Merging individual clients for married filing joint and domestic partnership returns (1040)

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The joint client merge feature is a valuable tool designed to merge client data from two separate returns into one client. From that client, you can calculate the return as married filing joint, or for state purposes, as a domestic partnership.

Merging individual clients provides:

Merging individual clients is particularly useful when:

Merging individual clients for married filing joint and new domestic partnership returns

Use this procedure to merge the client data from two individual clients into one joint client for purposes of filing a married filing joint or domestic partnership return.

If you are processing proforma'd domestic partner returns, see the Working with proforma'd domestic partner clients to preserve carryover amounts section.

  1. Complete each individual return for the taxpayer and spouse/partner, including specifying for each individual return a filing status of single, married filing separately, head of household, or qualifying widow(er), as applicable, in Screen 1040.

    The separate returns used in the merge process to create a joint domestic partnership return should be completed to the point of being ready to file for federal purposes prior to merging. All state data entered in the state tax and Client Organizer screens must be entered in the joint client after merging.

    The separate returns used in the merge process to create a joint individual return do not need to be completed to the point of being ready to file for federal purposes prior to merging. Federal data can be entered in tax or Client Organizer screens in the joint client after merging or in the separate clients before merging. State data must be entered in state tax or Client Organizer screens in the joint client after merging.

  2. After each individual return is completed as necessary, choose File > New Client to open the New Client dialog.
  3. In the General information group box, select a preparer (if applicable), and enter a unique client ID for the new joint client you are about to create.
  4. In the Entity information group box, click the 1040 option and select Domestic Partner from the 1040 drop-down list.

    Note: If the clients to be merged are not domestic partners, but instead are two individuals who will file a married filing joint return, you still need to select Domestic Partner from the 1040 drop-down list. At the end of this procedure, after the joint client is created, you will change the return type for the joint client from Domestic Partner to an Individual return.

    After changing a Domestic Partnership return to an Individual return, the return type cannot be changed back to a Domestic Partnership return.

  5. Click the Add State(s) button to add a state return to the joint client, if applicable.

    Note: Currently, California, District of Columbia, Delaware, Hawaii, Illinois, New Jersey, and Oregon are the only states supported by UltraTax CS that allow people in domestic partnerships, state-only marriages, and civil unions to file a state income tax return with a joint status.

  6. Click the Advanced Properties button to open the Advanced Properties dialog, then click the Domestic Partners tab.
  7. In the Domestic Partners tab, highlight the taxpayer's client in the client list and click the Select Taxpayer button. Then highlight the spouse's client in the client list and click the Select Spouse button.
  8. If the new joint client will be used to prepare a Domestic Partnership return, check the Separately list individual returns in DPR transmittal letter checkbox if you would like the list of returns to appear in the Transmittal Letter.
  9. Click OK to close the Advanced Properties dialog.
  10. In the New Client dialog, click OK to begin the merge process.
  11. If critical errors and/or warnings are generated during the merge process, the Merge Client Data Results dialog opens detailing those critical errors and/or warnings. Critical error messages should be addressed by the preparer before proceeding with the merged client. Warning messages are generally informational and may not require additional attention from the preparer.

    Note: To print the list of critical errors and/or warnings created during the merge process, click the Print button in the Merge Client Data Results dialog.

    Do one of the following:

    • If the Merge Client Data Results dialog did not open, there were no critical errors or warnings and the merge is complete. Proceed to the next step.
    • If critical errors were generated and you want to resolve those critical errors before completing the merge, perform these steps.

      1. If desired, click the Print button to print the list of critical errors and warnings.
      2. In the Merge Client Data Results dialog, click Cancel. This will delete the new domestic partner (joint) client you tried to create.
      3. UltraTax CS notifies you that the new joint client failed to initialize. Click OK.
      4. Open the appropriate taxpayer and/or spouse client, address the critical errors, and close the client(s) after the critical errors are resolved.
      5. Repeat Steps 3-10 to re-create the domestic partner (joint) client.
    • If critical errors were generated and you want to ignore the critical errors, click OK to complete the merge, and then proceed to the next step. UltraTax CS will generate a diagnostic message in the merged client when unresolved critical errors still exist.
    • If only warnings were generated, click the Print button to print the list of warnings, if desired, click OK to complete the merge, and then proceed to the next step.
  12. The new joint client will open when the merge is complete. If the new joint client will be filed with a status of married filing joint and not as a domestic partnership, choose File > Client Properties, select the desired Individual return type from the 1040 drop-down list, and click OK to close the Client Properties dialog. If a warning message requires additional attention, make the necessary changes in the new joint client.

