Filing Status Optimization dialog

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Use this dialog to assess whether it is more beneficial for your married 1040 clients to file jointly or separately. After UltraTax CS calculates taxpayer and spouse data, it displays a report that enables you to quickly identify the optimal filing status.

To open this dialog, choose Utilities > Filing Status Optimization. (Note that this menu command is available only if the open client is a married filing joint 1040 client.)

General Tab

Client IDs group box

Displays the ID of the UltraTax CS client data. The Filing Status Optimization utility automatically creates unique IDs for the taxpayer and spouse by adding "TP" and "SP" to the end of the ID displayed here.

Displays the ID of the "taxpayer" client created automatically when you open this utility. The ID is the same as the joint client ID except that it ends with TP for taxpayer. The default client ID for the taxpayer can be edited.

Note: To save this client's data, mark the Save clients upon exit checkbox.

Displays the ID of the "spouse" client created automatically when you open this utility. The ID is the same as the joint client ID except that it ends with SP for spouse. The default client ID for the spouse can be edited.

Note: To save this client's data, mark the Save clients upon exit checkbox.

Other group box

Displays the deduction method used to prepare the clients' joint return. You cannot edit this field.

Note: To use a different method for the separate returns, select Standard or Itemized from the drop-down list for the Taxpayer field.

This field defaults to the same deduction method displayed in the Joint field. To see the results of using a different deduction method, select Standard or Itemized from the drop-down list for the Taxpayer field.

This field defaults to the deduction method selected in the Taxpayer field. You cannot edit this field.

Displays the deduction method used to prepare the clients' joint return. You cannot edit this field.

Note: To use a different deduction method for the separate returns, select Income, Sales - Table, or Sales - Actual from the drop-down list for the Taxpayer field.

This field defaults to the deduction method displayed in the Joint field. You can use this drop-down list to select the appropriate option to force the general sales tax (actual), general sales tax (tables), or state/local income tax deduction.

Note: If you select Sales - Table in this field, the Spouse field will display the same selection and will be disabled.

This field defaults to the deduction method selected in the Taxpayer field. You can use this drop-down list to select the appropriate option to force the general sales tax (actual), general sales tax (tables), or state/local income tax deduction.

Note: If you select Sales - Table in this field, the Taxpayer field will display the same selection and the Spouse field will be disabled.

The fields in the Taxpayer and Spouse columns display the taxable state/local refund amounts report on Form 1040. Mark the Force state/local tax refunds checkbox to allocate the state/local refund amount between the taxpayer and spouse in the married filing separate clients. When left unchecked, the default amounts transfer to the taxpayer and spouse returns.

This field displays 100.00 for the Section 179 dollar limitation to be used on Form 4562, line 5 - Dollar limitation for tax year. This is a display-only field.

This field displays half of the percentage entered in the Sec. 179 dollar limitation percentage - Joint field. By default, UltraTax CS enters 100.00 (100 percent) in the Joint field and 50.00 (50 percent) in the Taxpayer field. This is a force field only.

UltraTax CS automatically calculates the difference between the percentage in the Sec. 179 dollar limitation percentage - Joint and Sec. 179 dollar limitation percentage - Taxpayer fields and enters the difference in the Sec. 179 dollar limitation percentage - Spouse field. This is a display-only field.

Use these fields to select next year's organizer delivery method for the taxpayer and spouse. Your selection will be saved when you close the client.

By default, the Taxpayer and Spouse fields use the organizer delivery method entered in the Joint field. The following organizer delivery method options are available - Paper, Email (PDF), File (PDF), Web, Web - Print only, or None.

Assumptions for married filing separate calculations group box

Mark this checkbox if the married filing separate taxpayer meets all the requirements in the Form 8839 instructions to take the adoption credit or employer-provided exclusion.

Mark this checkbox if the taxpayer meets all of the requirements to be treated as unmarried for the purposes of determining the credit and exclusion on Form 2441. If the taxpayer does not meet all the requirements when filing as married filing separately, only the exclusion can be taken (see Form 2441, Page 2, Part III). The credit cannot be taken and will not be calculated in this case.

Mark this checkbox if the taxpayer and spouse are filing separately and have lived apart for the entire year.

