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User`s Manual - Drake Software

1. 1 First name Lastname Frank Carter 244 55 6666 Stepchild K j If more than f instruct amine 4 Carter 255 44 6666 Daughter KI see instructions _ je TPG72160 dependents see D d on6c Miata joas i 7 os oe cee Ae dosage nla ols name AR EMLESE ANON Figure 6 5 Enhanced Mode These five components are described in the following sections NOTE Basic mode the View and Print screens used prior to 2008 is avail able for those who prefer it see Table 6 1 Toolbar The Enhanced mode toolbar consists of the buttons described in Table 6 1 Table 6 1 Enhanced mode Toolbar Button Description Leave View mode and return to data entry E Data Entry Tax Year 2012 197 Viewing and Printing a Return Drake Software User s Manual Table 6 1 Enhanced mode Toolbar Description Send selected forms to printer send selected forms to Drake PDF printer includes option to password protect PDF file e mail selected forms quick print only the form open in the viewer Set up form properties color and order Access other setup options available in the program w Archive Access archiving features including the Document Manager Email S Refresh w E mail the return to a selected recipient Update the viewed return to reflect any changes made by another preparer working in
2. Form Form Form Name Form Name Number Number 4255 Recapture of Investment 8866 Interest Computation Credit Under the Look Back Method 4562 Depreciation and Amorti 8873 Extraterritorial Income zation Exclusion 4684 Casualties amp Thefts 8874 New Markets Credit 4797 Sale of Business Property 8881 Credit for Small Employer Pension Plan Startup Costs 5884 Work Opportunity Credit 8882 Credit for Employer Pro vided Childcare 6252 Installment Sale Income 8883 Asset Allocation State ment Under Sec 338 6478 Credit for Alcohol Used as 8903 Domestic Production Activ Fuel ities Deduction 6765 Credit for Increasing 8907 Nonconventional Source Research Activities Fuel Credit 6781 Gains amp Losses from Sec 8908 Energy Efficient Home tion 1256 Credit 7004 Request for Extension 8910 Alternative Motor Vehicle Credit 8050 Direct Deposit of a Corpo 8911 Alternative Fuel Vehicle rate Refund Refueling Property Credit 8082 Notice of Inconsistent 8912 Clean Renewable Energy Treatment Bond and Gulf Bond Credit 8283 Noncash Charitable Contri 8916A Supplemental Attachment butions to Schedule M 3 8586 Low Income Housing 8925 Report of Employer credit Owned Life Insurance Contracts 8594 Asset Acquisition state 8941 Credit for Small Employer ment Health Insurance Premi ums 8609 A Annual Stmt for Low 8949 Sales and other Disposi Income Housing Credit tions of Capital Assets 8611 Recapture of Low Income D Capital Gains amp Losses Ho
3. 2012 Tax Year Course Basic Tax Course B Tax Year Introduction Launch Course Vw Unit 1 Filing Status Launch Course x Unit 2 Dependents x Unit 3 nation mn EX BERD One ob wan gt ene Pe ee E a aa Ca ice eee Ss Figure 10 8 Units of the Basic Tax Course Tax Year 2012 Drake Software User s Manual Online Support CPE Credits Tutorials Tax Year 2012 To view units for a different tax year or course select an option from the Tax Year and Course drop lists Click System Requirements on the Tax Courses page to ensure IMPORTANT that your system supports the tax course programs Make sure your speaker volume is turned on in order to hear the audio To open a unit 1 Click Launch Course for the selected unit See Figure 10 8 on page 264 The unit is opened in a browser window 2 Use the navigation buttons in the upper right corner to move through the course Use the sound buttons at the bottom of the window to stop pause or replay audio 3 When you finish a unit click Exit to return to the Tax Courses page Completed units can be viewed again at any time Once all course units are completed the Launch Exam button will become available Click it to begin the test Submit your score upon completion of the test To earn CPE credits for taking a tax course in Drake ETC you must score 80 or higher on the course exam and submit a course evaluation Review the CPE details click the word here
4. 52 Tax Year 2012 Drake Software User s Manual Making Changes on the Fly Forcing Items to Be Generated Table 2 16 Items That Can Be Suppressed from the PRNT Screen Description Prevents proforma organizer for next year from being generated See Organizers and Proformas on page 80 Proforma organizer The option to print or suppress the 1040A and 1040EZ for all returns if applicable is set at Setup gt Options Form amp Schedule Options NOTES In the 1120S 1065 and 1041 packages if the option to print K 1 letters is selected at Setup gt Options you can go to the PRNT screen to sup press the printing of K 1 letters Table 2 17 lists PRNT screen items that can be forced even if the program calcula tions and established defaults would otherwise not generate them Table 2 17 Items That Can Be Forced from the PRNT Screen Item Description Schedule A Schedule A Itemized Deductions Schedule B Schedule B Interest and Dividend Income Form 4562 Form 4562 Depreciation and Amortization Form 6198 Form 6198 At Risk Limitations Form 6251 Form 6251 Alternative Minimum Tax for Individuals Form 8582 Form 8582 Passive Activity Loss Limitations Summary Individual Diagnostic Summary appears as SUMMARY under Mis cellaneous tab in View mode Compare Tax return comparison compares current year return with returns from the two prior years and appears as COMPARE under Misc
5. Bank Phone Website Advent Financial 866 655 2340 http adventtax com EPS Financial 877 801 4411 http epsfinancial net Republic Bank amp Trust 866 491 1040 http republicrefund com River City Bank 888 820 7848 http rcbral com Tax Products Group 800 779 7228 http cisc sbtpg com This chapter covers requirements for you and your clients processes for setting up your software for offering various banking options and data entry for these products It also explains what these products are and provides valuable information you will want to review in addition to the information already provided by Drake and your banking partner Tax Preparer Requirements Tax Year 2012 IRS Regulation 7216 provides guidance to tax preparers regarding the use and disclo sure of their clients tax information to parties outside of the tax preparer s firm The Consent to Use of Tax Information must be signed and dated by the taxpayer and spouse if married filing jointly before the return is prepared The Consent to Disclo sure of Tax Information must be signed and dated by the taxpayers before the return is e filed and the information submitted to a third party 209 Tax Preparer Requirements Drake Software User s Manual Drake offers several options for making these forms available to your clients includ ing printing forms in batches and having clients provide their signatures electronically These methods are described
6. 04 44 44 age ie aad tba eha tae a ede Te ea ed tba cds 357 Sec reFilePro seia 4 tray nad Mees aad dee Thad ORG EA aks aE BAS aed Gud tagae db baa A 362 New Features in Other Packages cccccceeeseeeeeeeeeeeeeeeeeeseneeeeeeeeenenes 367 Individual Entity Packages 0 0 ent e tte n teen teen ene 367 Fiduciary Package 1041 piner 64 20 Ged Gaa aaa O08 Ea Hab e4 4 wah daha adda doula ie be 371 Estate Package 706 osaces Kdos cee cota dou e Head woda Heaeules O E E Hegaies Seas 371 Appendix A Preseason CheckliSt ccccccceteeeeeeeeeeeeeeseeeeeeeeaeeeeeeeeees A 1 Appendix B E filing OvVervieW ccceceeeseeeeeeeeeeeeeeeeeeeeeeeeaaeeeeeeeeees B 1 vi Tax Year 2012 Drake Software User s Manual Appendix C AGYWOPKS is ccciccseseccccnsssescesecssassresssesneacceecccecsrenssnstensnersscenee C 1 Appendix D Acronyms amp Abbreviations cccccccssseeeeeeesseeeeeeeeeeeees D 1 Appendix E State E filing Mandates ccccceeeseeeeeeeeeeeeeeeeeeeeeeees E 1 Appendix F Addenda Pages for 2012 ccsscceeceeeseeeeeeseeeeeeeeeeeeeeees F 1 e ee E ere ree reese XX X Tax Year 2012 vii Drake Software User s Manual This page intentionally left blank Vili Tax Year 2012 Quick Reference Contact Information IRS Phone Numbers and Websites Tax Year 2012 Website Individual return assistance Business return assistance Exempt organizations Retirement Plan Admi
7. Commissions oon nn Insurance Sn dR once ci N DF meant a T ae Figure 5 24 Columns for Direct Expenses and Indirect Expenses IMPORTANT If the If multi dwelling unit box is not marked the program ignores any figures entered in the Indirect Expenses column Sale of Ifa property was sold and Schedule E must be associated with data from a 4797 Property screen Form 4797 Sales of Assets use a passive activity number PAN code to tie them together To do so enter a number in the PAN box on screen E and then enter the same number in the PAN box of the applicable 4797 screen PMI To indicate that insurance includes Private Mortgage Insurance PMI mark the check box under item 9 on screen E The program will display PMI on line 9 of the printed Schedule E Figure 5 25 on page 124 Tax Year 2012 123 Supplemental Income Operating Expenses Carryover Rental of Personal Property Schedule K 1 Screen codes K1 K1F K1S N Accessing K 1 Data Fields Activity Types 124 Drake Software User s Manual 7 Cleaning and mamtenance ae ara ae al T 8 Commissions s s seeees 8 9 Insurance C PMI eae 10 Legal and other professional fees 11 Management fees seal ARR TT OT O E ETEN Figure 5 25 If the PMI box on line 9 of screen E is marked the program displays a PMI indicator on the Schedule E Screen E includes a field for ent
8. Figure 2 16 Nested Conditional Paragraph In this example the Federal No Dir Debit Paper Paragraph is generated only if the Federal Balance Due Paragraph is generated and only if applicable for a return The Client Communications Editor accessed from Setup gt Letters is where you can read edit re write print and save the letters contained in the program You can also add your company letterhead and logo to the letters The right pane of the Editor dis plays the letter template The left pane displays in tree view the applicable para graphs and keywords by category Figure 2 17 Click to expand a category or click to contract it Hover your pointer over a keyword to view its description Keywords gt F Client Information Federal Return Paragraphs 8 Federal Amended Paragraphs Federal Amended Bal Due Paragraph Expanded Federal Amended Refund Paragraph category view Federal Amended Return Paragraph Federal Amended Zero Due Paragraph Federal Estimate Paragraphs Federal Extension Paragraphs Federal Return Results Federal Amended Results Federal Estimates ih EedatalExtepsion Recut tans mn Conditional paragraphs H A Figure 2 17 Category tree left pane of Client Communications Editor While the result letters are designed with keywords inserted to handle most situations additional keywords are available if you want to further customize the letter Tax Year 2012 Drake So
9. Account 1 thdrawal selection Federal selection _ State city selection Type of account I Checking I Savings Checking J Savings ame of financial institution pono amp Federal Federal payment amount Requested payment date Daytime phone number Payment is for M 1040 4868 M 2350 The ACH payment dates for estimates must be the estimate payment due dates Federal 1040 ES First Quarter Second Quarter Third Quarter Fourth Quarter Withdraw the following quarterly payments a r p m Payment amount a State State payment amount Requested payment date Daytime phone number 2 5 Figure 5 51 Required fields on PMT screen withdrawal selection 1 account information 2 specified return 3 The name of the financial institution the bank s routing number RTN the client s account number and the type of account checking or savings are required As with the DD screen the RTN Account number and Type of account must be entered twice item 2 in Figure 5 51 Finally the PMT screen must indicate the return to which the payment data applies item 3 in Figure 5 51 Mark the box of the applicable return type Withdrawal Neither state nor federal balances can be paid by direct debit of funds from more than from Multiple one account To have a state balance due electronically withdrawn from an acc
10. Documents are stored in folders listed in alphabetical order by the clients last names individual returns or first names business returns When you create a return in the tax software Drake automatically creates the client folder with subfolders labeled Tax and subfolders for tax year 2012 To create additional folders 1 Highlight the drawer or folder that will contain the new folder 2 Click New Folder 3 Enter a folder name in the New Folder dialog box 4 Click OK The new folder appears in the left pane Repeat these steps as needed to create more folders Backing Up Restoring and Updating the Archive Cabinet Backing Up 344 Contents The backup restore feature is used to copy files to a local networked CD DVD or USB drive You can back up and restore the entire Archive Cabinet structure or a spe cific cabinet drawer or folder To back up individual documents 1 Select a document from the document pane of the Archive Cabinet 2 Click the arrow beside the Copy button 3 Choose to copy to the clipboard copy to a location or copy to a CD If copying to the clipboard use the Working Cabinet s Paste button to paste the document into another folder If copying to a location choose a location for storing the copied file and then click Save If copying to a CD follow the instructions provided on your screen To back up cabinets drawers folders or the entire contents of the Archive Cabinet
11. Estate Package 706 Tax Year 2012 Because the IRS added a fourth page to Form 706 for the Deceased Spouse Unused Exclusion DSUE Drake has added a new DSUE screen This new section allows taxpayers to opt out of electing to transfer any DSUE amount to a surviving spouse and allows taxpayers to calculate the amount of DSUE that can be transferred in the event of an election and to account for any DSUE amount received from each predeceased spouse There is also a Schedule PC Protective Claim for Refund added to the Form 706 and a corresponding new Drake screen screen PC Schedule PC can be used for tax payers to preserve their right to a refund of estate taxes paid for assets or liabilities that are the subject of unresolved controversy at the time of filing the return Drake has also added a new Recapitulation Overrides screen screen 5 More details will appear in the estate 706 supplemental manual to be published early in 2013 371 Estate Package 706 Drake Software User s Manual This page intentionally left blank 372 Tax Year 2012 Drake Software User s Manual Appendix A Preseason Checklist Efficient preseason planning can reduce or eliminate many problems for tax preparers Take time now to prepare for the months ahead and ensure that your office is ready before the first client arrives The needs of each office vary in the months before tax season but your preparations might include the actions l
12. Tax Year 2012 Drake ETC is a convenient resource for training your office staff and earning continu ing professional education CPE credits through the use of tutorials practice returns videos webinars and interactive tax courses ETC also provides tracking tools and interactive testing so individuals and group administrators can monitor their personal and collective progress To access Drake ETC go to the Drake Support site and select Training Tools gt Drake ETC or go to DrakeETC com The new ETC Welcome page includes news and information on what s happening in Drake ETC Figure 10 4 on page 262 For information on the IRS s continuing education upload system and how Drake reports CE credits for Registered Tax Return Pre IMPORTANT parers RTRPs and Enrolled Agents EAs click the Important link available on ETC Home page the Administration setup page or when editing a student account 261 Online Support Drake Software User s Manual Creating an ETC Admin 262 Account Welcome to Drake e Training Center CPE accredited tax and software training for your entire staff RTRP Exam Prep Webinars Drake ETC offers two courses to help you get ready for the Keep up to date with Drake ETC s webinars CPE Credits Registered Tax Return Preparer exam available for select topics RTRP Study Course Current amp Upcoming Topics Interactive study of all domains on IRS exam Kiddie Tax Sep 18 2012 11 a m
13. a a See ye Saaana mm lie anal tee Bonus depreciation Figure 5 54 Prior year 179 expenses elected and allowed If the taxpayer expenses assets using section 179 the program produces a WK_1179L worksheet Section 179 Business Income Limit with the return For the 2012 tax year N DTE e Assets placed in service in 2012 50 bonus depreciation e Assets placed in service after 2012 50 bonus depreciation Investment Credit Codes If an investment credit code is required select the code from the Investment credit code drop list on the 4562 screen Asset amp Department Numbers The Asset number Department number and Asset Category fields on the 4562 screen are for tracking purposes in the Fixed Asset Manager see Fixed Asset Man ager on page 324 and can be used in reports NOTE Select asset categories from the Asset Category drop list in order to group items by asset category in the Fixed Asset Manager 168 Tax Year 2012 Drake Software User s Manual Depreciation Land Cost Use the Land cost field to enter cost basis of the land An amount entered here should not be included in the cost basis of the asset For example if the purchase price including the land was 100 000 and the cost of the land was 10 000 you would enter 10 000 for Land cost field and 90 000 for Cost Basis at the top of the screen Depreciating Home Used for Business If a 4562 screen is to be associated with a
14. e Screen 4 Self employed health insurance deduction field An entry here over rides system calculations from the screens listed above Be aware that the SEHI and screen 4 fields are overrides Do not duplicate entries SEHID The top half of the SEHI screen incorporates the Self Employed Health Insurance Worksheet Deduction Worksheet WK_SEHID in Drake from the 1040 instructions If entering an override on screen 4 type the deduction allowed not the total premium paid To have the software calculate the WK_SEHID leave the screen 4 field blank and enter the total insurance premium paid on the C or F screen as applicable Self employed health insurance deduction information is entered on the NOTE same screen as self employed pension SEP information This screen can be accessed using either the SEHI or SEP screen code Self Employment Pensions Screen code SEP SEP screen data flows to the WK_ SEP worksheet for Self Employed Rate and Deduction To have the program calculate the maximum SEP contribution enter the plan contribution rate as a decimal number on the SEP screen Tax Year 2012 137 Penalties Drake Software User s Manual Adjustments to SEP SIMPLE and Qualified Plans Self employed health insurance deduction information entered on the SEHI or SEP screen will be adjusted by any entries made in the SEP and or SIMPLE and KEOGH contribution fields on screen 4 Penalties This section of the manual covers penalties
15. 8 e Top most row for logo 3 Left most column for firm info 25 e Top most row for firm Info 4 Enter the path to the graphic in the Path Filename for Bitmap Logo text box or use the Browse button The full path and filename are required To use the simple default graphic enter C Drake12 CF LOGO BMP C indicates the drive letter to which the Drake program is installed Change if necessary Leave blank for no logo Click OK The left margin of a letter can be changed to suit your printing needs To change the left margin of the default letter 1 2 In the Client Communications Editor select Setup gt Letterhead and Margins Enter a number under the Left Margin Adjustment box Figure 2 18 on page 45 Tax Year 2012 Drake Software User s Manual Software Setup Naming a Template Press CTRL N to quickly access the Rename Letter dialog box Restoring a Template Tax Year 2012 Drake 2012 Letterhead and Margins Setup Letterhead Logo Setup Use this screen to specify the presence and location of logo and firm information on letters and to adjust the left margin of all letters To choose a logo either type the path and file name or click Browse Letter and Bill Indicators Coordinates V Use Logo on Letters Left most Column for Logo a Use Firm Info on Letters Top most Row for Logo Bo Use Logo on Bill Left most Column for Firm Info j5 I Use Firm Info on Bill Top
16. D To download files from a client From the Document Manager toolbar click Portal and select Download 2 Enter the Portal username and Portal password you set up with Secure FilePro com Click OK 3 Inthe Folder List for client name window select the item to be downloaded and click Download Tax Year 2012 Drake Software User s Manual SecureFilePro Uploading Private Files Uploading Public Files Tax Year 2012 The file is downloaded to that client s Document Manager folder A private file is one that SecureFilePro makes available to all preparers in your firm To make a file available to all preparers in SecureFilePro Open the Working Cabinet from the Home window of Drake Select the General folder from the document tree on the left side of the window Select a file from document pane Select Portal gt Private gt Upload The Private Folder List is displayed Select a folder from this list to receive the uploaded document Click Upload a a eS a A public file is one that SecureFilePro makes available to all clients To make a file available to all clients in SecureFilePro Open the Working Cabinet from the Home window of Drake Select the General folder from the document tree on the left side of the window Select a file from document pane Select Portal gt Public gt Upload The Public Folder List is displayed Select a folder from this list to receive the uploaded document C
17. Drake Software User s Manual Index Symbols adjustment fields 72 override fields 72 A ABCvoice files 245 accessing see also opening appointments 62 recent returns 62 state returns in data entry 75 acknowledgments acks Fees to ACH 221 codes for 233 234 e filing overview Appendix B notification of 62 processing 233 activating automatic program updates 288 error message beeps 29 flags 70 heads down data entry 82 imperfect return election 33 macros 38 prompting for check print transmission 33 state return options 32 W 2 verification option 28 addenda pages Appendix F adding custom paragraphs 32 59 employer information 307 firm information 20 preparer information 23 statements explanations to a return 189 student records ETC 269 add on fees 21 address book Drake e mail 280 addresses change of 180 foreign for tax firm 20 in care of 98 military 98 taxpayer 98 adjusted basis tracking 127 adjustment fields 28 72 ADMIN logging in as 14 administrative options setup 33 Tax Year 2012 Index administrative rights assigning 24 administrator login see also ADMIN logging in as in CSM 256 in ETC 262 269 passwords 19 Scheduler options 86 Advent Financial contact info x alimony 109 138 Alternative Minimum Tax AMT data entry of 141 amended returns 175 amortization codes 169 schedules 306 applications for bank products 212 216 appointment reminders 91 appointments see also Sch
18. Select an item and click Remove See Figure 2 12 e Editing a listed item Double click an item The Selected Entry box see Figure 2 11 is activated with the item properties Make changes and click Save You can also create drop lists for the Adjustments and Payments field NOTE of the BILL screen When viewing a customized drop list in data entry click F1 to see the item descriptions 36 Tax Year 2012 Drake Software User s Manual Software Setup Pricing Setup Use Pricing Setup to enter prices and allow Drake to calculate charges and generate them on the client s bill Prices can be defined for each form and on some forms for each item You can also enter minimum and maximum charges for a completed return NOTE Bank product fees are established in Setup gt Firm s To set up pricing 1 From the Home window go to Setup gt Pricing 2 Select a package from the Form box of the Pricing Setup window All forms for that package are displayed in the grid below View items by category by clicking the tabs at the top of the grid Figure 2 13 OS M a nant ony 2 a wT 17 pages YT TT ee TT e ae Y P we Category O AHE Update All Forms Worksheets Statements Per Item Charges Miscellaneous 0001 Form 1040NR U S Individual Nonresident Income Tax Return N A 0 00 4 x 0002 Form 1040 U S Individual Income Tax Return N A 0 00 2 x 0003 Form 10404 U S Individual Income Tax Return NA 0 00 2 x 0004 Form
19. To undo batch generated appointments go to the Appointment NOTE Scheduler select Batch Appts gt Undo Batch generated Appoint ments and click Yes The batch generated appointments will be removed from the current year s schedule Entering Ifan appointment conflicts with another you are asked if you want to save it anyway Overlapping _ If Yes the calendar displays a Multiple Appts note as shown in Figure 4 17 Appts bians aiil ica he8 f cecal 1t mer iege ni al N TA 2 45 PM 00 PM 15 PM 30 PM 45 PM 00 PM 15 PM 45 PM 00 PM 15 PM A ee eh iaei amaaa Figure 4 17 Notification of multiple appointments To view the multiple appointments scheduled double click the Multiple Appts row Appointments are shown in the Open Appointment grid To view appointment details double click an appointment Finding Next To locate the next available appointment time in the Scheduler Available Appointment 1 From the Appointment Detail dialog box click Find Next Appt 2 From the Find Next Appointment dialog box choose a preparer from the Pre f parer drop list or select Any Preparer ENSO 3 Select starting and ending dates The program searches all times within your date range 4 optional Specify a day of the week and set a range of times to search If you select a specific day of the week that day must fall within the entered date range Click Find Any available appointment times for the preparer are
20. Various Inherit and Inh2010 are acceptable for e filing Press CTRL F to force the software to accept INH2 010 Select S or L from the Type of gain or loss drop list to have it treated as short term or long term Type of gain or loss Select from the drop list to describe the gain or loss as long term or short term Stock or other symbol Enter the stock or other symbol for the security sold Quantity sold Enter the quantity of securities sold Proceeds from sale Enter the sale amount If only the gain amount is avail able enter the gain amount and leave the Cost or other basis field blank Cost or other basis Enter the cost or basis If only the loss amount is available enter the loss amount and leave the Proceeds from sale field blank Federal tax withheld Enter the amount of federal tax withheld from the pro ceeds of a sale Wash sale loss disallowed Enter amount of wash sale loss that is disallowed Description Enter description of capital gain or loss item using stock ticker symbols or abbreviations In the past Drake supported 32 characters but only the first 15 were transmitted with an e filed return By default the first 15 characters were displayed in black text on the screen additional characters were displayed in red With Modernize e File MeF all characters are now transmitted and all char acters are displayed in black text on the screen Basis not reporte
21. on page 339 for more information The use of a password is optional If you choose to password protect documents be sure to write the IMPORTANT password down and save it to a secure location Drake cannot retrieve Document Manager passwords To assign a password to a document from the Document Manager menu bar select Documents gt Password Protection or right click a file and select Password Pro tection In the Password Protection window enter the password twice and click Save To open a password protected document double click the file or select the file and click Open Enter the password and click OK Tax Year 2012 351 Working With Document Manager Files Drake Software User s Manual 352 To remove a password right click the file select Password Protection and in the Password Protection window enter the password in the Enter OLD Password field and click Save Leave both NEW Password fields blank To change a password right click the file select Password Protection and in the Password Protection window enter the old password in the Enter OLD Password field Enter a new password twice Click Save NOTE Document Manager passwords have an eight character limit and are case sensitive Sharing To share documents in a client s folder from the Document Manager menu bar select Documents Documents gt Share Document From the menu choose any of the functions e Copy to Location NOTE Select a docume
22. Access the EOM through the Drake Support webpage N OTE Support DrakeSoftware com by selecting My Account gt Bank Appli cation from the toolbar An EOM manual and video tutorial are avail able on the opening window of the EOM website click Help Setting Security Levels Tools 94x Reports 244 Security settings allow you to password protect reports in the online EF database To define security settings 1 2 3 4 Enter an e mail address and password and click Add Update Security Password Log in to the online EF database See Online EF Database on page 241 Click Options Click Configure Report Security e From the Tab Security section click False or True for a whole report cate gory False leaves the report unprotected True requires the password for access e From the Report Security section click False or True as desired for a spe cific saved report To exit the report security screen choose another report option from the blue sidebar menu Four functions are available from the Tools option Run 94x Report Manage Sup pressed Returns Download ABC Voice and Generate Contact List If you use Drake s Client Write Up to e file 940 941 and 944 reports and returns the online EF database allows you to run reports on those clients To run a report 1 2 3 From the online EF database sidebar menu click Tools gt 94x Report Choose the Return Type and Date Range Select a Status
23. Figure 13 1 Working Cabinet files are stored in alphabetically arranged client folders You can use the default Document Manager file structure or customize it as needed Tax Year 2012 Drake Software User s Manual Setting up Your Document Manager To implement the Document Manager file structure 1 From the Home window of Drake go to Setup gt Printing gt Document Man ager to open the Drake Document Manager Integration Options dialog box 2 Inthe General Options section select Use Working Cabinet 3 Select Allow Drake to set up Document Manager client folders Recom mended If this box is not marked you will have to specify the location where the Working Cabinet should store any scanned documents or returns printed through the PDF printer See Printing to Drake PDF on page 200 4 optional In the Working Cabinet section is the option to add folders to the default Document Manager file structure To do so e Click Add e Enter a custom folder name e Click OK The new folder will be inserted one level below the selected folder e Mark the Apply this layout check box if you want to insert the new folder into existing and new client files otherwise the new folder will be inserted only into new client files e To change the name of the new folder select the folder and click Edit To delete the new folder select the folder and click Remove 5 Click Save and then click OK Tip To avoid later restr
24. Figure 5 6 Entering foreign employer information on W2 screen If no W 2 was issued by the foreign employer use the Foreign Employer Compensa tion screen accessible from the Income tab to enter employee employer and income information NOTE Statutory Employees For information on the foreign income exclusion Form 2555 see Excluding Foreign Income on page 134 Because all statutory employees must file Schedule C for expenses related to W 2 income Schedule C is created for a statutory employee To indicate a statutory employee and generate Schedule C 1 Open a W2 screen for the employee and select Stat employee line 13 2 From the Special tax treatment list Figure 5 7 elect the associated Schedule C eee 52 5252525 Name cont pa E LL gin Form W2 Wage and Tax Statement ts t Fl Specialtax treatment v ed Employer information is required for e file Statutory employee wages for Schedule Cc Statutory employee wages for Schedule C Statutory employee wages for Schedule C Statutory employee wages for Schedule C Statutory employee wages for Schedule C 6 Statutory employee wages for Schedule C 6 Lagipatuzant smploveceasa fox Schedule Gat 7 1 2 3 He Wayne s Wonderful Widg 4 5 oe ope 234 Main srrect eee i Figure 5 7 W 2 in this example is associated with the second 2 Schedule C entered The earnings amount from scr
25. Form 4562 Depreciation and Amortization is used to claim deductions for deprecia tion and amortization to elect to expense certain property under section 179 and to indicate automobile and other listed property use for business investment purposes Where the Information Flows Data entered on the 4562 screen flows to the applicable sections of Form 4562 The information is also used to calculate data for other related forms and schedules Form 4562 Because the data entered into the 4562 screen flows to Form 4562 you should not have to use screens 6 7 8 and 9 4562 Parts 1 through 5c unless entering a pre pre pared return with no supporting documentation Data also flows as applicable from the 4562 screen to Form 4797 Sales of Business Assets and Form 3468 Investment Tax Credit Depreciation Screen 4562 is used to create depreciation or amortization schedules for Schedules A Schedules C E and F for Forms 2106 4835 and 8829 and for tax returns of partners in a part nership and shareholders in an S corporation Depreciation data is also used for the Auto Expense Worksheets for Schedules C E and F and Form 4835 To create an auto worksheet see Auto Expenses on page 171 To associate a depreciable asset with another screen in Drake see Associ ating One Screen with Another on page 73 Click the Form 4562 link or press CTRL W inside the Depreciation Tip field of a supporting schedule s screen such as S
26. From the Save as type drop list select CSV Comma delimited csv Click Save NOTA To import the file into your Local Address Book 1 From the Email Inbox window click the Address Book button to open the Edit Address Book dialog box 2 Click Import 3 From the Import Address Book File window browse to the address book file and Import double click it or select it and click Open 4 Click OK NOTE To delete an address from the Local Address Book select it and click Delete Report The Report Generated Recipient List option allows you to run a customized report Generated from your client EF and Scheduler data to generate a list of e mail addresses The Recipient keywords selected during the query are then used to create an e mail message Key List words inserted into the body of the message are replaced with the client s information You can access Scheduler data to send appointment reminders to NOTE groups of clients To do so select a Scheduler report in Step 3 of the following procedure To create a report generated recipient list 1 From the Drake Home window click Help gt E Mail 2 Click New to open a blank Compose Message window 3 Do either of the following to open the Report Manager window to e Click To in the New Message window and click the Create Report Gener ated Recipient List link 282 Tax Year 2012 Drake Software User s Manual E Mail Keywords Tax Year 2012
27. NOTE Only administrative users can set security rights Settings must be established before a preparer can begin working in the software To customize security settings for a preparer a 1 From the Drake Home window go to Setup gt Preparer s 3 i Select a preparer and click Edit Preparer 2 3 Select Security gt Custom Security 4 Q In the Preparer Security Setup window select a menu and then select the items to which the preparer should be allowed access Items left blank will be inaccessi ble to the preparer See Figure 2 5 on page 24 4 f 3 File EF Tools Reports Last YearData Setup Help 4 V Open Return I Cale Menu bar Print i V View 3 IV Forms Based Data Entry p Ea meee Preparer can gt open and view returns but cannot calculate Or print them i Check All Uncheck All oe a oe Sr ee Le ee af Figure 2 5 Security setup 5 Click Save When prompted click OK Click Exit to close Preparer Setup Other options available under the Security button are shown in Table 2 4 Table 2 4 Preparer Security Options Security Option Description Set Security to Allow No Options Employee cannot access any part of the program Set Security to Allow All Options Employee can access all parts of the program except for administrative only features Set Security Equal to Existing Preparer Employee is given security settings to match those of another preparer on the list
28. Output File Name 318 Additional options for sorting data calculating numeric data using prior year data and assigning an output file name are available from the Report Editor Step 2 win dow Figure 12 3 on page 317 Under Additional Report Options choose a keyword by which to sort reports For example to build a report on Clients with results sorted by the last name select Taxpayer Last Name from the drop list This list includes all the keywords in the report plus various others depending on the report selected Client type DCNs of client tax returns the start time and duration of scheduled meetings the firm s ID number the preparer s ID number the taxpayers names ID numbers phones num bers and ZIP code the client type Select the Summarize the Report Data box to have the program calculate and total each column Not all reports benefit from summarizing Edit your report and add such keywords as Count Average and Percentage to enhance the summary The program queries current year data by default To have a report run prior year data select the Use Data from 2011 box This option is available only with Client Reports An output file name consisting of the first eight letters of the Report title Step 3 in Assigning a Title and Description on page 315 is entered automatically in the Report output file name field Changing this name is optional A new name must be Tax Year 2012 Drake Sof
29. Tax Year 2012 A 1 Drake Software User s Manual UL Obtain Circular 230 Beginning January 1 2011 all tax preparers must comply with the stan dards of conduct set by Treasury Department Circular 230 revised October 2010 Under these standards current regulations that apply to attorneys CPAs EAs and other specified tax profes sionals now apply to all tax preparers including unenrolled preparers This circular is available on the Drake CD and at www irs gov pub irs pdf pcir230 pdf L Obtain Other IRS publications Order from the IRS or print from www irs com Contact the States L Obtain state applications Some states require e file applications and many states now enforce e file mandates Contact those states early to apply State data is available on the Federal State Facts page at the Drake Support site L Check state requirements for bank products Check with your state for special applications to offer bank products Contact applicable states that could require different forms L Check for state e filing mandates Mandates vary from state to state see Appendix E LY Check state requirements for business returns E filing requirements vary Contact Drake L Notify Drake of changes Inform us of changes to your firm s EFIN phone number address contact person e mail address etc e Mail accounting drakesoftware com call 828 349 5900 or make changes online at the Drake Support site Pr
30. To override any of these defaults for a return go to screen 1 of the return and select a firm preparer number or name or ERO under Return Options Figure 2 21 Return Options rma 7 zl ae Preparer ad Overpay Data entry z Invoice ROR Xj Fee og Figure 2 21 Setup override fields on screen 1 Be aware of the following information when determining what information is to appear on the return e Because both the firm and ERO information is determined by the return s pre parer a selection in the Preparer drop list will cause both the firm and ERO information to be overridden with the corresponding information associated with the selected preparer Tax Year 2012 55 Making Changes on the Fly Drake Software User s Manual Overriding Other Preparer Information e If for Preparer or Firm you select NONE Self Prepared Return No Paid Preparer nothing will be printed on the applicable lines on the return For ERO the program uses the information entered on the EF tab in Setup gt Options e Data entered on the PREP Preparer Information screen overrides the default data and the corresponding Return Options selections on screen 1 ERO informa tion is not affected by PREP screen entries For more on the PREP screen see Overriding Other Preparer Information following e The Data Entry field shown in Figure 2 21 on page 55 is for tracking pur poses only e A firm
31. at the end of the first paragraph of directions to determine CPE eligibility The CPE eligibility is also available from the main Support page under Training Tools gt CPE After completing all units of a course click Launch Exam on the Tax Courses page for that course After passing the exam with a score of 80 or higher click Launch Evaluation Once you have completed and submitted the evaluation you will be able to print a CPE certificate To reprint a CPE certificate click Report Card in the Drake ETC side bar menu Scroll to the bottom of the Report Card window to the CPE NOTES Credits list and click Print for the desired certificate To access information on all the ways to earn CPE credits from Drake without logging in to ETC go to Support DrakeSoftware com and select Training Tools gt CPE Tutorials teach the basics of Drake Software through text sound and animation For a list of available tutorials in ETC click Drake Resources gt Tutorials from the blue sidebar menu The Tutorials and Quizzes page displays a list of Drake tutorials Figure 10 9 on page 266 with green check marks indicating tutorials completed and red Xs indicating tutorials not yet begun 265 Online Support Practice Returns 266 NOTE NOTE Drake Software User s Manual Subject General Z Subject Tutorials i gt i 1040 com Affiliation Launch Tutorial wv gt 7246 Launch Tutorial 2 gt 8615
32. oven Het aco g State Information 5 IN NJ PA 1 Wages tips 2 Federal tax w h 87608 17265 3 Soc Sec wages 4 SocSecwihh a 29438 5545 K r I N a aa N a N Figure 10 16 Screen Help button for W2 screen In most cases a window similar to the field help window displays the screen help Some screen helps include links to form instructions and The TaxBook WebLibrary See Tax Book following The TaxBook WebLibrary is an independent tool for advanced research by tax profes sionals To subscribe to The TaxBook WebLibrary go to the Drake Support website Support DrakeSoftware com and from the blue sidebar menu select Resources gt Supplemental Resources A subscription to The TaxBook WebLibrary is 89 for the 2012 tax year Once your subscription is processed you can go to the Home window of Drake click the Tax Research button or select Help gt Tax Research and to go to the The Tax Book WebLibrary website Broadcast E Mail Tax Year 2012 Broadcast e mail messages announce the latest developments in the industry includ ing banking news IRS or state alerts software issues educational issues and impor tant information about new products or programs These e mail messages are sent during tax season to your 1040 com e mail address your EFIN 1040 com and dur ing the summer to the address you used when you registered with Drake for your account Access these broadcast e mail messages through Drake at Hel
33. 3333 loan agreements jpg File 11 2 2012 1 59 13 PM Right click and go to Properties ip enter Description B Carter William 6665 OrganizerProfoma pdf File 10 20 2012 7 42 50 AM Right click and go to Properties th enter Description NOT TAX OrganizerProforma2 pdf File 11 1 2012 4 13 27 PM P Ta state forms bmp File 12 7 2007 10 35 55 AM Right click and go to Properties th enter Description TE an Test file 10 13 12 TXT File 10 13 2012 10 16 51 AM Right click and go to Properties th enter Description L 4 IDs CEE CORP 7121 CHARITY TEST 1061 Selected Files in 4 Chaucer Geoffrey 6706 folder selected folder CHILDCARE ALANE 2441 APMCLIENT SAUPLGIATSIM aie apanman oan sept ais ah Bette AON a al tensile Figure 13 10 Parts of the Archive Cabinet interface Folders are organized in drawers of cabinets in standard tree format Click to expand a portion of the tree click to collapse it Or with a folder selected press the or keys on the numbers pad of your keyboard Navigating Click to open a cabinet a drawer then a folder to view a list of its files In the docu ment pane the Archive Cabinet displays document names types dates modified descriptions and status Click column headers to sort by columns Like other Drake windows the Archive Cabinet has a menu bar and a toolbar If a shortcut key such as F2 exists for a menu item it is listed to the right of the menu item You can
34. Because you are not sending the actual return it is not necessary to address other EF messages Only the ETD_MSG page needs to be addressed Payments Use the EXT screen to indicate the amount being paid with the extension If a voucher is needed mark the Produce 1040 V for extension box and use the Amount to print on 1040 V override field if the amount differs from the automatically calculated amount Mark the Taxpayer is paying the entire amount of tax due box see Figure 5 57 if the entire amount of tax is being paid with the extension Pe a ee ene Pr a If a fiscal year Form 1040 tax year beginnin g M and ending Amount paid with extension J Produce 1040 V for extension Taxpayer is paying the entire amount of tax due I Taxpayer has paper filed the extension and is now ready to file a regular return E a TS OOE E OE tithe tant Ne N stn E T Figure 5 57 Payment related fields on the EXT screen Filing the Before filing the actual return go to the EXT screen and mark the box labeled Tax Return payer has paper filed the extension and is now ready to file a regular return Nonresident Alien Returns Screen code NR Use the NR screen accessible from the Taxes tab to enter data for Form 1040NR U S Nonresident Alien Income Tax Return The 1040NR in Drake consists of three screens Press PAGE UP or PAGE DOWN to move from screen to screen Data from Form 1042 S Foreign Person s U S Source Income Subj
35. CPE Details Study guides quizzes practice test Drake 101 Data Entry Sep 19 2012 11 a m Take the course as many times as needed CPE Details a Test Overview and Tips Federal Tax Law Update 3rd Quarter 2012 Sep 19 2012 2 p m CPE Details a Ovir RS oam CWU Payroll amp Beyond Sep 20 2012 11 a m Tips on how study and what to expect CPE Details Tips for handling test anxiety See the full schedule and sign up EEA ai a aii a Ign E A E O N a Stele satan T An nehAPrminns Figure 10 4 The new ETC Welcome page Before you can log in to ETC your office must have an ETC administrator Admin account Once the account is established you can create student accounts and begin tracking student progress With their own user names and passwords students can log in to ETC on their own Admin accounts are created using the Need to sign up section Figure 10 5 Need to sign up It s easy to get started with Drake ETC We ll begin by creating your account First are you a Drake customer Yes No Submit p Figure 10 5 Need to sign up section of ETC Welcome page To create an Admin account 1 Inthe Need to sign up section Drake customers select Yes and click Submit Enter your EFIN and Drake password from your packing slip and click Submit In the Welcome window complete all applicable fields To earn CPE credit for completing ETC courses select Yes from the CPE
36. Client Communica tions Editor 42 Drake Software User s Manual Text is generated only if this condition applies Include your payment and Form 1040 V with your return For faster processing and to prevent errors make your check or money order payable to the U S Treasury and write your Social Security number and lt Current Tax Year gt Form 1040 on the check or money order If you want to review credit card and other payment options available call 800 2PAYTAX or 888 PAY 1040 lt End Paragraph gt Figure 2 15 Conditional paragraph Many conditional paragraphs are nested within larger ones Different nesting levels are indicated by different colors In Figure 2 16 the Federal No Dir Debit Paper Paragraph from Figure 2 15 is nested inside the Federal Balance Due Paragraph The green and purple text show where each paragraph begins and ends lt Federal Balance Due Paragraph gt Your federal return reflects a balance due of lt Federal Balance Due gt lt Federal No Dir Debit Paper Paragraph gt Include your payment and Form 1040 V with your return For faster processing and to prevent errors make your check or money order payable to the U S Treasury and write your Social Security number and lt Current Tax Year gt Form 1040 on the check or money order If you want to review credit card and other payment options available call 800 2PAYTAX or 888 PAY 1040 lt End Paragraph gt lt End Paragraph gt
37. Department of Revenue to be exempted from these requirements The DoR may grant an exemption for no more than one year at a time Tax preparers that file more than 100 income tax returns in a calendar year is required to file all such returns using scan technology or by electronic means If however the filing requirement will not apply if e A schedule must be attached to the return that cannot be filed using scan technol ogy or electronic means e The taxpayer requests in writing that the income tax preparer not file the return using scan technology or electronic means e The Utah Tax Commission waives the requirement that a return be filed by scan technology or electronic means A tax preparer may obtain such a waiver from the commission by demonstrating that the use of scan technology or electronic means would result in an undue hardship The filing requirement also does not apply to amended returns or returns for any taxable year that begins before the first day of the current taxable year Ifa preparer or multiple preparers affiliated with the same establishment prepared 101 or more returns in the prior calendar year they must submit all UT individual tax returns electronically Effective January 1 2012 paid preparers who prepare 50 or more returns in a tax year must file all eligible returns electronically using e File If a return is not eligible for e File it may be filed on paper Tax Year 2012 Drake Software User