    If you recombine data from taxpayer and spouse clients into an existing joint client, any changes made to federal data in the existing joint client will be overwritten.

    After changing a Domestic Partnership return to an Individual return, the return type cannot be changed back to a Domestic Partnership return.

Note: UltraTax CS adheres to the following default rules when merging data:

  • Data in amount fields in single-unit input screens are added together and transferred to the joint client.
  • Non-financial data in single-unit input screens transfers only from the taxpayer client.
  • Data entered in statement dialogs in single-unit input screens transfers from both taxpayer and spouse clients, with the taxpayer items appearing first and followed by the spouse items.
  • All data in multiple-unit input screens transfers to the joint client.

It is strongly recommended that you thoroughly review data in the merged joint client to ensure you have the desired results.

In some situations, the default merge rules listed above do not apply. UltraTax CS assumes the following default merge behavior for the following forms and screens.

Input screen Default
2YR, 8914, Amend, ComPSt, FAFSA, History, PRR, TPW, TPW-2, TPW-Comp, and TPW-ACA Amounts entered in these input screens do not transfer to the joint client.
4255 Amounts entered in this input screen do not transfer to the joint client unless the amounts are entered in the asset module. After the merge, re-enter any non-asset module data in Screen 4255 in the joint client.
1116, 2106, 2106-2, 3903, 8621, 8621-2, 8886, 8886-2, 8938-2, and MortgInt The Unit field in these screens may be reassigned during the merge process to ensure all unit numbers in the joint client are unique.
3903, 5405, 8332, 8828, H, Home, POA, and POA-2 A maximum of two units will transfer to the joint client.
3115, 4835, 5471, C, F, K-1, K1-T, and Rent If the Unit field in the spouse client has the same number as the Unit field in the same input screen in the taxpayer client, the entire activity will not transfer from the spouse client to the joint client. In order to transfer the spouse activity, open the spouse client, change the number in the Unit field to a number that will be unique in the joint client, and then recombine the clients.
4684B and 4684P The Casualty/Theft number field may be reassigned during the merge to ensure all casualty/theft numbers in the joint client are unique.
56, 1310, 5074, 8379, 8697, 8840, 8857, 8857-2, 8857-3, 8938, and 9465 If the input screen in the taxpayer client has data, then the input screen data from the taxpayer client will transfer to the joint client and any input screen data from the same screen in the spouse client will not. If the input screen in the taxpayer client is blank, then any input screen data in the spouse client will transfer.
8689 Input screen data will only transfer from the taxpayer client.
8814 The Child number fields may be reassigned during the merge to ensure all child numbers in the joint client are unique.
8839 The amount entered in the Married filing separate qualifying for credit and/or exclusion field will not transfer to the joint client.
8862 Data entered in the EIC reduced or disallowed due to incorrect earned income or investment income? and Taxpayer (or spouse if MFJ) qualifying child of another? fields will not transfer to the joint client. Data entered in the Child 1, Child 2, and Child 3 sections will only transfer to the joint client if the child is present in the taxpayer client.
B&D

If either spouse has an interest in or signature/authority over a foreign account, the information in all related fields will transfer to the joint client, even if the other spouse did not have an interest or signature/authority over a foreign account.

If both clients have data in the 1202 Corp reported on 1099-DIV or 1202 Corp reported on Form 2439 fields, the data will not transfer to these fields in the joint client. If data exists in only the taxpayer or spouse client, the data will transfer to the joint client.