These fields display the spouse's earned income amount used in calculating the exclusion for child and dependent care expenses on Form 2441. Use this field to change the allocation of the spouse's earned income used to calculate the exclusion in the separate return. The amount entered in this field will transfer to the Earned income for exclusion, if student, disabled, or MFS (Force) field on Screen Cr.

Other fields and buttons

Mark this checkbox to make the separate taxpayer and spouse clients that were automatically created by the Filing Status Optimization utility available for next year's proforma. Note that this checkbox is available only if you mark the Save clients upon exit checkbox.

Mark this checkbox to suppress the printing of the Filing Status Optimization Report with the married filing joint tax return. When the printing of the report is suppressed, additional invoice items are not generated.

If you choose to suppress the printing of the Filing Status Optimization Report, but later decide you want to print the report with the tax return, return to the Filing Status Optimization in the joint return, clear the Suppress printing of FSO report with the married filing joint tax return checkbox, and click Done.

Mark this checkbox to suppress the printing of the Filing Status Optimization Report with the married filing separate tax return. Use the drop-down list to suppress the printing of the report for the taxpayer, spouse, or both.

If you choose to suppress the printing of the Filing Status Optimization Report, but later decide you want to print the report with the tax return, return to the Filing Status Optimization in the joint return, clear the Suppress printing of FSO report with the married filing separate tax returns checkbox, and click Done.

Mark this checkbox to view the Filing Status Optimization Report based on information already entered in the separate clients without regenerating the process optimization routine. Only mark this checkbox if you need to make changes to the separate returns. If you change the joint return, you will need to run the filing status optimization process after completing the changes.

Mark this checkbox and click the Save button to have UltraTax CS calculate amounts for Form 8379.

Note: UltraTax CS only calculates amounts if you have selected the injured spouse on Screen 8379. If client data is changed after marking this checkbox, you must do one of the following:

  • Choose Utilities > Filing Status Optimization, mark this checkbox again, and click the Save button.

    or

  • Use the force fields on Screen 8379 to update amounts on Form 8379.

If performing a subsequent filing status optimization due to changes made in the joint client, mark this checkbox to preserve any state data entry completed in the separate clients prior to the subsequent optimization.

Payments tab

Federal group box

If all of the payments entered on Screen Est for the joint return do not apply to the taxpayer, use the fields on this tab to allocate the payments between the taxpayer and spouse.

Change an amount in the Taxpayer column and then click the corresponding field in the Spouse column. UltraTax CS automatically calculates the difference between the amounts in the Joint and Taxpayer columns and enters the difference in the Spouse column.

State group box

Click this button to open the State Payments dialog, which you can use to optimize your clients' state tax payments.

Community Prop / Filing Status / Other tab

Options for Community Property returns group box

Mark this checkbox to split income entered in the joint return according to Community Property rules. This checkbox is disabled if none of the following states are attached to the joint return or are the postal code entered on Screen 1040: AZ, CA, ID, LA, NM, NV, TX, WA or WI. For more detailed information about splitting community property returns, see Using the Filing Status Optimization utility (1040) and Filing Status Optimization utility FAQs (1040).

Filing Status group box

UltraTax CS calculates the taxpayer and spouse returns using the filing status specified in the Taxpayer and Spouse drop-down lists. Married Filing Separate is the default filing status for all returns. If the taxpayer or spouse return will be calculated using Single or Head of Household filing status, select the applicable status from the drop-down list.

Personal Information group box

To change the salutation that will appear on client documents in the Taxpayer and Spouse clients, update the Taxpayer or Spouse field to the desired salutation.

Joint Tax Liability Analysis group box

When this box is marked, UltraTax CS calculates the allocable share of joint tax liability and payments based on guidance published in Revenue Ruling 80-7. Estimated tax payments, overpayment applied from the prior year, payments with extension, and additional payments can be allocated between the taxpayer and spouse using the Payments tab within the Filing Status Optimization dialog. Refundable tax credits and other tax payments are allocated automatically based on the respective share of the taxpayer’s and spouse’s joint tax liability, but can be forced using the fields provided in the dialog.

Mark this checkbox to suppress the printing of the Joint Tax Liability Analysis with the married filing joint tax return. When the printing of the report is suppressed, additional invoice items are not generated.

Enter an amount in this field to force the total refundable credits allocable to the taxpayer or spouse. By default, UltraTax CS allocates total refundable credits based on the respective calculated share of the taxpayer’s and spouse’s joint tax liability.

