Worksheets

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.

Form 1040 - U.S. Individual Income Tax Return

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.

Form 1099-G - Certain Government Payments

Form 1099-G, box 2, state and local income tax refunds are not supported on Form 1099-G but are supported on the Federal Carryover Worksheet.

Form 1099-MISC - Miscellaneous Income

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.

State and Local Income Tax Refunds Worksheet

If you received a state or local income tax refund for years prior to 2008 during 2009, 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.

Form 1116 - Foreign Tax Credit

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. 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.

FORM 1116 / FORM 2555 / PARTNERSHIP K-1 WORKSHEETS

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-like 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.

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-1Partnership 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.

Form 2106 - Employee Business Expenses

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.

Form 1040 - Foreign Earned Income Tax Calculation

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.

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.

Form 3520, Form 4970 - 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.

Form 4562 - Depreciation and Amortization

The program does not automatically calculate the following depreciation items: The increased section 179 expense deduction limit for Enterprise Zones, Renewal Communities, or the New York
Liberty Zone; 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.

Form 4562 - Taxable Income Limitation for Section 179

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.

Form 4562 - Property Acquired by Like-kind Exchange or Involuntary Conversion

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:

• 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.
• The use of the optional MACRS tables to compute depreciation for the new property. Only the computation method is supported.
• Computing depreciation on the new property when the old property was also acquired by like-kind exchange or involuntary conversion.

Form 4797 - Section 179 Recapture

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.

Form 4952 - Investment Interest Expense

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.

Form 4972 - Tax on Lump-Sum Distributions

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.

Form 5695 – Residential Energy Credits

The program does not support the situation when a married couple owns and occupies a house with either another married couple or a single filer.

Form 6198 - At-Risk Limitations
The program does not calculate the amount of Alternative Minimum Tax (AMT) At-Risk disallowed losses. The amounts of prior year disallowed losses are not automatically carried forward to the current year for either regular or AMT purposes. You will need to keep separate records of any disallowed losses for reference in calculating next year's limitation.

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.

Schedule K-1 Worksheet (Partnerships and S Corporations)

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.

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.

Form 6251 - Alternative Minimum Tax

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 18 also needs to be reduced by the depreciation adjustment for this activity.

The program does not automatically calculate the related adjustments on line 28 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 re-figuring 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.

Form 6252 - Installment Sales

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.

Form 8582 - Passive Losses

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.

Form 8582CR - Passive Activity Credit Limitations

Credits claimed on a Publicly Traded Partnership K-1 are not limited by the passive activity credit limitations.

Form 8606 - Nondeductible IRAs

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 (recharacterizes) to a traditional IRA. The taxpayer then converts the same amount again (conversion #2) to a Roth IRA and then recharacterizes 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 2009.

Form 8801 - Credit for Prior Year Minimum Tax

The program does not support the calculation on line 9 for a child under age 18. Refer to IRS instructions for Form 8801 for details on calculating line 9.

Form 8812 - Additional Child Tax Credit

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.

Form 8822 - Change of Address

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.

Form 8824 - Like-Kind Exchanges

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.

Form 8853 - Medical Savings Account

Employer contributions to MSAs: 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.

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.

Form 8853 - Long Term Care Insurance Contracts

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 28.

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 28.

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, 2008 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 override the Line J amount.

Form 8903 - Domestic Production Activities Deduction

W-2 safe harbor methods: There are two safe harbor methods for determining the W-2 wage amount that is allocable 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.

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.

Form 8839 - Qualified Adoption Expenses

If you have prior year excluded benefits for foreign and special needs children, we do not support this calculation.

Form 982 - Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)

When a cancelled debt is excluded from 2009 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 (Cancelled Debts, Foreclosures, Repossessions and Abandonment's), IRS publication 225 (Farmers Tax Guide) and publication 525 (Taxable and Nontaxable Income).

Keogh, SEP, and SIMPLE Contribution Worksheet: 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.

Form 8615 and Form 2210, Schedule AI

Form 8615, Tax for Certain Children Who Have Investment 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.

Form 2210 - Underpayment Penalty

Form 2210 does not support the calculation of the relief from the underpayment of 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.

Disposition of Nondepreciable Personal Property Used in a Trade or Business

According to the IRS, if you have a gain or loss from the disposition of nondepreciable 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.

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.

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.

Quicken or QuickBooks Import

1. To import your data, you must track your financial data in Quicken 2008 or later, or QuickBooks 2008 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 TurboTax.
- Quicken 2008 users must have version R3 or later.