38. Figure 13 20 Click Portal to upload or download documents to and from the SecureFilePro portal Uploading and Downloading Files Uploading Files Downloading 364 Files Before you can upload and download files using SecureFilePro you must set up both your portal and your system To set up your portal go to www securefilepro com or from your Document Manager toolbar click Portal and from the Portal Login window click Sign Up Follow the directions for setting up your folders IMPORTANT and your clients folders login and password options and e mail addresses Archive Cabinet only To set up your system from the Document Manager menu bar go to Setup gt Options and at the bottom of the Document Manager Options dialog box enter your Drake account number EFIN and Drake password To upload files from the Document Manager to SecureFilePro Open the Document Manager Click the Doc Mgr icon from the Home window any Data Entry Menu toolbar or your desktop From the client tree open a client s folder From the Document pane select the files to be uploaded Click the Portal button from the toolbar and select Upload Enter the Portal username and Portal password you set up with Secure FilePro com Click OK When the Folder List For client name window is opened select a folder to receive the uploaded file and click Upload 7 When the Portal Upload Result window is opened click OK dale ae cael N
39. Figure 5 44 see OP Codes following To override the OP code selection enter amounts to be applied into the Overpayment fields for each voucher item 3 in Figure 5 44 Estimated Taxes DUE in 2013 ES Code Estimate amt Overpa Voucher 1 Voucher 2 Voucher 3 Voucher 4 Figure 5 44 Entering overpayment amounts 152 Tax Year 2012 Drake Software User s Manual Estimated Taxes OP Codes _I f applying an overpayment to the 2013 estimated tax it is necessary to indicate how that overpayment should be applied on the estimate vouchers Do this by selecting an overpayment code on either the ES screen or screen 1 see Figure 5 43 on page 151 NOTE If a code is selected on both the ES screen and screen 1 the program uses the override code from screen 1 Overpayment codes are described in Table 5 12 Code descriptions can also be viewed opcode clicking in an overpayment code field and pressing F1 Table 5 12 Overpayment Codes in Drake OP Code Description blank Does not apply overpayment to 2013 refund entirely A Applies the overpayment to the vouchers in order until it is completely applied R Applies overpayment to first voucher and refunds the remainder E Makes the estimate equal to the overpayment O Applies the overpayment to the 2013 estimate but does not print any vouchers 4 Applies the overpayment to all four vouchers equally Underpayment of Estimated Tax By default th
40. GruntWorx Payment 358 Payment for GruntWorx is through the use of tokens Each use of a GruntWorx prod uct costs one token For instance it costs one token to organize a client s documents using Organize and it costs another token to add Populate for the same client Adding Trades to import brokerage data costs one additional token for every 50 trades To purchase tokens go to Support DrakeSoftware com or click Support from the Home window of Drake s tax software From the blue sidebar menu on the Support page select My Account gt GruntWorx Integration Scroll down to Token Pricing The retail price is 5 per token sold in multiples of 10 only with the per token price decreasing for larger purchases See Table 13 5 on page 359 Tax Year 2012 Drake Software User s Manual Additional Products Table 13 5 GruntWorx Tokens and Drake s Discounted Costs Tokens Retail Discount Cost Per Token 10 50 50 00 5 50 250 200 00 4 100 500 350 00 3 50 150 750 487 50 3 25 250 1 250 750 00 3 500 2 500 1 250 00 2 50 Tokens expire December 31 of the year following the upcoming tax season For example tokens purchased January 2013 expire Decem ber 31 2014 Tokens purchased in different years are spent in a first NOTES in first out order meaning the older tokens are automatically used first Master EFINs can purchase tokens for their sub EFINs or allow the sub EFINs to
41. If a more complex filter is needed click Edit Filters See Filter Manager on page 319 4 Click Next 5 Modify the Basic Search Conditions as needed and click Continue For more on basic search conditions see Search Conditions on page 319 6 From the Postcards dialog box update the postcard formatting as needed Click Help for more on individual fields 7 Click Finish 8 Set printer options in the Print dialog box as needed and then click Print Tax Year 2012 305 Amortization Drake Software User s Manual Amortization The Amortization tool prepares loan repayment schedules for various loan scenarios To prepare a loan repayment schedule 1 From the Home window select Tools gt Amortization 2 Enter a Schedule Title to be displayed at the top of the amortization schedule 3 Complete all other applicable fields Fields are described in Table 11 4 4 Click Calculate The program creates the amortization schedule Cakulte To print the schedule click Print 306 To save it for later viewing using Reports gt Report Viewer click Save Table 11 4 Amortization Schedule Fields and Descriptions Amortization Hescrintion Schedule Field P Loan Amount The original amount of the loan Amortization Periods The number of payments to be made over the life of the loan Example If the loan is for two years and monthly payments are required you would enter 2 4 2 years 24 months P
42. OtherTax2 Franchise S Corporation OtherTax1 NR Composite OtherTax2 Franchise Partnership OtherTax1 NR Composite OtherTax2 Franchise Fiduciary OtherTax1 NR Composite OtherTax2 Franchise Colorado Individual OtherTax1 Severance Tax Corporate OtherTax1 Severance Tax S Corporation OtherTax1 Severance Tax Partnership OtherTax1 Severance Tax Fiduciary OtherTax1 Severance Tax Connecticut Individual OtherTax1 Gift Tax OtherTax2 Business Entity Tax S corporation OtherTax2 Business Entity Tax Partnership OtherTax2 Business Entity Tax Delaware S Corporation OtherTax1 Composite Partnership OtherTax1 Composite District of Partnership OtherTax1 Franchise a Individual OtherTax1 Franchise Fiduciary OtherTax1 Franchise C 4 Tax Year 2012 Drake Software User s Manual Table C 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Florida Individual OtherTax1 FL 405 Corporation OtherTax1 FL 405 S Corporation OtherTax1 FL 405 Partnership OtherTax1 FL 405 Fiduciary OtherTax1 FL 405 Georgia S Corporation OtherTax1 Composite Partnership OtherTax1 Composite Kansas Individual OtherTax1 Franchise OtherTax2 Homestead Corporation OtherTax1 Franchise OtherTax2 Unitary S Corporation OtherTax1 Franchise OtherTax2 Unitary Partnership OtherTax1 Franchise Fiduciary OtherTax1 Franchise Estate OtherTax2 Estate Massachusetts Corporation O
43. PREP screen see For a Single Return Override below Preparer 1 9 Designated preparer for preparer numbers see list in Preparer Setup Yes box is marked Return Preparer Preparer who prepared the return Yes box is marked ERO Preparer indicated at Setup gt Options gt EF tab as Default ERO Yes box is marked If a preparer or ERO is selected a PIN must be entered for that preparer otherwise no preparer name shows up as the third party designee on Form 1040 For a Single Return Override Screen code Use the PREP screen to override the setup options for third party designee for a sin PRER gle return Enter the designee s name phone and PIN in the fields provided E mail address is optional 162 Tax Year 2012 Drake Software User s Manual Signing the Return Third Party Designee Figure 5 52 Third party designee fields on PREP screen For more on how to use the PREP screen to override preparer information see Over riding Other Preparer Information on page 56 No Third Party Designee To indicate that no one other than the taxpayer is allowed to discuss the return with the IRS go to the PREP screen and select No from the drop list in the Third Party Des ignee section See Figure 5 52 If no third party designee is indicated in Setup gt Options the No box is marked on the third party designee line of Form 1040 NOTES If you select Y
44. Shortcut Press CTRL P for the Print Selection option Printing to Drake PDF Print 200 To print tax return forms and other documents 1 Open Enhanced mode for a return The All Forms tab is shown by default 2 Collapse or expand the tree view as needed and select the forms to be printed by marking the check box to the left of each form See item 4 in Figure 6 5 on page 197 To print all forms in a set select all of the boxes in the tree view under All Forms NOTE If the main box of a set is selected all sub boxes are automatically selected 3 Click Print to open the Print Selection dialog box If you click the arrow next to the Print icon select Print Selected Forms 4 optional Select any printing options shown in the Print dialog box 5 Click Print again All of the selected items are printed using the printer selected from the Printer dialog box To print tax return forms and other documents as PDF documents 1 Open Enhanced mode for a return The All Forms tab is shown by default 2 Select the forms to be printed To print all forms in a set select all of the boxes in the tree view under All Forms 3 Click the arrow next to the print icon and select Print Selected Forms to PDF Document The Print Selection dialog box is displayed with the Drake PDF Printer selected Drake 2012 Print Selection x Print Dialog Select desired printer Use Properties to further configure printer d
45. To change this address 1 From the Drake Home window go to Help gt E Mail 2 From the menu bar within the e mail program select Setup gt Options 3 4 Enter an Alternate address This address replaces your 1040 com address Select Use alternative reply to address appearing as the sender and reply addresses on e mail messages you send Enter a Display name if desired If none is entered here the preparer s login name will be used as a display name on all e mails Click Save Work one on one with a Drake customer service representative CSR to resolve soft ware issues CSRs are trained year round on Drake Software topics such as connec tions conversions networking and other customer service needs To reach any department call 828 524 8020 or fax 828 349 5718 For additional phone numbers and contact information see Contacting Drake Support on page xii of the Quick Reference chapter Get answers to software questions using the fax cover letter provided on the following page Drake replies to faxes with faxes not phone calls Tax Year 2012 Drake Software User s Manual Fax Cover Letter for Support Fax Cover Letter for Support Name Company Name EFIN Phone number Fax Number To department or individual Computer Operating System select one J Windows 2000 Q Windows Vista O Windows NT U Windows ME U Windows XP U Windows 7 Are you working on a network LJ Windows 8 U Yes LI No
46. Tokens Used 125 Tokens Available 883 Product Tokens POPULATE POPULATE POPULATE ORGANIZE ORGANIZE POPULATE POPULATE NNA AON Refresh Ext Figure 13 19 Checking on status of uploaded job In the Status column of the GruntWorx Status dialog box one of these statuses is listed 361 SecureFilePro Drake Software User s Manual e Failed A transmission failure stopped the download e Pending The upload to GruntWorx is still in progress e Completed The upload to GruntWorx is complete but you have yet to down load the completed job back to your computer e Downloaded The job has been downloaded to your computer and the job is complete When the Status is Completed select the job to download by marking the check box on the left of the client s name and click Download Circled in Figure 13 19 on page 361 You can click the check box at the top of the ID column to select all listed jobs for download Click Refresh to update the window Note that in the upper right corner of the GruntWorx Status dialog box is a running tally of the number of tokens purchased the number used and the number remaining SecureFilePro Available to users of either the Working Cabinet or the Archive Cabinet Secure FilePro is an HTTPS file sharing site that allows you to send and receive documents on your own secure web portal Think of it as a document exchange site for you and
47. and click Next Filter the client database Click Next to open the Basic Search Condi tions dialog box Edit settings as desired see Search Conditions on a b page 319 and then click Continue 3 Choose to Print the depreciation list or to Export to File Print Send the list to the printer In the Print dialog box click Print Export to File Depreciation lists exported to file are stored in Drake12 Reports as CSV files Click OK Fixed Asset Manager Use the Fixed Asset Manager from the Home window go to Reports gt Fixed Asset Manager to run reports based on client assets Nine report types shown in Table 12 3 are available Table 12 3 Fixed Asset Manager Report Types Report Type Depreciation Schedules Report Description Depreciation list sorted by asset number assigned asset number and department number separated by a decimal exam ple of asset number 122 01 Items on Report Asset Number Description Date in Service Method and Recovery Period Basis Prior Depreciation Prior and Current Salvage Value and Current Year Section 179 expense Listings Depreciation list sorted by asset number assigned asset number and department number separated by a decimal exam ple of asset number 122 01 Asset Number Description Date in Service Method amp Recovery Period Business Percentage Cost Federal Basis Current Year Sec 179 Prior Year Depreciation State D
48. and move of PDF files For more on SecureFilePro see Chapter 13 Suite Products We ve streamlined the process of uploading and downloading documents to and from GruntWorx making it easier to select and upload documents from one or many cli ents From one window you choose the clients choose the documents scan new doc uments and transmit to GruntWorx We ve also made it easier to access GruntWorx allowing you to begin the process from the Data Entry Menu For more on using GruntWorx see Chapter 13 Suite Products Resources included on the Drake CD software manuals practice returns shipment letters informational brochures and IRS publications are now available through the software From the Home window in Drake go to Help gt Online Resources Inter net access is required Upgrading from PPR Pay Per Return customers who purchase 85 returns during the 2012 tax season are now switched automatically from the PPR package to the unlimited package without having to call Drake Support PPR customers who purchase fewer than 85 returns can still update to the full package after the tax season ends Data Entry Calculation This year s changes and enhancements include new data entry and calculation fea tures screen changes and improved letter functionality EF messages and notes Screen Changes Required Fields Some of the screen changes and enhancements you I see this year in Drake Fields tha
49. and then selecting Delete Sub Folder from the menu Tip To add a subfolder to every client s file see File Structure on page 332 Sending Files to Archive Cabinet To send the documents saved during the 2012 tax season from the Working Cabinet to the Archive Cabinet take the following steps 1 From the Working Cabinet toolbar select Archive to open the DDM Cabinet Utility window 2 Select the boxes to the left of the client folders you wish to archive or click Select All 3 Click OK 336 Tax Year 2012 Drake Software User s Manual Other Tasks Tax Year 2012 Setting up Your Document Manager 4 When the process is complete click Close NOTE If you open the DDM from within a return only that client s file will be offered for transfer to the Archive Cabinet Other tasks that can be performed in the Document Manager are listed in Table 13 2 With the exception of the GruntWorx button the following buttons are available on both the Working Cabinet and Archive Cabinet toolbars Other buttons and their func tions are explained in the section Working With Document Manager Files on page 348 Table 13 2 Other Working Cabinet Tasks Task Description A Working Cabinet only Open GruntWorx See GruntWorx on page 357 for GW details JV GruntWorx Click the File button and select Open Rename or Delete in order to open rename or delete a file respectively Fil
50. example to get information on reporting depreciation for a federal 1040 return in Drake s tax software you might take the following steps 1 Type depreciation into the Search text box Figure 10 2 Search for articles Search depreciation Click to Search Search using All Words z Search within Drake Software KB v Federal Returns z All Sub categories x All Sub categories 1065 Partnership 1120 Corporate ASSE Saroia Er a a PN a eS nO a a T a N n N null a T a Figure 10 2 Narrow your search with Search Within N From the Search using drop list make a selection See Table 10 2 on page 259 for the list of selections From the Select within drop list select Drake Software KB From the new drop list that appears below select Federal Returns From the new drop list that appears select 1040 Individual Select the Click to Search button at the top of the screen See Figure 10 2 oo ee The Browse tab lists all available topics as folders with all articles on each topic stored within the folders Select Client Write Up or Drake Software click a folder to see a list of articles and click an article to open it Figure 10 3 on page 261 Tax Year 2012 Drake Software User s Manual Online Support Navigation Icons Related Articles Attachments Feedback e Drake Software KB a Banking g Broadcast Emails Connectio
51. go to Setup gt Options gt Form Returns amp Schedule Options and clear the Print Form 6251 only when required check box Tax Year 2012 141 Foreign Tax Credit Drake Software User s Manual Foreign Tax Credit If the amount of foreign tax credit FTC is less than 300 600 for MFJ and no Form 1116 is required you can enter this amount directly into the Foreign Tax Credit field on screen 5 See Figure 5 35 we te te OP tet tet TS ee oe ae a wee eT Aa ia siie madin i pet ao fin Fe Bee inp pened tet ete tet ay ae sel N a we Credits ony acy Other Taxes S7 RRAIN Uepi RRA RCOM ee ea AE EE ara E a ETE E E E E om a S hie Figure 5 35 Use screen 5 to enter FTC if totals are less than 300 600 for MFJ For greater amounts use the FTC sections of the INT and DIV screens to enter data regarding foreign interests and dividends respectively or use the 1116 screen FTC Code If an 1116 screen is to be linked with an INT or DIV screen for foreign interest or dividends enter a number into the FTC box of the 1116 screen Enter this same num ber on the INT or DIV screen For more on entering foreign interests and dividends see Foreign Interest and Dividends on page 107 Required Statements A statement may be required with Form 1116 Use the SCH screen to attach a required statement On the SCH screen select the applicable 1116 item from the Type of Attachment statement number and title drop list If
52. is used to explain why a particular return is being paper filed Individual Returns For the tax year beginning on or after January 1 2010 any PA 40 2010 Pennsylvania Personal Income Tax Return prepared by a third party pre parer who submitted at least 50 PA 40 Pennsylvania Personal Income Tax returns or amended PA 40 Pennsylvania Personal Income Tax returns for any taxable year shall be e filed in the manner prescribed by Departmental instructions Corporation Returns For tax years starting on or after January 1 2011 paid third party tax preparers who prepare at least 50 PA Corporate Tax Reports RCT 101 are required to e file their clients tax reports during calendar years starting on or after January 1 2012 Once a third party preparer is subject to the e filing mandate the third party preparer will continue to be subject to the mandate regardless of how many PA corporate tax reports he or she prepares during the year A paid tax preparer may be allowed to file a paper report when a taxpayer specifically directs the preparer to do so or if the preparer proves that e filing would place undue hardship on the preparer by filing a written request for a waiver Volunteer unpaid preparers people who pro E 5 Rhode Island E 6 South Carolina Utah Virginia Drake Software User s Manual vide only support such as typing employees of a business who prepare tax reports for other employees and officers of the busine
53. l l l l New Client In Progress EF Pending EF Accepted Printed Status Status Status Status Status Figure 9 1 Some statuses are set automatically as the return is processed Predefined Statuses Table 9 1 displays the predefined statuses in the CSM Note that some are set automat ically while others must be set manually Table 9 1 Predefined Statuses in the CSM Set Automatically Set Manually New Client EF Pending Printed Complete On Hold Signed In Progress EF Accepted Under Extension Under Review Delivered Set statuses manually as appropriate Note that the program never automatically assigns a return a status of Complete NOTE When a status changes in the CSM it also changes in the PCM Custom Statuses Define as many as ten custom statuses Custom statuses must be set and changed man ually We recommend creating custom statuses before tax season begins To define a custom status in the CSM al 1 Click Customize The Customize Display dialog box is opened 2 Under the Status Settings tab select a status description to rename Figure 9 2 on page 251 Five of the custom statuses have suggested descriptions that can be changed Customize 250 Tax Year 2012 Drake Software User s Manual Setting Statuses Drake 2012 CSM Customize Display b Status Settings Enter new The Status Settings tab allows you to modify the Status Descripti
54. s 1040 package the K1P K1S and K1F screens contain tabs to associate the K 1 screens Schedule K 1 requires two screens in Drake the two sections of the basis worksheet and two 6198 at rink limit work sheets with a particular K 1 issued to the taxpayer For a new K 1 press PAGE DOWN Drake 2012 Data Entry Witt Carter William amp Carter MESEIA melia 1065K1 1 12 1065K113 20 Basis Worksheet Basis Worksheet continued 6198 At Risk f Schedule K 1 for 1065 Stal HI ts l st sc z city z paN Kd Partnership EIN 656z Partnership name N IE EAE A Partners in Grime Cleaning For state use only S Street address 1234 West Main Street F i E EE _ Franklin E U S ONLY State ZIP E z aal j ONLY povinceite a ohare Daan A h OD E yr apie aba saimi Figure 3 7 Tabs on the K1P screen for an individual 1040 return Creating and Opening Returns When you enter an ID number SSN or EIN the software searches both current and prior year files If it finds a client record in the prior year files only you are given the opportunity to update the record from the previous year into this year s program See Updating Client Files on page 78 to perform an update Creating a Return To create a return in Drake From the Home window click Open Create or ALT F O cE In the Open Create a New Return box enter the client s ID number Open Cre
55. s bank application into the Drake program See Banking Informa tion below Adding a To add a firm in Firm Setup Firm Add 1 From the Drake Home window go to Setup gt Firm s 2 Click Add to activate the bottom half of the Firm Setup window 3 Enter your firm s general and banking information Fields needed for e filing are indicated by red text NOTE General Information Enter contact and identification information includ ing firm name address phone and fax numbers contact name e mail address Employer Identification Number EIN and Electronic Filer s Identification Number EFIN If the firm is not located in the U S enter the province or state the country and the postal code A DCN serial number is assigned to each return based on the firm s EFIN and DCN If two returns have the same DCN the IRS rejects one of the returns To avoid duplications DCNs are automatically advanced for each return calculated Offices that use multiple computers that are not networked must stag ger DCNs to avoid duplication DCNs should be staggered before cre ating any 2012 returns For instructions on staggering DCNs see Staggering DCNs on page 234 Non paid prep If the firm is not a paid preparer enter a non paid code here Acceptable codes are VI VITA VT VITA T TE TCE X IP IRS PREPARED AND IR IRS REVIEWED Banking Information Choose a bank and include add
56. s three e filing services An E File Opt Out Request Form Form NJ 1040 0 is available for taxpayers who choose not to have their returns e filed by a tax practitioner Mandatory e file of PIT returns by preparers filing more than 25 returns taxpayers can opt out in writing penalty for noncompliance 5 per return 1 Ifa tax return preparer prepares 11 or more authorized tax documents for compen sation then all authorized tax documents prepared by that tax return preparer must be e filed There is no client opt out provision Tax preparers who do not comply with the e file mandate may be subject to a 50 per document penalty 2 Individual taxpayers are required to e file their NYS personal income tax returns if they meet the following conditions They use tax software to prepare their own return Their tax software supports e filing of their return They have broadband access New York State law prohibits software companies from charging an additional e filing fee If individual taxpayers don t meet all three of these conditions or if they prepare returns using paper and pencil they are not required to e file The 25 penalty that applied when an individual was required to e file but instead filed using paper has been removed New York City instituted a preparer mandate for the first time for tax year 2010 No change has been made to this mandate for tax year 2011 Preparers must e file if they both e Prepared more than
57. see Client Status Manager Ctrl W detail worksheets 69 70 custom paragraphs 32 59 customized supplemental letter 31 customizing colors 46 205 CSM display 252 data entry menu 33 drop lists 35 fields on BILL screen 34 flagged fields 34 greetings in letters 59 letters 42 miscellaneous code fields 34 report filters 317 security settings 24 D data entry bank screens in 220 basics of 66 colors 47 customizing 33 EF override options in 236 forms based 309 grid 68 100 165 heads down 82 help resources within 274 maximizing screens 28 menu 66 practice returns 266 printing client labels from 304 screen captures 75 setting CSM statuses from 252 setup options 28 Spanish 28 XXX Index special features in 183 192 upper mixed case 28 date shown on return 31 54 DCNs Document Control Numbers assignment of 20 changing 235 staggering 234 DDM 2 331 DDM see Document Manager debit card as electronic payment option 160 debt cancellation 133 deceased taxpayer 98 deductions claiming for depreciation 165 domestic production activities 139 itemizing 140 141 section 179 expensing 166 self employed health insurance 137 tuition and fees 138 deleted files in the CSM 254 deleting see also editing appointments 94 archived returns 208 checks 222 CSM records 256 duplicate entries from the CSM 256 e mail messages 277 employer data 307 files from Drake 297 firm information 21 flags 70 records from CSM dis
58. the program uses the default 02 FL Sold Placed in Service Overrides The 4562 screen has the following placed in service override fields e Force convention MQ mid quarter or HY half year If MQ is selected the program calculates which quarter to use Donot use MACRS tables Options include Qualified Indian Reservation Property Tax Year 2012 169 Depreciation Drake Software User s Manual Stopping Depreciation on an Asset To stop depreciation on an asset that was not sold enter the asset s remaining basis in the Salvage Value field fourth item on the left side of the 4562 screen The asset will be updated to next year No additional depreciation will be taken since the accumu lated depreciation equals the depreciable basis Depreciating Sold Assets To indicate the sale of an asset for depreciation purposes complete the applicable fields in the If sold section of the 4562 screen See Figure 5 55 Group Sales To enter group sales in Drake 1 Open a 4562 screen for the first asset of the group sale 2 Complete the applicable fields for the asset including Date sold and Property type fields and all fields under Group Sale Information Figure 5 55 tul A Fl st pal Emense of sale ee Form 4797 line 26d depreciation Form 4797 other Part Ill depreciation Depreciation allowed or allowable roup Sale Information Grom Sale MIE Group sale
59. tification Number ITIN 179 forms blank 290 order of in printing 206 properties of 205 forms based data entry 309 forums 270 frequently asked questions see FAQs front office mode in Scheduler 85 full time student 98 G gains capital 112 grid data entry 68 XXXV1 Drake Software User s Manual group sales 170 group security settings 25 GruntWorx 362 H heads down data entry about 82 macro for 40 toggling to basic data entry 82 health insurance COBRA 149 self employed 137 health savings accounts HSAs 133 home residence conversion to business use 118 credit for first time buyers 158 depreciation of 173 energy credits 143 months in 100 office 172 sale of 117 using the HOME screen 117 Home window in Drake 61 HSA funding distributions 118 identity theft 98 imperfect returns 33 236 importing see also exporting files into the DDM 348 Kiddie Tax data 149 QuickBooks data 299 Schedule D data 112 367 income exempt notary 110 index file repair 291 indirect expenses on Schedule E 123 installing Drake tax software 11 18 updates 287 Integrated File and Pay 160 interest and dividends 105 108 and penalty for late filed returns 181 rates manually entering 183 IRA adjustments 138 contributions 119 converting to Roth 120 income not reported on 1099 R 118 penalty computations 120 Tax Year 2012 Drake Software User s Manual IRS Regulation 7216 Consent to Use and Disc
60. with the letter of the drive where Drake is installed Access Help System items by using the Contents Index and Search tabs 2 IRS amp Social Security 1 2 Refund Cycle Chart Contents Search Type in the keyword to find lorganizer Organizer Fiter Selection JUNE Organizer Options Organizer Options list Other Contents Index Type in the keyword to find organizers Select Topic to display Ou Ouble click ane Outlook Outlook Express Overflow Statement veride Alt ee oo ap Figure 10 14 Contents Index and Search tabs Arranged in a Table of Contents style the Contents tab Figure 10 14 lists all available Help topics Topics are organized into books which contain the Help files for a specific topic Double click a book to see a list of topics contained in that book To see the Help screen for a topic click the topic The Index tab Figure 10 14 allows you to access the Help index by keyword As you type a keyword into the search field the matching index term is displayed in the lower box To see the Help screen for a matching term double click the topic or select the topic and click Display Use the UP ARROW and DOWN ARROW on your keyboard to move from term to term The Search tab Figure 10 14 allows you to search the Help topics by keyword Enter a search term and click List Topics or press ENTER From the topics displayed dou
61. your clients You can upload to SecureFilePro any documents that you have saved imported scanned and stored in your Drake files and your clients can go to the SecureFilePro website to view or download those documents Your clients can also upload files to the portal for you to retrieve Other features of SecureFilePro include e An activity report that shows at a glance who has accessed which accounts and what has been uploaded and downloaded from the site e Automatic alerts e mailed to your clients when their documents such as their tax returns are available for viewing or downloading e Automatic alerts when you are reaching the limit of your file storage capacity New for 2012 Folder Management 362 Among the changes and enhancements made to SecureFilePro e E mail customization will allow clients to Change certain text within the automatic e mails Add remove a logo Customize instructional paragraph for new and existing clients Add additional paragraphs and add footer information to e mails e Administrators and preparers can now add folders and upload files to Documents to Preparers e Users with access can rename and delete added folders The default folders still cannot be changed or deleted Tax Year 2012 Drake Software User s Manual SecureFilePro e Site Branding Logos can now be placed left or right of the Firm Name e File expiration settings will allow our clients to set
62. 1 2 Reports 9 Tax Year 2012 Open the Scheduler and click Reports The Report Manager is opened Expand the Schedule Reports and Client Contact menus to show the four types of reports that can be generated These are listed in Table 4 2 Table 4 2 Scheduler Report Types Scheduler Report Description Call List for all Preparers Lists the appointments scheduled for all preparers data types include appointment time and date client name client SSN duration of appointment client phone cell phone new client indicator preparer s name and cli ent s e mail address New Client Appointments Lists new clients entered for a selected preparer data types include appointment time start time client name client SSN and client phone numbers Preparer Appointments Lists the appointments for all preparers Data types include preparer name appointment date state time appointment time client name and SSN duration of appointment client phone numbers and new client indi cator Preparer Call List Lists the appointments for a preparer select a preparer name from the drop list Data types include preparer name appointment date start time client name SSN and client phone numbers Click a report type to select it Click View Report You will be asked if you want to create the report again using current data click Yes to do so Make any desired changes to the Basic Search Conditions dial
63. 1 Open the Archive Cabinet 2 Select a specific cabinet drawer or folder to back up 3 Click the Backup button on the Archive Cabinet toolbar The Backup dialog box is displayed Figure 13 9 on page 345 Note that the Selected Folder is marked as the default cabinet drawer or folder to back up Tax Year 2012 Drake Software User s Manual Setting up Your Document Manager E Backup fo 5 ea Location C DDMBackup Free Space 25 2GB Backup Restore Backup Name Carter William 6665 12072012 Selected Folder Clients C Carter William 6665 Entire DDM Estimated Backup Size 44MB Figure 13 9 Backup dialog box for Archive Cabinet 4 optional If you do not want to use the default location to store your backup click the Location button in the upper left corner and specify a new location 5 optional If you do not want to use the default Backup Name enter a new name The default name uses the cabinet drawer or folder name and the current date If more than one backup of the same selection is done on the same day the system incorporates a sequential identifier by default 6 Click Start to begin the backup process NOTE To back up the entire Archive Cabinet select Entire DDM in the Backup dialog box before clicking Start Because a backup may take several minutes you can minimize the dialog box and continue working You will be notified when the process is complete at which point you
64. 10 2 Options in KB Search Using Drop List See item 2 in Figure 10 1 Search Option Description All Words Searches for articles containing all search terms entered Any Word Searches for articles containing any one of the search terms Boolean Allows connector words to be used in conjunction with keywords to aid in searching Use and not and or Exact Phrase Searches for articles containing the exact phrase entered 259 Online Support Search Within 260 Browsing the KB Drake Software User s Manual Table 10 2 Options in KB Search Using Drop List See item 2 in Figure 10 1 Search Option Description Natural Language Allows you to enter a sentence in the Search field The KB pulls out matches to any words in the sentence 3 Select Click to Search Related articles appear in order of relevance with the most relevant first From the Sort by drop list articles can also be sorted by the date the articles were modified by the article rating or by the article titles Click a title to open the article If only one article meets the search criteria the KB opens that article Matches to your keywords are highlighted Be sure to click the How to Search the KB tab for additional instructions on setting up article searches Use the new Search Within feature Figure 10 2 to narrow a search to specific arti cle categories within specific databases and find pertinent articles more quickly For
65. 100 original New York City General Corporation Tax or Unincorporated Business Tax documents in calendar year 2011 including tax documents for prior periods e Used tax software to prepare one or more corporation tax documents in 2011 Tax preparers who meet the mandated criteria above cannot opt out of the e filing mandate If a taxpayer wants to opt out he or she must apply for a hardship waiver available at www nyc gow html dof html contact contact_emailefilewaiver shtml A tax return preparer that prepares more than 11 original tax returns during any calen dar year that begins on or after January 1 2013 shall use electronic technology to file Tax Year 2012 Drake Software User s Manual Oklahoma Oregon Pennsyl vania Tax Year 2012 with the tax commissioner all original tax returns prepared by the tax return preparer This division does not apply to a tax return preparer in any calendar year that begins on or after January 1 2013 if during the previous calendar year the tax return pre parer prepared not more than 10 original tax returns Ifa tax return preparer required by this section to submit original tax returns by elec tronic technology files an original tax return by some means other than by electronic technology the tax commissioner shall impose a penalty of 50 for each return in excess of 11 that is not filed by electronic technology Upon good cause shown by the tax return preparer the tax commissioner
66. 19 22 23 25 26 29 30 1 2 5 6 8 939 SD Today 9 17 2012 Se a a a es es i att ec Figure 4 10 The Appointment Scheduler features a toolbar 1 a calendar overview 2 calendar tabs 3 and a scheduled appointment list 4 If the user is logged in as an administrative user the Batch Appts button is displayed in the toolbar See Batch Appointment Generator on page 92 Setting Up Scheduler Options Use the Scheduler Setup feature to establish the logged in preparer s default settings for appointment durations automatically filled data and calendar views Only the logged in preparer s calendar and view are affected by any changes 86 Tax Year 2012 Drake Software User s Manual Scheduler Click the Setup icon in the Scheduler toolbar The Scheduler Setup consists of two rm tabs a General tab for default settings and a Calendars tab for setting viewing Setup options for calendars Options are described in Table 4 1 Tab Table 4 1 Scheduler Setup Options Setup Option Description General Appointment duration Set the default appointment time displayed in the Appointment Detail dialog box See Scheduling Appointments on page 90 Values are set in five minute increments Scheduler times Set time intervals 15 30 or 60 minutes to be dis played on the calendar grid rows of the Appoint ment Scheduler see Figure 4 10 on page 86 Appointment reminders Ac
67. 302 mandates 8 mandates e filing 8 margin adjustments letters 44 marketing kits 272 married filing separately see MFS filing status maximizing screens 28 maximum minimum fees 38 meals and entertainment 134 meals subject to DOT rules 110 medical savings accounts MSAs 133 message pages EF messages 230 MFS filing status claiming dependents 101 ineligibility for child care credit 143 splitting a joint return 73 using Quick Estimator 310 mileage and moving expenses 136 prior year 172 rates 172 military addresses 98 and EIC 156 processing codes 98 related tax forgiveness 180 Military Spouses Residency Relief Act 110 ministerial income allocation see clergy MOM see Multi Office Manager months in home dependents 100 mouse 63 moving expenses 135 MSG state EF message pages 232 multi form code MFC fields 73 xxxvii Index Multi Office Manager MOM 33 241 245 246 multiple EFINs 244 multi screen forms 68 N net operating losses NOLs 173 174 network options 16 peer to peer 234 new features this year other packages 367 new features this year 1040 package 2 7 non paid preparers 20 non passive activities 124 non profit contributions 119 notary income exempt 110 NOTE screen 187 notepad PAD screen 188 notes pages generated with return 195 release 271 NWClient 17 O office in home 172 Ohio city tax rates 309 online EF database 241 245 opening see also accessing see also activating see
68. 5329 1 per taxpayer 8863 1 Schedule A 1 5405 pg 2 2 8864 1 Schedule B 1 5695 1 8866 1 Schedule C 8 5884 1 8867 1 Schedule C EZ 1 per taxpayer 6198 10 8873 10 Schedule D 1 6251 1 8874 1 Schedule E Unlimited 6252 25 8880 1 Sch E pg 2 1 6478 1 8881 1 Schedule EIC 1 6765 1 8882 1 Schedule F 5 6781 1 8885 2 Schedule H 1 per taxpayer 8082 Unlimited 8888 1 Schedule J 1 8275 2 8889 2 Schedule R 1 8275R 2 8896 1 Schedule SE 1 per taxpayer 8283 Unlimited 8903 1 970 2 8379 1 8907 1 982 1 8396 1 8908 1 1098 C 10 8582 1 8909 1 1099 R 20 8582CR 1 8910 1 1116 20 8586 1 8911 1 1310 2 8594 1 8912 10 2106 1 per taxpayer 8606 1 per taxpayer 8917 1 2106 EZ 1 per taxpayer 8609A 10 8919 2 2120 4 8611 5 8930 1 2210 1 8615 1 8936 1 2210 F 1 8801 1 8938 1 xviii Tax Year 2012 Drake Software User s Manual Accepted Forms and Schedules Form or Maximum Form or Maximum Form or Maximum Schedule Number Schedule Number Schedule Number 2441 1 8812 1 8941 2 2555 1 per taxpayer 8814 Unlimited 9465 1 2555EZ 1 per taxpayer 8815 1 Pub 517 work 2 sheet 1 4 3468 1 8820 1 56 1 3800 1 8824 5 2350 1 3903 2 8826 1 4868 1 4136 1 8826 1 9465 1 4137 1 per taxpayer 8829 32 4 per Sch C W 2 50 4255 1 8834 1 W 2G Unlimited 4562 Unlimited 8835 1 W 2GU 10 4684 5 8844 1 2439 4 4797 1 8845 1 4835 4 8846 1 4952 1 8853 1 1120 The following chart identifies forms and schedules tha
69. 7 3 Electronic Filing and Banking USE Consentto Use of Tax Return Info DISC Consentto Disclosure of Tax Return Info DD Direct Deposit Form 8888 PMT Electronic Funds Withdrawal PIN 8879 8878 e file Signature EF EF Selections Figure 7 3 Electronic Filing and Banking section of General tab in data entry Taxpayer Application Complete an application agreement for every taxpayer applying for one of the bank ing options available see Taxpayer Requirements on page 212 Some banks require original applications to be mailed on a weekly basis Consult your bank for requirements Check and Card Stock Obtain all check and card stock from your bank All stock must be verified and secured upon receipt Read and retain all information included with the checks or cards Tax Year 2012 219 Using Bank Screens in Data Entry Drake Software User s Manual Using Bank Screens in Data Entry The Drake program has a separate screen for each of Drake s banking partners While the bank screens have certain fields in common each bank screen is unique Become familiar with the screen for the bank you are using Use the available help resources to ensure that all required information is entered for each taxpayer with bank products Described here are the fields that are found on most bank screens in Drake and vary from bank to bank Select Product Identification Ifa bank offers multiple products the screen for that bank inclu
70. ADMN Used to track which preparers made con tributions to the return preparer entry Reviewer Contribution ADMN Used to track which preparers reviewed the return preparer entry Approved Copy assemble Client contact Cli Used to track the various stages of return ent pickup Date promised Date completed completion preparer entry ADMN Prior year bank product data ADMN Dates and amounts are retained from prior year fields are completed automati cally Data entry stats for the return admin users These fields are completed automatically only ADMN Tax Year 2012 Drake Software User s Manual Binary Attachments Table 5 26 ADMN and ESUM Screen Information Type of Information Description EF transmission data admin users only These fields are completed automatically ESUM Non traditional return types admin users only These fields are completed automatically ESUM PA and NY only Current year bank product data ADMN Number and amount of check are com pleted automatically preparer must enter the date the check is picked up Bank code admin users only ADMN This field is completed automatically Note that some ADMIN screen fields are automatically filled with data from else where while other fields require direct entries Note also that some fields are admin only and are not visible to users who do not have administrative rights NOTE Some data from these screens
71. Accounting DrakeSoftware com Education Education DrakeSoftware com e Filing EF DrakeSoftware com Support General Support DrakeSoftware com Support State specific XXstate DrakeSoftware com Replace XX with state abbreviation Conversions Support DrakeSoftware com Client Write Up Client_wu DrakeSoftware com xii Tax Year 2012 Drake Software User s Manual Shortcut Keys Tax Year 2012 Shortcut Keys For more on the many helpful resources provided by Drake Software see Chapter 10 Resources and Support Save data entry time with the following shortcut keys Table Q 1 Home Window Shortcut Keys Desired Action Keyboard Keys Open Returns CTRL O Calculate returns CTRL C Print returns CTRL P View returns CTRL V Open recent client files Enter 1 9 Open Quick Estimator CTRL Q Open Client Status Manager CTRL L Open EF Return Selector CTRL S Transmit Receive CTRL T Open Drake Software Help CTRL F1 Exit the program Esc Table Q 2 Navigating Through Data Entry Screens Desired Action Move cursor forward one field Move cursor back one field Keyboard Keys TAB ENTER or DOWN ARROW V SHIFT TAB CTRL UP ARROW f or SHIFT ENTER Move cursor with a field LEFT ARROW or RIGHT ARROW gt Delete character behind the cursor BACKSPACE Delete character in front of the cursor DELETE Move to last field on the screen CT
72. Administration IMPORTANT Click here for important informatig Sign Out Click here to read an important m Figure 10 7 Sidebar menu for all ETC selections The sidebar menu lists the available resources within ETC as described in Table 10 3 Table 10 3 Drake ETC Resources Description Interactive tax courses explore IRS tax law and terminology and how they apply to Drake data entry CPE credits are available Current courses include 1040 1065 1120 and 1120S Drake Resources gt Tax Courses Tax Year 2012 263 Online Support Item Drake Resources gt Tutorials Drake Software User s Manual Table 10 3 Drake ETC Resources Description Instructional slide shows teach the basics of Drake Software Topics include tax and CWU subjects Many topics are available in Spanish Drake Resources gt Practice Returns Hands on data entry and e file training Drake Resources gt Videos and Recorded Webinars Recorded webinars cover such subjects as Drake setup and tools data entry and e filing Some topics from previous years include Drake installation required setup data entry View Print e filing letters and bills bank products and split extension and amended returns Past years videos for Client Write Up include such subjects such as spreadsheet importation and end of year e filing administration Webinars gt Avail able Webinars Covers such topics as Drake 1
73. Available for 2012 Residency Exclusion Due Dates BODY Penalties O Approved Extensions Products by Package 1120 Yes Approved Web Information 1120S Yes Approved 1065 Yes Approved Shipment Letter Form Instructions LLC Yes Approved Update Notes Drake Forum Website California Franchise Tax Board Figure 10 13 Link selections item 1 on the CA page link to the state taxing authority 2 State pages offer a list of available topics item 1 in Figure 10 13 from which to choose Click the state taxing authority link item 2 in Figure 10 13 to go to that state s website Drake Forums The online Drake Forums allow you to interact with other Drake clients Participation in Drake Forums is strictly voluntary To access Drake Forums from the Drake Sup port site select Resources gt Forums or from the sidebar menu on any of the state pages of the Federal State Facts page First time users must register before participating read the text on the Forums page regarding registration requirements and then select Click here to Register Follow the instructions provided on your screen 270 Tax Year 2012 Drake Software User s Manual Other Resources at Drake Support Drake Software Downloads Secure FilePro Supple mental Resources Broadcast Center Prior Year State Programs Release Notes Tax Year 2012 Once registered for the Forums select Click here to Login on the Forums page After log
74. Credits drop list 5 Preparers registered in California Oregon Texas or Pennsylvania should mark their respective boxes in order to receive CPE credits in those states PON D Enrolled Agents and Registered Tax Return Preparers should mark those boxes Enter your PTIN 8 Click Save Information When the system has saved your data click Next N Tax Year 2012 Drake Software User s Manual Online Support Creating an To create a student account log in to ETC See Logging In following click the ETC Student Administration link and click Add New Student After completing all applicable Account fields see steps 4 7 in the Admin account setup above click Save Information When creating a Drake ETC student account each student must enter NOTE a unique e mail address even if all students are part of the same administrative account Logging In To log in to ETC 1 Go to the Drake Support site and select Training Tools gt Drake ETC or go to DrakeETC com 2 Inthe Returning Users section enter a Username and Password Figure 10 6 Returning Users Username MaxsTaxes Password eeece e Figure 10 6 Logging in as a returning user 3 Click Sign In Once you re logged in the ETC Home page is opened On the left side of this page is a blue sidebar menu Figure 10 7 Drake e Training Center Home Drake Resources Sidebar menu Webinars _ Welcome RTRP Study Report Card