Enter an amount in this field to force other tax payments allocable to the taxpayer or spouse. By default, UltraTax CS allocates other tax payments based on the respective calculated share of the taxpayer’s and spouse’s joint tax liability.

Indefinite Carryovers tab

If all of the excess Section 179 for Schedule A, excess Section 179 for Schedule A-AMT, minimum tax credit, investment interest, investment interest-AMT, short-term capital loss, short-term capital loss-AMT, long-term capital loss, long-term capital loss-AMT, residential energy efficient property credit, D.C. first-time homebuyer credit, and tax credit bond carryover amounts entered in Screen CO for the joint return do not apply to the taxpayer, use these fields to allocate the carryovers between the taxpayer and spouse.

Change an amount in the Taxpayer column and then click the corresponding field in the Spouse column. UltraTax CS automatically calculates the difference between the amounts in the Joint and Taxpayer columns and enters the difference in the Spouse column.

5Yr, NOL, and Other Carryovers tab

Use these options to select a specific year and view the carryovers for that year. The carryover amounts will be displayed in either the 5 year or NOL and other year carryovers group boxes.

Notes

  • If 5 year carryover items exist for the years 2011-2016, the option(s) for the applicable year(s) is enabled.
  • If NOL and other carryover items exist for the years 1998-2016, the option(s) for the applicable year(s) is enabled.
  • If no 5 year or NOL and other year carryover items exist, all of the 1998-2016 options is disabled.

If all of the Section 1231 nonrecaptured losses, AMT Section 1231 nonrecaptured losses, 50% contributions, 30% contributions, 50% AMT contributions, 30% AMT contributions, 50/30% capital gain property, 50/30% AMT Capital gain property, 20% contributions, 20% AMT contributions, net operating loss, AMT net operating loss, 50% Qualified Conservation Contributions, 50% AMT Qualified Conservation Contributions, 100% Qualified Conservation Contributions, and 100% AMT Qualified Conservation Contributions carryover amounts entered in Screen CO for the joint return do not apply to the taxpayer, use these fields to allocate the carryovers between the taxpayer and spouse.

Change an amount in the Taxpayer column and then click the corresponding field in the Spouse column. UltraTax CS automatically calculates the difference between the amounts in the Joint and Taxpayer columns and enters the difference in the Spouse column.

Business Credit Carryovers tab

Use this drop-down list to choose from the different General Business Credit Carryover types that are present in the Screens COGBCr in the joint client. If there are no General Business Credit Carryovers present in Screen COGBCr, then this drop-down list is disabled as well as all fields in the Business Credit Carryovers tab.

If all of the 1998-2016 carryover amounts entered in Screen COGBCr for a particular credit type in the joint return do not apply to the taxpayer, use these fields to allocate the carryovers between the taxpayer and spouse.

Change an amount in the Taxpayer column and then click the corresponding field in the Spouse column. UltraTax CS automatically calculates the difference between the amounts in the Joint and Taxpayer columns and enters the difference in the Spouse column.

Excess Farm Loss tab

Use these options to select a specific year and view the farm income/-loss for that year.

Notes

  • If farm income/-loss items exist for the years 2011 - 2016, the option(s) for the applicable year(s) is enabled.
  • If no excess farm loss items exist, all of the 2011 - 2016 options are disabled.

If all of the Schedule F - Farm income/-loss, Schedule C - Farm commodity processing income/-loss, Schedule E - Partnership/S corporation farm income/-loss, Form 4835 - Farm rent income/-loss, Gain/-loss on sale of farming property, AMT gain/-loss on sale of farming property, and AMT Adjustments/Preferences to farm income/-loss amounts entered on Screen FarmLoss for the joint return do not apply to the taxpayer, use these fields to allocate the amounts between the taxpayer and spouse.

Change an amount in the Taxpayer column then click the corresponding field in the Spouse column. UltraTax CS automatically calculates the difference between the amounts in the Joint and Taxpayer columns and enters the difference in the Spouse column.

Other FSO Dialog fields & buttons

Mark this checkbox to save the separate taxpayer and spouse clients that were automatically created by the Filing Status Optimization utility. If after evaluating the Filing Status Optimization Report you decide it is best for the clients to file separately, use the taxpayer and spouse clients to prepare the separate returns.

Click this button to review the Filing Status Optimization Report.

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