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Form 8582 Line 7 worksheet bug?


Catherine
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I have a Form 8582 Line 7 worksheet that is putting a number on line 27 for self-employed SEP/SIMPLE deductions. But this client has chosen to put $5,000 into a deductible IRA (not an adjustment for this worksheet), and NOT into a SEP or similar.

If I go to they Form 1040 "figure your SEP deduction" worksheet, it is BLANK. But the worksheet hop-to takes me there like it expects something. I've tried choosing different SE retirement programs, and the number on the 8582 worksheet changes. But if I make the SEP worksheet blank, it doesn't delete the entry on the 8582 worksheet. I can't get rid of that entry without an over-ride. And then I also have to over-ride the "total adjustments" line 30 on the worksheet, too.

Am I missing something like a checkbox here, or is this an actual program bug?

TIA,

Catherine

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I believe that line is for ALL 'qualified plan' adjustments, SEP, SIMPLE, IRA, etc. So I think the form is working correctly.

Well, that was my first thought. However, it is NOT the IRA amount, but differs by $1246 (a pretty random amount!). And the TaxBook specifically said modified AGI for this purpose (passive loss) is AGI figured without deductible contributions to IRA's or the one-half of SE tax. (TaxBook page 7-12)

So I think I'm still confused.

Catherine

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Well, that was my first thought. However, it is NOT the IRA amount, but differs by $1246 (a pretty random amount!). And the TaxBook specifically said modified AGI for this purpose (passive loss) is AGI figured without deductible contributions to IRA's or the one-half of SE tax. (TaxBook page 7-12)

So I think I'm still confused.

Catherine

Bumping this up; still hoping to get some help on this one.

C

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Okay, the chocolate chip cookies got me. I don't think I have the answer and can't easily recreate your whole scenario but I looked at my own return. Have you just tried to enter the contribution to the IRA on the IRA/Roth Wkst form? I don't have any passive activities so adding the 8582 probably didn't really recreate your situation. But when I added the contribution on the IRA/Roth Wkst, it went to line 32 of page 1.

Good luck and I hope I win the cookies...but likely not. This answer seems too obvious but you didn't mention having tried it so....

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Okay, the chocolate chip cookies got me. I don't think I have the answer and can't easily recreate your whole scenario but I looked at my own return. Have you just tried to enter the contribution to the IRA on the IRA/Roth Wkst form? I don't have any passive activities so adding the 8582 probably didn't really recreate your situation. But when I added the contribution on the IRA/Roth Wkst, it went to line 32 of page 1.

Good luck and I hope I win the cookies...but likely not. This answer seems too obvious but you didn't mention having tried it so....

Yes, the IRA contribution is on the IRA worksheet. And it flows through properly to Line 32 on the 1040. But the Form 8582 Line 7 worksheet line 27 has created a number out of thin air for self-employed SEP, SIMPLE, and qualified plans. Jump-to bunny for that line takes me to the BLANK Line 28 of the 1040. Jump-to from blank line 28 takes me to the worksheet, which has NO plan type chosen at the top "compute maximum contribution" line and nothing filled in lower down for deferrals or contribution rates or anything. But this 8582 line 7 worksheet _insists_ on putting some weird amount that does NOT match any allowable (but unchosen!) contribution amount for a SEP, SIMPLE, or other plan!

It puts in $3354 for a Keough, SEP, 401k, or SARSEP, and $11,000 for a SIMPLE, or SIMPLE IRA. And if I pick "blank", for NO plan -- it puts $3354 on that worksheet line.

Now, this work IN my client's favor by lowering the AGI to where they can take more of their rental loss. But it's not right and I don't know where to go to fix it. I have to over-ride that worksheet line. And I really don't like this oddball number popping in out of nowhere.

And while all this is going on, the client keeps emailing wanting to know if I've finished. (They _were_ finished but then found more business miles for me to add in, and going back through is when I found this weird problem. So they are still working on the assumption that all I have to fix is a mileage number. Can't even explain this because I didn't know WHAT was going on -- still don't!)

Catherine

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Drat and I was so hoping for the cookies! How about entering 0 or $1 (to see what happens) in the fields where actual contributions would go? How about deleting the 8582 and re adding it? If afraid, duplicate the return and try these and any other desperate measures in the duplicate.

Is there anything at all at the bottom of the Ln 28 worksheet where partnerships are listed? If there are SE earnings, maybe it thinks you must want to have SE retirement contributions. I did override the SIMPLE employer matching contributions on my worksheet because there wasn't one - and I don't feel guilty about making the end result reflect reality. Sometimes, I think we have to do that.

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Have you talked to support at ATX? We had a problem a week or two ago with taxpayers where one worked and one did not, and the program did not want to let us divide the IRA contribution between them. (More to it than just that, but nevertheless...) We could not get it to work out without override, so we called support and within twenty four hours they had updated the form so that the problem was corrected and we did not have to override. The hold times are not as bad as earlier this year and it just might work...

I wish I had the answer, though - I love cinnamon rolls.

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Have you talked to support at ATX? We had a problem a week or two ago with taxpayers where one worked and one did not, and the program did not want to let us divide the IRA contribution between them. (More to it than just that, but nevertheless...) We could not get it to work out without override, so we called support and within twenty four hours they had updated the form so that the problem was corrected and we did not have to override. The hold times are not as bad as earlier this year and it just might work...

I wish I had the answer, though - I love cinnamon rolls.

In the end I just over-rode the stinking worksheet. Sigh. I haven't got the patience to deal with tech (non)support right now. Thanks for all the good suggestions, though. I'll keep in mind the deleting and re-adding the form, and the others.

Catherine

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