Cr Data in the Not qualifying for child tax credit(s) and Total social security, Medicare and Tier 1 taxes paid (Force) fields will not transfer to the joint client.
Cr-2 If there is data in the Form 8396 - Mortgage Interest Credit section in the taxpayer client, the entire section will transfer only from the taxpayer client to the joint client. If this section is blank in the taxpayer client, any data in this section of the spouse client will transfer to the joint client.
EIC Data in the Disqualifying investment income (Force), Not qualifying for earned income credit, Have IRS figure the credit, and Preparer name/PTIN fields, as well as the fields for Form 8867 due diligence requirements, will not transfer to the joint client. Data entered in the Child 1, Child 2, and Child 3 sections will only transfer to the joint client if the other spouse does not have any children.
Elect A maximum of 10 election selections will transfer to the joint client. Entries in the Passive Activity Group Disclosure - Rev Proc 2010-13 section will not transfer to the joint client.
Est Data in the Treat calculated amounts as paid field will not transfer to the joint client. The largest amount between the taxpayer and spouse client in the Amt to round up each estimate field will transfer to the joint client.
Letter A maximum of five custom paragraph selections will transfer to the joint client. Data in the Miscellaneous Variables and Mailing Slipsheet section will not transfer to the joint client. Data in the Invoice amount (Force), Dollar discount, Percent discount, and Client invoice number fields will not transfer to the joint client.
1045-3, 1045-4 Amounts entered in the Net Operating Loss section will not transfer to the joint client.

Notes

  • State input screen data will not transfer to the joint client. Any state-specific data from the taxpayer and spouse client must be re-entered in the joint client after the merge.
  • Data entered in federal Client Organizer screens, if licensed, including prior-year amount fields, will transfer to the joint client. However, data entered in state Client Organizer screens will not transfer to the joint client and must be re-entered in the joint client after the merge.
  • Information entered in the asset module will transfer to the joint client.

Tips

Recombining taxpayer and spouse clients into an existing married filing joint or domestic partnership return

If individual taxpayer and spouse clients are merged into a joint client, and information in the taxpayer or spouse client changes after the clients are merged, the taxpayer and spouse client data can be recombined into the joint client. Use this procedure to recombine client data from the taxpayer and spouse clients into their joint client for purposes of filing a married filing joint or domestic partnership return.

If you are recombining proforma'd domestic partner clients and want to preserve carryover amounts, see the Working with proforma'd domestic partner clients to preserve carryover amounts section before proceeding.

Recombining data from taxpayer and spouse clients into an existing joint client will overwrite any changes made to federal data, including State if different fields, in the existing joint client. You can enter new information manually into the joint client instead of recombining the data to avoid overwriting information specific to the married filing joint client, such as amounts entered for section 179 elections.

  1. Open the joint client whose individual taxpayer and spouse client data you want to recombine.
  2. Choose File > Client Properties to open the Client Properties dialog.
  3. Click the Advanced Properties button to open the Advanced Properties dialog, then click the Domestic Partners tab.
  4. In the Domestic Partners tab, the joint client's taxpayer and spouse clients are already selected. Verify that the selected taxpayer and spouse clients are the proper clients. If necessary, select a different taxpayer and/or spouse client.
  5. Mark the Recombine the federal data of the taxpayer and spouse clients checkbox, and click OK to close the Advanced Properties dialog.
  6. If you are recombining proforma'd domestic partner clients as described in the Working with proforma'd domestic partner clients to retain carryover amounts section, mark the Retain prior year carryover amounts when re-combining current year data checkbox.
  7. In the Client Properties dialog, click OK to begin the recombine process.
  8. If the new joint client will be used to prepare a Domestic Partnership return, check the Separately list individual returns in DPR transmittal letter checkbox if you would like the list of returns to appear in the Transmittal Letter.
  9. If critical errors and/or warnings were generated during the recombine process, the Merge Client Data Results dialog opens detailing those critical errors and/or warnings. Critical error messages should be addressed by the preparer before proceeding with the merged client. Warning messages are generally informational and may not require additional attention from the preparer.

    Note: To print the list of critical errors and/or warnings created during the recombine process, click the Print button in the Merge Client Data Results dialog.

    Do one of the following:

    • If the Merge Client Data Results dialog did not open, there were no critical errors or warnings and the recombine process is complete.
    • If critical errors were generated and you want to resolve those critical errors before completing the recombine process, perform these steps.