75. Drake Support review the following questions to ensure that the necessary conditions for printing checks have been met Is the correct printer selected Go to Setup gt Printing gt Printer Setup and look in the Checks field of the F5 General Setup tab Select another printer from the drop list if necessary Are you using the same computer from which the return was transmitted Have you received the bank acceptance acknowledgment for this taxpayer Has the correct SSN been entered if reprinting Text Won t Line Up If the text is not lining up correctly on the check you may have to modify the adjust ment settings for the printer To adjust these settings 1 2 3 From the Home window go to Setup gt Printing gt Printer Setup Select the F8 Edit Printer Settings tab Select the printer being used to print the checks Once a printer is selected all other fields are activated Enter a number in the Check Adjustment Vertical field Each whole number represents a fourth of a line Enter a positive number 1 to move the check down a fourth of a line text will show up higher on the check Enter a negative number 1 to move the check up a fourth of a line text will show up lower on the check Remember to click Update before closing the Edit Printer Settings window If the text is showing up too far to the left or right you may have to adjust the printer itself Consult the user manual for your pri
76. EF gt Process Acks The Process Processing Acknowledgments box displays progress This data is copied to the EF database for later access See EF Database on page 239 If no new acknowledgments are found Drake asks if you want to review old ones After you read the acknowledgment file an Acknowledgment Report shows the acknowledgment code and batch ID Ack Codes Drake codes are shown in Table 8 1 Re send any return that receives a B ack Table 8 1 Drake Acknowledgment Codes Code Description P Tax return transmitted successfully to Drake Return is being processed T TEST return transmitted successfully to Drake B Bad transmission A B ack received for a return sent in a batch with other returns means NOTE only that return received the B ack the other returns in the transmis sion will still be processed if they each generated a P ack Tax Year 2012 233 E filing a Return Drake Software User s Manual IRS acknowledgment codes are shown in Table 8 2 IRS acknowledgments are usu ally processed within 24 hours Table 8 2 IRS Acknowledgment Codes Code Description A Tax return has been accepted by the IRS Tax return has been rejected by the IRS R D Tax return is a duplicate of a previously filed return or DCN rejected by IRS E Imperfect return see Imperfect Returns on page 236 Bank acknowledgments listed in Table 8 3 are usually processed withi
77. EIN Index The Client Status Manager CSM index was updated CSM Index Tax Year 2012 291 File Maintenance Drake Software User s Manual To repair index files Shortcut Press CTRL R to open the Repair Index Files window From the Home window go to Tools gt Repair Index Files Select the index files to repair To repair all types of index files click Repair All Click Continue Click OK If Name Index was selected select a Name Index Option first When the file repair is completed click Exit to return to the Home window ia a oe a a NOTE Repairing the name index takes about a minute for every 2 000 names File Maintenance The File Maintenance menu provides access to the following functions e Backing up and restoring files including copying data and configuration files to other computers or for use as backups e Importing exporting changing deleting unlocking and password protecting files Backing Up and Restoring Files Use the Backup and Restore tools to prevent loss of client data or to move client files to another machine Files backed up to other locations can be used to restore lost data If multiple machines are used for tax preparation in one office files can be moved to other computers and uploaded to a single machine to create a master file Tip Back up your files often and store them at an off site location Backup To back up your files from the hard drive 1 From the Drake Home wi
78. Excise Tax OtherTax2 Interest and Dividends Corporation OtherTax1 Franchise and Excise Tax S corporation OtherTax1 Franchise and Excise Tax Partnership OtherTax1 Franchise and Excise Tax OtherTax2 Interest and Dividends Fiduciary OtherTax2 Interest and Dividends Estate OtherTax1 Estate Tax Texas S corporation OtherTax1 Franchise Partnership OtherTax1 Franchise Individual OtherTax1 Franchise Corporation OtherTax1 Franchise Fiduciary OtherTax1 Franchise Tax Exempt OtherTax1 Franchise Tax Year 2012 Drake Software User s Manual Appendix D Acronyms amp Abbreviations cA ack ack ACH ACRS AGI AMT ATIN B ack CAF CSM COGS CWU Dy ack DAN DCN DD DDM doc DTP Tax Year 2012 This appendix lists and defines many of the acronyms and abbreviations you may encounter when using Drake tax software Accepted transmission Acknowledgment A report generated by the IRS and by Drake to a transmitter that indicates receipt of transmissions Automated Clearing House A system that administers electronic funds transfers EFTs among participating financial institutions Accelerated Cost Recovery System Adjusted Gross Income Alternative Minimum Tax Adoption Taxpayer Identification Number A tax processing number issued by the IRS as a temporary taxpayer identification number for a child in the domestic adoption process who is not yet eligible for a Social Security Num
79. Export Launch Tutorial x Figure 10 9 Tutorial list Click Launch Tutorial for the desired tutorial Tutorials do not have to be completed in the order listed Each tutorial has its own quiz Quizzes test the student s knowledge of the subject and if you re an administrator can help track student progress To access a quiz select Quizzes from the Subject drop list and click Launch Quiz for the desired quiz Tutorials are added throughout the season so check for new tutorials often To view tutorials for Drake CWU select Client Write Up from the Subject drop list shown in Figure 10 9 Practice returns have been designed to help your firm become familiar with the basics of data entry and e filing in Drake Software To access practice returns in ETC click Drake Resources gt Practice Returns The Practice Returns page displays instruc tions and a list of available practice returns Figure 10 10 Practice Returns Individual Practice Return 1 View Return View Solution Individual Practice Return 2 View Return View Solution Individual Practice Return 3 View Return View Solution Individual Practice Return 4 View Return View Solution Individual Practice Return 5 View Return ee ot a aiie View Solution ee O apne Figure 10 10 List of practice returns on the Practice Returns page Click View Return to view the basic return scenario in a PDF file Open Drake s tax software and prepare the return according
80. F4 990990990 Ted s Tax Exempt F5 400400400 Seay s Trucking and Shi F6 400006665 Carter William amp F7 606006001 Autobots F8 414141414 Partners in Grime Clean F9 400001009 ACAPPELLA TEST amp OK Cancel Figure 6 1 Batch Calculation dialog box Tax Year 2012 193 Calculation Results Drake Software User s Manual 2 Using one of the following methods indicate the returns to calculate e Press the function key of a return to calculate The return s identification number SSN EIN appears in the field to the left of the list e Type the SSN EIN of a return into the top field and press ENTER 3 Repeat the previous step until all returns are indicated 4 Click OK The program calculates the returns Calculation Results When you calculate a return from data entry the Calculation Results window Figure 6 2 is displayed by default You can also choose to display the Calculation Results window when you View a return or calculate a return outside of data entry for instance from the Calculate button of the Home window of Drake The pause option in Setup gt Options gt Calculation amp View Print NOTE tab must be selected for the calculation results to be displayed when you click View or calculate outside of the return For more information see Table 2 6 on page 29 Calculation Summary The Summary tab shown in Figure 6 2 has four main sections the calculation sum mary EF Messages Return Not
81. Form 1040 Excluding Ifthe taxpayer qualifies for the foreign earned income exclusion use the 2555 screen Foreign accessible from the Other Forms tab to complete Form 2555 Foreign Earned Income Income The income amount from this screen flows to the 1040 as a negative number in other words it is subtracted excluded from the total income shown Form 1040 Foreign income must be included in total income via a W 2 Schedule C etc before it is excluded from total income using Form 2555 NOTES The 2555 screen consists of five screens or pages accessible by clicking the links at the top of the screen To create a new second 2555 screen press PAGE DOWN Educator Expenses Screen code 4 Enter educator expenses in the Educator expenses field on screen 4 Employee Business Expenses Screen code 2106 Use the 2106 screen accessible from the General tab to enter data for Form 2106 Employee Business Expenses The 2106 screen expense flows to the Job Expenses and Certain NOTE Miscellaneous Deductions section of Schedule A It does not flow directly to Form 1040 Meals and Entertainment Department of Transportation DOT workers are allowed to claim 80 rather than the standard 50 of the costs of meals as a business expense To calculate the allowed amount properly enter the total expense in the Meals entertainment field of the 2106 screen and enter the amount attributable to DOT hours of service rules for meals in the
82. Form 8829 Business Use of Home select 8829 from the For drop list at the top of the screen If the home was the taxpayer s main home mark Main home for Form 8829 in the Other Information section on the left side of the 4562 screen Amortization Enter amortization codes in the Amortization code section field on the 4562 screen under Amortization Information To allow the extra 5 000 deduction in the first year of amortization select Elect additional first year deduction State specific Depreciation Information All States For state specific depreciation information complete the applicable fields under State Specific Information section near the bottom of the left column ensuring that all state rules and guidelines are followed Note that State basis if different is an override field The default basis is the Cost Basis from the top of the 4562 screen FL KY and State specific fields for Florida Kentucky and Pennsylvania returns are located on PA screen 4562 e Occurrence of Schedule field Choose the occurrence of the state form or sched ule to which the asset relates default is 1 For PA entries this field applies only when the asset is sold e Schedule form data flow list Select the state form or schedule to which the asset data should flow For PA this field applies only when the asset is sold e Removal Method field FL only Press F1 to view valid entries If left blank and a 2012 Date sold is entered
83. Householdincome Prisoner income Foreign Employer Compensation Tax exempt interest NO Schedule B required Een 9 Dividend income NO Schedule B required DIV SY r a ae EN ee ea en ee Figure 5 9 Interest and dividend fields on screen 3 The Income screen amounts are calculated and the results flow directly into Form 1040 Any interest or dividend income entered on the INT or DIV screens is com bined with the screen 3 amounts when the return is calculated Do not duplicate entries Schedule B Interest and Ordinary Dividends Schedule B is required if taxable interest or ordinary dividends exceed 1 500 Use the INT and DIV screens to report interest and dividend income that exceeds this amount Amounts are generated for Schedule B and flow into Form 1040 Reporting Certain portions of ordinary dividends domestic dividends not taxable by a state and Portions Of ordinary dividends that are U S Government dividends can be expressed on the DIV Dividends screen as either amounts or percentages Figure 5 10 Amount Percent Percent of lines 1 and 2 that are nominee dividends and capital gai ees Dividends included in Box 1a that are NOT taxable on the state fee Dividends included in Box 1a that are U S Government dividends DaO include she U S Government dividend noctigpron she HOT taxabbamstate TIREE angian Figure 5 10 Enter portions of ordinary line 1a dividends as amou
84. In the past screen 8863 was used if the taxpayer or spouse was a student if a depen dent was a student the education expenses were entered on the Dependents screen 138 Tax Year 2012 Drake Software User s Manual Domestic Production Activities Deduction screen 2 Now regardless of whether the student is the taxpayer the spouse or the dependent all education expenses are entered on the 8863 screen NOTES If a dependent does not qualify for an education credit the software does not apply this information when calculating the federal return Student and _ Enter the SSN and the name of the student and the qualifying expenses in the top sec School Info tion of the 8863 screen If more than one 8863 screen must be used for families with more than one student enter the information on lines 23 26 and the qualifying expenses only on the first screen In the lower section of the 8863 screen enter the information about the schools the student attended Form 1098 T Ifthe amounts of qualifying expenses came from a Form 1098 T Tuition Payments Statement supplied by the educational institution enter the amount of qualifying expenses then mark the proper check boxes in the lower section of screen 8863 For an amount received from any taxable scholarship that was not reported on a Form W 2 enter the amounts on screen 3 Domestic Production Activities Deduction Screen code 8903 Use the 8903 screen accessible from the Adjustments tab fo
85. Income 106 108 Form 1099 MISC Miscellaneous Income 105 Form 1099 OID Original Issue Discount 107 Form 1099 PATR Taxable Distributions Received from Cooperatives 131 Form 1099 Q Payments From Qualified Education Pro grams 132 Form 1099 R Distributions From Pensions Annuities Re tirement or Profit Sharing Plans IRAs Insurance Contracts etc 118 Form 1099 S Proceeds from Real Estate Transactions 115 Form 1116 Foreign Tax Credit 108 142 Form 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer 179 Form 2106 Employee Business Expenses 134 Form 2120 Multiple Support Declaration 179 Form 2210 Underpayment of Estimated Tax 153 Form 2350 Application for Extension of Time to File 164 176 Form 2439 Notice to Shareholder of Undistributed Long Term Capital Gains 157 Form 2441 Child and Dependent Care Expenses 142 143 Form 2848 Power of Attorney and Declaration of Repre sentative 23 179 Form 3468 Investment Credit 146 165 Form 3903 Moving Expenses 135 Form 4136 Credit for Federal Tax Paid on Fuels 146 157 Form 4137 Social Security and Medicare Tax on Unre ported Tip Income 147 149 Form 4506 Request for Copy of Tax Return 179 Form 4562 Depreciation and Amortization 29 165 171 Form 4797 Sales of Business Property 115 165 170 Form 4835 Farm Rental Income and Expenses 131 Form 4852 Substitute for Form W 2 or Form 1099 R 119 Form 4868 Application
86. Manager MOM on page 245 Office Manager To select a report category click one of the report categories from the blue sidebar menu item 1 in Figure 8 10 on page 243 or scroll down the Overview page and click a blue heading item 2 in Figure 8 10 on page 243 242 Tax Year 2012 Drake Software User s Manual Online EF Database Viewing a Report Saving Report Criteria Deleting Reports Overview System Overview Lastname SSN Lookup Access detailed information ab Bank Products rae penn 2 Checks H This robust reporting tool allows you to run reports Fees as extensions Queries can be limited to a date range future reference Reports may also be printed directly from they Summary Tonie gt Bank Products This tool allows for reporting on bank pr sorted and reporting filters can be saved for future reference Options gt downloaded for future reference MOM Checks The Checks reporting tool allows reporting on che Queries can be limited to a date range data can be sorted a Log Out may also be printed directly from the website or downloaded fi Fees The Fees reporting tool gives you access to reports ol fiktagacidav fe apsactiorRenotonee he Figure 8 10 Two methods of selecting Returns from the Online EF database report categories To view a report 3 4 Click a category option to select a report category Figure 8 10 Enter a Return Type Return Statu
87. Message window is opened showing the attached files in the Attachments list Figure 6 13 Dike 201 Email Compoce Mesoge keda E p VaN SA fi To Attach Help Exit support drakesoftware com Attachments 2012 Tax Return Documents PDF Sed ce Print File 400006665 1040 Bec Data File 400006665 1040 Subject 201 2 Tax Return Information Attachments Add ee Oe Se eee ee ee T Figure 6 13 Attachments shown in Attachments list of the Compose Message dialog box 4 Click the To button shown in Figure 6 13 and double click an e mail address from the Drake Software Support Address Book Click OK 5 Click Send NOTE You have the option of attaching additional files See Attaching Files on page 277 204 Tax Year 2012 Drake Software User s Manual Setting Up View Print Options IMPORTANT If you changed the password for e mailing a PDF document Drake Support will need that password in order to open the file Setting Up View Print Options In addition to setting up options for form properties colors and printing order you can access other utilities within Drake using the Setup feature Setting Form Properties The Form Properties setup function allows you to change the form description pric ing information and numbers of copies to print for a form within a return To access this feature in Enhanced mode select a document and click Setup gt Form Proper ties Se
88. NOOR Ifa password has already been entered for an SSN or EIN the Current Password field Figure 11 7 is activated Once you ve entered the correct password you can change or remove it using the bottom two text boxes on the screen Unlocking Client Files If files are automatically locked upon e file acceptance they can be viewed but not changed after e filing The option to lock files automatically is available in Options Setup see E filing on page 32 To unlock a client file that has been locked 1 From the Home window go to Tools gt File Maintenance gt Unlock Client Files 2 Enter the SSN or EIN of the return 3 Click Continue The file can now be modified in data entry Deleting Files from the Program Deleting Print Files Tax Year 2012 A client file is created when a return is prepared A print file is a temporary file that is created when a return is calculated Print files are used for e filing and are automati cally removed from the system after the designated number of days See Table 2 6 on page 29 to view or change the number of days to store print files To manually delete print files 297 File Maintenance Drake Software User s Manual 1 From the Home window select Tools gt File Maintenance gt Delete Print Files and wait for the program to scan the day s files Print files are listed in the Return Selector Select the file to delete To delete all files click Select All Cl
89. NOTES Interactive Support e Click the arrow next to the To icon and select Report Generated List The Report Manager window is displayed 4 Select or create a report that includes only those clients who fit the criteria for the e mail list For example to include only those clients who have filed an extension application you would create an Extensions report 5 Click View Report A message states the number of matching e mail addresses found Click OK to close the message window Your recipient list has been generated When you click Send the e mail message will go to all e mail addresses in the list To view the addresses click the Edit button see Figure 10 23 To remove a name from the address list select it and click Remove Any keywords that were available to the report are now in the Keyword Selector pane of the Compose Message window Figure 10 23 You can double click a key word to add it to the body of the e mail In the Figure 10 23 example the preparer has begun the letter with the greeting Dear lt TAXPAYER NAME gt Drake 2012 Email Compose Message oJ 2 I 4 Of To Attach Help Exit To Report Generated Recipient List Sample Client Report As of 10 23 2012 Edt Send Subject Prepare Now for Tax Season Attachments Add Dear lt TAXPAYER NAME gt Keyword Selector Selector Don ID just wanted to take a moment to let you know that if you have
90. Ohad wed Biehl hla 308 Scheduler aze anean Cee Ee ee ee ree 308 Forms Based Data Entry sis 0 8 sod doo Baden tie dao a da debate Rada ead ban 309 Quick Estimator g c8s pce eal aad dane ad Gea ead ed ee AN eA ERED a a a HOR ANG Cae AEN 310 REDONS araa 313 Report Managet oeo ices ces ssndsn erone Cia weds Ved eE Cee EOE EE EE EOE EO a 313 Setting Upa Rep rt serci seror erion e wank aa E E OEE aa ee A ed esd pane E 315 Filter Manager oie cieee cerr erie nene ee bth bebo E E E E e Ee aA 319 Report VISWER sdieri don dee doa doe od ae dG hate dana a a Wadd EE W bandas A REAN G 323 Depreciation List jcc 5 6 sea doed ine dea oak betes ec less Gna saad a Se dole baw WER nal dae end 323 Fixed Asset Manager 3 2 oa808 ceded ce hac edad oh aca hal dead ead ak aad bane 324 Client Status Manager CSM Reports 0 0 0 eee een ene e nnn eens 326 Hash Lotalsii4 cus dha seb odd waded hd eons baad ob tana dda daa most a E dade hedatdard 326 pol UL Coal 2 e cy 1 nn ese AEE eee eee ee 329 Changes to Suite Products in 2012 0 0 eee eee nen eben een eens 330 Drake s Document Manager 1 0 6 cc eee nen e tenet eee teen nee 331 Setting up Your Document Manager 0 ce teen nen teens 332 Working With Document Manager Files 0 0 0 cee teenies 348 Pax Plann ef sgae aie a E a a a a a Be Mode in Abiiedtce E edna re wacA 353 Chient Write Up errs cia enaga edd Gund diam aut dl aan goe lee Seale wares E a TRE R E ans 356 Additional Products
91. Open a test return and calculate it before testing transmission NOTE Your account number must be entered in ERO Setup in order to trans mit returns See ERO Setup on page 13 To test system transmission Shortcut CTRL S 1 From the Home window select EF gt Select Returns for EF 2 From the EF Return Selector select the test returns to transmit Select only the returns in the 400 00 or 500 00 series provided in the CAUTI ON software All other returns are processed as actual live tax returns and can result in a charge of filing fraudulent returns Click Continue The Report Viewer displays the selected returns Click Exit to close the Report Viewer Shortcut CTRL T From the Home window select EF gt Transmit Receive Click Send Receive in the Transmit Receive dialog box that is opened D AH NEW FOR A green progress bar appears assuring you that the transmission is 2017 proceeding normally during the transmittal of large files 7 When the process is complete return to the Home window and select EF gt Process Acks to view acknowledgments An IRS acknowledgment of T indicates a successful test transmission Transmission unsuccessful Go to Setup gt ERO and add or correct NOTE your ERO information as needed and re transmit If transmission is still unsuccessful make sure your Internet connection is working properly You can save time and mouse clicks by combining the previous seven steps
92. Options box Use the BILL screen to adjust individual amounts on a client s bill The following items are added to or subtracted from the bill using the BILL screen e Write in Adjustments such as for coupons and other discounts and adjust amounts charged for these adjustments e Balance due from prior years e Scenario Planner fees e Percentage increases and discounts e Sales tax percentage e Prior Payments Tax Year 2012 Drake Software User s Manual Making Changes on the Fly NOTE To create user defined drop lists for the write in Adjustments and Pay ments screens see Customized Drop Lists on page 35 You can also indicate the following adjustments from the BILL screen e To exclude a charge for the Filing Status Optimization Report See About the MFJ MFS Report on page 74 e To adjust the bill as needed for a self prepared or firm prepared e filed return The BILL screen also allows you to override the date printed on the bill and add a short note separate from the custom paragraph to the bottom of the bill Pricing for a To override Pricing Setup and establish prices for a single return Single Return 1 In data entry click View to access View mode for the return 2 Right click a form in the left column and select Setup gt Form Properties The Properties dialog box is displayed Figure 2 22 TE 1040 Properties C DRAKE12 PR FED PER Ea 1040 Properties Update the 1040 description prici
93. Other Working Cabinet Tasks Task Description Access Help Exit the DDM w Restricting Access to the Working Cabinet Shortcut to 338 To restrict access to the Working Cabinet for individual preparers 1 From the Home window of Drake go to Setup gt Preparer s to open the Pre parer Setup window Double click a preparer s name click the Security button and select Custom Security from the menu to open the Preparer Security Setup window From the menu bar select Tools Remove the check mark from the Document Manager check box Click Save OK and Save To restrict access to the Working Cabinet for groups of preparers 1 N a From the Home window of Drake go to Setup gt Preparer s to open the Pre parer Setup window Click the Group Security button From the list at the top of the window double click to choose security group to edit From the menu bar select Tools Remove the check mark from the Document Manager check box Click Save Individual restrictions are not available for security groups ADMIN and NOTE FULL The FRONT OFFICE security group and any security groups GruntWorx you ve added can be restricted For details on setting up security groups Setting Up Group Security on page 25 If you have office personnel who regular work with GruntWorx but who do not have access to Drake Software you can create a desktop shortcut to GruntWorx To d
94. Passive Activity Credit Limitations Tax Year 2012 145 Child Tax Credit Child Tax Credit Drake Software User s Manual The Child Tax Credit is calculated automatically in the program See Additional Child Tax Credit and Combat Pay on page 157 Retirement Savings Contributions Credit Screen code 8880 Use the 8880 screen accessible from the second Credits tab for Form 8880 Credit for Qualified Retirement Savings Contributions NOTE Other Credits When this credit can apply Form 8880 is generated automatically and a note is produced stating that retirement plan contributions have been carried to Form 8880 The note also provides instructions for preventing Form 8880 from being generated Table 5 8 lists all credit forms not mentioned previously for which Drake provides screens If you need a form for which no screen is available most forms can be found at Tools gt Blank Forms Screen 4136 Table 5 8 Other Credits Calculated in Drake Form and Credit Form 4136 Credit for Federal Tax Paid on Fuels 3468 Form 3468 Investment Credit 5884 Form 5884 Work Opportunity Credit 6478 6765 8396 Form 6478 Credit for Alcohol Used as Fuel Form 6765 Credit for Increasing Research Activities Form 8396 Mortgage Interest Credit 8609 Form 8609 Low Income Housing Credit Allocation and Certification 8801 Form 8801 Credit for Prior Year Minimum Tax Individuals Estates and
95. Preparer Over ride drop list 4 Click Process Figure 4 8 to open the Print Organizers Proformas dialog box Figure 4 9 Organizers Proformas Print Options Highlight a client to view or print the forms within it To highlight multiple clients hold down the Ctrl key while clicking on each client Click View Print to view all forms for all selected items If you uncheck an item here you will not be able to print it from the main Batch Printing page Click Save to return to the main Batch Printing page Print Options IV Send document s to Printer IV Save document s to Document Manager I Upload document s to Secure File Pro Form Options Client List SSN Name 111223333 Mary Cann 400005008 Scott Carter 400006665 William Carter ee oe ee ee i aa Te Oe Figure 4 9 Select print options from the Print Organizers Proformas dialog box 5 Select options from the Print Options section red circle in Figure 4 9 You can choose send the proformas or organizers to the printer to the Drake Document Tax Year 2012 83 Organizers and Proformas Drake Software User s Manual Manager or to the SecureFilePro portal For information on how to use the Drake Document Manager and SecureFilePro see Chapter 13 Suite Products NEW FOR When sending organizers from multiple taxpayers to the Document Manager or SecureFilePro portal Drake automatically sends the 7017 organizers or proformas to th
96. REMICs Figure 5 21 Screens for entering Schedule E data Schedule E Screen code E Use screen E to complete page 1 of Schedule E Part I Income or Loss From Rental Real Estate and Royalties Page 2 of Schedule E Parts II through V is calculated from K 1 schedules The corresponding screens in Drake E2 E3 and E4 primarily contain override fields data entered here overrides amounts that would otherwise flow from the K 1 IMPORTANT Use screens E2 E3 and E4 only if transcribing the information from a previously calculated Schedule E Form 1099 Screen E includes check boxes for indicating 1 if any Forms 1099 were required to Reporting be filed and 2 whether the required Forms 1099 were filed Schedule E Rental State Information tsu tT wl F st nc gt city pan Re ER g Property description for reporting cabin in woods a NE E eee LE A Didyou make any payments in 2012 that would require you to file Form s 1099 M Yes F No Questions A and B should be answered B If yes did you or will you file all required Forms 10997 ccnecceennenweenienntenesen M Yes No on first Schedule E screen ONLY j an a awe p St re ae me z Figure 5 22 1099 check boxes on screen E NOTE If more than one Schedule E is required questions A and B above should be answered only on the first screen E Tax Year 2012 121 Supplemental Income Drake Software User s Manual General Inform
97. S oe 50S Sa Ses USER S MANUAL Support DrakeSoftware com gt 828 524 8020 Drake Software User s Manual Tax Year 2012 Support DrakeSoftware com 828 524 8020 Drake Software User s Manual Copyright The 2012 Drake Software Manual Drake Tax Software and any other related materi als are copyrighted material All rights are reserved by Drake Enterprises LTD including all ownership rights This document associated software and related mate rial are the property of Drake Enterprises LTD Drake Enterprises LTD hereby authorizes you to download display print and repro duce the material in this document in an unaltered form only for your personal non commercial use or for non commercial use within your organization Copyright trademark and other proprietary notices may not be removed 2012 Drake Enterprises LTD All rights reserved While every attempt has been made to produce an accurate and complete manual there is no warranty expressed or implied to that effect Drake Enterprises LTD assumes no liability for damages or claims resulting from the use of the information contained herein Trademarks The Drake Software Logo and Drake Tax are registered trademarks of Drake Enterprises LTD Other product names mentioned in this manual may be trademarks or registered trademarks of their respective companies il Tax Year 2012 Drake Software User s Manual Table of Contents Table of Content
98. San Se 1234 West Main Street e eRe eR _ Franklin U S ONLY Ghee FIP o aaa ae T E EE N IN TREN O enn di memtu di omen 9 annie Figure 5 26 In this example the program is opened to the first page of the K1P screen In Figure 5 26 you would click 1065 K1 13 20 to complete lines 13 through 20 The K1P K1F K1S E and 4835 screens feature an Activity Type drop list for desig nating an activity as passive or nonpassive A selection from this list controls what Tax Year 2012 Drake Software User s Manual Supplemental Income income data if any goes to Form 8582 Passive Activity Loss Limitations Available activity types are described in Table 5 3 Table 5 3 Activity Type Selections for K1P K1F K1s E and 4835 screens Activity Type Description A Active rental real estate Activity is a rental real estate activity with active participation Calculation flows to the Rental Real Estate Activities With Active Participation section in Part of Form 8582 and to the WKS 1 worksheet This is the default for screen 4835 B Other passive activity Activity is a passive activity but is not a rental real estate activity Calculation flows to the All Other Passive Activities section in Part of Form 8582 and to the WKS 3 worksheet C Real estate professional Activity is that of a real estate professional and does not flow to Form 8582 D Not a passive activity Activity is not a passive activ
99. Save 339 Setting up Your Document Manager Archive Cabinet porerne DDM Location CADrakeDDM Search e ae a Figure 13 7 Protecting Archive Cabinet with optional password With a password in place users must enter the password in order to open the Docu ment Manager s Archive Cabinet To change a password repeat the steps described previously In the Add Pass word for DDM Startup text box and the Confirm Password text box see Figure 13 7 enter the new password and click Save then click OK To remove a password delete the passwords from the Add Password for DDM Startup and Confirm Password text boxes see Figure 13 7 and click Save then click OK To delete select a password and press DELETE NOTE For information on password protecting individual files in the Archive Cabinet see Document Security on page 351 Adding You can use the default Document Manager file structure or customize it as needed Folders 340 To implement the Document Manager file structure 1 2 TIP From the Home window of Drake go to Setup gt Printing gt Document Man ager to open the Drake Document Manager Integration Options dialog box Select Allow Drake to set up Document Manager client folders Recom mended If this box is not marked you will have to specify the location where the Archive Cabinet should store any scanned documents or returns printed through the PDF printer See Pri
100. Screen code 3 Enter NOL carryback amounts from future years on screen 3 in the NOL field Figure 5 56 on page 174 This field can also be used to amend the current year amount or to adjust carryback amounts calculated from the LOSS screen Tax Year 2012 173 Net Operating Losses Drake Software User s Manual Pet ee mnan E e PE E SE T Se TE ee Y pe eN ae tle lle Note Program will figure taxable portion of 2012 SS benefits 24 Other I Form 8615 investmentincome 21 income Form 8615 investmentincome 21 I Form 8615 investmentincome 21 NOL carryforward carryback LOSS Real estate tax recovery eee Personal property rental income Gambling winnings Alaska Permanent Fund Figure 5 56 NOL carryback field on screen 3 An amount entered here flows to the Other income line of Form 1040 Click the LOSS link as needed to access the LOSS screen Carryforwards from Prior Years Screen code Use the LOSS screen to enter NOL carryforward amounts from prior years Enter LOSS amounts for each year using the Amount available from carryforward Used prior to 2012 and Used in 2012 columns on this screen Never add a LOSS screen for a current year NOL The program carries forward any current year NOL and displays the carryforward on the WK_CARRY worksheet The results of your data entry are reflected on NOTES the WK_NOL worksheet To have the pr
101. See Firm Setup on page 20 Options See Options Setup on page 27 Tax Year 2012 Drake Software User s Manual Software Setup Table 2 3 Setup Procedures Required and Optional Required Setup Procedure Optional Setup Procedures ERO See ERO Setup on page 21 Pricing See Pricing Setup on page 37 Preparer s See Preparer Setup on page 22 Macros See Macros Setup on page 38 Data Locations See Single Workstations and Letters See Letters Setup on page 43 Network Options on page 16 Pay Per Return PPR clients only see PPR Colors See Color Setup on page 46 manual on CD from the Home window of the software at Help gt Online Resources or from Printing See Printing Setup on page 47 the Drake Support website If you used Drake last year you can bring forward most required program settings from your 2011 program See Updating Settings on page 79 for details Logging in as an Administrative User Setting an ADMIN Password Shortcut Double click the ADM row to edit it Tax Year 2012 Log in as ADMIN to enter setup information The administrator can access the follow ing features not available to non administrative users e Preparer setup security features in Setup gt Preparer s e Additional features in Setup gt Firm s e Network options Setup gt Data Locations e The Administrative Options tab o
102. The available statuses are e A Include only returns with A accepted acks e P Include only returns with P pending acks e R Include only returns with R rejected acks e S This status not active for these reports Click Run Report Tax Year 2012 Drake Software User s Manual Online EF Database Manage Suppressed Returns ABCvoice Files Generate Contact Lists K L When running Returns reports you are offered the option of hiding rejected returns See Figure 8 11 Records Returned 170 Page 1234 9 Lines per Pag Ack Code Hide Tran Date 777777 JONES SAMPLE A 2222 01 13 2012 Rejected 01 12 2012 7777717 SANDERS CLYDE 1004 01 21 2012 Rejected ide 01 21 2012 104 ITI gs SANDERS NYO ater nnngnttnce te DA anaa a GUID a eiee aa tide a o G21 em pa Figure 8 11 Click hide to delete rejected returns from a Returns report To return the rejected returns to the report go to Tools gt Manage Suppressed Returns and click Show See Figure 8 12 Records Returned 2 Page 1 Lines per Page 20 777777 JONES SAMPLE A 2222 2 777777 JONES SAMPLE A 2222 01 13 2012 Regorhgealad an 3 14 2012 523R anms h am A aAa atoa a aaa f Figure 8 12 Click Show to restore hidden returns to a Returns report Also in Tools the option to Download ABC Voice applies to preparers using the ABCvoice File tool For more information call Versicom at 937 438 3700 NOTE If using AB
103. This price includes 10 hours of continuing education on federal tax law that applies towards the annual RTRP requirement plus study guides examples quizzes and a prac tice test The RTRP Test Overview And Tips course provides an overview of the RTRP test and tips for success Course costs 19 and includes two hours of continuing education and includes information on test specifications ways to study and prepare what to expect on test day and tips on handling test anxiety LJ Get Required CPE Credits PTIN holders are required to obtain 15 hours of continuing educa tion annually including two hours of ethics three hours of federal tax law updates and 10 hours of federal tax law topics To view a Drake webinar on continuing education requirements log in to DrakeETC com and from the blue menu sidebar select Webinars gt Available Webinars and from the list of webinars select Continuing Education Requirements Click Details or Regis ter Apply for Electronic Filer s Identification Number EFIN All new EROs must apply to the IRS to become an e Services provider in order to receive an EFIN If you are a new ERO and are not a CPA EA attorney banking official or officer of a publicly held company you must also submit a fingerprint card Register as an e Services provider online through the IRS website www irs gov Click the For Tax Pros tab and from the Getting Started section click Become an Authorized e file Provider
104. Title and Last Name gt Conditional Text Paragraph lt Federal Electronic Filing Paragraph gt Enclosed is your lt Current Tax Year gt Form 1040 U S Individual Income Tax Return prepared fi the information provided Your return will be electronically fled with the IRS once we receive your signed Form 8879 IRS e file Signature Authorization Figure 2 14 A letter template consists of keywords text and conditional paragraphs Keywords appear as red text within angle brackets A keyword is a description of the type of text to be generated and added to the letter For example the keyword Current Date is at the top of each letter When a letter is generated the Current Date key word is replaced with the current date For more on keywords see Appendix C Text in black text is displayed exactly as it will be printed in the output of the letter Conditional paragraphs like keywords contain angle brackets Each paragraph actually consists of a starting tag the conditional text and an lt End Paragraph gt tag Note that both the starting and ending tags end with the word Paragraph The enclosed conditional text is printed only if a particular situation applies in that let ter For example the conditional paragraph in Figure 2 15 on page 42 is generated only if the taxpayer who has a balance due is paper filing and has selected not to pay by direct debit 41 Software Setup Paragraph Nesting
105. Unverified field Fields flagged as UNVER must be verified before e file is possible File extension for Microsoft Excel files Tax Year 2012 Drake Software User s Manual Appendix E State E filing Mandates Alabama California Connecticut Florida Illinois Tax Year 2012 State e filing mandates for tax year 2012 as collected from state tax authority publi cations are provided below Ifan income tax return preparer prepares 50 or more acceptable original individual income tax returns using tax preparation software in a calendar year then for each subsequent calendar year thereafter all acceptable individual income tax returns pre pared by that income tax preparer must be filed using electronic technology Regula tion 810 3 27 09 A taxpayer can elect to opt out of e filing you need only to file a signed paper original individual income tax return That client s paper return will be included in your total mandate count If an income tax return preparer prepares 25 or more acceptable original corporate or partnership income tax returns using tax preparation software in a calendar year then for that calendar year and for each subsequent calendar year thereafter all acceptable corporate and partnership income tax returns prepared by that income tax preparer must be filed using electronic technology There is no opt out provision for corporations or partnerships California law requires tax preparers who prepar
106. Use E mail Setup in View Print to indicate the e mail method you want to use and specify default settings MPORTANT Even though you must open a specific return to indicate your set tings those settings will apply for all e mailed returns The steps below are optional you may not need to make any changes if you are happy with the program defaults To set up your e mail program for sending returns 1 Go to View mode of any return 202 Tax Year 2012 Drake Software User s Manual E Mailing from View Print Email Y 2 Click the arrow on the Email button and select Email Setup 3 Inthe Email Setup dialog box select your preferred e mail program the e mail program you normally use or the Drake program from the Select Email Method drop list This default will be applied whenever you click the Email button not when you click the arrow next to the Email button 4 To include a default Ce or Bee address one to which all e mailed returns will be sent type the address in the applicable field under Email Default Settings If entering multiple addresses use a semicolon as a separator between addresses It is not recommended that you enter a default To address If an AUTI DN address is entered in the To field every return e mailed through View mode will be sent to that address 5 Make any changes to the default message 6 Click Save Your default settings will be applied for all e mailed returns Sending a Return
107. a date to expire all files e Move Copy feature has been added so clients can move or copy to a new target location e There have been behind the scenes changes to make PDF file sizes smaller This will help with storage in SecureFilePro and with decreasing lag time in creating copying and moving PDF files e A download indicator was added When a file has been downloaded the date and time the download was completed will show in the file information e Other changes Unlimited number of files is now allowed in these folders Document to Clients Documents to Preparers Private administrator and preparers only Public SecureFilePro Sign up and Costs Sign up for SecureFilePro from the Drake Support website Support DrakeSoft ware com or click Support from the Drake Software Home window From the blue menu box to the left side of the Support web page select Resources gt SecureFilePro Follow the onscreen directions to set up an administrative account and to add employ ees and clients who will have access to the site The cost of using SecureFilePro is determined by the number and size of the docu ments you upload and save there Prices are as follows e 9 95 monthly 99 95 annually for a 250 Mb portal e 19 95 199 95 for a 1 Gb portal e 29 95 299 95 for a 5 Gb portal Accessing SecureFilePro Once your account has been set up and made accessible you and your clients ca
108. a detailed register of checks printed by your office 1 From the Home window select EF gt Check Register 2 Inthe Check Register dialog box select the Starting Date Ending Date and EFIN Firm Name 3 Click Continue The Report Viewer displays the check number date amount EFIN sequence number client ID and client name for all checks within the parameters 4 optional Print or export the register as needed See Report Viewer on page 293 for more on using these features in the Report Viewer 5 Click Exit to close the Report Viewer Resetting Check Numbers Occasionally you might have to reset the check range Follow the process outlined in Printing Checks for Bank Products on page 222 When you get to the Check Print Options dialog box click Setup Checks to access the feature for resetting check range Tax Year 2012 223 Troubleshooting Check Printing Drake Software User s Manual Lost or Stolen Checks If you do not physically possess a check that must be reissued for example if a check is lost missing or stolen follow your bank s procedures for a lost or stolen check Do not reprint the check Troubleshooting Check Printing Listed below are some common issues that preparers encounter when printing checks Please read the following information before contacting Drake Software Support Checks Aren t Being Printed There are many reasons that a check is not being printed Before contacting
109. a question about the status of your lt RETURN TYPE gt feel free to contact me at any time TAXPAYER NAME TYPE TOTAL INCOME Thank you for letting me be part of your tax team TOTAL TAX REFUND Sincerely BALANCE DUE RETURN TYPE PREPARER NAME FIRM NAME FIRM NUMBER lt PREPARER NAME gt lt FIRM NAME gt lt FIRM NUMBER gt N N ae ee Oe Oe ON ee ae oe Figure 10 23 Selecting from available keywords for e mail message Click your pointer anywhere within the body of the e mail before double clicking the keyword to have the keyword entered in that location Once keywords are added edit the e mail message add a subject line and add any attachments before clicking Send The message is sent to all selected recipients Recipients will be unable to see other addresses in the recipient list they will be unaware that others are receiving the same e mail To delete the recipient list click Cancel Query at the bottom of the Compose Message dialog box If you close the completed message before sending it you will be prompted to save it in the Drafts folder If you click Yes the e mail mes sage is saved along with the generated report list and keywords 283 Interactive Support Alternative Reply Address Phone Fax 284 Drake Software User s Manual The e mail program uses your 1040 com e mail address your EFIN 1040 com for example 777777 1040 com This address is used for both your sender and reply address
110. a text file or a CSV spreadsheet format file You can then import that information into other programs such as Microsoft Word Excel or Access To export data files 1 From the Home window go to Tools gt File Maintenance gt Export Client EF Data The Export Client EF Data box provides several choices Figure 11 6 Drake 2012 Export Client EF Data This will export all EF or Client data to a Text CS file The text or CSV file can be opened using word processor database and spreadsheet software Click Continue to export data or Exit to leave this screen without exporting files C Export client data files Export efile data files J Export to CSV Comma Separated Values I Include test returns Path File name for record layout F D RAKE 1 2 export EFLAYOUT TXT Path File name for export data F DRAKE12 export EF_DBF TXT Help Continue Exit Figure 11 6 Export Client EF Data dialog box 2 Select to either Export client data files or Export e file data files e Ifyou choose Export client data files the path to the location of the exported client data files is displayed Change the default path as needed e Ifyou choose Export e file data files the path to the location of the exported e file data files is displayed Change the default path as needed 3 optional Click Export to CSV Comma Separated Values if you want to export the data to a spreadsheet 4 optional Click In
111. accessing screens 124 applying expenses to 172 basis worksheets for 127 entering data for 124 127 exporting data from another return 126 letters 31 43 53 60 printing page 2 30 state amounts if different from federal 125 Schedule R Credit for the Elderly or the Disabled 143 Schedule SE Self Employment Tax 136 Scheduler 85 96 establishing daily schedules 87 new features this year 85 reports 95 313 searching 94 screen captures 75 search conditions in Filter Manager 319 322 searching appointments 94 business codes 110 city codes 98 CSM 253 DDM 335 347 Drake Software User s Manual 1 EF database 239 federal and state publications 272 Help feature in Drake 273 Knowledge Base 259 preparers 27 reject codes 240 241 reports 319 student records ETC 269 section 179 expensing entering data for 166 168 for general partner on K1P screen 125 report of assets 324 SecureFileProTM 363 security group 25 Tax Year 2012 Index levels online EF database 244 of client files 296 preparer 23 selecting a filing status 97 self employment see also Schedule C Profit or Loss From Business adjustments 136 138 clergy see clergy foreign income 134 tax 136 Series I Savings Bonds 159 sets printing 201 setup procedures 18 52 Setup Wizard 14 shipment letters 9 Shortcut Keys xiii shortcut keys 63 67 Simplified General Rule Worksheet 118 Single Member Limited Liability Company SMLLC 110 Social Security benef
112. administrator or have the Display program update avail ability drop box at Setup gt Options gt Administrative Options tab set to All w Update Rights See Table 2 12 on page 33 for more information e Your system needs the updates If no updates are needed an Up to Date message is displayed in the Notification section of the Home window When your system needs updates you are informed that updates are available click the Get Updates button to begin updating Figure 11 2 Notifications t Notifications Update Status Up to Date Update Status Updates Needed Get Updates PADI pasts tomers ant oon alike ioga DI IZh neni DANa amaA a R Figure 11 2 L System is up to date R updates are needed 289 Download Fonts Drake Software User s Manual NEW FOR For users of GruntWorx notifications of GruntWorx jobs completed and 7017 ready for uploading will also appear in the Notifications sections For more on GruntWorx see Chapter 13 Suite Products Download Fonts Special software based fonts or soft fonts are required for printing tax forms Because most laser printers do not come with these fonts installed you might have to download them to the printer s memory each time the printer is turned on Drake includes downloadable software fonts that work with HP compatible laser printers and allow preparers to produce federal and state tax forms By default fonts are down loaded with each prin
