Discussion:Lacerte - COLA taxes adjustment

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Discussion Forum Index --> Business Growth Community --> Lacerte - COLA taxes adjustment

Natalie (talk|edits) said:

16 April 2006
Okay, now I know that an adjustment is required on the federal return for the state tax deduction on Schedule A (learn something every day). Now my question is, how to I adjust the calculation in Lacerte? The program is taking a percentage of all of the state taxes (withholdings, estimates, prior tax paid, etc.), but most of the income comes from the spouse and therefore shouldn't be included in the reduction of the deduction. Does anyone know how to get around this in Lacerte?

Bengoshi (talk|edits) said:

16 April 2006
hehe...this is the same issue I had (using Creative Solutions Ultra Tax). You'd think if only one spouse received COLA, then just that spouse's withholding should be adjusted on Sch. A. But a representative for Creative Solutions in my area vigorously claimed all withholdings receive the adjustment on the federal return. Not sure if that's correct...

What is the formula Lacerte uses in figuring the COLA adjustment? I can't remember what Ultra Tax does -- something like: COLA /(FED AGI + COLA) = % ;  % x State Withholding = Non deductible portion of State income taxes.

Natalie (talk|edits) said:

17 April 2006
Yes, that's it. And now that I think about it a little more, it makes sense. Since we're using the total AGI in the denominator, that already reduces the % to account for any other income. Thanks Bengoshi!

Taxea (talk|edits) said:

17 April 2006
And isn't that ashame when the cola for the person that has it is a much higher percentage then you get when you use the agi of both parties on the return!

I calculate the cola receivers adjusted gross income and all other cola adjustments separately so the 20% cola remains 20% for the state tax and also for the prior year refund.

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