      1. If desired, click the Print button to print the list of critical errors and warnings.
      2. In the Merge Client Data Results dialog, click Cancel.
      3. UltraTax CS notifies you that the joint client failed to initialize. Click OK.
      4. Open the appropriate taxpayer and/or spouse client, address the critical errors, and close the client(s) after the critical errors are resolved.
      5. Choose File > Open Client and open the domestic partner (joint) client you tried to recombine.
      6. UltraTax CS notifies you that domestic partner client was not successfully combined and asks if you want to recombine the client. Click Yes. The Advanced Properties dialog opens.
      7. Verify that the selected taxpayer and spouse clients are the proper clients. If necessary, select a different taxpayer and/or spouse client. When you have verified that the selected taxpayer and spouse clients are the proper clients, click OK to close the Advanced Properties dialog.
      8. In the Client Properties dialog, click OK to recombine the clients, and then return to step 8.
    • If critical errors were generated and you want to ignore the critical errors, click OK to complete the recombine process. UltraTax CS will generate a diagnostic message in the merged client when unresolved critical errors still exist.
    • If only warnings were generated, click the Print button to print the list of warnings if desired, and click OK to complete the recombine process.

Working with proforma'd domestic partner clients to retain carryover amounts

When processing domestic partner returns that were proforma'd from the prior year, all three returns related to the merge - the individual taxpayer, individual spouse, and merged domestic partner return - must be proforma'd to preserve the joint carryover amounts calculated in the prior year.

  1. Proforma all three related prior-year returns: the individual taxpayer return, individual spouse return, and the merged domestic partner return.
  2. In the proforma'd individual taxpayer and spouse federal returns, enter the current-year federal data.
  3. Recombine the individual taxpayer and spouse returns as described in the Recombining taxpayer and spouse clients into an existing married filing joint or domestic partnership return section.

    Note: The items listed in the table below will be retained in the merged client upon recombining the individual returns.

    Input screen Amounts retained
    1099Q Basis of this account on 12/31/12 field
    1116CO All 2003-2012 foreign tax credit carryover information fields
    2106 Section 179 carryover fields
    2Yr All fields on the screen
    3468 Investment credit and Rehabilitation credit prior year passive credit carryover fields
    4835-2 Section 179 carryovers, Excess Farm Loss, and all passive activity carryover fields
    8801 All fields on the screen
    8829 Carryovers for Operating expenses, Casualty loss CO holding period, and Depreciation. This information is entered on the assets Home Office tab.
    8834 Prior year passive credit carryover fields.
    8903 All fields in the Prior Year Suspended Deduction section
    8907 Prior year passive credit carryover, Recapture of energy credit for this and any prior tax year, and Recapture of enhanced oil recovery credit for any prior tax year fields
    8910 Prior year passive credit carryover fields
    8911 Prior year passive credit carryover fields
    8936 Prior year passive credit carryover fields
    8941 Prior year passive credit carryover fields
    C-3 Section 179 carryovers, Excess Farm Loss, and all passive activity carryover fields
    CO All fields on the screen
    CO6765 All fields on the screen
    COGBCr All fields on the screen
    Cr-2 Certain retirement distributions received for tax year (including extensions) 2012 and 2011 fields
    CrBus All Prior year passive credit carryovers fields and Research expenses for prior 3 yrs fields
    CrBus2 All Prior year passive credit carryovers fields
    CrBus3 All Prior year passive credit carryovers fields and Indian employment credit recapture field
    CrBus4 All Prior year passive credit carryovers fields and New markets credit recapture field
    CrBus5 All Prior year passive credit carryovers fields
    FarmLoss All fields on screen
    F-3 Section 179 carryovers, Excess Farm Loss, and all passive activity carryover fields
    IRA Traditional IRA basis, Roth IRA contribution basis on 12/31/12, and Roth IRA conversion basis 12/31/12 fields
    K1-4 Section 179 carryovers, Excess Farm Loss, and all passive activity carryover fields
    K1-St Section 179 carryovers, Excess Farm Loss, and all passive activity carryover fields
    K1Cr All Prior year passive credit carryovers fields
    K1T-2 Section 179 carryovers and all passive activity carryover fields
    NOLCO All fields on the screen
    Pen 2012 Tax fields
    Rent-2 Section 179 carryovers and all passive activity carryover fields
  4. In the domestic partner return, enter current-year state-specific data in the applicable state input screens.

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