113. also access toolbar selections from the menu bar Each toolbar button activates a different function and different buttons are available at different levels of the Archive Cabinet For example from the Cabinet level you can add only drawers and cabinets so only these buttons are available from the Drawer level you can add new folders from the Folder level you can add folders back up and restore create files import files scan copy rename delete drag send e mail and link to other files Searching To find a cabinet drawer or folder in the Archive Cabinet enter part of the name in the Find text box and click Find The file location is highlighted in the tree Figure 13 10 Archive Cabinet Toolbar Most of the features located on the Archive Cabinet toolbar function the same as in the Working Cabinet For details see Table 13 2 on page 337 and Working With Docu ment Manager Files following Tax Year 2012 347 Working With Document Manager Files Drake Software User s Manual Working With Document Manager Files Printing Returns Importing a File Scanning a 348 File Once the Document Manager Working Cabinet or Archive Cabinet folders and any subfolders are established you can begin adding files The Document Manager sup ports many file types and allows you to import or scan files into the Document Man ager or link to a file outside of the Document Manager Once added to a folder files are liste
114. an amended screen CTRL X Reset the screen CTRL U Exit screen without saving changes SHIFT ESC Open Help Within data entry CTRL From Home window CTRL F1 Flag a field for review F2 Clear a flagged field F4 Clear all flagged fields CTRL SHIFT SPACEBAR Open Drake Document Manager F6 xiv Tax Year 2012 Drake Software User s Manual Shortcut Keys Table Q 3 Data Entry Shortcut Keys Desired Action Keyboard Keys Open Drake Tax Planner F7 Open the Set Client Status menu F8 Go to EF database F9 Activate the calculator F10 E mail a client data file F11 Exit data entry Esc View Open Forms based data entry CTRL G Opens Macros CTRL SHIFT M Table Q 4 Client Status Manager Shortcut Keys Desired Action Keyboard Keys Open CSM from the Home window CTRL L Open selected client in CSM CTRL O Search for a client record CTRL F Customize the display CTRL D Refresh the display F5 Filter the client list CTRL L View information for the currently selected return CTRL Q Generate reports CTRL R Export to Excel CTRL E Help F1 Exit CSM Esc Table Q 5 Frequently Used Codes Field Code Application TS or T Assigns data to primary taxpayer The program default is T if TSJ field is left blank S Assigns data to spouse J Assigns data to both taxpayer and spouse F 0 zero Excludes data from federal return ST State For state retur
115. and e mail support See Contacting Drake Support in the Quick Reference on page ix for more information on contacting Drake Support NOTE The filing deadline for 1040 is Monday April 15 2013 Note that Drake s tax season support hours are effective through April 20 For more on the many helpful resources provided by Drake Software see Chapter 10 Resources and Support State and federal tax rules and regulations can change at any IMPORTANT time Read the Drake shipment letters and broadcast e mails throughout the season to stay up to date on the latest changes to the software and in the state and federal tax laws Tax Year 2012 Contacting Drake Support Drake Software User s Manual This page intentionally left blank 10 Tax Year 2012 2 Tax Year 2012 Installation amp Setup Read this section before installing your 2012 Drake program Setup procedures for stand alone and network systems have been simplified requiring different selections this year See Single Workstations and Network Options on page 16 The initial shipment of the software sent in early December includes Drake Software CD with all federal packages 1040 1120 1120S 1065 1041 990 706 and 709 2012 year end update of Drake s Client Write Up CWU accounting payroll and accounts payable program The 2013 version is released in January Document Manager Shipment letter e Filing software for sending test retur
116. and must be manually verified cleared prior to e filing To flag a field click the field to activate it and then press F2 You can also do this by right clicking in the field and selecting Flag For Review The field is displayed with a shaded background Figure 3 15 2210 Options 2270 Coda z 2011 Fed tax 84887 2011 State tax 14348 Figure 3 15 Flagged fields are shaded Default is green When a return with flagged fields is calculated an EF message is generated It must be removed in other words all flagged fields must be cleared before the return can be e filed To clear a flagged field place the cursor in the field and press F4 To clear all flagged fields on an open screen press CTRL SHIFT SPACE To clear all flagged fields in the open return go to the Data Entry Menu and press CTRL SHIFT SPACE A user with administrative rights can designate certain fields to be flagged in all returns When flags are set globally they apply to all returns Global flags can be for screens or for new returns e Screens The presence of an unverified flag produces an EF message only if the screen exists for the return For example if the Employer ID field on screen C is flagged an EF message for the unverified field is produced only if a Schedule C is present on the return and the Employer ID field has not been verified If there is no Schedule C no verification is required e New Returns When a
117. are included on the INT and DIV screens e A section for foreign tax credit information Tax Year 2012 107 Passive and Investment Income 1099 DIV etc Drake Software User s Manual Foreign Tax Credit Data Associating Data with the 1116 Screen Screen code 1116 Suppressing Form 1116 108 e Ability to associate information from an INT or DIV screen to an 1116 screen e Ability to suppress Form 1116 if it is not required for the return e Ability to open the 1116 screen in the program via a Form 1116 link The INT and DIV screens include a section for Form 1116 FTC information Figure 5 13 shows this section as it appears on the DIV screen Form 1116 FTC Information ARE Ae i eres eres S reer en oe vysenrsenoe vere ory eens T 1116 NOT required Form 1116 CRU att Ceo 1 Benen Neate setae x OO Ameena E nena Cah TO x Type of income z Date paid or accrued Accrued FTC Figure 5 13 Form 1116 section of DIV screen If data is entered in this section of the DIV or INT screen Form 1116 is generated automatically Data entered here does not have to be re entered on the 1116 screen In fact if amounts are entered on both screens the program combines the two amounts and prints the total on the return Because the INT DIV screens include the most commonly used Form 1116 fields and because Form 1116 is generated if these fields contain data it may not be necessary to enter anything onto screen 1116
118. backup copy of a return before you change any NOTE data You can create both a PDF copy and a backup client file in the Document Manager if you archive the return See Archive Manager on page 207 To create an amended return in Drake 1 Open the return to be amended 2 From the Other Forms tab click X 1040X Amended Return 3 To have the program autofill the 1040X screen with data from the original return click Yes To leave the fields blank click No 4 Enter all applicable data in the 1040X screen 5 Revise any other sections of the original return as needed 175 Special Returns Extensions Screen code EXT 176 e Filing an Extension Drake Software User s Manual The 1040X screen contains the following sections Amounts as on ORIGINAL return These amounts can be autofilled by the program A manual entry in any of these fields overrides program calculations for the original return Part I Exemptions These numbers can be autofilled by the program A man ual entry in any of these fields overrides program calculations for the original return Amounts and information for the AMENDED return These fields must be completed manually as applicable Part II Presidential Election Campaign If the taxpayer or spouse did not want 3 to go to the Presidential Election Campaign Fund but does now mark the appropriate box Part III Explanation of Changes Type an explanation of the chang
119. be prepared later Data from the Quick Estimator flows to the full tax program and might need adjusting Tax Year 2012 311 Quick Estimator Drake Software User s Manual This page intentionally left blank 312 Tax Year 2012 1 2 Reports The Reports function allows you to create printable reports based on data entered into the program via data entry the CSM or the Scheduler Report Manager Use the Report Manager to create a variety of pre defined and customized printable reports To access the Report Manager from the Drake Home window select Reports gt Report Manager Report Categories Five report categories are provided in the Report Manager Table 12 1 Report Categories Report Category Description Client Reports Criteria for these reports consist of client contact data preparer and revenue data return details status and tracking data and summary data EF Bank Reports Criteria for these reports consist of data related to e filing and banking including bank product status tracking check and sum mary data and EF status tracking and summary data Scheduler Reports Reports are based on data entered in the Scheduler and include reports on new clients preparer call lists and appointments My Reports Reports that you create either by editing one of the pre defined reports or by starting with a blank report are automatically stored in My Reports Other Report Options This category gives
120. ble click a topic to view or single click it and press ENTER You can also use the UP ARROW and DOWN ARROW on your keyboard to move from topic to topic Data Entry Help Field Level Help 274 Two types of help are available in data entry field help and screen help Field help provides information about a selected field There are three ways to access field help e Click inside a field and press F1 e Select View Help from the right click menu e Press SHIFT Tax Year 2012 Drake Software User s Manual Screen Help Tax Book Software Support In Drake s Tax Software The help for the selected field is displayed as shown in the example in Figure 10 15 Co 3 Date of Birth direct entry Enter the date of birth DOB in MMDDYYYY format An age may be entered if the exact DOB is unknown however for electronic filing and bank product purposes a full DOB is required tt gt gt wy A C T N AT a ee ee Figure 10 15 Example of field help Each help window indicates whether the field is a direct entry adjustment or override field To close a help window click the X in the upper right corner or press ESC Screen help provides information about an open screen in data entry To access screen help click the Screen Help button at the upper right corner of the screen Figure 10 16 this button may not be visible for all Windows 7 users press CTRL ALT or select Screen Help from the right click menu Q
121. can also view helpful publications and download prior year Drake programs prior year release notes and software for converting data 269 Other Resources at Drake Support Drake Software User s Manual files from other tax software programs into Drake and order marketing kits checks and printed forms Some of these resources are available from the sidebar menu on the left side of the Support Web page and others by scrolling down the Resources Overview page Here are just a few of the many resources available Federal State Facts The Federal State Facts pages have federal data on and lists of forms eligible for e file and state data on e filing state tax forms state payments and deposits state due dates penalties and extensions You can also access state shipment letters form instructions and update notes Figure 10 13 As EF packages are approved that information is added to the state pages The pages also include links to the Drake Forums see Drake Forums following and state taxing authority websites The Professional Tax Solution Home Products Training Support About Us Drake Software Support Selecta link on this site Year 2012 7 State California ms 2 California Franchise Tax Board E file Packages Available Products available for Electronic Filing E file Requirements Payments and Deposit DateApproved DateApproved Reciprocal Agreements Tax Type
122. can be incorporated into Report Man ager and Client Status Manager CSM reports ADMN Two reports can now be generated directly from the ADMN screen Screen Reports Return Preparation Data Consists of data entered by preparers in the Return Preparation Data section of the ADMN screen e ADMIN ONLY Return Data Consists of information generated by the soft ware and displayed in the ADMIN ONLY side of the ADMIN screen The ADMIN ONLY fields can be viewed only by users with administrative rights To generate a report go to the ADMN screen and mark the applicable check box e The Generate Return Preparation Data Report box is located in the Return Preparation Data section of the ADMN screen e The Generate ADMIN ONLY Return Data Report box in the ADMIN ONLY section of the ADMIN screen ADMN screen reports are generated when the return is calculated and appear as TRAC and TRACADM with the federal forms in View mode Sales Tax Worksheet Screen code The software uses data entered into the State amp Local General Sales Tax Deduction STAX Worksheet the STAX screen accessible from the General tab to determine which tax is better to take the state sales tax or the income tax Lines 1 and 4 of this screen are calculated by the software but you can enter overrides as necessary As applicable lines 2 3 and 7 should be completed in order to calculate the maximum deduction Tax Year 2012 191 Binary Attachmen
123. categories as set on 4562 screens Asset Category Cost Federal Basis Current Section 179 Federal Deprecia tion State Depreciation Alternate Depreciation Book Depreciation Preference Report List of assets placed in service after 1986 Asset Number Description Date in Service Method amp Recovery Period Basis Current Depreciation Alternate Depreciation Preference Amount Auto Code Print Report based on the macro setup for each client selected Reports can com prise any of the described reports and any valid options associated with them See Using Fixed Asset Manager Mac ros on page 326 Running a Fixed Asset Manager Report To run a report using the Fixed Asset Manager 1 From the Home window select Reports gt Fixed Asset Manager The Fixed Tax Year 2012 sorting options Figure 12 8 Asset Manager dialog box has drop lists for report types reporting options and Drake 2012 Fixed Asset Manager Fixed Asset Manager Choose to run a report edit a macro or cancel Depreciation Schedules Ad Federal Help 4 Run Report Edit Macros Full Schedule ad Cancel Figure 12 8 Fixed Asset Manager dialog box Select a report type See Table 12 3 for available report types Select a tracking format Options are Federal Tracks federal depreciation methods State Tracks state depreciation methods Alternative Tra
124. checks you must set up a check range IMPORTANT Click Setup Checks to choose a bank and set up the check 7 222 range You can also use Setup Checks to change the check number if necessary Click Continue and then click Print Tax Year 2012 Drake Software User s Manual Processing the Check Immediately after the checks are printed your system should initiate the process to transmit the check register to Drake When the bank receives the check register pre parer fees are usually deposited on the next business day The check register must be transmitted to Drake before you can IMPORTANT receive fees from the bank Drake recommends running EF gt Transmit Receive after printing large batches of checks Reprinting Checks To reprint a check 1 From the Home window select EF gt Check Print e Ifno new checks are ready for printing you are prompted to reprint checks Click Yes to open the Reprint Checks dialog box e Ifnew checks are ready the Select Checks dialog box is displayed Click Exit and then click Yes to open the Reprint Checks dialog box 2 Type an SSN and press ENTER The Reprint Checks dialog box displays any pre vious taxpayer and check information 3 Click Print The program automatically voids the prior check number NOTE You must write VOID on the face of the check that is no longer valid Follow your bank s guidelines for disposition of voided checks Check Register To access
125. clearing the Add Reminder Private Appointment or Recurring Appointment boxes at the bottom of the Appointment Detail dialog box e If Add Reminder is marked the preparer will receive automatic alerts regarding the appointment when logged in e Ifan appointment is marked private the assigned preparer will be the only one allowed access to that appointment data e Ifan appointment is marked recurring you must provide information about the frequency Daily Weekly or Monthly and the end date of the recurring appointment The dialog box will expand to offer options 6 Click Save The appointment will now be displayed on the schedule grid For a recurring appointment you can edit a single occurrence or the series You can also make a group meeting recurring To e mail an appointment reminder to the client click the E mail Notifi cation button An e mail address must be displayed in the E mail field NOTES in order for this feature to work An appointment on a preparer s calendar can be changed by dragging and dropping it to another section of the calendar grid Recurring appointments must be changed on the Appointment Detail dialog box For a Group To schedule multiple preparers to meet with a client follow the instructions provided of Preparers in For an Individual on page 90 Instead of selecting only one preparer in Step 4 however you can select up to 50 Figure 4 15 There is no need to double cl
126. click the Download You are asked whether you want to open or save the file Click Open or Save as desired If you click Open you will have another opportunity to save it from within Excel All data for the given report criteria is saved not just the data shown on the current page Once the report is exported and saved as a worksheet access it from either Excel or Access 246 Tax Year 2012 Drake Software User s Manual Copying EF Data Copying EF Data Firms with multiple computers but no network might have to copy data from com puter to computer using a disc USB flash drive or other memory storage device For firms that use a network copying EF data from one computer IMPORTANT to another is not recommended Copying to Another Location To copy EF data from a computer to a memory storage device 1 From the Home window of the software select EF gt Copy EF Returns to Disk and select the returns to copy Click Select All or Unselect All as needed Tip Click column headers to sort in ascending or descending order 2 Click Continue Select the output drive from the Select Drive drop list 4 Click Copy Files Figure 8 14 ae Oe pipe Sots ppt a ae a ee Lot seitan n iai vom saneren emanatie pee pe Oy Select Drive D CD ROM Drive Drake105Export x Coe Figure 8 14 Copying files to CD 5 Click OK after files are copied Copying From a Storage Device To copy EF information from a data storage
127. completion only Preparers are responsible for knowing tax preparation and for the accuracy of returns filed with the IRS and state tax authorities Drake Software Manual Tax Year 2012 Your Drake Software User s Manual Tax Year 2012 is an electronic document with a comprehensive index to help you quickly find the information you want You can save the manual to your desktop or print your own copy It is available from three locations Drake Home window Select Help gt Online Resources e Software CD The latest version of the manual is shipped with each CD e Support website Support DrakeSoftware com gt Training Tools gt Manuals To purchase a printed copy of the manual 25 plus tax and shipping go to Sup port DrakeSoftware com Training Tools gt Manuals If you use a printed copy be aware that it must be updated manu ally throughout tax season Addenda pages are included on each IMPORTANT Drake CD Because Drake continually updates the online manual throughout the season your best bet for always having the most current version is to use the online manual 257 Online Support Drake Software User s Manual Online Support Drake s Support website Support DrakeSoftware com offers a wealth of resources that are available 24 hours a day In addition to current tax information it provides the online support options discussed here A reliable Internet connection is necessary to take full advantage
128. cords and connections to be used during tax season Ooo OO Check scanner Review Drake recommended scanners If necessary purchase a scanner to use with the Drake Document Manager For a Drake recommendation see Compatible Scanners on page 349 L Purchase office supplies These include folders envelopes paper and toner Install and Set Up Software L Review system requirements for installation See System Requirements on page 12 LJ Install the 2012 Drake Software CD Refer to your shipment letter or see Installing from CD on page 12 L Customize program settings Complete required and optional program settings Check the packing slip to verify your EFIN Enter your new password and account number at Setup gt ERO Keep your packing slip which contains your serial number and account number in a safe place m Perform database updates Update the EIN Database from the prior year m Set up your office s network See Running Drake on a Network on page 15 L Perform configuration updates Update configurations for firm information macros etc from the prior year L Establish billing amounts Save time later by setting your billable amounts now Help Clients Prepare for Tax Season Prepare proformas and organizers for prior year clients Note that reports organizers pro formas and returns can be stored and e mailed as PDF files L Prepare preseason
129. date into the active field Launch heads down data entry mode If the symbol is inserted after the selected data in a macro the program enters the data then activates heads down data entry To have heads down closed from the macro add a second symbol See Heads Down Data Entry on page 75 Bypass the Existing Forms List when performing the task set by a macro Enter an asterisk only once in any macro and place it at the beginning of the macro When you open a screen that has mul tiple records an Existing Forms List is displayed and you have the choice of selecting an existing record or creating a new one To bypass the New Record option and open the first record listed enter the symbol in front of the macro For example c opens the first Schedule C record To open the second record enter a 2 inside brackets 2 thus the macro C 2 opens the second C screen C 3 opens the third etc New Perform the assigned task on a new record For example C New opens a new C screen The aster isk bypasses the Existing Forms list It must be present for the New function to work properly Home Return to first field on a screen If Home is inserted into a macro the cursor moves to the first field on the screen End Move to last field on a screen If End is inserted into a macro the cursor moves to the last field on the screen FF Cursor jumps ahead a prescribed number
130. device to a computer 1 From the Home window of the software select EF gt Copy EF Returns from Disk 2 Inthe Copy EF Return from Disk dialog box select the drive to copy files from 3 Click Copy Files 4 Click OK to copy each file Click Exit to close Tax Year 2012 247 About State e Filing Drake Software User s Manual About State e Filing Most states accept e filed returns and some require it or have regulations that deter mine at what point a tax professional can or must begin to e file Mandates don t apply to taxpayers who e file their own returns Some states with mandates have their own application process for EROs and tax preparers who offer bank products These processes and the rules and regulations pertaining to e file vary from state to state The state FAQ screens in data entry includes links to state e file information Informa tion on individual state requirements is available at Support DrakeSoftware com and in Appendix E State e File Mandates 248 Tax Year 2012 9 Client Status Manager Use the Client Status Manager CSM for tracking workflow within an office The CSM can show you with just a glance the status of all returns in their various stages of completion when a return was begun when it was completed who worked on it and the current filing status and payment status to name of few of many available sta tuses The CSM can display various other types of data including client nam
131. displayed i 6 Choose a date time and preparer and click Select to return to the Appointment Detail dialog box with that date and time entered and preparer selected NOTE Preparers with no set schedules are excluded from the search To find a scheduled appointment see Find Scheduled Appointment on page 94 Finding a The Lookup feature allows you to find a client s record and insert the client informa Client tion into an Appointment Detail dialog box Record Tax Year 2012 93 Scheduler Drake Software User s Manual S Changing Appointment Details Deleting an Appointment 2 To locate a client record From the Appointment Detail dialog box click Lookup Select the location from which to search from the Select clients drop list Select a client name from the displayed list Clients are listed in alphabetical order by last name or entity name Click OK The list is closed and several fields are filled with client data Content is determined by what was entered on screen 1 in data entry To change the details of an appointment that has already been entered into the Sched uler double click the time slot of the appointment in the Appointment Scheduler When the Appointment Detail dialog box for the selected appointment is opened make any changes necessary Click Save To delete an appointment from the Scheduler 1 APON Double click the appointment time slot in the Appointment Schedul
132. e Have a result letter other than the default printed with the return e Enter a personalized letter greeting e Add a custom paragraph In addition it provides the following options e Force print a letter for a paper filed return or extension application even if the return application is eligible for e file e Force print a letter for an e filed return or extension application even if the return application is ineligible for e file e Force or suppress a customized supplemental letter engagement letter or pri vacy policy letter The result letter is the standard letter that is printed with a return It tells the client that the return has been prepared from the information provided states the amount of the refund or balance due and provides instructions for mailing the return if paper fil ing The program uses Result Letter 1 as the default To change the default letter for a return go to the LTR screen and select a new letter from the Letter drop list In addition to other result letter templates you can have the program generate a result letter in Spanish Figure 2 23 an extension letter or an amended return letter instead of the program default letter LTR Custom Paragraph for the Letter Letter v This selection overrides any entry in Setup _ 1 Individual Result Letter 01 Default Personalize z Individual Result Template 3 Individual Result Template 4 Individual Result Template amp C
133. eek 150 Earned Income Credit EIC 0 0 0 rere ee ne e e nee nen tenn ene 154 Additional Child Tax Credit and Combat Pay 0 0 c ccc teeta 157 Other Payments ereet ei a kos Go ou cee SEE dae Bee Che Soe hee hee eon eeaaee E E Reds 157 First Time Homebuyer Credit 0 eee een nnn ene eens 158 Direct Deposits seise rinners eaa doth d ihe die danas Ged gua Sake dag a dade Guana Glee Ble ae domes 158 Electronic Payment Options 1 0 0 cc eee nen teen ene e eee nee 160 Third Party Designee cissi cretani ieena ni nent ttn n nent e ene 162 Signing the R t rn reusea eea ad ae palaces dis waned hata wa Glee ge tow eee A A Ea RA AS 163 TD SPECIAL OM cy sanma e ar oes Gedaeuete E 4 seca Ghee A E Leahey eens 165 Auto EXPENSES i sanea seat dud cd edhe a tbat ws adodson dhe wae dd dee wd a edie 171 Office m HOME ersin cea et Ree ae eee nee ee ee eee ARO ee aes baa aa eee eae eee ATS 172 Net Operating Losses lt 2 ws sada been ds See eee a Cees ek Stes eee ceed RAS ead Ree eve oe es 173 Election Options lt 6 6 00 ee ch vi PERM AGERE eae eed hehehe gee e ieee ends een wes pees 175 Special Retummis lt c42h34 nob bobaede ohtat akin bie ea e e Me hete kee eet sata 175 iv Tax Year 2012 Drake Software User s Manual Table of Contents Requests Claims and Other Forms 0 0 0c eee nee nent eens 178 Features for Late Filed Returns 0 0 0 ccc eee ent n teen e eens 181 Other Special Features in Data Entry 0 0 cent
134. ene e nnn ne ees 183 Binary Attachments 265 esiones eee Se a es ee ek bee O bee tel doe eens 184 Return Results iiccsssscctiniietinstinsssnieivnissioredna aaah 193 Calculating a Retum 2 0 0 6 criant aeiiae ta dee gacedan Ganda thawte a 193 Calculation Results iis ainei pr E e ek deeb ad ok Shia pa EE hee sae Skee Ree 194 Viewing and Printing a Return 0 nett nent een e eens 196 E Mailing from View Print ce vegas scams eden oe EER Se Ped ETER wen eens weed 202 Setting Up View Print Options 0 0 0 cette ence teen e nent n en ens 205 Archive Manager sone 0 can adenine aon E ere eed AAEE E E E eke Bae Re ee Pe ironies 207 Bankin gssai EERE AE aa 209 Tax Preparer Requirements nannan nannan nnee 209 Taxpayer Requirements e siae ceed ea a dana Madde aa a a aa ede OAR 212 Franchise Network Requirements nnan nanne nnana 213 Bank Products masir sari iae A a ia a a a anda e a E a ath ed heralace 213 Distribution Methods sis rerieriper kerin t inp T ARTERE EEEE EE E ETOS EOE TEE EEA EE E E E 213 EI Visa Prepaid Card Program 0 cect eee teen e nent n teens 214 Preparing to Offer Bank Products 000 ccc ett e een e nee e eens 216 Using Bank Screens in Data Entry 0 cette ene n teenies 220 Bank Product Transmission 00 00 cee ent t ene e nent eee ene 221 Processing the Check 2 23 02 0c04 peed pba ese heid ti a bib a bee edd Re eoda eed eben eds 221 Troubleshooting Check Printing 0 ce
135. enter the location where you wish to store and access prior year files in the Location for 2011 client files drop list 3 Click OK Some network setups such as peer to peer networks don t work off an actual server Each station runs Drake independently but one computer a designated server is used for transmitting returns For such setups follow the instructions in Installing from CD on page 12 to install Drake onto each workstation Once Drake is installed on all your workstations and your network has been mapped one of your workstations should be designated as the server and the other worksta tions should linked to the server in the following manner 17 Software Setup Drake Software User s Manual 1 From the Home window in Drake go to Setup gt Data Locations to open the Data Locations dialog box See Figure 2 3 on page 16 2 Inthe Network Setup section select the drive of the workstation designated as the server from the Tax returns are stored here drop list 3 Click OK By default all workstation using Drake on a peer to peer network use the configu ration files as set up on the individual workstations To share the same configuration files as the server or some other workstation 1 From the Home window in Drake go to Setup gt Data Locations 2 Inthe Network Setup section of the Data Locations dialog box Figure 2 3 on page 16 choose the drive l
136. extra data entry if there was more than one and allows preparers more flexibility to allocate deductions to a particular income type than in prior years The IRS has created a page at www irs gov form1041 for information about Form 1041 and its instructions Information concerning developments affecting Form 1041 filers such as legislation enacted after the 2012 form is released will be posted to that page Changes to 706 Package Changes to the 706 package include e The Deceased Spouse Unused Exclusion DSUE screen to allow taxpayers to opt out of electing to transfer any DSUE amount to a surviving spouse e The Protective Claim for Refund PC screen to allow taxpayers to preserve their right to a refund of estate taxes paid for assets or liabilities that are the subject of unresolved controversy at the time of filing the return e The Recapitulation Overrides screen For more information see Estate Package 706 on page 371 Manual Supplements Tax Year 2012 In early 2013 Drake will publish supplements to this manual These supplements pro vide basic procedures for using Drake s 1120 1120S 1065 990 1041 and 706 pack ages They will be available through the software from the Home window go to Help gt Online Resources or from the Drake Support website at Support DrakeSoft ware com IRS Changes and Requirements Drake Software User s Manual IRS Changes and Requirements The following pages cover j
137. field is flagged for all new returns an unverified flag produces an EF message whether or not the screen has been opened for the return In the above example an EF message would be created even if no Schedule C was present in the new return In effect this type of global flagging would force the data entry operator to open screen C even if only to clear the flag Tax Year 2012 Drake Software User s Manual Data Entry To prevent flagged fields from being overlooked all new return flags cause the corre sponding screen and tab names to appear as the color of the field flag Figure 3 16 default color is green Once the field has been verified the highlighted tab and screen names go back to their original colors Genera income Adjustments Credits amp C Self Employed Income d O 0 UDp J Farmers Income Averaging q 4835 Farm Rental Income k 6198 Amount Not at Risk WOR 2 om Modifo oaint aaan Figure 3 16 Screen C under the Income tab has a flagged field Flagging To flag one or more fields in all returns Fields Globally 1 From the Home window select Setup gt Options Administrative Options 2 Select Use Customized Flagged Fields on all Returns 3 Click Flag to open a dialog box with buttons for all Drake packages Figure 3 17 Drake 2012 Flag Fields For Review E 1120 Corporate 11205 Sub S 1065 Partnership 1041 Fiduciary 990 Tax Exempt 706 Estate Exit Figure 3 17
138. first time you log in to Drake Setup Assistant The Setup Assistant is opened automatically the first time you log in to Drake Designed to guide you through the software setup screens the Setup Assistant appears each time the program is opened until all required setup items are completed A green check mark see Figure 2 2 on page 15 indicates that a setup item is complete A red X indicates or a question mark indicate an incomplete setup item 14 Tax Year 2012 Drake Software User s Manual Running Drake on a Network Welcome to the Drake Software Setup Assistant Use the Required for E filing Setup section to enter setup information for firms preparers and e filing Each setup screen is designed to allow for minimal data entry in order to start using the software The checkboxes will let you know if you if you have the minimum required fields for a successful e filing To further customize the software to your needs use the Optional Setup section V Do not show Setup Assistant at program startup Required for E filing Setup Completed Mi Firms You have completed the firm information required for e filing You can add more firms by going the Setup gt Firms x ERO ERO is missing some or all of the fields needed for e filing Go to ISetuo gt EROI to complete the needed information You have completed the preparers information required for 2 P e filing for at least one of your preparers However one o
139. flow to Form 5329 and have the taxable amount of the distribution subject to the 10 penalty To do so go to the desired 1099 screen and select the applicable box under Additional Information for this Distribution Figure 5 20 Additional Information for this Distribution I 1099 R for disability I Ifso reported as wages on the 1040 SCH Carry this entryto Form 5329 and compute 10 penalty Exclude from income reported on Form 4972 J Exclude from income reported on Form 8606 Firstyear of ROTH contribution Was this 1099 R altered or handwritten Figure 5 20 Select box to carry 1099 R data to Form 5329 120 Tax Year 2012 Drake Software User s Manual Supplemental Income To access the 5329 screen directly from the 1099 screen click the Form 5329 link shown in Figure 5 20 on page 120 Exception On the 5329 screen exception numbers 01 and 06 Part I line 2 apply only to distri Numbers butions from qualified employee plans not to those from IRAs annuities or modi fied endowment contracts To view full descriptions of each exception number click inside the Exception number field and press F1 Supplemental Income Links for Schedule E and K 1 screens are located in the Schedules E and K 1 section of the Income tab Schedules E and K 1 E Rent and Royalty Income K1P Partnership K 1 Parts of K1F Fiduciary K 1 ia Schedule E gt Cmaps Mi meri E3 Estates and Trusts ncome tab 4
140. for Ohio returns Report reports visible in tree mode Select a report for viewing or printing The report appears in the pane to the right of the tree view For more information on View mode see Viewing a Return Enhanced Mode on page 197 NOTE Currently the state report feature is available for Ohio returns only 74 Tax Year 2012 Drake Software User s Manual State Returns Screen Captures Calculator Macros The program saves the MFS data shown in the reports only if you save the split returns If you are not planning to save the MFS versions of the returns but want to show the reports to your client later print the reports now for your client s records If the MFS versions are saved both the completed MFS_ COMP and OH_ COMP reports can be viewed after calculating the return If they are not saved only the Joint column will be completed on these reports Billing for this report is done through Setup gt Pricing use item 350 NOTE For more on setting up pricing in Drake see Pricing Setup on page 37 To suppress the charge for an individual return use the BILL screen See Overriding the Bill Amount on page 56 Screen captures can be taken in data entry and sent to the clipboard a printer or a file To capture a data entry screen 1 Right click any open screen not within a field or text box 2 Select Screen Shot The program offers three choices for screen captures e To File S
141. form Code boxes of those screens See Associating One Screen with Another on page 73 NOTE Enter data for Schedule C Part IV Information on Your Vehicle on the AUTO screen Program Defaults for Screen C The program s default accounting method item F is cash Select Accrual or Other as applicable for accounting methods other than cash If Other include a description The program s default position for activity type item G is that the activity is not a passive activity option D For more information on activity type options see Activ ity Type Codes following Tax Year 2012 109 Self Employment Income Schedule C Drake Software User s Manual The program s default position for investments item 32b is that all investments are at risk If this is not true for your client select Some investment is NOT at risk Note that item 32b includes a link to screen 6198 for entering data to compute deductible losses for Form 6198 At Risk Limitations The program s default inventory valuation method item 33 is cost If the valuation method is not cost select the correct method under Part III Cost of Goods Sold Activity Type Codes Screen C offers two options for activity type item G and shows where on Form 8582 Passive Activity Loss Limitations the calculation flows if applicable e Option B Other passive activity Form 8582 line 3 All Other Passive Activities e Option D Not a passive activi
142. from income because it was rolled over Pensions into another qualified plan indicate this using the Exclude from income drop list on Annuities the 1099 screen under the Rollover Information heading see Figure 5 18 Rollover Information Exclude from income rolled over into another qualified plan Partial rollover amount Figure 5 18 Selections for rolled over 1099 R distribution Select S if the distribution was rolled over into the same type of account Select X if it was rolled over into another plan If S is selected the word ROLLOVER is dis played on Pensions and annuities line of Form 1040 501 c 18 Contributions Enter contributions to a 501 c 18 pension plan on screen 4 but do not include amounts that have been assigned Code H elective deferrals to a section 501 c 18 D tax exempt organization plan in box 12 of the W 2 Those amounts are carried automatically from the W2 screen to Form 1040 IRA Contributions For traditional IRA contributions use the 8606 screen which addresses Part I of Form 8606 Nondeductible IRAs For Roth IRA contributions use the ROTH screen which addresses Parts II and III of Form 8606 Tax Year 2012 119 Retirement Income Drake Software User s Manual Deductible IRA contributions are calculated from the 8606 screen and displayed on the IRA deduction line of Form 1040 If an amount is entered into the Deductible IRA field on screen 4 it is combined wit
143. letter 31 private appointments setting up 91 Tax Year 2012 Index mortgage insurance PMI 123 processing acknowledgments 233 loan checks for bank products 221 proformas 81 84 property disposal of 122 listed 166 on Schedule E 121 qualified Indian reservation 169 rental of personal 124 sale of 123 section 179 expensing 167 type and usage 122 PTIN 8 19 23 227 public safety officers 118 publications IRS Drake etc 272 purchasing GruntWorx 358 SecureFileProTM 363 W 2 downloads 104 Q qualified charitable distributions 118 Quick Estimator 310 Quick Reference Accepted Forms xviii Contact Information ix Shortcut Keys xiii QuickBooks imports 299 R railroad benefits 132 Ready for EF indicator 32 real estate 121 125 receiving acks only 233 recurring appointments setting up 91 referral coupons 31 refunds direct deposit of 158 160 Regulation 7216 Consent to Use and Disclosure of Tax Return Information 22 209 212 reject codes see also acknowledgments due to multiple 2106 forms 135 foreign tax credit 142 looking up 240 troubleshooting acks 234 release notes 271 rental real estate with active participation 125 rentals see also Schedule E Supplemental Income and Loss by clergy 140 XXXIX Index converted from home use 118 farm 130 repairing index files 291 report cards ETC 269 reports appointment 95 creating 315 CSM 255 deleting 319 depreciation list 323 filters 316
144. listed on the new Form 8949 Sales and Other Dispositions of Capital Assets and summarized on Schedule D Information for these forms is entered on screens 8949 D or D2 These screens are available under the Assets Sales Recapture tab of the Data Entry Menu Form 1099 B Proceeds From Broker and Barter Exchange Transactions N ITE now reports individual transaction information and contains cost basis fields for brokers who are required to supply such information Enter 1099 B data on screen 8949 Screen 8949 has fields for Form 8949 Schedule D and Form 1099 B data Following are some guidelines for data entry on this screen first for 1099 B information and then for 8949 specific information e Foreign Expropriation Mark this box if the corporation sold foreign property Foreign expropriation capital losses cannot be carried back but are carried for ward up to 10 years 367 Individual Entity Packages Drake Software User s Manual Date of Sale or Exchange If a single date does not apply type Bankrupt Worthlss or Expired as applicable Select S or L from the Type of gain or loss drop list to have it treated as short term or long term If Expired is entered the return must be paper filed Date of Acquisition Enter the date acquired as an eight digit number using MMDDYYYY format This date is used to determine whether the sale is short term or long term Enter VARIOUS INHERIT or INH2010 as applicable Only
145. listed under available columns To view a keyword description hold the mouse pointer over a selected keyword Figure C 3 on page C 2 Tax Year 2012 C 1 Select Report Columns Categories Available Return Results Ls Alimony Received Alt Min Tax Applied Child Care Credit Child T ax Credit Child T ax Credit Additional Dividends Ordinary Total Education Credits Drake Software User s Manual Figure C 3 Place mouse pointer over a selected keyword to see the description Letter Keywords year s tax return and two forms of identification We look forward to preparing your return this year Sincerely Figure C 4 Keywords from letter template Client Information Federal Return Paragraphs Federal Estimate Paragraphs Federal Return Results Federal Estimates Bank Product Paragraphs Banking Miscellaneous Prep Firm and Revenue Firm E mail Address Firm Name Paid Preparer E mail Paid Preparer Fax Paid Preparer Name Paid Preparer Phone Preparation Fee Cr a a Ta Figure C 5 Prep Firm and Revenue keywords a ee aoe FP ee ee ee N For instructions on creating and editing reports see Chapter 12 Reports Letter keywords appear as bracketed phrases within the letter templates of the Client Communications Editor Figure C 4 on page C 2 p EASE Ciare aay vo mays betot
146. method used enter the credit card type and the last four digits of the credit card number in Optional Letter Information sec 160 Tax Year 2012 Drake Software User s Manual Electronic Payment Options tion of the EPAY screen The client letter will then reference the amount that will be charged to the credit card and the card s last four digits N DTE A website www integratedfileandpay com status is available for check ing payment statuses See the EPAY screen help for more details Electronic Funds Withdrawal Direct Debit Screen code PMT Use the PMT screen accessible from the General tab to indicate that the balance due funds are to be electronically withdrawn direct debited from the taxpayer s account Program By default the program indicates that the entire balance due the Amount You Owe Defaults and section of Form 1040 is to be electronically withdrawn on the return due date unless Overrides otherwise indicated using the override fields for each account entered See Federal override fields in Figure 5 51 If the return is e filed on or before April 15 the requested payment date cannot be later than April 15 If the return is transmitted after April 15 the requested payment date cannot be later than the current date Required A Withdrawal selection item 1 in Figure 5 51 is required if the program is to direct Information tax authorities to electronically withdraw funds from the taxpayer s account
147. most Row for Firm Info a Bitmap Path and File Name Path and File Name for Bitmap Logo Browse DRAKE12 CF LOGO BMP Note A full path and file name are required to print a logo Leave blank for no logo Left Margin Adjustment Enter a value to increase the left margin for all letters Note Values are in inches For example Enter 2 to adj E margin by two inches Enter 1 to adjust by 1 10th of an inch If 0 is entered the program will use the default margin of 1 5 inches Figure 2 18 Left Margin Adjustment feature Values are in inches An entry of 1 for example adjusts the margin one inch to the right and an entry of 1 5 adjusts it an inch and a half Values can also be entered in increments of one tenth of an inch For example an entry of 1 adjusts the mar gin one tenth of an inch to the right see example in Figure 2 18 3 Click OK The appearance of the margin in the letter template will not change however when a letter is generated with a return you ll be able to see the margin change both in View mode and on the printed letter NOTE An entry of 0 applies the default margins Drake does not accept neg ative numbers or numbers with two decimal values such as 1 25 Each template has a default name see Table 2 14 on page 43 To assign a new name 1 From the Client Communications Editor click Open and select a letter template 2 Click Setup gt Rename Letter 3 Enter a new name
148. new IRS requirements for the Paid Preparer s Earned Income Credit Checklist e Redesigned the 2441 screen to make it easier to read and to complete e Anew Record feature allows you to build new macros with fewer key strokes See Macros Setup on page 38 e Assets placed in service in 2012 50 bonus depreciation e Assets placed in service after 2012 50 bonus depreciation Highlights of Federal Tax Law Changes Tax Year 2012 The passage of the American Taxpayer Relief Act of 2012 that included the AMT patch and the so called extenders means that few things have changed for preparers of 2012 returns Among the key provisions of ATRA e AMT permanently adjusted for e Educator expense deduction inflation renewed e Sales tax deduction renewed e Work Opportunity Tax Credit renewed Other Packages Drake Software User s Manual e Tuition and fees deduction e Bonus depreciation is 50 for renewed 2012 and 2013 e Increased and expanded 179 e Credit for Energy Efficient Appli deductions ances renewed Among the changes to the 1040 package e Adoption Credit Unlike last tax season the adoption credit is a non refund able credit The maximum 2012 adoption tax credit is still 12 650 for all qualify ing adoption expenses e Conversion to Electric Motor The credit for converting gasoline powered automobiles to electric hybrid has expired Merchant Card and Other Third Party Income Reporting La
149. of Drake s online resources Knowledge Base The Knowledge Base KB is a searchable database of articles submitted by clients programmers the IRS and state revenue departments covering most of the topics that generate support questions There are more than 1 800 articles covering such topics as Drake s tax and Client Write Up software changes in state and federal tax laws tax return troubleshooting bank products tax law research and other topics related to your tax practice To access the KB go to the Drake Support site and select Resources gt Knowledge Bases From the list displayed click the KB you want to view e Drake Software Support Articles covering both Drake Software and Client Write Up e Client Write Up Article covering just CWU and CWU update notes When you open a KB the Search tab for that KB is displayed Figure 10 1 Search Browse FAQ Glossary Howto Search the KB Search for articles Search Click to Search Advanced Search Search using All Words M Search within All Knowledgebase s Latest Articles Hot Topics s 09 21 10 Broadcast Drake artners Announced 5 Preparer Regulation and e File Mandate for 2011 Tax Se a Preparer Regulation and e File Mandate s 09 21 10 Broadcast Drake Bank Partners Announced 5 Rejects on Form 8815 5 Network Setup for Drake on Vista or Windows 7 Compute a NY Generating a Form NY CT 399 5 Rejects on Form 881
