Minnesota 2007

[Jim K]

I'm getting phone calls from clients that claimed the tuition & fees deduction on their 2007 federal returns (new that year). Minnesota did not allow the federal change and now is auditing those returns - my question is why didn't my ATX software handle this properly on the state return? With hindsight I guess I shouldn't have trusted my software to do that, but then again isn't it their responsibility to provide software that's in compliance or update if they missed it earlier.

[Gail in Virginia]

In a perfect world, yes the tax software would have flagged that at some point. However, if tax software were infallible, people would not need us to do their taxes - they could just buy turbo tax or use the free-file programs the IRS refers them to. It is our responsibility to stay up to date on federal and state tax law. And software programs are notoriously weak on state law - usually they are pretty good on the state they are based in, fair on neighboring states and progressively worse as you get farther away. I am sorry that you got caught by this because it is not always easy to keep up to date on state law either - there are many more programs for federal changes than for state. I hope you did not have very many of these that year.

Do you belong to any state organizations such as your state's chapter of NAEA or NATP? They will sometimes provide state updates for their members along with the federal updates - at least the chapters of each of those in Virginia do.

[Jack from Ohio]

There are resources available every year that will have all the state information. Still, as it was brand new in 2007, my instinct was to check every state and see. The software producers and writers are not current tax preparers so they count on input from us to make sure all the little "quirks" are correct. The number of revisions to forms each year speaks to their process of keeping things up to date.

Sorry, but if you do more than one Minnesota return, you should have checked and made sure. Especially since states are not as quick to allow deductions that lower AGI.

[jainen]

>>There are resources available every year<<

In my opinion, a professional simply MUST take state and federal updates. In my opinion, that by itself would be a much surer indication of competency than any other test. Here in California, "non-conformity" is always a major block of the update course.

It's not just for tax prep, but is important for planning too. California does not allow HSA'S, dependency is determined by the divorce decree instead of time in the home, corporations can't use MACRs depreciation, and registered domestic partners file a joint return. Virtually nothing new that Congress approves (except pension reform) applies to California for at least several years. The chart of non-conforming items is pages and pages long, not counting explanations.