Discussion:State Refund Reminder

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Discussion Forum Index --> Business Growth Community --> State Refund Reminder

Dennis (talk\|edits) said:	29 January 2007
The problem still exists in ProSeries Basic, so I thought it would be a good idea to repost this discussion for the benefit of the software dependent. Discussion:State Refund and AMT

Death&Taxes (talk|edits) said:

29 January 2007

I just ran this on Proseries Professional this year for someone with a 2100 refund last year and 671 of AMT and it appears it correctly came up that his refund is not taxable since AMT without that amount of withholding in his 2005 taxes was $138. Obviously I am not giving you enough facts, but any glance at the return tells me the most if not all of the refund is not taxable. Understand too that the return has no other information in it but this calculation, but his income should not change this one bit. Last year, I recall I would have ended up with this amount taxable.

One simple way to recompute is to open Tax Planner in the 2005 program....Planner does calculate AMT.

Be glad you don't do several sports people I have, where every four or five years their union refunds 75-90% of dues assessments for those years, and you have to recompute each year to find the tax benefit. The first time I had one of these in 1998, I had to call an IRS specialist in Washington, where he referred me to a PLR on state tax refunds.

FrankF (talk|edits) said:

7 March 2007

I admit to being software dependent on the AMT. I tried following Discussion:State Refund and AMT, but the final answer isn't obvious, at least to me. For the Proseries dependent, do I understand the steps you (Dennis) take correctly to be:

Open prior year Proseries
In prior year Proseries, override Form 1040 line 10 with the current year refund amount
In prior year Proseries, copy AMT and regular tax amounts
In current year Proseries, paste the above-mentioned (recalculated) AMT and regular tax amounts into the current year refund worksheet

Thanks in advance for any additional clarification you can give.

Dennis (talk\|edits) said:	7 March 2007
Step two would be to override line 10 to add the current refund amount to the prior year's number. Lacerte will give a slightly different answer by making the change on schedule A, reducing the prior year deduction by the amount refunded.

Death&Taxes (talk|edits) said:

7 March 2007

I use the prior year [2005] Tax Planner, open it and select 2005 as the year in the first available column....then I open the itemized deductions section and reduce state and local taxes by the refund, go back to the summary and put the revised AMT and regular tax in the 2006. One warning, however, if you had a real estate refund on Line 21, you might have to make additional calculations.

As I recall when I tried to do this for 2005 using the 2004 planner, it never gave the correct answer and I resorted to a method like Dennis. I was not aware of Taxalmanac then and Dennis' work.

FrankF (talk|edits) said:

7 March 2007

Thanks for the clarifications — I was doing it the way Dennis described, but I was not confident in the result. I went through this the past few years trying to understand the nonexistent help in Proseries, and I was grateful for the verification. I wonder what our moderator would think about having a Proseries tips/knowledgebase on taxalmanac.org for stuff like this to fill in the gaps in the help file.

MBMGroup (talk\|edits) said:	27 January 2008
I also am software dependent. Lets suppose I do not have any proir information about thge client in 2006. They are new and they came to me with a copy of their 2006 return. lets say their AMT was $120 and their state refund in 2007 was $3500. Proseries is useless for this situation. Do I just add the refund back to 2006's AGI and recompute from there?