150. of fields For instance FF 5 jumps the cursor ahead five fields This macro is not compatible with macros that use or are initiated in heads down mode FB Cursor jumps back a prescribed number of fields For instance FB 5 would jump the cursor back five fields FJ Cursor jumps to the prescribed field number For instance FJ 25 would jump the cursor to field 25 Obtain field numbers by viewing the screen in heads down mode This macro is not compatible with macros that use or are initiated in heads down mode Prevents a macro from clearing a flagged field PAGEDOWN Move to the next screen in a list For instance in a return with several W2s screens Dependent screens or 4562 detail screens press the macro to move from one screen to the next PAGEUP Move to the previous screen in a list For instance in a return with several W2s screens Dependent screens or 4562 detail screens press the macro to move from one screen to the next NEXTTAB Move from one linked screen to the next linked screen For instance for clients who receive a K 1 from a partnership press the macro and go from the 1065 K1 13 20 screen to the Basis Worksheet screen PREVTAB Move from a linked screen to the previous one For instance for clients who receive a K 1 from a part nership press the macro and go from the Basis Worksheet screen to the 1065 K1 1 12 screen Introduction to Letters in Dra
151. of the Electronic Filing Setup window In the event you must edit your serial number mark the Serial Number check box and enter the changes 3 Under Connection Settings make a new choice if you wish to change from the default setting Always use my existing Internet connection which works for most computers Contact Drake Support if you have trouble connecting to Drake 4 Ifyour firm is a franchise or network complete the Franchise Network Infor mation fields See Franchise Network Requirements on page 213 5 Ifapplicable enter in the Disclosure or Use of Tax Information field the name of the franchise or network to which tax information must be disclosed in order to apply for bank products The field facilitates compliance with IRS Regulation 7216 see Taxpayer Requirements on page 212 6 Click OK Preparer Setup Preparer Setup fields and preparer security must be completed before a preparer can begin preparing and e filing returns All preparers must be entered in Preparer Setup Data entry operators can also be entered Each time a name is added to Preparer Setup a number is assigned to that name Include data entry operators in Preparer Setup to 1 track data entry Tip information and 2 easily set up Front Office preparers in the Sched uler See Scheduler on page 85 22 Tax Year 2012 Drake Software User s Manual Software Setup Adding a Preparer To apply for a PTIN go online at www i
152. on Schedule D Capital Gains and Losses Now they are to be listed on the new Form 8949 Sales and Other Dispositions of Capital Assets and summarized on Schedule D Information for these forms is entered on screens 8949 D and D2 These screens are available under the Assets Sales Recapture tab of the Data Entry Menu 6 Tax Year 2012 Drake Software User s Manual Other Packages 8825 Rental Property Attachment The IRS is requiring preparers to provide taxpayers with more detail about income from rental property so Drake now generates the K 1 Rental Real Estate Activity attachment listed as K1_ 8825 in View mode explaining the Net rental real estate income loss as it appears on line 2 of each shareholder s or partner s Schedule K 1 This attachment is generated automatically whenever Form 8825 is generated See 8825 Rental Property Attachment on page 368 for details Qualified Real Property The provision of the Small Business Jobs Act of 2010 under which taxpayers could expense up to 250 000 of the cost of qualifying real property QRP placed in service during tax years 2010 and 2011 rather than recovering that cost through depreciation deductions was set to expire at the end of 2012 but through the American Taxpayer Relief Act of 2012 been extended for the 2012 and 2013 tax years 1041 Changes For 2012 Drake provides better support of multiple grantor statements last year it required some
153. on page 73 for more on multi form codes See Screen Help on the 2106 screen for more assistance in directing data entry to Form 2106 NOTE Be sure that either T for taxpayer or S for spouse is selected as applicable on the 2106 screen Health Savings Account HSA Deduction Screen codes Use the 8889 screen accessible from the Adjustments tab to enter HSA data for 8889 HSA Form 8889 Health Savings Accounts Fields 1 coverage indications and 2 HSA contributions for the year of this screen are required in order to e file Form 8889 Qualified HSA Distribution An amount in the Qualified HSA distribution field of the 8889 screen flows to the Other Taxes section of Form 1040 and is marked with a notation of HDHP Form 1099 H Payment amounts from Form 1099 H Health Coverage Tax Credit HCTC Advance Payments can be entered on the 8889 screen Moving Expenses Screen code 3903 Use the 3903 screen accessible from the Adjustments tab to enter data for Form 3903 Moving Expenses Tax Year 2012 135 Self Employment Adjustments Drake Software User s Manual Form 3903 Qualification If the mileage is less than 50 and the Mileage test does not apply to this move box is marked on screen 3903 Form 3903 will not be generated As the preparer you must determine if the taxpayer qualifies for the moving expense deduction See IRS Pub 521 for details Multiple Moves If there are multiple qualifying moves with
154. on this amount program calculations determine whether the taxpayer should receive the underpayment penalty Estimated Tax Penalty The program automatically calculates an estimated tax penalty and displays the calcu lation on the Estimated tax penalty line of Form 1040 To override the system calcu lation use the Estimated tax penalty field at the bottom of screen 5 NOTE For information on calculating interest and penalty amounts for future years see Penalty and Interest Calculation on page 181 Earned Income Credit EIC 154 The IRS requires that certain questions be addressed on a tax return for a taxpayer to receive EIC These questions are located in the following locations within Drake e EIC Information section of screen 2 must be completed for each qualifying dependent e KIC screen for Form 8867 Paid Preparer s EIC Checklist must be completed for the taxpayer claiming EIC The EIC Due Diligence screens also provide supplemental questions to help ensure a comprehensive interview with each taxpayer While the IRS does not require answers to these supplemental questions to be submitted with the return these screens provide a means for collecting valuable supporting documentation in case of a due diligence audit Tax Year 2012 Drake Software User s Manual Earned Income Credit EIC EIC Information for Dependent If the taxpayer has EIC with qualifying dependents the EIC Information section of sc
155. organizers Estimate payment reminder Remind current year clients that estimate payments are due provide instructions for sending payments Appointment letter Send appointment reminder letters to selected clients email notifications via letter or e mail EF status letter Provide acknowledgment status of e filed return Engagement letter Enter into contract with clients to prepare their tax return Tax Year 2012 301 Letters Drake Software User s Manual You can also use the Letters tool to print batches of pre addressed mailing labels envelopes and postcards The information provided here applies to letters that can be printed in batches For more information on the other types of letters available in Drake see Introduction to Letters in Drake on page 40 NOTES If printing an engagement letter for a taxpayer who has not been entered into the system you are prompted to provide the person s name and address information and type of return This action does not create a client file in Drake the information is used for the engagement letter only Printing Letters To print one or more letters 1 From the Home window go to Tools gt Letters gt Letters 2 From the Client Letters dialog box select a letter type Figure 11 11 Select letter to print for clients Post season for 2012 clients C Pre season for 2011 clients C Individual estimate payment reminder for 2013 Appointment letter email notificati
156. press Add Client Repeat for additional cli ents and then click Next and wait for the program to scan the client files 82 Tax Year 2012 Drake Software User s Manual Organizers and Proformas See Filter e Click Next and select filtering and sorting options as desired Click Next ee adie again and modify filtering criteria from the Basic Search Conditions dialog on using filters box Click Continue and wait for the program to scan the client files 3 When the Proforma Organizer Options dialog box is opened select the desired options red circle on left in Figure 4 8 Proforma Organizer Options Please select the desired options from the list below You will be allowed to select specific forms for printing after the Proformas Organizers have been prepared Click Process 1040 to continue Additonal Proforma Organizer Options a ca Print Organizer even if printed before ust those returns that were calculated in 2011 Print Sch A always Print INT always Print DIY always Fi Include Sch D Blank Form Include Form 4684 Blank Form Include HOME Worksheet Blank Form Do Not orint M Preparer Override Help Select All Unselect all_ Process 1040 Cancel Figure 4 8 Organizers Options dialog box includes Process button m RI RI RI KI KI KS To have a certain preparer s name appear on the preseason engage NOTE ment and privacy policy letters select a name from the
157. program if desired From the Report Viewer NOTE click the arrow on the Export icon and select a format If you click the Export icon not the arrow the program automatically exports the data into Excel 307 Install State Programs Drake Software User s Manual Install State Programs Use Install State Programs to install or repair state program files This can be done by accessing the Internet the latest CD or any drive location that has the needed pro gram files For networked offices sharing information all users must close Drake before installing state programs To install state programs 1 From the Home window select Tools gt Install State Programs The Install State Programs dialog box is displayed 2 Choose to install state programs from a drive or from the Internet If a selected location has state files available the files are displayed in the States Available panel on left If the States Available panel stays empty select another location Select the location of the state installation files Install state s from this drive gt C DRAKE11 z Install state s from the Internet Figure 11 12 Install state programs from computer CD or Internet 3 Choose the states to be installed and click Select or Select All States selected appear in the States Selected for Installation pane on the right 4 Click Install The progress bar identifies the states being retrieved and installed
158. purchase their own tokens GruntWorx Process Add all the necessary documents before submitting a job to Grunt IMPORTANT Worx You cannot amend or submit an addition to an already submitted file instead you would have to resubmit the entire file as a new job and pay the appropriate amount in tokens Uploading You can upload documents from a single client or do batch uploads submitting Files documents from several clients at once Select documents from the various clients files or Working Cabinet document pane or scan new documents not previously saved Document feeder scanners are recommended for use with GruntWorx NOTE For special pricing on Fujitsu scanners for Gruntworx customers go to www 1st in scanners com gruntworx Selecting To select documents for uploading to GruntWorx take the following steps Documents 1 Open GruntWorx by clicking the icon on toolbar of the Home window from the Working Cabinet toolbar or from your desktop See Shortcut to GruntWorx on page 338 The GruntWorx window is opened See Figure 13 18 on page 360 w 2 At the top of the Submit Jobs tab select a client from the Step 1 Job For drop list You can scroll down the drop list or begin typing an individual client s last name or a business s first name in the Job For field Tax Year 2012 359 Additional Products Drake Software User s Manual In
159. related screen without having to return to the Data Entry Menu The example in Figure 3 5 shows that Foreign Employer Compensation screen the INT screen the DIV screen and the 1099 G screen can be directly accessed from the Income screen screen 3 NN Interest income NO Schedule B required Tax exempt interest NO Schedule B required Dividend income NO Schedule B required EE nian oe ee PE 0 na ee E a E a pate AB tg tht onthe Ae neta TEA 1 soggy Form 1040 Income eT ost fc coy z Taxpayer Taxable scholarships not reported on W 2 7 N Other income reported on line 7 NOT W 2 wages M Householdincome J Prisoner income Figure 3 5 Links from the Income screen Federal to state links serve as shortcuts to related state screens For example the state links on screen 2441 Child amp Dependent Care Expenses are to those state screens for child and dependent care expenses State links are located in a State Information section at the upper right corner of a screen Figure 3 6 64 State Information AR LA NY EIC NY 272 PA PORTA E peal Months Date of e ne Apes Figure 3 6 Example of a State Information section for federal to state links Tax Year 2012 Drake Software User s Manual Creating and Opening Returns Screen Tabs Screen tabs allow you to organize multiple instances of the same form and their asso ciated worksheets For instance in Drake
160. returns are pro cessed more quickly resulting in fewer errors and faster refunds to taxpayers E 1 E 2 Indiana Kansas Kentucky Louisiana Maine Drake Software User s Manual Opt out Information If a client refuses to allow you to e file his or her return you can remain in compliance with the mandate by having your client complete and sign Form IL 8948 Electronic Filing Opt Out Declaration Retain all Forms IL 8948 you receive from your clients in your files for three years The department may request copies at any time Form IL 8948 is available through Drake Software Professional tax return preparers who files more than 50 personal income tax returns in a calendar year for resident or nonresident individuals must file personal income tax returns in an electronic format in the immediately following calendar year If a tax pre parer is part of a firm the mandate applies to the firm as a whole If an individual employed by the firm prepares more than 100 returns for clients other than the firm s clients that individual must also e file the returns Amended returns are not counted because they cannot be e filed A paid preparer s client may refuse to allow his or her income tax return to be e filed In order for the preparer to avoid being penalized for not e filing the tax return a com pleted Form IN OPT must be signed by the client and the paid preparer must keep this form on file for five years Professiona
161. s Manual West Virginia Wisconsin Tax Year 2012 The Tax Commissioner has the authority to waive the requirements to e file if that requirement would cause an undue hardship for the tax preparer The tax preparer must request the waiver Form 8454 P in writing and clearly demonstrate the nature of the undue hardship Hardship waiver requests will be responded to within 45 days of receipt Taxpayers may elect not to have their returns e filed To opt out the taxpayer must complete the Taxpayer Opt Out Form 8454T which is to be retained by the tax pre parer In addition the tax preparer will indicate on the taxpayer s return that the tax payer elected to opt out of the e file requirement Both Form 8454P and Form 8454T are available through Drake Software Income tax preparers who filed more than 25 personal income tax returns and will be using tax preparation software to complete one or more of these returns must e file them for the current tax year Tax preparers may opt out of the e file provision if the preparer has clients who prefer not to e file Starting in 2012 taxpayers who pay more than 10 000 in any tax for a single year must e file all returns however the Department through procedural rule decided to phase this requirement in over three years The threshold will be 50 000 for the tax year beginning January 1 2013 look back to 2012 25 000 for the tax year begin ning January 1 2014 and 10 000 for the tax y
162. s Share of 8586 Low Income Housing Credit 1041 Income Deduction Cred its 1116 Foreign Tax Credit 8609 A Annual Statement for Low Income Housing Credit 2210 Underpayment of Esti 8801 Credit for Prior Year Mini mated Tax by Individuals mum Tax Individuals Estates Estates and Trusts and Trusts 2439 Notice to Shareholder of 8820 Orphan Drug Credit Undistributed Long Term Capital Gains 3468 Investment Credit 8824 Like Kind Exchanges 3800 General Business Credit 8829 Expenses for Business Use of Your Home 4136 Credit for Federal Tax Paid 8864 Biodiesel Fuels Credit on Fuels 4255 Recapture of Investment 8874 New Markets Credit Credit 4562 Depreciation amp Amortiza 8881 Credit for Small Employer tion Pension Plan Startup Costs 4684 Casualties and Theft 8882 Credit for Employer Provided Childcare Facilities and Ser vices 4797 Sale of Business Property 8886 Reportable Transaction Dis closure Statement 4952 Investment Interest 8896 Low Sulfur Diesel Fuel Pro Expense Deduction duction Credit XXV Accepted Forms and Schedules Drake Software User s Manual 990 Form Form Form Name Form Name Number Number 4970 Tax on Accumulation Dis 8941 Credit for Small Employer tribution of Trusts Health Insurance Premiums 4972 Tax on Lump Sum Distri PMT Payment Record Electronic butions Funds Withdrawal Direct Debit Payment 5884 Work Opportunity Credit STMbnn Statement Records
163. screen If the home was placed into service during the current tax year however leave Part HI blank start a 4562 screen for the home and enter the data shown in Table 5 19 Table 5 19 Screen 4562 Fields to Complete for First Year 8829 Screen For 8829 Information or Text to be Entered Select 8829 Multi form code Enter the instance of Form 8829 to be associated with this 4562 screen See Associating One Screen with Another on page 73 Description Enter a description of the asset Date Acquired Enter the date the home was placed in service Cost Basis Enter the smaller amount the cost basis or the fair market value This amount would normally be entered in Part Ill of the 8829 screen Do not include the cost of the land Business Use Leave this field blank default is 100 Method Federal column Select SL Straight Line Life Federal column Enter the number 39 Land cost Enter the cost of the land only This amount should not be included in Cost Basis above This amount would normally be entered in Part Ill of the 8829 screen Main Home for 8829 Select this box if the asset was the main home This information is posted to the bottom of Form 8829 when the return is generated Net Operating Losses This section explains how to enter carrybacks and carryforwards of net operating losses NOLs in Drake Carrybacks from Future Years
164. screens Effective usually for monitor resolu tion set to 800 x 600 or smaller Tab to ZIP code field skip city state and use ZIP code database Press the TAB key while entering an address in data entry to bypass the City and State fields and go directly to the ZIP field City and State fields are completed automatically based on the ZIP code entered Show notes reminders to preparer when opening a return Show all notes and reminders from the NOTE and PAD screens every time you open a Client file that contains notes or reminders Verify SSN when creating new return Require double entry of SSN or EIN helping eliminate erroneous entries Enable Windows standard keystrokes CTRL X cut CTRL C copy CTRL V paste SHIFT CTRL X autofill amended screen SHIFT CTRL C calculate return SHIFT CTRL V view return Autofill preparer and firm number on new returns Automatically enter the firm number and preparer number where required on data entry screens Magnify data entry Enlarge the active field for easier reading Activate W 2 wage and federal with holding verification fields To ensure accuracy of data entry require wage and withholding amounts be entered twice on the W2 screen Do not restrict minimum font size in 800x600 This is a sizing option for computers using an 800x600 resolution If this option is selected the program will not attempt a font substitution to retain readabili
165. section of the EF screen If you re filing an extension the applicable box 4868 or 2350 must be selected on the EF screen in order for the program to transmit it Suppressing State Returns By default all eligible returns are transmitted unless you indicate otherwise on the EF screen To suppress one state or city return while e filing others select the states or cities you want to e file from the Select the states cities to e file drop lists The selected states will be e filed but no other state returns will be transmitted even if those other returns are eligible If nothing is selected from the Select the states cities to e file drop NOTE lists or no check mark is placed in the Do NOT send any states check box the program sends all eligible state returns Overriding Bank Product Alert Under the EF tab of Setup gt Options is an option to alert the preparer via an EF mes sage if no bank screen for a bank product has been completed for a return There are two ways to eliminate this EF message complete a bank screen for the return or if the taxpayer is ineligible for a bank product go to the EF screen and mark the Return not eligible for a bank product check box located under Additional Options Paper Filing Forms and Supporting Documentation Form 8453 A return can be e filed even if it contains certain forms that must be paper filed The IRS requires that Form 8453 U S Individual Income Tax Transmittal for an IRS
166. should click Close to return to the Archive Cabinet Use the Copy function or the Backup tool to back up and restore files Tip from one computer to another or to store data off site as part of a disas ter recovery plan Estimated As shown in Figure 13 9 the Backup dialog box provides Estimated Backup Size Backup Size amp and Free Space information for the selected location If there is not enough free space Free Space you will be prompted to select another location The Free Space information is not available if backing up to a CD DVD drive so you need to determine the amount of free space by manually checking the available space on the disk Restoring To restore backed up contents to the Archive Cabinet Contents 1 Click the Backup button on the Archive Cabinet toolbar The Backup dialog box is displayed See Figure 13 9 2 Click the Restore tab 3 Ifnecessary click the Location button to browse to the location of the files you want to restore 4 From the Select a Backup to Restore drop list click a file to restore Tax Year 2012 345 Setting up Your Document Manager Drake Software User s Manual 5 Click Start to begin the restore process If you see a No Backups were found at message you may have NOTE selected an incorrect location to fill the Select a Backup to Restore drop list Check your information and try again You will be notified when the process is complete at which point you should click Clos
167. that uses W 2 eXpress that client s W 2 can be downloaded directly into Drake See the Drake Support site My Account gt W 2 Block Purchase for information on purchasing W 2 downloads and a list of companies that supply employee W 2s using this service To import W 2 information N 1 From the Data Entry Menu ofthe client s return click Import gt W2 Import m3 Import CSM Cram h Y Import edule D mport 2 Inthe W2 Download dialog box select Taxpayer or Spouse as applicable The name and SSN of the selection is displayed below the Taxpayer Spouse drop list Drake 2012 W2Download lt gt E Taxpayer Spouse Taxpayer william Carter 400006665 PIN 10203040 Download Progress Figure 5 8 Name and SSN appear in W 2 Download dialog box 3 Enter the client s PIN supplied by the employer In some cases the employer will provide the format for a PIN for NOTE instance if the company uses the last four digits of the employee s SSN but will not provide the PIN itself 4 Click Download and then click Yes to continue 5 When the W2 Download Complete message is displayed click OK The W2 screen for the taxpayer now contains the downloaded information 104 Tax Year 2012 Drake Software User s Manual Passive and Investment Income 1099 DIV etc 2D Barcode Scanning 1099 MISC Screen code 99M Purchase W 2 downloads in sets of 15 25 per set E
168. the Income Housing Credit Corporation s Stock 8611 Recapture of Low Income M 3 Net Income Loss Reconcili Housing Credit ation 8697 Interest Computation Under N Foreign Operations of U S the Look Back Corporations 8820 Orphan Drug Credit O Controlled Group Information 8824 Like Kind Exchange PH U S Personal Holding 8827 Credit for Prior Year Mini mum Tax The following chart identifies forms and schedules that can be e filed with an 1120 return for the 2012 tax year Form Form Form Name Form Name Number Number 1120S U S Corporate Income Tax 8825 Like Kind Exchange Return 982 Reduction of Tax Attribute 8827 Credit for Prior Year Mini Discharge mum Tax 2220 Underpayment of Esti 8832 Entity Classification Elec mated Tax by Corporation tion 2439 Undistributed Long Term 8834 Qualified Electric Vehicle Capital Gains Credit 2553 Election by a Small Busi 8835 Renewable Electricity ness Corporation Must Credit be sent as PDF 3115 Application for Change in 8838 Consent to Extend Time to Accounting Method Assess Tax 3468 Investment Credit 8844 Empowerment Zone Credit 3800 Other Business Credits 8846 Credit for Employer SS amp Medicare Taxes 4136 Fuels Credit 8847 Credit for Contributions to Selected Community Development Corps xxi Accepted Forms and Schedules xxii Drake Software User s Manual
169. the open return Basic View Switch to the cascade view the exclusive Drake view before 2008 wy 8615 Export Export parent information into child s Form 8615 Kiddie Tax this button is vis ible only for Individual 1040 returns with qualifying dependents See Export ing Data for Kiddie Tax on page 149 K 1 K1 Export Open the K 1 Export tool This button is visible only for certain business returns Help Access Drake online help i Exit Exit View mode Viewing Tool Use the arrows and zoom icon Figure 6 6 when viewing in Enhanced mode QOQ Figure 6 6 Click arrows to move through the return click zoom icon to zoom in or out Category Labeled tabs allow you to view sections of the return according to selected categories Tabs For example if you click the EF tab only the documents directly related to e filing are displayed in the tree view 198 Tax Year 2012 Drake Software User s Manual Tree View Directory Viewing Panel Viewing and Printing a Return Federal Worksheets Figure 6 7 If the EF tab is selected only the EF specific documents are shown in tree view Category tabs and descriptions are provided in Table 6 2 Table 6 2 Category Tabs and Descriptions Tab Items Shown in Tree View All Forms Every form generated during production of the return Sets Forms as distributed into the printer set
170. the organizers complete them and mail them to you or can scan them and upload them back to SecureFilePro where you can download the organizers and start enter ing the data into Drake You can also send organizers directly to the Drake Document Manager to your regular printer and to SecureFilePro at the same time If you send multiple organizers to the Document Manager or to SecureFilePro portals the program places the organizers in the correct Document Manager folders and correct portals For more on organizers see Printing Organizers and Proformas for Clients on page 82 For more on SecureFilePro see Chapter 13 Suite Products What s New in Drake for 2012 Drake Software User s Manual SecureFile Pro GruntWorx Online Resources Changes have been made to SecureFilePro e E mail customization will allow clients to Change certain text within the automatic e mails Add remove a logo Customize instructional paragraph for new and existing clients Add additional paragraphs and add footer information to e mails e File expiration settings will allow our clients to set a date to expire all files To help keep their portal size managed automatically e Move Copy feature has been added so clients can move copy to a new target loca tion There have been behind the scenes changes to make PDF file sizes smaller This will help with storage sizes in SecureFilePro and lag time in create copy
171. the return receives reject code 0973 on Form 1116 a statement must be entered as statement number 98 99 or 100 on the SCH screen This statement must indicate how the foreign currency was converted into U S dollars For information on adding unformatted statements in Drake see Unformatted Schedules on page 189 Child and Dependent Care Expenses Credit Screen code 2441 Use the 2441 screen accessible from the General tab for Form 2441 Child and Dependent Care Expenses Where to Enter Data Enter data on both the 2441 screen and on screen 2 for each dependent for whom expenses were incurred No Income for Spouse To qualify for the childcare credit parents must have earned income be full time stu dents or be disabled If a spouse does not have income but is disabled or a student then enter 250 one child or 500 two or more children for each month the spouse 142 Tax Year 2012 Drake Software User s Manual Elderly Disabled Credit was a student or disabled This information is entered on the 2441 screen in the Earned income for 2441 purposes ONLY field Figure 5 36 a a oe E A 12 Employer provided dependent care benefits received in 2012 eeceeesesecseesssneccseesenessnnesesneesseressesenneesseeessneessueesneesneesseeessene 13 Amount carried over from 2011 and used in 2012 during the grace period eee 44 Amouniioreitad Wanye a ee ec me ee ee eee 22 Amount of line 14 thatis from your s
172. the settings are brought forward for the year they can be individu ally adjusted CAUTION Selecting a previously updated item can cause a loss of current year data To update settings from 2011 1 Inthe 2012 version of the program go to Last Year Data gt Update Settings 2011 to 2012 The Update Settings dialog box is displayed Figure 4 3 on page 80 Tax Year 2012 79 Organizers and Proformas Drake Software User s Manual Drake 2012 Update Settings Update Settings The application has detected Drake 2011 on the drives listed below Recently updated items are not preselected Selecting these items could cause loss of current year data Get update settings from drive C Hard Drive X Preparer Information _ Firm Information Preparer Schedules and Appointments Macros Colors ERO Screen Document Manager Letterhead Reports Client Status Manager Custom Statuses only Setup gt Options Pricing Federal Pricing State City Continue Figure 4 3 Update Settings dialog box 2 Select the drive that stores the 2011 data to bring forward 3 Select the setting categories to bring forward All items except for previously updated items are selected by default Click the plus sign in front of an item to expand it and view or select sub items If you select an item with sub items all sub items are selected by
173. to Resources gt Download Center A manual is also available on the CD through the software from the Home window in Drake go to Help gt Online Resources or for download from the Drake Support site Go to Training Tools gt Manuals Scroll down to the Client Write Up Manuals section and select a year 356 Tax Year 2012 Drake Software User s Manual Additional Products Additional Products GruntWorx and SecureFilePro are separate programs designed to integrate with Drake Software to make storing accessing and manipulating large numbers of documents easier GruntWorx Use GruntWorx to organize your clients supporting documents in a single book marked PDF file You can also import data from certain federal forms directly into Drake s tax software Drake has added a GruntWorx Knowledge Base to the list of available NEW FOR Knowledge Bases New articles are being added To search the Grunt Worx KB go to Drake Support com select Resources gt Knowledge 7017 Bases select Drake Software Support Knowledge Base and from the Search within drop list of the Search for articles section select GruntWorx KB GruntWorx offers three products to handle these tasks Organize Populate and Trades e Organize With Organize you scan or import all documents from one client send the documents to GruntWorx and receive a PDF with those documents clas sified organized and bookmarked For clients with multiple federal tax fo
174. to a folder at the root of the selected drive or subdirectory In the 2012 Drake program the folder name always starts with DS2012 and is followed by the eight digit date MMDDYYYY format a hyphen and the number of the backup for the day For example the second backup file of January 28 2013 would be titled DS201201282013 02 Restore Use the Restore tool to copy data files from a media storage device to a computer Use this feature along with the Backup tool to transfer files from one computer to another or to restore lost files Tax Year 2012 To restore Drake files 1 2 9 From the Home window select Tools gt File Maintenance gt Restore Click the Location to restore files from button and browse to the desired loca tion Once you have made a selection the Select folder to restore from drop list displays all of the subdirectories created during backup Folder directories are dis played in the format described previously Choose to Restore All Files in Folder or Restore Select Files in Folder Click Restore This button is not activated until a restore location is entered 293 File Maintenance Drake Software User s Manual 5 Click Exit when restoration is complete If you do not have Windows XP Windows Vista or Windows 7 IMPORTANT and want to back up your data on CD you must use your CD burner software not the Drake Backup tool to perform the backup Automated Backup Use the automated backup
175. to the first account entered on the Accounts DD screen If depositing funds into multiple accounts complete the Federal selection field to indicate whether the first account entered should be used for the federal refund Figure 5 48 The default selection is Yes Account Information a Account 1 2 Deposit selection Federal selection Stay Name of financial institution No Smalltown Bank Repeat account information Figure 5 48 Select No if federal refund is not to go to the account listed To indicate that a refund should be distributed into multiple accounts enter the por tions for each account in the appropriate Federal deposit amount fields on the DD screen Figure 5 49 An amount entered here overrides the calculated refund amount ederal deposit amount State deposit amount Figure 5 49 An amount entered in the Federal deposit amount field overrides the calculated refund amount NOTE Because not all states support multi account direct deposit the State deposit amount field Figure 5 49 is inactive by default Series To indicate that a taxpayer wishes to make a Series I Savings Bond purchase from the Savings tax refund press PAGE DOWN from the DD screen and fill out the BOND screen If Bonds the taxpayer wishes to receive the remainder of the refund disbursed as a paper check mark the applicable box on the BOND screen Direct Deposit of Stat
176. to the scenario Once you ve calculated the return go back to the Practice Returns page and click View Solution to compare your return to the solution return Drake ETC offers 10 basic and intermediate practice returns for the 1040 package and one practice return each for the 1120 1120S and 1065 packages To practice e filing and working with bank products scroll to EF Banking and click View Return Fol low the instructions located in the PDF file Tutorials and practice returns are also available outside of ETC To see the tutorials or to work on the practice returns without signing on to ETC go to the Support website and click either Training Tools gt Prac tice Returns or Training Tools gt Tutorials Practice returns are also available on your Drake CD and through the software Help gt Online Resources Tax Year 2012 Drake Software User s Manual Online Support Recorded Webinars Webinars Registration for Webinars Tax Year 2012 Some of our live webinars have been recorded and can be viewed at any time Although these recorded webinars do not earn you CPE credits they can help famil iarize you with such topics are Program Setup and Tools Data Entry and e Fil ing for Drake tax software users and Spreadsheet Importing and End of Year e Filing for Client Write Up users To view a recorded webinar 1 From the sidebar menu at the left of the Drake ETC window select Drake Resour
177. up Archive Cabinet Options Option Description Document Manager Data Path To store data in a location other than the default loca tion enter the data path here or click Browse to map to a new location Use this scan device By default the Document Manager chooses a scan ner To choose a different scanner select it from the list Turn off scanner interface The software automatically uses the default scanner s settings To change those settings click this box and when the scanner control box is opened make changes to the color dpi size or shape options Common Documents list Click Show Hide to edit names assigned to commonly scanned document types For more information see Setting Up Common Documents on page 334 Document Status list Click Show Hide to see the status of documents in the Working Cabinet You can add statuses here then apply them to the document Right click the document and select Status from the menu The status appears on the right side of the document pane of the dialog box See Setting Document Status on page 350 Secure customer folder names Client files used to be stored in the Document Man ager based on the client s nine digit ID number SSN or EIN These files are now stored based on the cli ent s last name and the last four digits of the ID For instance documents for William Carter SSN 400006665 are now stored in a folder named C
178. 01 Kiddie tax federal tax law update IRAs filing statuses EITC due diligence and continuing education requirements More webi nars are added each month Panelists are available to answer your questions CPE credits are available no test required Also keeps track of webinars you re attended through Webinars gt My Webinars RTRP Study Study courses to help preparers pass the IRS s Registered Tax Return Preparers competency test Report Card Track students progress in the tutorials and in the tax courses including dates of completion quiz results and CPE credits earned Administration Available only when logged in with an Admin account this section allows you to create student accounts and view student report cards 2 Tax Courses 264 When a course unit tutorial practice return recorded webinar or video has been viewed a green check mark replaces the red X next to the completed item See Figure 10 8 ETC offers basic return preparation courses for forms 1040 1120 1120S and 1065 An intermediate 1040 course is also available CPE credits are available for the suc cessful completion of each course There is a fee for printing the completion certifi cate Check the Drake ETC website DrakeETC com for details and pricing For a list of available courses and units from the sidebar menu click Tax Courses The Tax Courses page displays the units of the Basic Tax Course Figure 10 8
179. 012 Drake Software User s Manual Preparing to Offer Bank Products Click Help on the EOM website to view the EOM tutorial or download Tip the EOM manual These resources provide information on managing your accounts applications sub offices fee overrides and other options available through the EOM Applying for In the procedure that follows note that completing bank applications for single office a Bank sites is slightly different from the procedure for multi office sites To access and complete a banking application 1 Access the EOM website in one of two ways e On the Drake Support website Support DrakeSoftware com select My Account gt Bank Application e Go directly to the EOM website eom 1040 com 2 Enter your EFIN and Drake password and click Sign In If you are a single office site and this is your first visit select Account NOTE Information from the menu complete the Company Information fields and click Save before proceeding It s a good idea to review this information each time you log in to the EOM 3 multi office sites only Follow the instructions on the Recommended First Steps page that is displayed clicking one of the gray boxes to complete each step When finished mark the I ve completed all relevant steps check box and click Continue This page is not displayed for single office sites 4 Select Bank Application from the menu of the EOM home page A Bank Appli cation drop list appe
180. 099 Schedule B etc Click the States tab in data entry to view a list of states Click any state from the list or enter the two letter state code in the selector field to access the Data Entry Menu for that state It is not necessary to return to the States tab to enter a new state code Access city screens by entering a city code into the selector field Another option is to open a state menu and then click the Cities tab if available Cities are listed with their two letter codes Practice Returns and Test Returns Practice returns test returns and EF test returns are available on the Drake Support site and on the software CD Practice returns help new Drake Software clients become more familiar with how data is entered in Drake Practice preparing returns by completing data entry based on the practice scenarios provided Practice returns can be found on the installation CD through the software from the Drake Home window go to Help gt Online Resources and at Support DrakeSoftware com gt Training Tools gt Practice Returns Test returns can be installed with Drake Software The SSNs for these returns run from 400 00 1031 through 400 00 1040 and consist of various forms and sched ules to show how different tax scenarios are prepared in Drake You can also use the test returns to test e filing before tax season begins by transmitting a test return EF Banking practice returns also allow you to practice e filing returns in Dra
181. 1 see Figure 8 9 2 Enter the reject code in the Reject Code field 3 Click Go The IRS explanation of the code is displayed in the lower box Figure 8 9 F1 General Information F2 Bank Direct Deposit Info F3 Fees Miscellaneous Info F4 Reject Code Lookup C 1041 Category 1120 11205 Loan Status Codes FED v 1065 C Bank Decline Reasons o an Statement Record The only valid entry in a Required Statement Record field is a Statement Reference i e STMbnn For Required Statement Records Line 02 must be blank Line 03 must be present and must contain significant data For Required Statement Records any Statement Record number STMbnn occurring within a tax return must have a corresponding Statement Record Figure 8 9 Looking up 1040 reject code on Reject Code Lookup tab Tax Year 2012 Drake Software User s Manual Online EF Database 4 optional Click Print to print the code explanation To search for a state reject code for an individual return select 1040 and then select the state from the Category drop list before entering the reject code To view bank product status select Bank Codes wording varies by bank Explana tions are displayed in the lower box To view Bank Decline Reasons select that option and then choose a bank from the drop list Explanations are displayed in the lower box Not all bank have codes listed Leaving the EF Database Take one of the fol
182. 1 forms for multiple states requiring States the preparer to enter two or more amounts for the same state K 1 items To enter federal and state K 1 information where multiple state K 1s are issued Tax Year 2012 125 Supplemental Income Drake Software User s Manual 1 Enter all information for federal and the first state on the K1 screen Enter data in the State column only if the state amount differs from the federal 2 From the first page of the screen press PAGE DOWN to start a new screen 3 In the F text box at the top of the screen type 0 zero to exclude the information on this screen from the federal return See Figure 5 28 4 Selecta state from the ST drop list In Figure 5 28 below North Carolina has been selected 1120S K1 1 11 1120S K1 12 17 Basis Worksheet Basis wag Schedule K 1 for 1120S Fa E wf a S Commerc TE an S corporation name For state use only ale a a a a te BP adler BA a NT N vars Figure 5 28 Enter 0 in the F text box and select a state from the ST drop list 5 Complete all applicable fields Basic information such as ID number and name must be re entered Because the program does not use the entries on this screen for federal purposes it is not necessary to enter the federal amounts however all applicable state amounts are required even if they are identical to the federal amounts entered on the previous screen 6 Click the linked tab at
183. 1040E2 U S Individual Income Tax Return NAA 0 00 1 x Li E ai E E S S T ey T Ae Figure 2 13 Tabs allow you to view categories of documents that can be priced Use the scrollbar 3 Select a form in the grid and press ENTER or double click the form or arrow keys to ar R find forms Double 4 Optional Edit the Form Description This description is printed on the client click a form to bill if Include on Bill is selected Do not edit the form name select it quickly oo ae 5 Enter pricing information in the Per Item and Per Form fields e When a Per Item entry is not applicable for a form the field is unavailable e If Per Item pricing is allowed the price entered will apply to all instances of the selected form that are printed for a return To view all items for which per item pricing is allowed click the Per Item Charges tab see Figure 2 13 6 Click Update and then click Save Repeat these steps for each form or set pricing for only the most commonly used forms You can price other forms from within the individual returns that require them For more information see Overriding the Bill Amount on page 56 Fee Options The program includes options to add a custom fee and a financial product assistance fee Both fees are included in the Forms section of the bill e Custom fee The custom fee is charged on all client returns Use item 0387 in the Pricing Setup window to assign a fee name descrip
184. 163 164 of preparer 23 PMI private mortgage insurance 123 Populate GruntWorx function 357 Portal SecureFileProTM 362 postcards 305 power of attorney 23 164 PPR see Pay Per Return practice returns 76 266 preparer checklist for EIC 155 mode in Scheduler 85 Tax Year 2012 Drake Software User s Manual PIN signature 23 schedules 89 96 security settings 24 setup 22 27 tax identification number see PTIN pre prepared entry also forms based data entry 309 presidential campaign 98 previously passive activities 124 pricing for a single return 57 maximum minimum fees 38 per item and per form 37 setup 37 printer setup 47 52 printing see also viewing bill summary 30 calculation details 196 carryover worksheets 30 checks 221 222 data entry screens 75 date of signature 31 depreciation schedules 29 documents only when required 32 due diligence info for homebuyer credit 34 EF status page 33 EIC due diligence documents 34 estimate vouchers 151 filing instructions 30 forms in a certain order 206 forms in a return 200 forms only when required 29 labels 304 letters batches 302 list of EINs 307 list of firms 21 list of preparers in a firm 26 on the fly 52 options 205 207 organizers and proformas 82 preparer fees withheld 32 printer sets 201 referral coupons 31 return summary 30 sets 51 SSN on bill 32 tax returns 196 taxpayer phone number 31 third party designee 31 using the PRNT screen 52 privacy
185. 2 Office in Home Screen code 8829 Enter information for Form 8829 Expenses for Business Use of Your Home on the 8829 screen accessible from the Adjustments tab Applying 8829 Data to a Form The 8829 screen can be applied to Schedules C and F Form 2106 and Schedule K 1 for Partnership Select the form type from the For menu at the top of the 8829 screen Use the Multi form code box as needed default is 1 See Associating One Screen with Another on page 73 Special The multi form code information must be modified slightly if the 8829 screen is being Conditions associated with a Form 2106 Employee Business Expenses and the spouse has a Form 2106 2106 form The program numbers all primary taxpayer 2106 forms before numbering the spouse 2106 forms as shown in Table 5 18 Table 5 18 Screen 8829 Multi form Codes for Form 2106 Enter this If the 2106 is for code Primary taxpayer 1 Primary taxpayer and it is the primary taxpayer s second 2106 2 Spouse and the primary taxpayer does not have a 2106 1 Spouse and the primary taxpayer does have a 2106 2 172 Tax Year 2012 Drake Software User s Manual Net Operating Losses Table 5 18 Screen 8829 Multi form Codes for Form 2106 Enter this If the 2106 is for code Spouse and the taxpayer has two 2106 forms 3 Depreciation of Home Generally home depreciation data should be entered under Part III of the 8829
186. 2 Dependents in Drake maybe screen 2441 Child Care Credit and possibly screen A Itemized Deductions To set up a scenario follow these steps 1 From the Tax Planner window click a scenario then click Open NOTE A reminder that you are in a Tax Planner scenario and not the original return appears in the lower right corner of the Data Entry Menu 2 From the Data Entry Menu choose the screens you want to add or change 3 When you re finished setting up the scenario calculate the scenario click Caleu late from the toolbar 4 Close the Calculation Results window 5 Click the Tax Planner button to return to the Tax Planner window If you are in a scenario and want to go to the original return click Tax NOTE Planner select Original Return from the Tax Planner window and click Open When you have finished creating and setting up different scenarios and you want to compare them to the taxpayer s original return follow these steps Click Compare from the Tax Planner toolbar 1 2 Inthe Scenario Comparison Selector choose up to three scenarios to be com pared to the original return 3 Click Compare to open the Tax Scenario Planning Comparison worksheet in View mode Figure 13 17 on page 356 Print the worksheet e mail it or send it to the Document Manager from View mode 355 Client Write Up Drake Software User s Manual Tax Scenario Planning Comparison 2012 Scenario Name 2 Scenario Na
187. 26 Alternative Minimum Tax 8900 Qualified Railroad Track Maintenance Credit 4684 Casualties amp Thefts 8903 Domestic Production Activi ties 4797 Sale of Business Property 8906 Distilled Spirits Credit 5471 Info Return of Persons with 8907 Nonconventional Source Respect to Certain Foreign Fuel Credit Corps 5472 25 Foreign Owned U S 8908 Energy Efficient Home Credit Corporation 5884 Work Opportunity Credit 8910 Alternative Motor Vehicle Credit 6252 Installment Sale Income 8911 Alternative Fuel Vehicle Refueling Property Credit 6478 Credit for Alcohol Used as 8912 Clean Renewable Energy Fuel Bond Credit 6781 Gains amp Losses from Sec 8916 Reconciliation of Sch M 3 tion 1256 Taxable Income 7004 Request for Extension 8916A Supplemental Attachment to Schedule M 3 8050 Direct Deposit of a Corpo 8925 Report of Employer Owned rate Refund Life Insurance Contracts 8082 Notice of Inconsistent 8941 Credit for Small Employer Treatment Health Insurance Premiums 8283 Noncash Charitable Contri 8949 Sales and Other Dispositions butions of Capital Assets Tax Year 2012 Drake Software User s Manual 1120S Tax Year 2012 Accepted Forms and Schedules Form Form Form Name Form Name Number Number 8586 Low Income Housing credit B Additional Information for Schedule M 3 Filers 8594 Asset Acquisition statement Capital Gains amp Losses 8609A Annual Stmt for Low G Certain Persons Owning
188. 323 hash totals 326 in Drake 313 327 keywords Appendix C Multi Office Manager MOM 246 reprinting checks 223 Republic Bank contact info xi requirements e filing see e filing EIC due diligence 155 for bank product eligibility 212 service bureau 213 system for running Drake software 12 resetting check stock 223 restoring see also backup and restore files archived returns 208 client files 292 293 color settings 47 CSM data 256 DDM files 345 default color palette basic view print 206 letter templates 45 print order settings 52 statuses in the CSM 251 retirement income 118 121 return options 55 returns amending 175 archiving 207 208 calculating 193 196 230 comparing data between 186 creating 65 e filing process 227 248 e mailing to Drake 277 entity packages 990 1120 1120S 1065 367 estate 706 299 371 extensions 176 fiduciary 1041 60 131 filing late 181 gift 709 177 indicators on 54 late filed 181 non resident 177 xl Drake Software User s Manual NOTES pages 195 opening 65 252 Pay Per Return PPR 27 practice 76 266 preparation of 97 192 pre prepared entry 309 printing 196 requesting copies from IRS 179 splitting 73 state 75 238 statuses of 249 storing information in DDM 331 337 tax exempt organizations 990 186 tracking information on 190 updating from prior year 77 80 viewing and printing 196 202 River City Bank contact info x1 rollover of pensions annuities 119 Roth I
189. 350 Tax Year 2012 Drake Software User s Manual Working With Document Manager Files 1O Options a Use this scan device v Tum off scanner interface W Common Documents list Show Hide Document Status list Show Hide Final Review First Draft a Figure 13 14 Options for commonly scanned documents 2 Click the Document Status Show Hide button The list of document statuses is shown in a small window of the dialog box 3 Inthe example in Figure 13 14 the user has added Pending Approval to the list 4 Add or edit names as desired 5 To save changes click Save txt doc xls Your computer must have Word and Excel installed in order to use the Document Manager to create new text txt Word doc and Excel xls files To create a new text Word or Excel file 1 From the Document Manager toolbar click File e j 2 Inthe menu that is displayed select New Text File New Word Document or New Excel Spreadsheet 3 Enter a name for the new document or spreadsheet 4 Click OK The applicable program is opened when you click a selection You can open rename or delete folders from the File button Document When a DDM document is password protected a password must be entered before the Security document can be accessed This is separate from the optional password you can use to restrict entry into the Document Manager s Archive Cabinet See Optional Pass word Protection
190. 48 Tax Year 2012 Drake Software User s Manual Other Taxes Other Taxes Screens for the following other forms are available under the Taxes tab in Drake Table 5 10 Other Tax Forms That Can Be Calculated in Drake o Form and Tax 4137 Form 4137 Tax on Tips 4970 Form 4970 Tax on Accumulation Distribution of Trusts 4972 Form 4972 Tax on Lump Sum Distributions 8611 Form 8611 Recapture of Low Income Housing Credit 8615 Form 8615 Kiddie Tax 8814 Form 8814 Parents Election to Report Child s Income 8828 Form 8828 Recapture of Federal Mortgage Subsidy If both parents are deceased go to the MISC screen and select Both parents deceased in the Dependent filer special situation section To enter the amount of COBRA premium assistance received in 2012 NOTE go to screen 5 and enter the amount in the COBRA premium assis tance received in 2012 line of item 60 Exporting Data for Kiddie Tax F7 The 8615 Export feature allows exporting of parent data to a child s Form 8615 This u process consists of two main steps 1 exporting the data from the parents return and 8615 Export 2 importing the data into the dependent s return Exporting To export a taxpayer s information into a Form 8615 for the dependent Parent Information 1 Goto View mode for the taxpayer s parent s return 2 From the toolbar click the 8615 Export button The Export 8615 dialog box lists the dependent na
191. 4FE97D71 DOCUMENTS TAX 2012 1900 BS PDF CADRAKE12 DT 5 4FE97D71 DOCUMENTS TAX 2012 W2S PDF py Duplex Scanning Remove Step 4 Optional V Send e mail when job is done to WCarter Dnet net Step 5 Mark as ready to send Step 6 Jobs in Queue g Client Name Ready Job Type Date Created User Est Tokens LAST FIRST 3333 False ORGANIZE 1226 2012 bian 1 Last First 5557 Tue ORGANIZE 1226 2012 bian 1 7 Carter Wiliam amp Amelia 6665 Tue POPULATE 1226 2012 esutton 2 Right click to remove or load a job 5 Ext Figure 13 18 GruntWorx window for submitting jobs To upload documents for another client repeat steps 2 8 If you opened GruntWorx from the Home window and wish to open NOTE your DDM click the Load DDM button on the lower left corner of the 360 Submit Jobs tab See Figure 13 18 Tax Year 2012 Drake Software User s Manual Submitting Jobs Job Status Tax Year 2012 Additional Products To submit jobs to GruntWorx 1 Inthe Step 6 Jobs in Queue list at the bottom of the Submit Jobs tab place a check mark in the box to the left of the name of all client jobs to submit 2 Click Submit Other items of note on the GruntWorx window e The Click to read instructions link near the top of the window offers instructions on how to select and upload files e The Which option to choose link in the Step 2 Job Options section offers help in selecting Populate or Trades e The number of tokens you have purchas
192. 5 if a joint return spouse s first name and initial Last name Spouse s social security number Amelia Carter 243 24 3243 Home address number and street If you have a PO box see instructions Make sure the SSN s above 123 Main and on line 6c are correct City town or post office state and ZIP code If you have a foreign address also complete spaces below see instructions Presidential Election Campaign FRANKL Check here if you or your spouse if filing IN NC 28734 jointly want 3 to go to this fund Checking Foreign country name Foreign province county Foreign postal code 3 box below will not change your tax or refund You Spouse Single 4 Head of household with qualifying person See instructions If Filing the qualifying person is a child but not your dependent enter this ia ELECTION Status Married filing jointly even if only one had income child s name here s STATMENT 3 Married filing separately Enter spouse s SSN above gt Miscellaneous Check only LD SCHA_LN5 one box and full name here B gt 5 Qualifying widow er with dependent child s TPG_INFO 2 6a X Yourself If someone can claim you as a dependent do not check box 6a Boxes checked Exemptions y Spe t on 6a and 6b 2 b No of children c Dependents 2 Dependent s 3 Dependent s Sey Oaa nae social securitynumber relationshiptoyou for child tax credit livedwith you 2 SSe instructions did notlive with you due to divorce
193. 5 a NY Some New York City Returns must be Paper Filed a S Corporation Income is Not Self Employment a Cannot Open Saved Tax Planner in Excel 2007 a Preparer Web Site Page Not Found 09 16 10 Broadcast Prepare for W 2 and 1099 e Filing CWU2010 5 09 16 10 Broadcast Prepare for W 2 and 1099 e Filing Q 5 Bank Products for OLF 4 09 07 10 Broadcast OLF We re Improving Preparer We 5 1040 com Preparer Revenue Checks Sent Twice a Year 5 Cannot Open Saved Tax Planner in Excel 2007 a Preparer Web Site Page Not Found 5 Dependents Not on 1040X Top 10 Frequently Asked Questions 5 CWU Why do get a malicious script error when trying to update 5 How do send paper documents with an e filed 1040 return tom medida dage Aythenticationbailed meag when trying to TARER Rin sasama ananth nannti amna tmnt on aa aaant Figure 10 1 KB tabs item 1 search fields item 2 and suggested articles item 3 258 Tax Year 2012 Drake Software User s Manual NEW FOR Online Support Drake has added a GruntWorx Knowledge Base to the list of available Knowledge Bases New articles are being added To search the Grunt l 7 Worx KB from the Search for articles section select GruntWorx KB from the Search within drop list See item 2 in Figure 10 1 on page 258 For more on GruntWorx see Chapter 13 Suite Products Begin your queries by viewing the Latest Articles those most recently published or changed Hot Topi
194. 52 e Lines 1 15 Part I of Form 6252 Complete these lines for the year of sale only Lines 1 15 must also be completed in subsequent years in order to have the gross profit percentage carry through to subsequent years As an alternative and only if the current year is not the year of sale you can enter the Gross Profit Percentage on the 6252 screen Use a whole number not the decimal equivalent For example enter 62 as 62 notas 62 e Line 19 and Receipt category section Part II of Form 6252 Complete line 19 use a whole number not a decimal equivalent and the Receipt cate gory fields for the year of sale and for any year in which a payment or debt must be treated as a payment on installment options e Part III Related Party Sale Income Complete Part III if a the sale was made to a related party and b the income is not from the final payment in the current tax year e Unrecaptured Section 1250 Gain If unrecaptured 1250 gain is present enter the gain amount in the Unrecaptured Section 1250 Gain field to the right of line 19 The taxable amount is calculated on the WK_ 1250 work sheet and is carried to Schedule D line 19 based on these calculations View the return See line 31 of Form 4797 for the recapture amount if any Like Kind Exchanges Screen code 4562 Screen code 8824 116 If an asset has been traded and requires continued depreciation and there is an increase in basis that must b
195. 6251 AMT See Section 179 Expensing following for more on section 179 The default business percent use is 100 Enter a number in this field only if business percent use for the asset is not 100 If business use dropped to 50 or less complete the Business use field and select the Recapture box under Other Information The program recaptures any excess section 179 or depreciation and carries it to Form 4797 Part IV and to the Other income line on the form being associated with the 4562 screen EXP cannot be the selected method if the Recapture box is marked The Method field must contain an acceptable IRS method for the recapture to be calculated correctly A selection in the Listed Prop Type field is required for an asset that could be used for personal entertainment recreation or amusement purposes An entry here lists the asset as Listed property on Form 4562 Depreciation limitations could apply The amount in the Prior depreciation field is carried from the previous year if the information is available Otherwise enter this information directly Section 179 Expensing 166 Drake calculates the amount up to the established current year limit for all properties expensed under the section 179 deduction If section 179 EXP in the Method drop list is selected as the depreciation method on more than one 4562 screen the program expenses the initially entered items first regardless of which schedule lists th
196. 90990 ESSBEEESS 400500600 SILVER JOHN 400111111 FRED S FIDUCIARY 802000001 SEAY S TRUCKING AND SHI 400400400 AUTOBOTS 606006001 PARTNERS IN GRIME CLEAN 414141414 ACAPPELLA TEST amp 400001009 All Clients 1040 1120 11205 1065 104 990 706 e e ie e ie ie ie OK Cancel Figure 3 8 Open Create a New Return dialog box 3 Click OK The Data Entry Menu is opened for the selected return Returns are prepared in data entry mode Access data entry screens from the Data Entry Menu See Figure 3 9 on page 67 When in data entry press ESC to save your data exit the open screen and return to the Data Entry Menu Pressing Esc from the Data Entry Menu returns you to the Home window Figure 3 2 on page 62 Also in data entry you can use the TAB key the UP ARROW and DOWN ARROW keys and the PAGE UP and PAGE DOWN keys to move from field to field or from screen to screen The Data Entry Menu Figure 3 9 on page 67 is displayed when you open a return It consists of a toolbar tabs screen codes and names the selector field and the status Tax Year 2012 Drake Software User s Manual me A A e B BZ ea amp Calculate View Print Split DocMgr TaxPlanner Import CSM Email Help Exit General Income Adjustments Credits Credits Taxes Other Forms Miscellaneous States 1 Name and Address A Itemized Deductions Schedule 2 Dependents STAX Sales Tax Worksheet 3 Inc
197. 91 1040 e Taxpayer support 866 581 1040 e Check verification 866 631 1040 or www republicverify com e Website www republicrefund com Contact Information for River City Bank e Mail River City Bank P O Box 389 Irvington KY 40146 e Phone 888 820 7848 e Fax 800 896 9793 xi Contact Information Drake Software User s Manual e Website www rcbral com Contact Information for Tax Products Group e Mail University Bank P O Box 261639 San Diego CA 92196 Enrollment 877 901 5646 e Tax office support 800 779 7228 e Taxpayer customer service 800 901 6663 e 24 hour automated support 800 455 7228 e 24 hour fax support 858 430 2795 e Risk Analysis Group 800 814 0401 e Website www cisc sbtpg com Contacting Drake Support E mail Support Support DrakeSoftware com Recommended for simpler Drake Software questions Telephone Support 828 524 8020 Recommended for more complicated Drake Software questions Fax Support 828 349 5718 We reply to faxes with faxes not phone calls Client Write Up Telephone Support 828 349 5547 Drake Support Hours December 3 2012 April 20 2013 April 22 December 2 2013 Monday Friday 8 a m 10 p m EST Monday Friday 8 a m 9 p m EST Saturday 8 a m 6 p m EST Saturday 9 a m 5 p m EST Other Drake Following are department e mail addresses at Drake Software Support Pe Psa Department Contact Accounting
198. A E Rh Aaa ates dw aatoudwe band 256 Admin only Features 2 0 0 0 ee een en eben nnn eee e eens 256 Resources and Support wa cicscscasicesiisssnsanncexssannccibasaaaapnnceasieniciuasnatssarenteals 257 Drake Software Mantal ses wersececcer iecere eee ene nen a EEE EOE E 257 Tax Year 2012 v Table of Contents Drake Software User s Manual Online SUPPOME ere sin eee ee Saeed E E ee aoe bbe Bae CoA Ee ee alee e Pewee RRR 258 Other Resources at Drake Support 0 een etn n ene ene n nee 269 Software Support In Drake s Tax Software 20 cette ene n enna 273 Interactive SUPPO ee acces Sask A he hE Hee ead has Phe deed Roe ea Pee E Roe Gees 276 Fax Cover Letter for Supports eer siese a a a aea Bach ald Bucur dey awe E eked 285 TOOLS csr E E 287 Update Manager cassai senideen had eae ee a T hare SRA E FR ode a RE A R 287 Download Fonts secre cssbrsri rnei etaria aon ae e a a a a E E OE EE 290 Blank FORMS peri errrenerere tan E a E E EE EE E EE EENE eee E EE eae 290 Repair Index FEileSeerseeie sided bao eben aks E eels abe E EEEE EEE ETEA 291 Fil Mamtenanee s esemes seenen ral ka r EE EE TOERE howd boa danas E E EEA 292 Letters eseo ed e bea ee e ee Bo ee ae a a E eg OG Bos 301 Amoran s res aia nace abide eE EAE EEE E Bae ends BPG toe dpe wine Sea ee Roce ee eb ed 306 EIN Database acre castes a ce cicn as chee E a ete E ohne ai isan Shas aa eee aL N E eau anes 307 Install State Proprainis lt 0 0 6 5 4 i260 2280 o Oooo 4a RIMM a dhe woh
199. Add Preparer to Security Group Add preparer to a pre established security group See Setting Up Group Security following Front Office Scheduling Only Employee can access the Scheduler only Administrator Full ADMIN Rights Employee can access all parts of the program including administrative only features 24 Tax Year 2012 Drake Software User s Manual Software Setup it RemoveRights Setting Up Group Security Add Group Tax Year 2012 To remove security rights from all preparers other than administrative users go to Setup gt Preparers and click Remove Rights To remove rights for an individual employee set that person s security to Allow No Options Only an administrative user can apply security settings to a group of preparers You can create as many security groups as needed but a preparer can belong to only one security group at a time You cannot assign a preparer to more than one security group If you NOTE try to do this the preparer is removed from his or her current group and added to the new one To apply group security 1 2 From the Drake Home window go to Setup gt Preparers Click Group Security to open the Group Security dialog box Three security levels listed below and shown in Figure 2 6 are available by default If preparer data is brought forward from last year and there are preparers with any of these security levels they are automatically added to the appr
200. Colors Select screen colors for the calendar Establishing The Scheduler allows you to view at a glance the planned daily schedules of selected Daily preparers including the times they are scheduled to be in the office Schedules To establish a preparer s daily schedule in the Scheduler Tax Year 2012 87 Scheduler Drake Software User s Manual 1 Click Setup The Scheduler Setup dialog box is displayed ra 2 Select a preparer from the Open setup schedule for drop list The Setup Sched up ule dialog box Figure 4 11 is opened for the selected preparer Drake 2012 Setup Schedule dood i Preparer Schedule Setup Select a day s then the times When the schedule has been set for the selected day s click Apply to save the information to the schedule grid below Continue to set schedule day and time combinations Click Save to save dood s schedule and exit the screen Standard Schedule Detail Schedule Set un Times 1 Select day s V Mon M Tues M Wed M Thus M Fri ar 8 00AM v In 1 00PM Nn ww in Out 12 00PM v Out 5 00PM Out v Out X Standard Schedule n Dut n 8 00AM 12 00PM 1 00 PM Tuesday 8 00AM 12 00 PM 1 00 PM Wednesday 8 004M 12 00 PM 1 00 PM Thursday 8 00 4M 12 00 PM 1 00 PM Friday 8 004M 12 00PM 1 00 PM Clear All Save Cancel Figure 4 11 Setup Scheduler dialog box for a p
201. Conversions Choose a tax year and a brand of software Read the instructions available for downloading and printing before running the conversion From the Drake Support site select Training Tools gt Publications to download some commonly accessed IRS publications At the bottom of the publications list is a Search 1040 com for more publications link which takes you to the 1040 com web site From this site you can search for federal and state tax forms instructions and news get tax tips download tax tables find federal tax estimators and financial calcu lators and get information all professional tax preparers need Advertise your business using the newspaper ads posters banners and radio spots available at the Drake Support site Select Training Tools gt Marketing Kits to access and order these resources visit links to other marketing resources and pick up free marketing kits from the IRS From the sidebar menu click Partner Programs to access information on Drake s partner companies that provide solutions for banking forms and checks budgeting business planning Internet services and electronic tax payments Drake clients have exclusive use of the Business Planning Group BPG This group consists of retirement specialists advanced underwriters and attorneys who can help your firm assist your clients in minimizing tax on Social Security benefits estate tax planning and reduction retirement planning and business c
202. Corp Fiduciary Part nership Tax Exempt Estate or Heir See Figure 11 8 on page 299 4 Click Continue 298 Tax Year 2012 Drake Software User s Manual File Maintenance Estate and Qualified Heir Returns 5 When the conversion is complete click OK You can use a single SSN for two return types when a taxpayer requires a Form 1040 and one of the two return types listed below e Form 706 U S Estate and Generation Skipping Transfer Tax Return e Form 706 A U S Additional Estate Tax Return An SSN must already be associated with a return in the software before it can be assigned to a second return type To assign a single SSN to multiple returns 1 From the Home window select Tools gt File Maintenance gt Change File Type to open the Convert Client Data File Type dialog box 2 Inthe Enter SSN EIN to convert field enter the SSN to be assigned to a new return type and click Continue 3 The available return types are displayed In Figure 11 8 the selected return is a 1040 so that option is disabled Note that the 706 and 706 A options are in the right hand column Drake 2012 Convert Client Data File Type This will allow you to convert a client data file from one type of return to another The following data converts name address fiscal year all depreciation screens 6 7 8 9 and 10 In addition corporation and sub s corporation conversions converts the balance sheet and Schedule A informat
203. Cvoice go to the ABCV screen to indicate whether the tax payer has signed the Consent to Disclosure of Tax Return Information To build lists containing contact information for your clients From the online EF database toolbar click Tools Click Generate Contact List Enter report criteria by selecting or clearing the check boxes To further restrict the results enter start and end dates to search Click Run Report optional To export the report into a spreadsheet click Download You are asked whether you want to open or save the file Click Open or Save as desired If you click Open you will have another opportunity to save the report from within Excel 2 SP eS Multi Office Manager MOM Tax Year 2012 The Multi Office Manager MOM is the online version of the Client Status Manager CSM See Chapter 9 Client Status Manager Designed for the multi office envi ronment MOM allows you to track workflow of multiple offices providing a snap shot of your entire business Reports and statistics on demographics return status return type bank payments fees and billing information are available 245 Online EF Database Drake Software User s Manual Transferring For CSM data to be transferred to MOM the software must be configured to send Data to MOM CSM data to Drake during the e filing process Each Level 1 and Level 2 EFIN office in a multi office environment must complete the following steps 1 From
204. DCN counter Once your network has been mapped and Drake is installed on a server complete the following steps at each workstation 1 Click Start gt Run Windows 7 users Click the Office button The Windows Start and Office buttons are located at the lower left corner of your screen 2 Type F DRAKE12 NWCLIENT NWCLIENT EXE substituting your server drive letter for F 3 Click OK Windows 7 users Press ENTER 4 Click OK The server only system is now in place Once this process has been completed at each workstation that will be using Drake you will be able to access the Drake program from any of these workstations By default all workstation use the configurations for letters pricing firms preparers etc as set up on the server To use configurations set up elsewhere for instance on each individual workstation 1 From the Home window in Drake go to Setup gt Data Locations 2 Inthe Network Setup section of the Data Locations dialog box Figure 2 3 on page 16 choose the drive where you ve made the configuration settings from the Share settings letters pricing drop list 3 Click OK By default all prior year files are stored on the server To access prior year files stored elsewhere 1 From the Home window in Drake go to Setup gt Data Locations 2 In the Location of client folders section of the Data Locations dialog box Figure 2 3 on page 16
205. DOT meals subject to 80 limit field Figure 5 32 Na Pathe oNs trans portetOne mc ee er A A Travel ara Fom home an 3a 4a Other business expense Meals entertainment enue has ERN DOT meals subject to 80 limit 09 2 2 tS De at en Re OA a ll hea Figure 5 32 On the 2106 screen use both the Meals entertainment and DOT meals subject to 80 limit fields as appropriate 134 Tax Year 2012 Drake Software User s Manual Health Savings Account HSA Deduction Multiple 2106 Forms If 2106 screens are established for both taxpayer and spouse the primary taxpayer s 2106 screen must be entered first because the taxpayer is listed first on the return or the return will receive a reject code after it is transmitted Clergy Expenses If the taxpayer is a member of the clergy mark the Pastor check box located near the bottom of the right hand column of the 2106 screen The program carries the employee business expenses to the clergy worksheets WK_ CLGY1 WK_CLGY72 when the return is generated See Ministerial Income Allocation on page 140 for more on data entry for clergy Directing Data Entry to Form 2106 To associate the data from a 2106 screen to that of another screen such as the 4562 screen for depreciation select 2106 from the For drop list at the top of the other screen Use the Multi form code field as needed See Associating One Screen with Another
206. Data Entry Menu and data entry screens you re familiar with to set up the various scenar ios For more information see Tax Planner on page 353 Drake s Document Manager Doc Mar NOTE Instructions in this chapter will apply to both the Working Cabinet and the Archive Cabinet unless otherwise noted Use the Document Manager to store and organize electronic documents such as PDF copies of tax returns scanned Forms 8879 and 1099 B and scanned copies of driver s licenses Social Security cards and other forms of ID Think of the Document Man ager s file structure as a virtual filing cabinet where files are saved within folders Use the Document Manager to e Store your clients documents Scanned documents and copies of your clients returns are stored in electronic folders e Copy files to CD Copy Document Manager files directly to a CD e Password protect Protect your clients documents with passwords e Assemble documents sent to GruntWorx See GruntWorx on page 357 for more information on this product e Access SecureFilePro See SecureFilePro on page 362 for more informa tion of this product Document Manager makes storing and moving documents easy e When you create a new return in Drake a corresponding folder is opened in the Document Manager e When you archive a return in View mode of the tax software a copy of the archived return is automatically sa
207. EST 1063 CAESAR TEST amp CLEO 1015 P Camden Calhoun amp Caroline 5432 CANASTA JOE 4802 CANASTA JOE 4802 CANASTA JOE 4810 CANASTA JOE 4810 4B Cann Mary 3333 CARE LONG amp SPOUSE 2492 Carter AMELIA amp William 3243 H 9 Carter Scott 5008 i Carter Wiliam amp Amel 6665 Document pane showing F defaut files in selected folder m Selected folder PAE L V OON T T iaaa At ee N ee a Figure 13 4 Part of the Document Manager interface Folders are listed alphabetically on the left side of the window Figure 13 4 based on the individual clients last names or the business clients first names Subfolders are stored within each client s folder Click to expand a portion of the tree click to collapse it Or with a folder selected press the or keys on the numbers pad of your keyboard Click to open a folder to view a list of its files In the document pane the Document Manager displays document names types dates modified descriptions and status Click column headers to sort by columns Like other Drake windows the Document Manager has a menu bar and a toolbar If a shortcut key such as F1 for help exists for a menu item it is listed to the right of the menu item You can also access toolbar selections from the menu bar Each toolbar button activates a different function To find a particular folder in the Document
208. Flag Fields for Review dialog box 4 Click a package button The Flag Fields for Review window for that package is opened Note that this window resembles the Data Entry Menu Select a screen to open it o 6 Choose one ofthe following options e Flag a field for a screen Click the fields to flag The field is flagged with the word Screen e Flag a field for all new returns Right click a field and select Flag For Review When Return is Created The field is flagged with the word Return as shown in the example in Figure 3 18 on page 72 Tax Year 2012 71 Data Entry Drake Software User s Manual State information Figure 3 18 Field has been flagged for all new returns NOTE Click a field a second time to remove the flag 7 Return to Setup gt Options Press ESC to exit each window press ESC again to exit the Flag Fields for Review window and then click Exit 8 Click OK Override amp By default fields that allow overrides are preceded by an equal sign and display Adjustment red text Data entered in these fields replaces or overrides program calculations Fields Direct entry field Override field Adjustment field Figure 3 19 Direct entry override and adjustment fields Fields that allow adjustments are preceded by a plus minus sign and display blue text by default Data in these fields adjust program calculations by the amount entered A positive number increases the
209. Form amp Schedule Option Description Print Schedule A only when required Produce Schedule A only when taxpayer qualifies to itemize Print Schedule B only when required Produce Schedule B only when taxpayer has enough interest income to require filing Schedule B Print Form 4562 only when required Produce Form 4562 Depreciation and Amortization only when the tax return requires it Print Form 6251 only when required Produce Form 6251 Alternative Minimum Tax only when the tax return requires it Next year depreciation schedule Select this option to produce a depreciation schedule for next year in addition to the one for this year W 2 1099 R forms Produce and display in View mode all W 2 forms with the return Tax Year 2012 29 Software Setup Option Print two W 2 1099 Rs per page Drake Software User s Manual Table 2 7 Options Setup Form amp Schedule Description If return has more than one W 2 or 1099 R form print two per page Carryover worksheet Produce any carryover worksheets associated with the return Print page 2 of Schedule K 1 Produce page 2 of Schedule K 1 for Forms 1120S 1065 and 1041 Form 8879 bank account options Select bank account printing options on Form 8879 1040A EZ suppress Automatically suppress Form 1040A or 1040EZ Form 1045 page 2 NOL Automatically produce Form 1045 page 2 if the return ha
210. Form 4506 Request for Copy of Tax Return To request a transcript of a tax return use Form 4506 T available in Drake at Tools gt Blank Forms or call 800 829 1040 8857 Form 8857 Request for Innocent Spouse Relief If question 3 on this screen is answered Yes do not file Form 8857 File Form 8379 instead For question 23 use the SCH screen code 209 to submit information about assets 9465 Form 9465 Installment Agreement Request Form 9465 is e filable if the taxpayer uses direct debit to pay Otherwise this form must be paper filed If e filing a PIN is required indicate Form 9465 and enter prior year AGI on the PIN screen W7 Form W 7 Application for IRS Individual Tax payer Identification Number ITIN This form is not e filable Statements and Claims Table 5 22 lists additional screens for statement and claim forms Table 5 22 Statement and Claim Forms Available from Other Forms Tab in Drake Screen Form Notes 2120 Form 2120 Multiple Support Declaration The rules for multiple support agreements still 8332 Form 8332 Release of Claim to Exemption for apply to claiming an exemption for a qualifying rela Child of Divorced or Separated Parents tive but they no longer apply to claiming an exemp tion for a qualifying child For the definitions of qualifying relative and qualifying child see your tax return instruction booklet 1310 Form 1310 Statement
211. If however a return has a less common foreign income factor such as a carryover you must enter that data on screen 1116 You can associate the DIV and INT screens with an 1116 screen so that the generated Form 1116 incorporates the applicable data from all applicable screens To associate the Foreign Tax Credit information in a DIV or INT screen to an 1116 screen 1 Complete the Form 1116 FTC Information section of the DIV or INT screen See Figure 5 13 Enter a number into the FTC field of this section See Figure 5 13 Open the 1116 screen to be associated with the DIV or INT screen 4 Type the FTC number from Step 2 into the FTC field Figure 5 14 ON Form 1116 Foreign Tax cami TSJ x 4 Resident counttry Part Taxable Income Loss from O Figure 5 14 FTC field at top of 1116 screen The program uses this FTC number to associate the 1116 screen with the other screens and calculate the correct information for Form 1116 By default Form 1116 is generated with the return if any data is entered into the Form 1116 FTC Information fields If these fields include data but a Form 1116 is not Tax Year 2012 Drake Software User s Manual Taxable Refunds required and you don t want one generated select 1116 NOT required See Figure 5 13 on page 108 to view the check box as it appears on the DIV screen For more on Form 1116 in Drake see General Business Credits on pa
212. If this fax is concerning a prior year Drake Program Year program what year Give us a brief description of the situation Tax Year 2012 285 Fax Cover Letter for Support Drake Software User s Manual This page intentionally left blank 286 Tax Year 2012 1 1 Tools This chapter covers the various tools available on the Tools menu of the software and online at DrakeSupport com Update Manager Regular updates to the program are critical to ensure that your software is performing efficiently The program will alert you when updates to the program are available see Notification of Updates on page 289 or you can use the Update Manager to obtain and install files manually or automatically Updates include modifications to both the federal and state packages to reflect the most recent changes in the tax law Program updates include updates to the Document Manager s Work ing Cabinet but not to the Archive Cabinet For details on backing NOTES up and restoring the Archive Cabinet see Backing Up Restoring and Updating the Archive Cabinet on page 344 If the system finds updates are available you will be alerted to update your software Downloading and Installing Updates Manually To download and install updates manually 1 From the Home window select Tools gt Update Manager The Update Man ager dialog box is displayed Figure 11 1 on page 288 Updates are shown in tabbed format with tabs r
213. In the Check Print Options dialog box the check number displayed should match the number on the next check to be printed If it doesn t see Resetting Check Numbers on page 223 Procedures Required post season procedures vary from bank to bank Refer to your bank s operat ing procedures to determine the proper method of storing or returning taxpayer bank applications and the proper handling of excess check stock If your office is closing for any extended period between April and October notify Drake and your bank so the bank can print any late checks if the service is available 225 Troubleshooting Check Printing Drake Software User s Manual This page intentionally left blank 226 Tax Year 2012 8 e File This chapter provides an overview of the e filing process and outlines procedures for Setting up an e filing account Testing your e filing system e Filing federal and state tax returns Reading acknowledgment codes Using the EF database and online EF database Drake tax software incorporates IRS regulations where feasible to ensure that returns are e filed correctly however as a tax preparer you should be well versed in the IRS rules and processes Before tax season begins all tax preparers should Read relevant IRS publications IRS Pubs 1345 and 1346 have information on the processes laws regulations and specifications for e filing tax returns Register for a PTIN New preparer regulations re
214. Income Averaging for Farmers and Fishermen e Form 4835 Farm Rental Income and Expenses Enter crop insurance and disaster payments for Schedule F and Form NOTES 4835 on the Crop Insurance and Disaster Payments CIDP screen The Auto Expense Worksheet AUTO screen can be applied to the F and 4835 screens See Auto Expenses on page 171 Schedule F Profit or Loss From Farming Screen code F Use screen F accessible from the Income tab to enter data for Schedule F Profit or Loss From Farming Screen F The program s default accounting method item C is cash Select Accrual if the tax Defaults payer s accounting method is not cash The default position for material participation item E is that the taxpayer materi ally participated in the current year If the taxpayer did not materially participate select Did NOT materially participate option 130 Tax Year 2012 Drake Software User s Manual Unemployment Compensation The default position for investments in Part II Expenses is that all investments are at risk If this is not true for your client select Some investment is NOT at risk 1099 PATR Enter the distribution amount from Form 1099 PATR Taxable Distributions Received from Cooperatives in the Co op total distributions field on screen F Form 4835 Farm Rental Income and Expenses Screen code 4835 Use screen 4835 to enter data for Form 4835 Farm Rental Income and Expenses Note that this form is fo
215. MT Cost Basis fields on screen 8949 Ifthe U S Real Property sold by a nonresident box is marked the program might have to do a special calculation for line 30 of Form 6251 AMT Individuals see Form 6251 instructions for more information Amount of gain or loss subject Enter amount of gain or loss subject to 28 rate e State Use Only Check with your state for required codes Screen D2 has fields for short term gains losses from other sources long term gains losses from other sources loss carryovers from the prior year capital gain tax compu tation and federal withholding If Drake was used for the taxpayer last year the gains losses and carryover fields are updated automatically If amounts to be entered on screen D2 differ due to AMT enter them under the AMT if Different column For information on override fields press F1 in a selected field Schedule D Imports Create a Worksheet Tax Year 2012 Use the Schedule D Import tool to import capital gain and loss transaction data from an Excel or other worksheet into Drake Before you can use this feature you must have a worksheet containing the transaction data This worksheet should be saved as a Microsoft Excel TAB or CSV file with each column labeled in order for a field on screen 8949 Suggested labels are shown in Table 5 2 on page 114 Columns must be in the same order as the fields on screen 8949 When looking at Table 5 2 which shows th
216. Manager enter part of the name in the Find text box and click Find The file location is highlighted in the tree Figure 13 5 on page 336 335 Setting up Your Document Manager Drake Software User s Manual Carter H CADEN TEST 1063 H CAESAR TEST amp CLEO 1015 4 Calhoun Cedric amp Alaka Ol 6700 6 Camden Calhoun amp Caroline 5432 H CANASTA JOE 4802 H 9 CANASTA JOE 4802 6 CANASTA JOE 4810 4 CANASTA JOE 4810 H Cann Mary 3333 H CARE LONG amp SPOUSE 2492 oe H 9 Carter Scott 5008 Figure 13 5 Click Find to locate files that match a search term To find the next instance of the search term click Find again Repeat as needed until you find the folder you are looking for NEW FOR Click Hide Figure 13 5 to hide all folders except the one you were 7017 searching for Click Show to restore the complete list Click Refresh to refresh the screen Adding More subfolders can be added to the Drake integrated file structure To create addi Individual tional subfolders to the Working Cabinet for individual client folders Subfolders 1 Highlight the folder in the tree that will contain the new subfolder a 2 Click New Folder New Folder 3 Enter a folder name in the New Folder dialog box 4 Click OK The new subfolder appears in the left pane Repeat these steps as needed to create more subfolders Delete subfolders by selecting them right clicking
217. Maryland 1099G PG Certain Government Payments Maine 1099R PG Distributions from Pensions Michigan 1099R PG2 Distributions from Pensions Annuities etc F aa 1116 PG Foreign Tax Credit Tucson 1116 PG2 Foreign Tax Credit X Port Huron Help Search Figure 11 3 Blank Forms window oN Scroll through the form list to locate a form A Select a form and click View or Print Pick a form category default is Federal and tax package default is Individual NOTE Repair Index Files IRS Rev Proc 96 48 requires the Paperwork Reduction Act Notice to be distributed with federal forms When providing a blank copy of a federal form you must include a copy of the notice Access it from Tools gt Blank Forms gt Federal Under Individual select PAPERWRK PG An index file is a comprehensive list of data on the client files in Drake Keep index files current by repairing them regularly as part of your general file maintenance rou tine Table 11 1 lists specific instances that could require repair of index files Table 11 1 Situations that Might Require Repairing of Index Files What To Situation Repair Files were restored using Tools gt File Maintenance gt Restore Name Index A client record was deleted through Tools gt File Maintenance gt Delete Name Index Client Files The EF gt Search EF Database function does not seem to work properly EF Index Records were added to the EIN database
218. N Tapaers rame WILLIAM CARTER Sporse s rame Figure 8 5 DCN on Form 8879 in View mode Once the DCN has been changed the return can be re transmitted Imperfect Returns Two common error codes listed below for IRS rejection of 1040 returns relate to name and SSN mismatches on either Form 1040 or Schedule EIC Error Code 0501 A dependent s SSN or name on Schedule EIC does not match the SSN or name in the IRS master file Error Code 0504 A dependent s SSN or name on Form 1040 does not match the SSN or name on the IRS master file The IRS wi ll accept such returns with these error codes as imperfect returns but you must set up the program for e filing them To set up your program 1 From the Home window go to Setup gt Options EF tab 2 Select Activate imperfect return election in data entry To e file an imperfect return 1 Open the return and go to the EF screen in data entry 2 Under Additional Options select Imperfect return election 3 Calculate the return When you view the return Drake displays a NOTES page indicating the return is imperfect When you e file the return the IRS will accept it provided there are no other unrelated issues but with an E ack Processing of an imperfect return can take up to six weeks NOTES Because IRS acceptance is not guaranteed for an imperfect return no bank products can be e filed wi
219. N income tax returns this year This requirement also applies to preparers located in other states who expect to prepare more than 10 MN individual income tax returns for the current year Do not include in the 10 return threshold returns prepared for busi nesses property tax refund returns amended income tax returns or returns filed with other states State law M S 289A 08 subd 16 requires tax preparers who are required to e file MN individual income tax returns to pay a 5 fee for each original Form M1 that is filed on paper that could have been e filed The fee will be waived only if the IRS or the department requires the federal or MN return to be filed on paper E 3 Nebraska New Jersey New Mexico E 4 New York New York City Ohio Drake Software User s Manual For purposes of this law the business entity as a whole is the preparer If the busi ness employs individuals to prepare returns the total number of returns prepared by all employees in the business count toward the 10 return threshold Likewise if the business operates from multiple locations the total of returns prepared by all locations count toward the threshold Effective Jan 1 2010 any paid preparer who prepares and files more than 25 individ ual income tax returns annually must file the returns electronically Practitioners who prepared 11 or more NJ resident income tax returns must file their clients returns via one of the state
220. NOTES default If updating Pricing setup you will be prompted to enter a percentage increase to apply per item per form or both and the option to round to the nearest dollar 4 Click Continue and then Confirm the selections to start the update process 5 Click Exit when the status for each item is displayed as Completed Organizers and Proformas 80 Available for the 1040 package organizers help clients prepare for their tax appoint ments Many organizer sheets feature two column layouts with one column contain ing prior year data and the other intended for current year data Figure 4 4 on page 81 NEW FOR Organizers can now be sent directly to the Drake Document Manager or to your SecureFilePro portal For details see Printing Organizers 2017 and Proformas for Clients on page 82 For more on the Document Manager and SecureFilePro see Chapter 13 Suite Products Tax Year 2012 Drake Software User s Manual Organizers and Proformas Name William Carter ON FILE Federal Company TS I D No Name Re Loum ooo O lD No 1111111 Federaiwages ama fats aa2s3 reens an lonj aaza g NC State wages 2012 zon 13253 sitet 202 20m 1234 Locality 2012 on toca pow 4 Figure 4 4 Sample of Wages and Salaries page from an organizer Available for individual and business packages proformas have numbered fields cor responding to the fields on Drake data entry screens Figure 4 5 Profor
221. NT enter an amount in the Home mortgage interest and points reported on Form 1098 field on screen A Form 1098 C Enter amounts from Form 1098 C Contribution of Motor Vehicles Boats amp Air planes on either screen A if less than 500 or screen 8283 if more than 500 Additional Itemized Deductions Screen codes Use the 4952 screen to enter data for Form 4952 Investment Interest Expense Deduc 4952 8283 tion Use the 8283 screen to enter data for Form 8283 Noncash Charitable Contribu tions Calculations from the 8283 screen flow to the Gifts by cash or check line of Schedule A There is also a direct entry field for this line on screen A Do not enter duplicate amounts NOTE When a Donee ID number is entered on the 8283 screen the program automatically stores the number in the EIN database Alternative Minimum Tax Screen code 6251 Use the 6251 screen accessible from the Taxes tab to enter information for Form 6251 Alternative Minimum Tax Forcing Form 6251 Although Form 6251 amounts are computed on all returns the form itself is generated with a return only when required You can force this form to be generated for a single return or you can force it to be generated with all returns Fora Single To force Form 6251 for a single return go to the PRNT screen of the return and select Return the Print 6251 box in the Items to Print section of the screen For All To have the program print Form 6251 for all returns
222. OSPITAL INC 9 Under Review 10 23 1922 08 20 2012 RESIDENT APPORTIONMENT Updated From 2011 10 60 2015 Appointments amsema On TEST Partnership TWO In Progress 30 60 2020 In Progress 30 60 2020 Updated From 2011 80 61 2022 McCrae Augustus Partners in Grime Clean Seay s Trucking and Shi Test Exempt My Fiduciary In Progress 60 61 2023 4 FIDUCIARY COMPLEX TRUST FP 31 1041 Updated From 2011 10 61 2026 TEST MFG PARTNERSHIP THREE 1065 In Progress 10 61 2027 PARTNERSHIP FOR A FREER AMER 1085 Updated From 2011 20 61 2031 NJ TEST FIDUCIARY In Progress 12 08 2011 60 61 2032 TEST KANSAS PARTNERSHIP In Progress 10 61 2035 TEST S CORPORATION ONE Updated From 2011 90 61 2035 TEST CORPORATION ONE Updated From 2011 60 61 2046 eres DC20CR corp In Progress 60 61 2047 Notifications DC204G Corp In Progress 60 61 2047 CONNECTICUT CORPORATION 1120 Undated From 2011 10 61 2054 m Update status Updates needed Get Updates 12 19 2012 Appointment Reminders are off fem AON 6 Version P2 1 2 2013 0 DriveC Windows7 Figure 3 2 Drake Home window Tax Year 2012 Drake Software User s Manual General Navigation Personal Client Manager The Personal Client Manager PCM allows a logged in preparer to manage client returns more easily by providing a personalized version of the Client Status Manager CSM Client records can be sorted by name return type status date the return was started or completed dat
223. Only installed states are updated 5 To remove any states from the Installation pane highlight the state in the Instal lation pane and click Unselect or Unselect All 6 To remove any state program from Drake click Uninstall State s and from the Remove States dialog box select the states currently installed click Select or Select All and click Uninstall Tip Check for updates Tools gt Update Manager after installing state pro grams to ensure that you have the most up to date information Repairing State Program Files Scheduler 308 If the state program files on your computer or server are more recent than the state program files most recently installed the current files will not be replaced If you must overwrite the current state files contact Drake Support or click the Help button of the Install State Programs dialog box for more information The Scheduler tool is used for scheduling and maintaining client appointments For information on using this tool see Scheduler on page 85 Tax Year 2012 Drake Software User s Manual Forms Based Data Entry Tax Rates for Ohio and Pennsylvania Cities About PA Cities Use the City Tax Rate Editor to edit and add tax rates credits and addresses to be used when creating city returns for the states of Ohio and Pennsylvania Always verify tax rates as they are subject to change To view and edit city tax details for these states 1 From the Home window go
224. Open to open data entry screens to set up various sce narios or to open the client s original return Remove Select a scenario from the scenario pane and click Remove to delete the scenario Compare Click Compare select up to three scenarios and click Com pare again to compare the chosen scenarios to the client s cur rent tax situation based on the original return Help Click Help to get explanations and direction for using the plan ner Exit Click Exit to close the planner and return to Drake data entry Working in the Tax Planner The first step in working with the Tax Planner is to create various scenarios After you ve created the scenarios you make changes to the scenarios such as in marital status number of dependents amount of income etc then compare them to tax payer s original return to see what effect the projected changes would make to the tax payer s current financial and tax situation Creating To begin creating scenarios to compare to the original return follow these steps Scenarios 1 Open a client s return in Drake 2 Click the Tax Planner button on the Data Entry Menu toolbar to open the Tax a Planner dialog box Click New from the Tax Planner toolbar and choose a tax year Figure 13 16 o 4 Inthe Tax Planner Creation window enter a name for the scenario and click OK Create as many scenarios as you wish Drake 2012 Tax Planner x SO f 0O fi Open R
225. Other Forms tab Table 5 23 Other Forms Available from Other Forms Tab in Drake Screen Form Notes W4 Form W 4 Employee s Withholding Allowance Cer tificate 56 Form 56 Notice Concerning Fiduciary Relationship PIN and prior year AGI required enter this data and indicate Form 56 on the PIN screen 982 Form 982 Reduction of Tax Attributes Due to Dis charge of Indebtedness 8815 Form 8815 Exclusion of Interest from Series EE and U S Savings Bonds Issued After 1989 8822 Form 8822 Change of Address This form is not e filable 8866 Form 8866 Interest Computation Under the Look Back Method 9022 Form 90 22 1 Report of Foreign Accounts See Report of Foreign Accounts following Report of Use screen 9022 to complete Form T D 90 22 1 Report on Foreign Bank and Finan Foreign Accounts 180 Use a separate 9022 screen for eac cial Accounts The 9022 screen consists of four sections Filer Information Complete once for each filer reporting a foreign account h account If necessary select either T or S at the top of the screen to indicate which filer should report the account default is T Once a filer s data is entered on a 9022 screen this section can be left blank in subsequent 9022 screens for that filer Choose one of the boxes at the top For Parts II II IV V Complete this section for each 9022 screen used of this section to indicate the nature of the acc
226. RAs 120 rounding amounts 31 royalties 121 S S corporations changing from C corps 298 sale of residence 117 sales tax 191 saving previously prepared returns 207 scanners 12 334 341 348 349 scanning 2D barcode 105 DDM files 348 Schedule A Itemized Deductions and application for tentative refund 174 depreciation schedules for 165 entering data for 140 141 printing 29 53 Schedule B Interest and Ordinary Dividends entering data for 105 107 order of items listed on 29 printing 29 53 Schedule C Profit or Loss From Business applying expenses to 171 172 depreciation schedules for 165 e filing 111 entering data for 109 111 for clergy 140 for statutory employees 103 foreign income on 134 Schedule C EZ Net Profit From Business 111 Schedule D Capital Gains and Losses entering AMT cost basis on 113 entering data for 112 367 importing data from spreadsheet 113 Tax Year 2012 Drake Software User s Manual sale of home 118 Schedule E Supplemental Income and Loss activity types 122 124 applying expenses to 171 depreciation schedules for 165 entering data for 121 124 using for farm income amp expenses Form 1041 131 Schedule F Profit or Loss From Farming applying expenses to 171 172 depreciation schedules for 165 entering data for 130 131 Schedule H Household Employment Taxes 148 Schedule J Income Averaging for Farmers and Fishermen 130 Schedule K 1 Share of Income Deductions Credits etc
227. RL END Move to first field on the screen CTRL HOME Bring up additional data entry screens W2 PAGE DOWN 1099 etc Return to previous screen or exit Esc Go to the first position in a data entry field HOME Go to the last position in a data entry field END xiii Shortcut Keys Drake Software User s Manual Table Q 2 Navigating Through Data Entry Screens Desired Action Keyboard Keys Navigate up and down a data entry screen CTRL UP ARROW or CTRL DOWN ARROW V Access View mode CTRL V Access Print mode CTRL P Access data entry from View or Print mode CTRL E Access an action menu Right click in field Right click in gray area Table Q 3 Data Entry Shortcut Keys Desired Action Keyboard Keys For field help during data entry or to verify a Social F1 or SHIFT Security Number Insert today s date in any date field ALT D Calculate a return CTRL C View a return CTRL V Print a return CTRL P Return to data entry from view or print mode CTRL E Split MFJ return to MFS return CTRL S Open a Detailed Worksheet Access Form 4562 Double click CTRL W or from the Depreciation field Right click gt Add Worksheet View preparer notes CTRL R Enter the Preparer note pad PAD screen CTRL SHIFT N Increase Declaration Control Number DCN CTRL M Toggle heads down and standard data entry CTRL N Delete a data entry screen CTRL D Carry data to
228. Scanning a File on page 348 Working Cabinet Window kel Doc Mar Navigating Searching Tax Year 2012 The Document Manager Working Cabinet window consists of the folder tree on the left side a list of files contained within the selected folder on the right and a menu bar and toolbar at the top Figure 13 4 I Drake Document Manager Working Cabinet Menu bar n File Setup Documents Help cE EBE R R a A New Folder Archive GruntWorx File Copy Cut Paste Portal Import LinkFile Scan E mail Drag Off Help Exit Toolbar Document Name Type Last Modified Description Retesh _ 1099s pd File 5 15 2012 3 11 49 PM Right click and go to Properties to er 1900 Bs pdf File 10 3 2012 9 11 17 AM Received from client 1 3 13 2012 Organizer pdf File 11 1 2012 9 07 49 AM Right click and go to Properties to e Appendix D Symbols doc Linked doc File 8 15 2012 11 44 34 AM Firm information2 pdf Linked pdf File 11 2 2012 8 48 56 AM Right click and go to Properties to e Letter to Client DOC File 11 2 2012 8 58 46 AM Right click and go to Properties to e Schedule D Import TXT File 10 29 2012 11 53 23 AM Third Test File 10 13 112 dat Linked dat File 11 2 2012 8 51 08 AM Right click and go to Properties to e W2s p File 11 20 2012 1 21 44 PM _ Right click and go to Properties to e H 9 CADEN TEST 0256 a H 9 CADEN TEST 1023 CADEN TEST 1023 CADEN T
229. Trusts 8820 Form 8820 Orphan Drug Credit 8826 8834 Form 8826 Disabled Access Credit Form 8834 Qualified Electric Vehicle Credit 8835 Form 8835 Renewable Electricity Refined Coal and Indian Coal Production Credit 8839 Form 8839 Qualified Adoption Expenses 8844 Form 8844 Empowerment Zone and Renewal Community Employment Credit 8845 Form 8845 Indian Employment Credit 8846 Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips 146 Tax Year 2012 Drake Software User s Manual Additional Tax on Qualified Plans etc Table 5 8 Other Credits Calculated in Drake Screen Form and Credit 8859 Form 8859 D C First Time Homebuyer Credit This credit expired in 2009 The 8859 screen in Drake contains TSJ and carryforward fields only 8864 Form 8864 Bio diesel and Renewable Diesel Fuels Credit 8874 Form 8874 New Markets Credit 8881 Form 8881 Credit for Small Employer Pension Plan Startup Costs 8882 Form 8882 Credit for Employer Provided Childcare Facilities and Services 8885 Form 8885 Health Coverage Tax Credit 8896 Form 8896 Low Sulfur Diesel Fuel Production Credit 8907 Form 8907 Nonconventional Source Fuel Credit 8908 Form 8908 Energy Efficient Home Credit 8909 Form 8909 Energy Efficient Appliance Credit 8910 Form 8910 Alternative Motor Vehicle Credit 8911 Form 8911 Alternat
230. User s Manual business 110 city 73 error in e filing 230 ES estimate 151 extension form 176 filing status 97 form 66 FTC foreign tax credit 142 investment credit 168 miscellaneous 187 multi form MFC 73 non paid preparer 20 OP overpayment 153 proforma 81 reject 240 searching 110 special processing 98 ST state 73 tax treatment 110 TS TSJ 73 underpayment 154 unformatted schedule 189 colors in data entry 46 in view print mode basic and enhanced 205 combat zone 98 community property allocation 139 comparing current to prior year 30 network options 16 two versions of a return 186 configuring colors in basic mode 205 DDM 333 Consent to Use and Disclosure of Tax Return Information IRS Reg 7216 22 209 212 contact lists 245 conversions 272 copying DDM files 337 344 EF data 247 coversheets 30 CPE credits 265 creating see also opening amended returns 175 appointment reports 95 archived returns 207 CSM reports 255 EF reports 241 ETC accounts 262 filters 322 key combinations 38 macros 38 Tax Year 2012 Index miscellaneous codes 34 35 preparer schedules 87 reports 315 returns 65 credit card as electronic payment option 160 credits see also individual credit and form names child and dependent care 142 child tax 146 elderly disabled 143 foreign tax 142 home energy 143 homebuyer 117 118 158 retirement savings contributions 146 crop income for Form 1041 131 insurance 141 CSM
231. a reference where applicable on the printed return Figure 5 66 on page 190 189 Binary Attachments Drake Software User s Manual ding and closing inventory ras are esse ways Yes No xplanation 400 000 E ara ee 1 000 ath in Daltile 20 tee T gO en AO mane Figure 5 66 The attached explanation see item c is Statement 1 Even if you have not created a required statement yet the program prints a reference to the statement For example in Figure 5 66 the Statement 1 label is triggered by marking Other for item c of Part III on screen C not by creating the statement on the SCH screen View a created statement by clicking the STATMENT label in View mode Return Tracking Screen codes ADMN ESUM 190 Use the Administrative Tracking ADMN and EF Summary ESUM screens to track the progress of each return The ADMN screen shows at a glance who did the work who reviewed it and how much time was spent on the return It also shows bank product information The ESUM screen provides an e file summary of the return You can also review e filing and bank product information Use the ADMIN screen to track the data shown in Table 5 26 Table 5 26 ADMN and ESUM Screen Information Type of Information Description Fee and Payments ADMN Amounts are updated from prior year First came in interview ADMN Used in timed billing optional feature Preparer Contribution
232. a return with an archived version Drake recommends that you preserve the existing client data before restoring an older version of a return A built in prompt will suggest that you archive the latest version of a return before restoring an older version To restore an archive 2 3 4 From View mode of the return select Archive gt Archive Manager Click the row of the archive to restore Click Restore A program prompt suggests that you create a new archive of the current version of the return before restoring the older version e To create a new archive click Yes The Archive Client Return dialog box is opened so you can name and save the new archive e To proceed without creating a new archive click No A final warning is dis played click OK to proceed When the archive has been created click OK Deleting an Return from the Archive Manager 208 amp To delete an archive of a return from the Archive Manager 1 2 4 From View mode of the return select Archive gt Archive Manager Click the row of the archive to delete Click Delete You are prompted to confirm the deletion Click Yes to delete the file from the archive Once deleted the previously archived file cannot be recovered Tax Year 2012 l Banking For tax year 2012 Drake is working in conjunction with the banks listed in Table 7 1 to provide taxpayers access to bank products Table 7 1 Drake Banking Partners
233. ach instance of a downloaded W 2 counts as one against your total even if the same W NOTE 2 is downloaded twice If however the client has W 2s from multiple employers and all W 2s are downloaded in the same session it counts as only one download If the W 2s are downloaded in separate sessions each session counts as one against your total For W 2 forms with a 2D barcodes W 2 and K 1 data can be scanned into Drake 1040 package only Open the program to the client s Data Entry Menu not the W2 or K1 screen to scan the barcode the scanned information appears on the applicable screen For example if a W 2 is scanned a W2 screen is opened that contains the data from the W 2 Guidelines for scanning are provided below e When scanning the information the program opens a new screen containing the information It does not overwrite previously entered data on a W2 or K1 screen e The IRS issues guidelines for the 2D barcode If the software producing the bar code follows these guidelines the correct information will be entered on the Drake screen If not you will need to verify that the scanned data was correctly transferred to the screen e For Form W 2 the 2D barcode picks up only what is on the W 2 In the case of multiple city withholding which is on a separate schedule that does not fit on the W 2 the extra information must be typed in after the barcode is scanned e Most barcode scanners can be used but Drake recommend
234. ach number refers to a row If you enter 2 printing will begin two rows into the label Horizontal adjustment Enter a positive number Each number refers to a column If you enter 2 printing will begin two columns into the label Name format From the drop list select the name format to use Click Finish The Client Labels dialog box is opened if you selected Print to a label maker in Step 6 If so make the following selections Choose the clients from the list on the left whose labels will be printed Click to highlight one name press CTRL and then click names to choose multiple clients or click Select All In the Other Selections section choose to 303 Letters Drake Software User s Manual Print labels with IRS Mail To Addresses for individual and business returns with and without payments Print labels with State Mail To Addresses for various individual and business returns Print labels for mailings to IRS Service Centers Build a Custom Label e Options allows you to change the order of the clients names on the label to hide the Label Preview which appears when you choose one of the other options in the Other Selections section or when you choose Single client address in Step 2 and to use a custom printer dialog box 8 Click Print NOTE The Mailing Labels tool can also be used to run reports See Chapter 12 Reports Printing a Drake provides a convenie
235. age 293 for details on Report Viewer features 5 Click Exit to close the Report Viewer The selected returns are now in the send queue and are ready for transmission EF Select The EF Select button is available in all packages and is located at the bottom of the Button Calculation Results window By default the button is activated if the calculated return is eligible for e file Figure 8 3 on page 232 Tax Year 2012 231 E filing a Return Drake Software User s Manual i see N iy weet Meer Ma Aiia _ i k F LT amaii Shp DON ee e gia sds y p Total Tax Refund 14 803 Eligible For E F A Back Continue Figure 8 3 EF Select button at bottom of Calculation Results window By clicking EF Select you can send federal and state returns directly to the e file queue The option to pause at the Calculations Results window must be NOTE selected in Setup gt Options Calculation amp View Print tab You also must go to Setup gt Options EF tab and select Allow selection for EF from the Calculation Results screen Trouble Ifa return is not in the EF Return Selector consider these troubleshooting actions shooting Return Recalculate the return Selection Eliminate EF messages Remember to check for both federal and state messages e From the Home window go to Setup gt Options and select the EF tab to see if Require Ready for EF Indicator on EF screen is selected If it is go
236. ager on page 324 Access the Filter Manager from a Filter Selection box which is opened when you might have to narrow a selection of records See Figure 12 3 on page 317 To access the Filter Manager from a Filter Selection box click Edit Filters See Customized Filters on page 317 Search Conditions Use the Filter Manager to set up search conditions There are two levels of search con ditions Basic Search Conditions and Additional Search Conditions Tax Year 2012 319 Filter Manager Additonal Search Conditions for the Selected Filter Drake Software User s Manual Basic Search Conditions for the Selected Filter Return Type is 1040 Edit Schedule Cis p Add Condition Edit Condition Delete Match All Conditions C Match Any Condition Figure 12 5 Basic and Additional Search Conditions boxes Basic Search Basic search conditions described in Table 12 2 refer to the most common filtering criteria Return Type s Return Result Activity and Preparer and Firm Conditions 320 Table 12 2 Basic Search Conditions Categories Category Return Type s Description Return types to include in the report To include all return types select All Return Types Select Allow MFS 1040 Returns to include returns with a status of Married Filing Separate Return Result Result types of the returns to include in the report Example If Balance Due is selected only those returns with a b
237. agger by 2 000 with the first computer starting at 01000 the second computer would start at 03000 the third at 05000 and so on In this case each computer can process 2 000 returns before duplicating a DCN Be careful if changing DCNs after tax season begins and returns CAUTI DN have already been transmitted If DCN staggering is done improperly returns might be processed with duplicate DCNs causing e file rejections Changinga When a return receives an IRS rejection because the same DCN was assigned to more DCN than one taxpayer the DCN must be changed before you can re transmit the return To change the DCN of a tax return 1 In data entry for the return press CTRL M and wait while the program assigns a new DCN 2 Click View to go to View mode where you can check Form 8879 to verify that the DCN has been changed lew Tax Year 2012 235 EF Override Options in Data Entry Drake Software User s Manual gt Keep this form for your records See instructions 00 777777 066658 CR Declaration Control bs AMELIA CARTER Number DCN Tax Return Information Tax Year Endin ole Dollar 1 Adjusted gross income Form 1040 line 38 Form 1040A line 22 Form 1040EZ lineg e 2 Total tax Form 1040 line 63 Form 10404 line 37 Form 1040EZ line 1 03 I tte hres tee aytiamnagmtonn WN ca E ramannama chm Ahn ana annn hn Depe WET TEE ATT Ie real Reverie Serve I Declaration Control Number DC
238. ake Software User s Manual Changes to Suite Products in 2012 Drake has made significant enhancements to both the Document Manager and the Tax Planner for tax season 2012 Read the following sections carefully to be able to take full advantage of the new versions of these two tools This chapter focuses on the two Suite Products Document Manager and Tax Plan ner and on the two additional products GruntWorx and SecureFilePro For CWU instruction the Client Write Up Manual is available on the Drake CD through the tax software from the Home window go to Help gt Online Resources and from Sup port DrakeSoftware com Drake Document Manager Document Manager users have two storage options or sources to choose from the Archive Cabinet and the Working Cabinet The Archive Cabinet stores docu ments for all clients from multiple years in a central location outside of Drake Soft ware the Working Cabinet allows individual year storage in the same location where the Drake program is located Which DDM source you choose will depend on how you want to handle your docu ment storage Archive Cabinet files are stored outside of the tax software are backed up and restored separately from the tax software and any updates to the Archive Cabinet are downloaded separately from the tax software s updates All documents from all years for all clients are stored in the Archive Cabinet in alphabetically arranged ca
239. alance due will be included Select Any Result to include all results Activity Status of returns to include in the report To include both active and inactive returns select Any Status Type Preparer and Firm Preparer and firm of returns to include in the report To include only those returns handled by a specific preparer or firm in the report select a preparer or firm name as applicable To edit basic search conditions 1 Click Edit in the Basic Search Conditions for the Selected Filter box If you re changing a filter that is used in other reports the Filter Changes window is opened describing these reports and informing CAUTI IN you that changes to the filter will affect these reports Click Edit to continue to edit the filter or recommended click Copy to make a copy of the filter and change the copy so as not to affect other reports 2 When the Basic Search Conditions dialog box is opened select items within the main categories 3 optional To include applicable test sample returns for example Drake returns that begin with 400 00 in the report select Allow Test Sample Returns Tax Year 2012 Drake Software User s Manual Filter Manager 4 5 optional To allow a user to modify conditions when running a report select Ask about the Basic Search Conditions each time the Filter is used Click OK to save the changes to the basic search conditions Additional You can add as man
240. also creating Drake tax software 14 61 password protected files in the DDM 351 returns from the CSM 252 returns in Drake 65 the DDM 331 the EF return selector 231 the Scheduler 85 the Tax Planner 353 optional documents with return 30 items on return 31 options setup 27 36 order of forms 206 Organize GruntWorx function 357 organizers 80 84 overflow statements 29 overlapping appointments in Scheduler 93 overpayments 152 override fields 28 72 overriding bill amounts 56 xxxviii Drake Software User s Manual EF options 236 letters setup 58 setup options 53 60 P PAD screen preparer notepad 188 paper boy 110 paper document indicators 238 paper jams 225 parsonage allowance 140 see also clergy partner programs 272 passive activities 124 activity loss limitations 125 activity numbers PANs 123 income 105 142 password protecting client files 296 DDM files 351 e mails with PDFs 203 online EF database reports 244 pause option for calculations 29 Pay Per Return PPR 27 payment options electronic 160 payroll see Client Write Up PCM see Personal Client Manager PDF documents e filing 184 186 PDF files e mailing forms as 164 penalties estimated tax 154 for early withdrawal of savings 138 for late filed returns 181 IRA 120 138 Pennsylvania city tax rates 309 penny rounding 31 pensions self employment 137 Personal Client Manager 34 63 PIN signatures auto generating for taxpayer 32 in data entry
241. alterna tive e signature field on the PRNT screen for that return If applicable enter the firm s Republic Bank Identification Number RBIN Enter Power of Attorney information necessary for Form 2848 Power of Attor ney and Declaration of Representative Preparer Designation Select the designation under which the preparer is authorized to practice before the IRS CAF Number Enter the preparer s Central Authorization File CAF number assigned by the IRS Jurisdiction Enter the jurisdiction in which the preparer is authorized to practice before the IRS If the preparer is an IRS Enrolled Agent EA enter the EA number here Enter W 7 Acceptance Agent information for the preparer if applicable You are now ready to set up preparer security If you click Save at this point you will be reminded that security rights need to be set before the preparer can access any fea tures in the program If you select to close Preparer Setup now be aware that you ll have to return at some point to set the preparer s security rights To proceed go to Step 4 in the following section Setting Up Preparer Security 23 Software Setup Drake Software User s Manual Setting Up This feature establishes security settings for an individual preparer To assign the same Preparer security level to many preparers the Group Security feature may be a better option Security See Setting Up Group Security on page 25
242. an separate clients by return types and have an Individual and a Business cabinet instead Regardless of the structure you choose cabinets are required for storing drawers and folders To create a cabinet in the Archive Cabinet follow these steps You must be on the Cabinet level to add a cabinet 1 2 3 4 Open the Archive Cabinet by clicking the Doc Mgr button from the Home win dow of Drake or from the Data Entry Menu within a return Click New Cabinet Enter a name in the New Cabinet dialog box Click OK The new cabinet appears in the left pane Repeat these steps as needed to create more cabinets File cabinets cannot be stored inside other file cabinets Each cabinet is N OTE for Level 1 storage Drawers are for Level 2 storage and folders are for Tax Year 2012 Level 3 storage 343 Setting up Your Document Manager Drake Software User s Manual Adding Drawers Adding Folders Add drawers to cabinets for file storage The Drake filing system lists these drawers by the first character of the name on the return To add a drawer to a cabinet 1 Open the Archive Cabinet by clicking the Doc Mgr button from the Home win dow of Drake or from the Data Entry Menu within a return Highlight the cabinet you want to add a drawer to Click New Drawer Enter a drawer name in the New Drawer dialog box Poe Click OK The new drawer appears in the left pane Repeat these steps as needed to create more drawers
243. ancial institution the bank s routing number RTN the client s account number and the type of account checking or savings are required The RTN Account number and Type of account information must be entered twice Figure 5 47 or an EF message is generated and the return cannot be e filed Name of financial institution RTN Account number Type of account Checking M Savings M Checking M Savings Repeat account information Figure 5 47 Repeat account information for RTN account number and type of account Direct Deposit of Federal Refund Form 8888 Conditions 158 If a single account is entered on the DD screen the information flows to the Refund section of Form 1040 If multiple accounts are entered the program produces Form 8888 You can enter up to three accounts The following conditions must apply for the taxpayer to file Form 8888 e The taxpayer cannot choose to get any part of the refund as a check e The account indicated for the refund deposit is a checking savings or other account such as an IRA MSA etc Tax Year 2012 Drake Software User s Manual Direct Deposit e The account is in the taxpayer s name Multiple accounts are not allowed if filing Form 8279 Injured Spouse Allocation NOTE A taxpayer cannot request a refund deposit to an account that is in the name of someone else such as the tax preparer Multiple By default the program directs the federal refund
244. and location for your backup Time Select a time from the Select time to perform automatic backup drop list e Type Select a type from the Select backup type drop list Choose All Files for a full backup choose Only changed files to back up only those files changed since the last backup e Location Click the backup location icon and browse to a desired location 5 In Select Files to Back Up choose the files to be automatically backed up e Client Files Client files located in the Drake12 DT folder 294 Tax Year 2012 Drake Software User s Manual File Maintenance e Setup Files Pricing and setup information files e System Files CSM EF database IRS bank and Scheduler files 6 Click Save Click Exit to close the Backup dialog box The amount of free disk space is indicated in the lower right section of the Automated Backup Settings dialog box If an attempt at automatic NOTE backup is unsuccessful due to lack of disk space the backup is stopped and you receive a message stating that disk space is insuffi cient Once automatic backup is activated the backup icon is added to the system tray at the bottom of your screen You can click this icon to view the latest backup information The automated backup program is also added to the Startup menu and will continue to be in operation after the machine is rebooted Disabling There are two ways to turn off automatic backup Automated Backup Go to To
245. aracters of a taxpayer s name be transmitted on a tax return In Drake names of more than 35 characters taxpayer and spouse named combined are automatically shortened and a note is generated If after the name is shortened it is still too long you will be directed in an EF message to shorten the name manually on screen 1 Press F1 in the taxpayer s First name field on screen 1 for further instructions Below the E mail text msg field indicate if a taxpayer is a dependent of another is a full time student wants to donate to the Presidential Campaign Fund or is blind NOTES If the taxpayer was a victim of identity theft enter his or her IRS assigned PIN in the Identity Protection PIN field on the MISC screen Entering Residency Information State and Local Data The Mailing Address section of screen 1 includes fields for both domestic and for eign addresses To indicate a stateside military address mark the Stateside military NOTE address box on screen 1 Enter combat and special processing code information on the MISC screen accessible by clicking the Combat Zone link on screen 1 If the resident state differs from the state in the mailing address select the appropriate state code from the first drop list in the Resident state City School district line near the bottom of screen 1 If the taxpayer is a part year PY resident of the state in the mailing address select PY from the Resident state drop list To sup
246. are available for reporting taxable income not reported elsewhere on the return Amounts entered here are produced on line 21 of Form 1040 and descriptions are listed in a statement Several screens are available in Drake for entering other types of income as described in the following sections Taxable Distributions 1099 Q Ifthe amount on Form 1099 Q Payments From Qualified Education Programs exceeds the amount of education expenses compute the taxable amount of the distri butions and enter it on screen 5329 Part II line 5 and on screen 3 line 21 132 Tax Year 2012 Drake Software User s Manual Other Income Medical amp Enter distributions from Medical Savings Accounts MSAs on the 8853 screen Form Health 8853 Archer MSAs and Long Term Care Insurance Contracts Enter distributions Savings from Health Savings Accounts HSAs on the 8889 screen Form 8889 Health Sav Accounts ings Accounts HSAs Taxable amounts from these screens flow to Form 1040 Lines 1 coverage indication and 2 HSA contributions for the IMPORTANT year of the 8889 screen are required if Form 8889 is to be e filed with the return Gambling Income amp Loss Screen code W2G Use the W2G screen accessible from the General tab to enter gambling income and loss information from Form W2 G Data from the W2G screen is carried to line 21 and line 22 if applicable of Form 1040 The W2G screen has check boxes for Lottery Winnings and Elec NOTE
247. arers transmit certain documents with returns and compare and review information more effectively include all required details on a return and track a return s progress Tax Year 2012 183 Binary Attachments Binary Attachments Drake Software User s Manual Binary or PDF files can be attached to certain tax forms These attachments are gen erally signature or third party documents such as a copy of a divorce decree bank ruptcy papers signed lease or a signed appraisal statement transmitted with the return to support or explain an entry in the return In either case a PDF must be avail able to be attached to the return in order to be e filed with the return Attach files through the PDF Attachments screen accessible from the Electronic Filing section on the General tab of the Data Entry Menu The PDF Attachment Process Three main steps are involved in the PDF attachment process in Drake 1 Creating a PDF file to be attached 2 Informing the program that a PDF file will be sent with the return 3 Attaching the PDF file for e filing These steps are described in the following sections Creating a To create a PDF file PDF File 1 Scan the document to be attached to the return as a PDF TIP step It s a good idea to use the Document Manager scanning feature for this 2 Save the document to your client s Document Manager to your computer s desk top or anywhere you can readily find it NOTE
248. ars 5 Select a bank from the drop list The application for that bank is displayed 6 Complete the application If you re unable to complete the application in a single sitting or if you want to come back and review the application later before sub mitting it you can click Save and Finish Later 7 Click Submit Completed Application Once you have submitted the application Drake forwards it to the appropriate bank To import your banking information directly from your Drake bank appli cation see Firm Setup on page 12 If offering e Collect or the E1 Card program go to epsfinancial net to NOTES access and download additional information Program participants must complete compliance training through the EPS website Republic Bank also requires compliance training through its website republicrefund com Checking To check the status of your application log in to the EOM website and select Bank Application Application from the menu The Application Status appears in the box at the top of Status the page CAUTION Making changes to an application and resubmitting it can change its status Tax Year 2012 217 Preparing to Offer Bank Products Drake Software User s Manual Application statuses are listed below A Accepted B Accepted post acceptance changes rejected C Accepted post acceptance changes pending D Declined Call the selected bank to resolve any issues E Accepted awaiting bank account
249. arter 6665 Older files in your Document Manager might still be stored using the nine digit tag To truncate all IDs to match the new system click Secure IDs Account EFIN Password Enter your Drake account number your EFIN and your Drake password The Archive Cabinet takes up very little disk space but more space may be required for storing office files The storage drive for an average sized office needs approxi mately 1GB of space for each year Most new computers have at least a 20GB hard drive so if you own a new computer storage should not be an issue 341 Setting up Your Document Manager Drake Software User s Manual Archive The Archive Cabinet stores files in a file structure consisting of virtual cabinets Cabinet File drawers and folders and displays them alphabetically in a tree Figure 13 8 Structure p ee ee et pital pe i wW oe g Clients a 1 Business BC F Cann Mary 3333 F Carter William 6665 B P Tax ants diet Alen emails there T to Figure 13 8 Each cabinet contains drawers which contain client folders If you re building your own file structure map it out by hand before creating it in the Archive Cabinet More cabinets drawers and folders can be added to a Drake inte grated file structure Be aware that while long file names can be used this naming conven NOTE tion might not function properly o
250. artners on Supplemental Info tab The K 1 Rental Real Estate Activity attachment K1_8825 is not IMPORTANT transmitted when the return in e filed Preparers should present this attachment to each shareholder or partner who receives a Schedule K 1 Fields Added to Name Address Information Doing Business As and In care of lines have been given separate data entry fields in the business packages to allow this info to flow to state forms Figure 14 4 Name andAddress Information Employer D reenrvnber oe Corporation s legal name Cop ae ae ae T a ar Figure 14 4 C O and DBA lines split in business packages Bonus Depreciation For the 2012 tax year e Assets placed in service in 2012 50 bonus depreciation Assets placed in service in 2013 50 bonus depreciation Data Entry Field Enhancements On screens in the 1120 1120S and 1065 packages where Doing business as and In care of fields were combined in the past these are now separate lines to allow this information to flow through to certain state packages 370 Tax Year 2012 Drake Software User s Manual Fiduciary Package 1041 Fiduciary Package 1041 For 2012 Drake provides better support of multiple grantor statements last year it required some extra data entry if there was more than one and allows preparers more flexibility to allocate deductions to a particular income type than in prior years
251. asis of Home and Form 5405 fields are included in the Drake update routine These fields are updated as long as there is not a date in the Date home was sold field Once the home is sold there is no need to continue tracking the basis 117 Retirement Income Schedule D Section 121 Calculation Conversion to Business Use Exclusion for Surviving Spouse First Time Homebuyer Credit Drake Software User s Manual The home sale flows to Schedule D only if the gain on the sale exceeds the exclusion amount If Schedule D is generated both the gain on the home and the Section 121 exclusion if applicable appears on Schedule D The WK_ 2119 is still generated but Schedule D is added to report the taxable gain on the sale The software calculates the section 121 exclusion using the number of days during the last five years that the taxpayer used the home and the number of days the home was owned during the past five years Enter this information in the Calculate Section 121 Exclusion section of the HOME screen Ifa home was lived in and then converted entirely to rental or business use and subse quently sold the transaction must be shown on Form 4797 Mark the Carry taxable gain to 4797 box in the Miscellaneous section to have the applicable HOME screen information flow to the 4797 For two years after the death of a taxpayer a spouse is permitted to take the MFJ exclusion for gain on the sale of a principal residence assu
252. ate Click OK Click Yes when asked if you want to create a new return In the New Return dialog box select the return type Enter the client s name NO ee eS Click OK Data entry screen 1 for the new return is displayed NOTE You may be required to verify the ID number for a new return Verifica tion is required for all Pay Per Return PPR clients Opening a Return Recentlyaccessed To open an existing return in Drake returns can be a pee 1 From the Home window click Open Create The Open Create a New Return list in the Home dialog box is displayed Figure 3 8 on page 66 wine 2 Perform one of the following tasks Tax Year 2012 65 Data Entry Data Entry Data Entry Menu 66 Drake Software User s Manual Enter the ID number of the return item 1 in Figure 3 8 Select one of the last nine returns opened item 2 in Figure 3 8 Click a row to select a return Select a return type item 3 in Figure 3 8 Returns are displayed in the grid to the left Click a row to select a return m Drake 2012 Open Create a New Return Ea Enter the SSN EIN or the LAST NAME for the return you want to open create If a NAME is entered then the closest match will be displayed and the corresponding SSN EIN will be entered in the SSN EIN field automatically Sorting by PACKAGE is available by selecting the PACKAGE TYPE on the right of this screen J VARTER WILLIAM amp TED S TAX EXEMPT 3909
253. ategories choose from the Select a category to display drop list Drake s prior year software packages for state programs 1998 2009 are available for installation e Tax years 2007 and after Use Tools gt Install State Programs in your Drake program Once state programs are installed update them using Tools gt Install Updates for 2007 and 2008 or Tools gt Update Manager for 2009 e Tax years 2003 2006 First download the state tax packages from the Down load Center From Resources gt Download Center on the Drake Support site select a year then any states you need and then install the updates within Drake Software Tools gt Install Updates e Tax years 1998 2002 Go to Resources gt Prior Year States on the Drake Sup port site click the appropriate year select the state to download and then follow the instructions on your screen Software release notes from prior years are available on the Drake Support site Scroll down the Resources Overview page to Release Notes Select a year and update category to view the list of releases and release dates Click a note link to view the release note 271 Other Resources at Drake Support Drake Software User s Manual Conversions Publications 272 Marketing Kits Partner Programs Business Planning Group To download software to convert data files from other tax programs into Drake for mat go to the Drake Support site and select Resources gt
254. ation Use this section to complete lines 15 16 and 18 of Form 6198 If data is entered here the program uses Part III to calculate the amount at risk for these fields The lower portion of the screen has fields for entering prior year carryover and cur rent year losses and deductions Use these fields for the following types of amounts e Prior year losses that were not deductible due to the at risk limitations e Current year amounts to override either a the equivalent fields on other K1 screens or b the at risk calculation NOTE Most of the entries on the 6198 At Risk tabs are used for calculating Form 6198 line 4 Other deductions and losses At Risk Limit When applicable the program produces At Risk Limit Worksheets with the calculated Worksheets return In View mode the worksheets are listed as WK_IPRSK for partnerships and WK_ISRSK for shareholders Two copies of the worksheet are printed for each Schedule K 1 one for regular tax and one for the alternative minimum tax AMT Use the scroll bar in View mode to see both copies To force the software to print the At Risk Limit Worksheets even when NOTE they are not needed mark the check box at the bottom of the 6198 At Risk continued tab Farm Income Entry fields for the following farm related forms are located under the Income tab Screen codes e Schedule F Profit or Loss From Farming can also be used with a 1065 return F J 4835 A a e Schedule J
255. ation Displayed are a list of students buttons for add ing and searching student records and a drop list for displaying Active Students Inactive Students or All Students Figure 10 12 Active Students P LastName FirstName Usertiame Password Admin Report Card tte ee ee tite Gii No Edit Report Card amos oe meara No Edit Report Card ee baem emm arenen No Edit Report Card o ae oam ened be ee ae Oe te ee Yes Edit Report Card ott ne kora Koopa ceca o No Edit ET T sateen lit mealies ABO saline a TE T E a N E AO E E TS Figure 10 12 Admin page displays list for student information Click to view a student s Report Card or click Edit to view and edit a student s information Click Save to save it To log out of Drake ETC click Sign Out You are returned to the ETC login page For information on the IRS s continuing education upload system and how Drake reports CE credits for Registered Tax Return Pre IMPORTANT parers RTRPs and Enrolled Agents EAs click the Important link available on ETC Home page the Administration setup page or when editing a student account Other Resources at Drake Support Tax Year 2012 The Drake Support site offers a wealth of additional resources such as information about webinars trade shows live training sessions preparer regulations state and fed eral tax laws 1040 com e mail and webpage account update schools GruntWorx SecureFilePro and CWU You
256. ation entered in the Property description for reporting field at the top of the Property screen shown in Figure 5 22 on page 121 appears in the headings of all generated Information worksheets associated with the activity The following general information fields are also located at the top of screen E e Activity type If option D Not a passive activity is selected and EIC is involved the program prints NPA on the appropriate line of Schedule E For more on selecting activity types see Activity Types on page 124 e Address and Type of Property Enter the property address in the fields pro vided and select the property type from the options below those fields If Other type a brief 20 characters or fewer description of the property type e Some investment is NOT at risk Mark this box if portions of the real estate investment are not at risk To enter data for computing deductible profit or loss from at risk activities click the Form 6198 link to open the 6198 screen for Form 6198 At Risk Limitations When you exit the 6198 screen the program returns you to screen E e Property was 100 disposed of in 2012 Mark this box if the property was sold or otherwise disposed of in the current tax year e Property is an SMLLC Mark this box if the property is a Single Member Limited Liability Company state use only If the property was 100 disposed of and a 4562 screen has been N DTE completed the so
257. ation is necessary in some situations for example if the parents of the dependent are MFS and reside in different states TSJ z State ZI State codes Figure 5 4 Fields for TSJ State and State codes Enter a state code disabled adopted etc as applicable To view all state codes click inside the State codes field and press F1 Double click a displayed code to select it Additional Dependent Information Screen 2 contains fields for other dependent related data Information on the below listed fields is provided elsewhere in this document e Childcare Expense Information See Child and Dependent Care Expenses Credit on page 142 e EIC Information and related due diligence questions See Earned Income Credit EIC on page 154 It could be necessary to override or further clarify dependent information entered on screen 2 for example if a child is over 18 and disabled or is not a U S citizen Use the Additional Information section of screen 2 for this kind of data Drake has redesigned both the Dependents screen and screen 8863 to NEW FOR conform to new requirements for Form 8863 Education Credits The 7 l 7 Education Expense Information has been removed from the Depen dents screen and moved to the redesigned 8863 screen See Education Expenses on page 138 Personal Service Income W 2 1099 MISC Use the W2 and 99M screens both accessible from the General tab to enter personal service
258. ave the screen as a bitmap bmp file to a location you select e To Printer Open the Print dialog box and print an image of the screen e To Clipboard Copy an image of the screen to your clipboard in order to paste it into another program such as Microsoft Outlook 3 Save print or copy the image as directed according to your selection A calculator feature is available in every numeric field in data entry To access it press F10 from within a field Once results are calculated press F1 to insert those results into the field When the calculator is active the NUM LOCK status is activated NUM LOCK is disabled when the calculator is closed Macros are shortcuts that allow you to enter frequently used data entry items with minimal keystrokes This feature is described in detail in the Macros Setup on page 38 Heads Down Data Entry Heads down data entry provides an efficient method of data entry when working from a proforma interview sheet Information on this method is provided in the Heads down Data Entry section of Chapter 4 Preseason Preparation State Returns Tax Year 2012 When a return is prepared Drake automatically generates state returns based on data entered for the federal return Calculation is based on the state entered on screen 1 for 75 Practice Returns and Test Returns Drake Software User s Manual resident state and on the state codes indicated on other forms W 2 Schedule C 1
259. ax composite tax etc that are required by certain states and cities AOL T PO EE n P a ad eee State Return Results State Amended Results State Estimates 1 State Other Tax Paragraphs ST OtherTax1 Balance Due Paragraph ST OtherT ax1 E Filing Paragraph ST OtherT ax1 Paper Filing Paragraph ST OtherTax1 Refund Paragraph ST OtherT ax1 Zero Due Paragraph ST OtherT ax2 Balance Due Paragraph ST OtherT ax2 E Filing Paragraph ST OtherT ax2 Paper Filing Paragraph ST OtherT ax2 Refund Paragraph ST OtherT ax2 Zero Due Paragraph tate Uther Tax Estimate Paragraphs State Other Tax Results T gis AT e Figure C 7 Examples of OtherTax paragraph keywords Tax Year 2012 C 3 Drake Software User s Manual Table C 1 lists the Other Tax types indicated by specific letter keywords for state and city returns in the Drake tax packages Table C 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Alabama S corporation OtherTax1 Composite OtherTax2 Privilege Tax and Annual Report Partnership OtherTax1 Composite OtherTax2 Privilege Tax and Annual Report Individual OtherTax2 Privilege Tax and Annual Report Fiduciary OtherTax2 Privilege Tax and Annual Report Corporation OtherTax2 Privilege Tax and Annual Report Arkansas Individual OtherTax1 LLC Franchise Corporation OtherTax1 LLC Franchise
260. ax penalty and interest on late filed 1040 returns You can manually enter interest rates as needed and override certain components such as interest owed that affect system calculations of penalty and interest Penalty and Interest Calculation You can set up the program to calculate penalties and interest for all late filed returns or you can have penalties and interest calculated on a per return on the fly basis Global To have the program calculate penalties and interest for all late filing clients based on Option the filing dates 1 From the Home window go to Setup gt Options gt Optional Items on Return 2 Ensure that the Automatically calculate box is marked Figure 5 60 on page 182 Tax Year 2012 181 Features for Late Filed Returns Drake Software User s Manual On the Fly Option MV Automatically calculate penalties and interest on retums filed after the due date based on interest rates below Formats must be entered as For example 1 5 would be entered as 01 50 415 6 30 13 ooog 7 1 9 3014 ooo 10 1 12 31 15 fooo0 71 9 3013 oo 101 12 31 14 fopop 1 71 331716 ooo 10 1 12 31 13 00 00 11 3 3115 ooo 4 1 6 30716 ono 11 3 3114 oao 41 6 3045 jooo 7 1 9 30 16 oono 41 6304 foogo 7 71 93015 jooo 10 1 12 31 16 0000 Figure 5 60 Interest and Penalty Calculation section Setup gt Options gt Optional Items on Return 3 Click OK The program will now cal
261. ayments Per Year The number of payments to be made each calendar year Annual Interest The annual interest amount for the loan This amount is calculated automatically If the interest is unknown but the payment amount is known leave this field blank Payment Amount The amount of the payment In most cases this amount is calcu lated automatically based on the other information entered If this field is left blank and the interest amount is entered in the Annual Interest field the program displays the calculated payment here Payment Type The payment type Select one of two types of payments Fixed Payment or Fixed Principal The default is Fixed Payment Date of First Payment Due date of the first payment This entry is used to determine the dates for subsequent payments To show only the payments from certain dates enter those dates in the Filter Sched ule Payments fields and click Apply To clear the screen click Reset To get information on balloon payments click the How do I make a balloon pay ment link To send the schedule to the printer click Print To save it for viewing through Reports gt Report Viewer click Save designate a file name and click Save Tax Year 2012 Drake Software User s Manual EIN Database EIN Database The program stores all EINs and related data in the EIN database for later retrieval Use the Edit EIN Database tool to add edit or delete an employer s informati
262. bels for mailings to the IRS and state taxing authori Tip ties and design custom labels from the Data Entry Menu Right click the menu and select Client Labels to open the Client Labels dialog box See step 7 of Mailing Labels on page 302 for more information on the options To print addresses on envelopes 1 Ensure that envelopes are loaded properly into the printer 2 From the Home window go to Tools gt Letters gt Envelopes 3 Select filtering and sorting options from the Envelopes Filter Selection box If you need a more complex filter click Edit Filters See Filter Manager on page 319 4 Click Next 5 Modify the Basic Search Conditions as needed and then click Continue For more on Basic Search Conditions see Search Conditions on page 319 6 Inthe Envelopes dialog box update the envelope formatting as needed Click Help for more on individual fields 7 Click Finish 8 Set printer options in the Print dialog box as needed and then click Print Not all printers are capable of printing envelopes Verify that your NOTE printer has this capability before using this function in the program Always test print an envelope before printing an entire batch To print addresses on postcards 1 Ensure that the postcards are loaded properly into the printer 2 From the Home window go to Tools gt Letters gt Postcards 3 Select filtering and sorting options from the Postcard Filter Selection box
263. ber SSN Bad transmission Centralized Authorization File number issued to a preparer by the IRS Client Status Manager a tool for tracking workflow within a preparer s office Cost of Goods Sold Client Write Up Duplicate of previously filed return Rejected Depositor Account Number The financial institution account to which a direct deposit refund is to be routed Declaration Control Number A unique 14 digit number assigned by the ERO or in the case of online filing by the transmitter to each e filed tax return Direct Deposit Drake Document Manager File extension for Microsoft Word files File extension for Scenario Planner files EA E ack EF EFIN EFT EFTPS EFW EIC EITC EIN ERC ERD ERO ETA ETC ETD ETIN FMS HOH IRC IRS D 2 Drake Software User s Manual Enrolled Agent IRS acknowledgment for an imperfect return Electronic Filing Electronic Filer s Identification Number Electronic Funds Transfer The process through which direct deposit refunds are trans mitted from the government to the taxpayer s account at a financial institution Electronic Federal Tax Payment System A free service from the U S Treasury through which federal taxes may be paid via the Internet by phone or through a ser vice provider Electronic Funds Withdrawal A payment method which allows taxpayers to authorize the U S Treasury to electronically withdrawal funds from their checking o
264. ber located on your software packing slip Click Next If you chose New in step 5 select an installation drive and click Next Select an installation drive from the list of available drives Click Next If you chose to install the Document Manager in Step 4 select the drive on which to install it and click Next Select states to install from the States on CD listing Click Next Click Install and wait for the Installation Complete window to be displayed Installation could take several minutes Click Install and wait for the Installa tion Complete window to be displayed Installation could take several minutes If a previous version of Drake is detected on your system the Update Admin Pre parer and Setup Information window is displayed after installation If you do not want to update now click Skip otherwise click Next Click Finish and Exit to close the Drake 2012 Software Programs window Test returns are installed automatically if you are installing to a new location Ifa drive letter is not displayed in Step 5 the software has determined that there is not enough space on the drive Downloading the Software If you choose to download the software from the Drake Support site rather than installing it from the CD follow these steps 1 Go to Support DrakeSoftware com Tax Year 2012 13 Installing from CD Drake Software User s Manual 2 Enter your EFIN and Drake password 3 From t
265. binets drawers and folders If you choose the Archive Cabinet as your source see Set ting up the Archive Cabinet on page 339 Use the Working Cabinet as your source if you prefer more integration with the tax software Working Cabinet source files are stored inside the tax software saved docu ments are backed up or restored whenever the tax software is backed or restored and all DDM updates are downloaded together with the tax software s updates You access Working Cabinet documents from within the Drake tax program for whichever year you are interested in 2012 documents in the 2012 software 2013 documents in the 2013 software etc If you choose the Working Cabinet as your source see Setting up the Working Cabinet on page 332 If you choose the Working Cabinet as your source you can easily IMPORTANT send your saved documents into the Archive Cabinet with just a few mouse clicks See Sending Files to Archive Cabinet on page 336 for details New Tax Planner 330 The redesigned Tax Planner tool still helps you assist your clients in making financial decisions Clients can see how events such as marriage the birth of a child a divorce buying or selling a house or taking a new job will affect their short and long term finances and tax liability Tax Year 2012 Drake Software User s Manual Drake s Document Manager The biggest change in the Tax Planner is that you now use the same Drake
266. ble fields as shown in the Figure 5 41 example Drake 2012 Data Entry 400006665 Carter William amp Carter 243243243Amelia Seen Help zoba Form 8615 Tax Computation for Certain Children with Investment Income Parent s First Name Last Name Parent s SSN Estimate State Information William Carter 400 00 6665 HI Parents filing status 2 z a Parents taxable income k 109876 ECLA REN a ee a a A a te a a a 30425 Parent s tax computed using either Schedule D or J E Parents net capital gain Figure 5 41 Parent information has been imported into dependent s 8615 screen Estimated Taxes This section focuses on the following information in Drake Estimated taxes paid in 2012 Estimated payments for 2013 Estimated tax adjustments Applying 2012 overpayment to 2013 Underpayment of estimated tax Estimated tax penalty Estimated Taxes Paid in 2012 Use the ES screen to enter by quarter the 2011 overpayment and the estimated taxes paid in 2012 The program applies the standard estimate payment dates If any of these dates are different enter the correct date in the applicable override field 150 Tax Year 2012 Drake Software User s Manual Estimated Taxes Estimated Taxes Paid in 2012 Federal Overpayment PANO a from 2011 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Ability to enter varying amounts for quarterly Date fields ar
267. both an overview of the RTRP test and tips for success The course costs 19 includes two hours of continuing edu cation and reviews the test specifications offers tips on how study and prepare what to expect on test day and how to handle test anxiety For more information or to sign up for the courses go to Support DrakeSoftware com and from the blue menu on the left select Training Tools gt Drake ETC gt RTRP Study For information on setting up an account in Drake s ETC see Drake s e Training Center ETC on page 261 Go to www irs gov For Tax Pros to learn more about PTIN renewal the RTRP test and new CE requirements e File Mandates The current e file mandate phased in over the past two years now requires tax prepar ers who anticipate preparing 11 or more federal individual or trust tax returns during the year to e file their returns This mandate went into effect January 1 2012 Tax Year 2012 Drake Software User s Manual Contacting Drake Support You must be an authorized e file provider to use IRS e file To apply to become an e file provider go to the IRS website www irs gov click the Tax Professionals tab and follow the links to set up an e service account For the newest state e file mandates see Chapter 1 Appendix E State E filing Man dates Contacting Drake Support In addition to the manual on screen Help and online resources Drake Software offers unparalleled telephone
268. c To deactivate calculator without inserting data in a field press Esc or click ESC Quit on calcula tor window Addition Enter number to be added and press PLUS key or click plus sign on calculator window Subtraction Enter number to be subtracted and press MINUS key or click minus sign on calculator window Multiplication Enter first number of equation and press SHIFT 8 or click on the calculator window Enter second number Press ENTER or click equal sign on the calculator window Division Enter the number to divide and press SLASH key or click on the calculator window Enter the number to divide by Press ENTER or click equal sign on calculator window Table Q 9 Print Mode Shortcut Keys Tax Year 2012 Desired Action Keyboard Keys Toggle in out of Classic mode CTRL S Return to data entry CTRL E Print selected form CTRL P Quick print select form CTRL Q Help F1 xvii Accepted Forms and Schedules Accepted Forms and Schedules Drake Software User s Manual 1040 The following chart identifies forms and schedule accepted for the 2012 tax year and the maximum number that can be e filed with a 1040 return Form or Maximum Form or Maximum Form or Maximum Schedule Number Schedule Number Schedule Number 1040 1 4970 1 8859 1 1040A 1 4972 1 per taxpayer 8862 1 1040EZ 1
269. calculated amount a negative number decreases it ZIP Code When a ZIP code is entered on a screen the city and state fields are filled by default Database from the program s ZIP code database There is no need to enter the city and state EIN When new employer data is entered on a screen the program stores the EIN business Database name and business address in the EIN database The next time the EIN is entered on a W2 1099 or 2441 screen the business name and address automatically appear in the required fields Bank Name The program retains the names of all financial institutions when they are entered for Database the first time in data entry The next time the first few letters of a saved name are entered the program auto completes the entry To add edit or delete entries from the bank name database place the cursor in a bank name field and press CTRL SHIFT E and follow the instructions that are displayed Common Many screens in Drake have fields labeled TS F ST and City These fields shown in Screen Figure 3 20 on page 73 are used to apply the data on the screen to the taxpayer or the Fields spouse or both on federal state or city returns 72 Tax Year 2012 Drake Software User s Manual Data Entry Associating One Screen with Another Splitting a Joint Return Tax Year 2012 Schedule C Profit or Loss from Business TS T x Flo st MI z City PT a Figure 3 20 Screen code examples for Sched
270. ccess the W2 screen Enter Interview Sheet Number and Section 2 6 Figure 4 6 Example Type 2 and 6 to access the W2 screen 3 Press ENTER The applicable screen is displayed for data entry Heads down Combine the proforma codes and heads down mode to move efficiently to the proper Data Entry areas of a screen for data entry To work in heads down mode 1 Open a screen in data entry 2 Press CTRL N Numbers appear beside each field as shown in Figure 4 7 1 Wages tips 2 Federal tax w h 23 54321 g 12345 3 SocSecwages 4 SocSecwh 54321 g 54321 5 Medicarewages 6 Medicare taxw h 27 54321 Ta SOC Segiins a8 Socata tips Figure 4 7 Numbered fields in heads down mode 3 Inthe Heads Down Mode box at the top of the screen enter a field number in the first text box and press ENTER 4 Enter data for the field in the second text box and press ENTER The data is placed in the proper field and the system returns you to the first text box 5 Repeat for all other fields pressing ENTER after the data for each field is entered To return to the Data Entry Menu press ESC Tip Use CTRL N to toggle between heads down and data entry modes Printing Organizers and Proformas for Clients To print organizers or proformas for selected clients 1 From the Home window click Last Year Data and select either Organizers or Proformas 2 Do one of the following tasks e Enter the client s SSN or EIN and
271. ces gt Videos and Recorded Webinars 2 Select from the Tax Year and Course drop lists 3 Click Launch Recorded Webinar The first time you view a webinar the WebEx Manager is automatically downloaded to your computer For help with WebEx Manager call WebEx Support at 866 229 3239 Drake ETC also offers videos CDs and DVDs of our annual Update Schools To order from the sidebar menu of the main Support website NOTE go to Resources gt Supplemental Resources If you re logged in to ETC return to the main Support website by clicking Support Login in the upper right corner of the window Drake ETC provides live webinars on various topics with new webinars added every month The live webinars are presented with panelists available to answer viewers questions during the event CPE credits are available no test required see NOTES below You or your account administrator can keep track of completed webinars and CPE credits earned through the ETC site Review the CPE details provided with each Drake webinar to determine CPE eligibility Our webinars cover various topics and are presented with panelists available to answer viewers questions during the event Attendees must respond to several polls offered during the webinars NOTES and complete a short evaluation after the webinar to qualify for CPE credits A fee is required for most webinars Please join webinars at least 10 minutes before the scheduled startin
272. ch the records for data matching the report criteria The report is displayed in the Report Viewer Report Viewer All reports in Drake are accessible through the Report Viewer To access the Report Viewer from the Home window select Reports gt Report Viewer To view a report select the report to view and click View From this point you can print the report export it or change the font You can also scroll through multiple page reports by using the arrow keys at the top of the viewer To perform a task click the applicable icon It s best to save reports where they re easily found Drake has a sug NOTE gested location Drake12 Reports Select a location by browsing from the Save CSV file window Depreciation List Tax Year 2012 The Depreciation List is a report that displays depreciation information for selected clients There are two methods for creating depreciation lists in Drake manually entering client SSN EINs to be listed and filtering the client database for clients that meet specified criteria To create a depreciation list for one or more clients 323 Fixed Asset Manager Drake Software User s Manual 1 From the Home window select Reports gt Depreciation List The Depreciation List Client Selection dialog box is displayed 2 Choose one of the following methods Create a list Enter the SSN EIN and click Add Client Repeat for addi tional clients until all the desired clients are entered
273. chedule E to access the associated 4562 screen or to begin a new 4562 screen Entering Depreciable Assets Screen code 4562 Use the 4562 screen accessible from the Income tab to enter depreciation data Enter each asset on a separate 4562 screen To open a new screen press PAGE DOWN Tip Grid data entry can be used for the 4562 screen Press F3 to switch to and from grid data See Grid Data Entry on page 68 Tax Year 2012 165 Depreciation Drake Software User s Manual Required Required fields on the 4562 screen are described in Table 5 17 Fields Table 5 17 Required Fields on 4562 screen Field Description For Used for associating an asset with a form or schedule see Associating One Screen with Another on page 73 Description Description of asset This field supports 42 characters Per IRS regula Business Use Listed Property Type Prior Depreciation NOTE IMPORTANT tions only the first 24 characters are transmitted in e filed returns Addi tional characters are displayed in red on the screen Date Acquired Date the asset was placed in service Cost Basis Depreciable basis of the asset press F1 for further details Method Depreciation method Life Class life press F1 for a recovery period listing If EXP section 179 is selected as the depreciation method the useful life recovery period entered in the Life field is used to calculate depreci ation adjustments for Form
274. ck Print again All of the selected items are printed Enhanced mode allows you to print the document currently in view Printing a single form in this manner is referred to as quick printing To quick print a single form from Enhanced mode 1 Click a form or document name to display it in the viewer pane In the example in Figure 6 10 on page 202 the 1040 form is selected for viewing 201 E Mailing from View Print Drake Software User s Manual All Forms Sets EF ry Figure 6 10 Click the form to view Shortcut Click 2 Click the arrow next to the Print icon and then click the Quick Print selection CTRL Q to print the form in view or press CTRL Q X X Cr LL _ Setup Archive Email a OF ssessi ome Data Entry Paint Print Selected Form s Ctrl P Print Selected Form s to PDF Document Ctrl D AEF ome Email Selected Form s Ctrl M N Siati 1040 giai For the year Jan 1 Dec 31 2012 or oth Your first name and initial aage 00a seme gat Select Forms Figure 6 11 Click the arrow next to the Print icon to see print options 3 optional Select any printing options shown in the Print Selection dialog box 4 Click Print again E Mailing from View Print You can e mail tax returns directly from both Basic and Enhanced modes Before e mailing returns this way set up View Print e mail preferences Setting Up Preferences
275. ck Send About A client must know his or her return s password in order to open the return Passwords The default format for passwords is the first four letters of the client s last name or the first four letters of the entity s name followed by the last five numbers of the SSN for individual returns or the last five numbers of the EIN for entity returns See Figure 6 12 on page 203 for an example An administrative user can change the pass word format at Setup gt Options Administrative Options tab Drake cannot recover a lost password If you opt to replace a password with a new one in the Password Protect dialog box be sure to write down the new password and keep it in a secure location in case you forget it Sending Client Files to Drake Support When you send an e mail to Drake Support from View mode the program automati cally sends both the print file and the data file These files allow the Customer Sup port Representative to open the return in data entry When working in Enhanced mode you have the option of including PDF attachments with the e mail To send files to Drake Support from Enhanced mode 1 Go to View mode of the return 2 optional Select any forms to be included as PDF documents in the e mail 3 Click the arrow on the Email button and select Email to Drake Support If you selected any forms in Step 2 the Password Protect dialog box is opened click OK if not changing the password The Compose
276. ck the down arrow next to the Split button and select a category of MFS filing status At this point if there is a Schedule A on the return and you have not specified on screen A whether to force itemized or standard deduction NOTE you are prompted to select Itemize Standard or Optimize before pro ceeding If you select Optimize the program will determine which is the better treatment of the Schedule A deductions Results are displayed in the Return Selector Figure 3 22 The MFJ MFS Report button allows you to view a Filing Status Optimization Report for a selected return See About the MFJ MFS Report following SSN EIN Date Time Name Fed Refund State Refund Type _ Status fm 400111111 10 11 08 47 27 SILVER JOHN SPUTRETURN OT PER Msg C 400222222 10 11 08 47 27 SILVER ALICE SPLIT RETURN PER Msg C 400111111 10 11 08 47 28 SILVER JOHN amp ALI PER Msg Click print or press the P key to print this screen Click save or press the S key to save the MFS returns Select returns first then click save and view Help MFJ MFS report Print Save Select all UnSelect all Exit Figure 3 22 Results for split return 3 Select files and then click MFJ MFS Report Print or Save as applicable 4 Click Exit About the To view the MFJ MFS report click the MFJ MFS Report button See Figure 3 22 MFJ MFS The report is displayed with the MFS_COMP and OH_COMP
277. cks alternative depreciation methods Book Tracks depreciation using book method 325 Client Status Manager CSM Reports Drake Software User s Manual Select a sorting option from the drop list on the right Choose to print a Full Schedule to sort By Department to sort by Form Schedule or to sort by Asset Category Not all of these sorting options are available for every tracking for mat Click Run Report In the Asset Manager Client Selection dialog box create a report for one or more specific clients or create a filtered report based on all clients e One or more clients Enter SSN EIN in the blank field and click Add Cli ent Repeat for all desired clients then click Next e Filtered report Click Next to open the Asset Manager Filter Selection dialog box Select a filter or sort option then click Next to open the Basic Search Conditions dialog box Edit settings as desired see Search Condi tions on page 319 and click Continue Select an option for displaying the depreciation list e Print Send the list to the printer When the Print dialog box is opened choose and printer and click Print e Export to File Save the report as a CSV file To open the saved file go to your Drake12 Reports folder Click OK Using Fixed Asset Manager Macros Use the Fixed Asset Manager macros to run a set of standard reports at one time To set up a macro in the Fixed Asset Manager 1 2 From the Home w
278. cks can be caused by calculating on multiple computers from a NOTE peer to peer network no dedicated server or if DCNs are not suffi ciently staggered See Staggering DCNs following Staggering Each computer assigns a Declaration Control Number DCN to every calculated DCNS return Each return created after the first return is assigned a DCN in sequential order starting with 01001 01001 01002 01003 etc If an office is not networked and uses 234 Tax Year 2012 Drake Software User s Manual E filing a Return multiple workstations for data entry each workstation must adjust stagger its DCN counter IMPORTANT Stagger the starting DCNs before creating 2012 returns To stagger the DCNs complete the following steps on each workstation 1 From the Home window go to Setup gt Firm s 2 Double click the firm or select it and click Edit Firm The bottom half of Firm Setup becomes active 3 Change the DCN serial number Figure 8 4 Drake suggests choosing starting DCNs that are at least 2 000 numbers apart Federal EIN 123456789 State ID number o O EFIN 123456 DCN serial number 05000 Non paid prep Figure 8 4 DCN Serial Number field in Firm Setup 4 Click Save to save changes or click Cancel to exit without saving changes Depending on the amount chosen to stagger the numbers each workstation now pro duces DCNs based on a different starting number For example if you chose to st
279. cle M 3 Net Income Loss Reconcili Credit ation for Certain Partnerships 1 per return 8835 Renewable Electricity STMnnn Statement record other than Credit K 1 The following chart identifies forms and schedules that can be e filed with a 1041 return for the 2012 tax year Form Form Form Name Form Name Number Number 1041 U S Income Tax Return 6478 Credit for Alcohol use as for Estates and Trusts Fuel C Form Profit or Loss From Busi 6765 Credit for Increasing 1040 ness Research Activities C EZ Form Net Profit From Business 6781 Gains amp Losses from Section 1040 1256 Contracts and Strad dles XXIV Tax Year 2012 Drake Software User s Manual Tax Year 2012 Accepted Forms and Schedu les Form Form Form Name Form Name Number Number D Form Capital Gains and Losses 8082 Notice of Inconsistent Treat 1041 ment or Administrative Adjustment Request E Form Supplemental Income amp 8275 Disclosure Statement 1040 Loss F Form Profit or Loss From Farm 8275 R Regulatory Disclosure State 1040 ing ment H Form Household Employment 8582 Passive Activity Loss Limita 1040 Taxes tion Form 1041 Alternative Minimum Tax 8582 Passive Activity Loss Limita Estates and Trusts tions J Form 1041 Trust Allocation of an 8582 CR Passive Activity Credit Limi Accumulation Distribution tations K 1 Form Beneficiary
280. clude test returns if you want to include Drake test returns in the export 5 Click Continue 6 Click Exit when the export is complete Password Protecting Client Files The Password Protect tool protects files from unauthorized access A protected file cannot be opened in data entry until it is unlocked with a password To password protect a file 1 From the Home window go to Tools gt File Maintenance gt Password Protect Files 2 Inthe Password Protect Client Data Files dialog box Figure 11 7 on page 297 enter the SSN or EIN of the client file to password protect 296 Tax Year 2012 Drake Software User s Manual File Maintenance Drake 2012 Password Protect Client Data Files This will password protect a single taxpayer return The password you choose MUST be eight characters or less It may be any combination of letters and numbers Enter the client s SSN EIN then enter and confirm the desired password Enter the primary taxpayer SSN EIN Enter password Confirm password Help Continue Exit Figure 11 7 Enter the SSN and then enter the eight character password twice 3 Enter an eight character password in the Enter Password field Passwords are case sensitive and can consist of any combination of letters and numbers Enter the password in the next field to confirm it Click Continue Click Yes to confirm that you want to password protect the file Click Exit
281. creen D2 Carryovers amp Other Entries e Cost or other basis Enter the cost or basis If only the loss amount is available enter the loss amount and leave the Proceeds from sale field blank e Federal tax withheld Enter the amount of federal tax withheld from the pro ceeds of a sale e Wash sale loss disallowed Enter amount of wash sale loss that is disallowed e Description Enter description of capital gain or loss item using stock ticker symbols or abbreviations In the past Drake supported 32 characters but only the first 15 were transmitted with an e filed return By default the first 15 characters were displayed in black text on the screen additional characters were displayed in red With Modernize e File MeF all characters are now transmitted and all char acters are displayed in black text on the screen e Basis not reported If the asset being entered is not being taken from a Form 1099 B indicate why by selecting an option from the drop list e Adjustments Up to three adjustments per screen are permitted For each adjustment select the applicable code from the drop list and enter the amount of adjustment and AMT adjustment if applicable to the gain or loss e AMT Several AMT telated fields are included on screen 8949 The Capital Gains and Losses worksheet D_AMT will use the same number as the regular Schedule D unless entries are made in the AMT Adjustment to gain or loss and A
282. cs those most viewed in the past month and Top 10 Frequently Asked Questions See item 3 in Figure 10 1 on page 258 Next search for specific articles questions or terms using the five tabs listed in Table 10 1 Table 10 1 KB Tabs See item 1 in Figure 10 1 Tab Description Search Search for articles using word searches Enter search criteria under Search for articles See item 2 in Figure 10 1 on page 258 see also Searching the KB following Browse Open folders containing all articles on a selected subject Choose from more than two dozen folders of tax software topics and 18 folders of Client Write Up topics FAQ View articles we believe to be most pertinent These change frequently so check back often Solution Finder Helps you diagnose identify and resolve data path problems Glossary View a list of relevant tax and Drake Software terms How to Search the KB View detailed instructions on how to use the KB search features to quickly find relevant articles Category List View all categories of topics in the Drake and CWU Knowledge Bases Searching To search for a topic or article in the KB the KB Tax Year 2012 1 Under the Search tab Figure 10 1 on page 258 enter a keyword in the Search field 2 optional Direct your search by selecting options from the Search Using and Search Within drop lists Search Using options are described in Table 10 2 Table
283. ct Ask about this Condition each time the Filter is used Click OK The new condition is displayed in the Filter Manager Figure 12 7 on page 322 321 Filter Manager Drake Software User s Manual Basic Search Conditions for the Selected Filter Return Type is 1040 Edit Additonal Search Conditions for the Selected Filter Schedule C is present Add Condition AGI is at least 50000 e Edit Condition Delete Match All Conditions C Match Any Condition Figure 12 7 New condition AGI is at least 50000 is displayed optional Repeat the previous steps to add more conditions as needed Select Match All Conditions for narrower results or Match Any Condition for broader results as applicable Click Save To edit a search condition select the condition and click Edit Condi NOTE tion Make changes and click OK To delete a search condition select the condition and click Delete When prompted click Yes Available Filters List The Available Filters list in the Filter Manager Figure 12 4 on page 318 can be modified as needed Create new filters edit existing ones or rename filters Creating a Filter Modifying a 322 Filter To create a new filter in the Filter Manager oe eS Sy S Click New Filter Enter a unique filter name Click OK Modify the search conditions as needed See Search Conditions on page 319 Click OK The new filter is added to th
284. culate penalties and interest on all late returns calculated The per return option can be used if the global option shown in Figure 5 60 is not selected To have the program calculate penalties and interest for a single return 1 2 Open the client s file in Drake and go to the LATE screen accessible from the Taxes tab Mark the Calculate penalties and interest on this return box Figure 5 61 Complete the Date return was filed text box Figure 5 61 If this field is blank the program uses the Date balance paid entry from the 2210 screen by default Late Filing Interest and Penalty l Suppress calculation of penalties and interest on this return MV Calculate penalties and interest on this return l Do not carry P amp Ito 1040V filing instructions or letter Failure to file pane Failure to pay penalty Interest Date return was filed Due date of return Date balance paid if different OT eae Oey SU cl beans Figure 5 61 The LATE screen accessible from the Taxes tab Wty Me Ae 0 Oe Other LATE You can also use the LATE screen to override these additional default settings 182 Screen Features Including calculated amounts elsewhere By default the calculated amounts are incorporated into the payment voucher filing instructions and client result let ter for the return To override this default go to the LATE screen and mark
285. d If the asset being entered is not being taken from a Form 1099 B indicate why by selecting an option from the drop list Adjustments Up to three adjustments per screen are permitted For each adjustment select the applicable code from the drop list and enter the amount of adjustment and AMT adjustment if applicable to the gain or loss AMT Several AMT telated fields are included on screen 8949 Form 4626 will use amount in the AMT Adjustment to gain or loss fields on screen 8949 1120 package only Amount of gain or loss subject Enter amount of gain or loss subject to 28 rate State Use Only Check with your state for required codes 8825 Rental Property Attachment 368 Because the IRS is requiring preparers to provide taxpayers with more detail about income from rental property Drake now generates attachment K1_8825 LD explain ing the Net rental real estate income loss as it appears on line 2 of each share holder s or partner s Schedule K 1 Figure 14 1 on page 369 Tax Year 2012 Drake Software User s Manual Individual Entity Packages Tax Year 2012 Partner s Share of Deductions Credit 1 Ordinary business income loss Net rental real estate income loss be 3 Other net rental income loss J Ate Guasaga PAY TeRi stanak a iath Figure 14 1 Line 2 Net rental real estate income loss of Schedule K 1 The amount on line 2 of Schedul
286. d eral or state error codes Eliminating All EF messages must be eliminated before a return can be e filed To eliminate an EF EF message Messages Open the return and click View to calculate it and go to View mode 2 Under the All Forms or EF tab in the left column click the MESSAGES page to view e EF messages are displayed in red and are listed by error code e Unverified fields are identified at the end of the EF message page It s easiest to view all EF messages from View mode but individual NOTE issues can be viewed and in some cases accessed from the Calcula tion Results window See Calculation Results on page 180 3 Return to data entry and correct the issues that are preventing e filing 4 Re calculate the return Repeat the above steps until all federal and state EF messages are eliminated 230 Tax Year 2012 Drake Software User s Manual E filing a Return Step 2 Prepare the Transmission File TIP To prepare the transmission file To bypass this step select the return directly from the Calculation Results screen See Figure 8 3 on page 232 Shortcut CTRL S 1 From the Drake Home window select EF gt Select Returns for EF The EF Return Selector displays a list of recently calculated returns Those eligible for e file are indicated by a check box Figure 8 2 EF Return Selector The EF Return Selector allows you to select clients for e filing To include a client f Number Double c
287. d The message and attachment are sent to the recipient Enter a partial SSN or EIN in the SSN EIN Search text box and click Search for a list of returns beginning with those numbers Double click a return on the list to attach it to the e mail Attaching New for 2012 Because of Drake s more stringent password formatting it is no longer Prior Year Returns 1 2 3 4 5 Tax Year 2012 possible to e mail returns through past Drake programs To attach returns from prior years through Drake12 follow these steps From the menu bar select Help gt E Mail The Inbox window is displayed Click New to open a blank Compose Message window Click Add to open the Email Attachments dialog box item 2 in Figure 10 19 In the SSN EIN Search text box of the Client Data Files section enter the SSN or EIN of the file to send Click Prior Year to open the Prior Year dialog box Figure 10 20 on page 280 279 Interactive Support Drake Software User s Manual Drake 2012 Attach Data File Prior Year mes ID Number 400006665 Select Drive Select Year F 2011 Md Results F DRAKE11 Attach amg Cancel Figure 10 20 Attaching prior year returns Select the drive where your prior year Drake files are kept Select a tax year Click a return circled in Figure 10 20 Click Attach The prior year return appears in the Attachments pane to the right side of the Email Attachments dialog box 2 Pot Attac
288. d EF Note These notes appear in NOTES in View mode and when you open the return unless you enter Date Completed above Hold EF Note Hold EF Note E Cioe Note Miscellaneous Notes These will be updated to next year I Dontshow I Hold EF I Print on Organizer These are the notes you see when opening a return and that will be updated levery year Figure 5 65 NOTE screen fields The maximum number of characters for the Note field is 120 Up to four notes can be entered on a single NOTE screen For additional screens press PAGE DOWN In the Date Completed field enter the date that the note should be dis NOTE continued The note will no longer appear when the return is opened but will still appear in NOTES in View mode Delaying In Drake the presence of an EF message prevents a return from being e filed A return E filing cannot be e filed until all EF messages are eliminated The NOTE screen can be used to delay the e filing of a prepared return even if the return is eligible for e file To have a note delay e filing select Hold EF see Figure 5 65 for the note and the note shows up as an EF message When you are ready to e file the return return to the NOTE screen and clear the Hold EF box Notes to be Notes in the top section of the NOTE screen apply for the current year only The Mis Updated cellaneous Notes item 2 in Figure 5 65 at the bottom of the NOTE screen are upda
289. d Preparer Record box As you type the software locates and highlights the record 4 Click Close Click Exit to close the Preparer Setup dialog box Pay Per Return Setup PPR Clients Only For information on setting up PPR see Drake Software User s Manual Supplement Pay Per Return PPR available on your Drake CD through the software from the Home window in Drake go to Help gt Online Resources and on the Drake Support site at Attp Support DrakeSoftware com Training Tools gt Manuals Data Locations Setup Data location settings formerly Directories Paths settings which manage the loca tions for data access and storage is now configured when you install the program To change your settings ADMIN only select Setup gt Data Locations from the Home window For more information see Single Workstations and Network Options on page 16 Directory and path settings should not be changed during tax sea son Changing a drive letter during tax season can cause problems in CAUTION file storage and e file processing For details on setting network con figurations see Single Workstations and Network Options on page 16 For assistance contact your office IT professional or Drake Support Options Setup Options Setup is The tax software is shipped with the most common preferences set as the defaults Use A in ane i Options Setup accessible by clicking Setup gt Options from the Home window to filing tax re
290. d as 8896 Low Sulfur Diesel Fuel Pro Fuel duction Credit 6765 Credit for Increasing 8907 Nonconventional Source Research Activities Fuel Credit 6781 Gains amp Losses from Sec 8908 Energy Efficient Home Credit tion 1256 7004 Request for Extension 8910 Alternative Motor Vehicle Credit 8082 Notice of Inconsistent 8911 Alternative Fuel Vehicle Refueling Property Credit xxiii Accepted Forms and Schedules Drake Software User s Manual Form Form Form Name Form Name Number Number 8283 Noncash Charitable Contri 8912 Clean Renewable Energy butions Bond Credit and Gulf Bond Credit 8308 Report of a Sale or 8925 Report of Employer Owned Exchange Life Insurance Contracts 8586 Low Income Housing Credit 8941 Credit for Small Employer Health Insurance Premiums 8594 Asset Acquisition statement 8949 Sales and other Dispositions of Capital Assets 8611 Recapture of Low Income 8906 A Annual Statement for Low Housing Credit Income Housing Credit 8697 Look Back Method for 8916 A Supplemental Attachment to Completed Long term Con Schedule M 3 tracts 8820 Orphan Drug Credit C Schedule C Additional Infor mation for Schedule M 3 8824 Like Kind Exchange D 1065 Capital Gains Losses 8825 Real Estate Income F 1040 Profit Loss from Farming 8826 Disabled Access Credit K 1 1065 Partner s Share 8832 Entity Classification Elec K 1 K 1 statement record tion STM099 8834 Qualified Electric Vehi
291. d if complying with the requirement would cause undue hardship Tax return preparers must file by electronic data submission all original Maine tax returns for individual income tax that are eligible for electronic filing except e When for the previous calendar year the tax return preparer prepared 10 or fewer original Maine tax returns for individual income tax that are eligible for e filing Tax Year 2012 Drake Software User s Manual Maryland Massachu setts Michigan Minnesota Tax Year 2012 e When the taxpayer refuses to allow the return to be e filed and the tax return pre parer notes the refusal in the taxpayer s records e When the tax return preparer has been granted a waiver from mandatory participa tion under section 05 Rule 104 For any taxable year beginning after December 31 2010 a preparer who has prepared more than 100 qualified returns in the prior taxable year is required to file the returns electronically The Act authorizes the Comptroller to impose on a preparer a 50 pen alty for each return that is not filed electronically in compliance with this Act unless the preparer is able to show that the failure to comply is due to reasonable cause and not due to willful neglect The total penalties assessed may not exceed 500 for all returns filed by the preparer in a taxable year Waivers are available Tax General Arti cle 10 824 Paid preparers must under certain conditions e file all corporat
292. d in the right pane of the Document Manager window Figure 13 10 on page 347 NOTE Files can be added to the Document Manager from the toolbar or through the menu bar Documents When you print a completed tax form or tax return in Drake you have the option of also saving an electronic copy of the form or return in the Document Manager and sending it to the SecureFilePro portal For details see Printing to Drake PDF on page 200 You can import a PDF copy or scanned image from another application or program located elsewhere in your computer or network into the client s Document Manager folder To import a file into the Document Manager 1 Select the folder where the document will be stored 2 From the toolbar click Import to open the Import File dialog box 3 Browse to and select the desired document 4 Click Open The Document Manager copies the document into the selected folder Scan documents into the Document Manager using a flat bed or document feed scan ner A flat bed scanner scans one page at a time creating a separate PDF for each page A document feed scanner scans multiple pages and makes one document of many pages Document feeder scanners are recommended See Compatible Scan NOTE ners on page 349 for scanners that have been reviewed and found to be compatible with the 2012 Document Manager release When you scan a document using the Document Manager the program automatically locates an
293. d spouse if married filing jointly must enter his or her name and the date onto the DISC screen in Drake Once the required fields on the applicable screen are completed the Consent to Disclosure of Tax Return Information will be generated with the return If using ABCvoice go to the ABCV screen in data entry to indicate NOTE whether the taxpayer has signed the Consent to Disclosure of Tax Return Information Consent to Disclosure Franchises Networks Screen code CONS Tax Year 2012 The Consent to Disclosure of Tax Return Information to franchises or networks for merly service bureaus is required for all returns not just bank product returns pre pared by firms that are part of a franchise or network The form is similar to the disclosure form for banks described previously and must be signed before the return is e filed Paper Forms Log in to the Drake Support site Support DrakeSoftware com and from the blue menu bar go to Resources gt 7216 Sample Letters Click Con sent to Use of Tax Return Information in English or Spanish Enter the firm and franchise or network name or print the documents and enter the names manually The taxpayer and spouse if applicable must sign and date the form prior to e fil ing Next in the software go to screen CONS accessible from the Miscellaneous tab and select the first box in the Paper Consent section Figure 7 2 A ee ee PO O a ose ft Paper Consent of Disc
294. d uses your system s default scanner A Scanner Cannot be Located mes sage implies that the scanner is not TWAIN compliant or has been improperly installed To scan a document into the Document Manager 1 Select the folder where the file will be stored 2 From the toolbar click Scan and select Use Scanner Bed or Use Document Feeder 3 From the Scan Input dialog box select a file type Figure 13 11 on page 349 Tax Year 2012 Drake Software User s Manual Working With Document Manager Files Compatible Scanners Linking a File Gy Link File E scan Input Esm Enter a name for ths document Social Security Card PDF JPG V Add name to common documents list 5 BMP TIF Enable duplex scanning f available GIF PNG a _ Cancel _ Figure 13 11 Scan input dialog boxes for Document Manager 4 Enter a name for the scanned document or choose a default name from the drop list by clicking the arrow at the right end of the name input field In the Figure 13 11 example Social Security Card has been selected 5 Click Scan To ease search and retrieval of Document Manager files use a Tip consistent naming convention The Common Documents feature can help you to do this See Setting Up Common Documents on page 334 Drake has reviewed the following scanners and found them compatible with the Doc ument Manager 2012 release This list does not represent product endorsement or pr
295. days or other days on which appointments should not be scheduled Dates Not Available for Appointments Create a list of holiday and other dates in which your office will be closed Day of Week _ Holiday Other January 21 2013 Monday M L K Day Add February 18 2013 Monday Presidents Day Figure 4 16 Example of dates entered that are not available for appointments To edit or delete an entered date select the date and click Edit or Delete 6 Select your preference for Appointment Date Criteria Your preference applies when a rolled forward appointment falls on a weekday or holiday You can also select to keep the day of the week for example if a client wants a Monday appointment each year or the date for example if a client wants to meet on the first day of a month 7 Click OK to begin the batch appointment process The program creates appointments as defined by your specifications and preferences Next it displays the Scheduler Batch Created Appointments report which dis plays the following information e Summary of appointments that could not be generated explanations provided e Number of appointments that had conflicts 92 Tax Year 2012 Drake Software User s Manual Scheduler e Number of new appointments generated successfully In addition the report shows 1 which appointments had conflicts along with the new times scheduled and 2 the new times scheduled for all other appointments
296. dence Screen code HOME Related Worksheets Updating from the Prior Year Tax Year 2012 Use the HOME screen to accomplish the following tasks e Report the sale of a primary residence e Enter data to determine the taxpayer s basis in the primary residence and calculate the tax implications of the transaction e Allow the program to reduce the maximum exclusion if the taxpayer is eligible for part but not all of the gain exclusion e Apply the appropriate treatment for the gain loss on the transaction e Indicate that a surviving spouse is taking the MFJ exclusion for gain on the sale e Enter data to calculate the amount of recapture in a year of sale if the First Time Homebuyer Credit Form 5405 was taken on the home e Enter data for Form 5405 Part III Disposition or Change in Use of Main Home for Which the Credit Was Claimed and Part IV Repayment of Credit Claimed for 2008 or 2009 A Primary Residence Calculations worksheet WK_2119 is generated with the return when the HOME screen is used It consists of up to three pages e Worksheet 1 Adjusted Basis of Home Sold e Worksheet 2 Gain or Loss Exclusion and Taxable Gain on Sale of Home e Worksheet 3 Reduced Maximum Exclusion These pages are for informational purposes only to allow the basis in the home to be tracked If no date of sale is entered only Worksheet 1 contains data when generated with the return Data entered in the Date home was purchased B
297. dents screens that contain data Enter the required data including the dependent s full date of birth at the top of screen 2 A dependent s age is displayed once a birth date is entered Figure 5 3 Dependent Information State Information Use lt F3 gt to switch to grid mode AR LA NY EIC NY 272 PA Months Dependent first name M Last name if different Suffix SSN Relationship inhome Date of birth Frank 244 55 6666 Son x 12 x 10 07 2007 Childcare Expense Information Form 2441 Age determined by Qualifying childcare expenses incurred and paid in 2012 date of birth Portion of qualifying expenses provided by ermployel eeeeeeseeseeeteeeeneeee TSJ z State zl State codes EIC A ey ey an fir ns E T S T A E ENT as of 12 31 2012 Figure 5 3 Calculated age is displayed once birth date is entered Figure 5 3 shows the default screen 2 Grid data entry can also be Tip used for entering dependent information To switch to grid data entry mode press F3 See Grid Data Entry on page 68 for more informa tion Entering Dependent Last Names By default the primary taxpayer s last name is used for all dependents Complete the Last Name field on screen 2 only if the dependent s last is different Selecting Months in Home By default the program calculates the return as if a dependent lived with the taxpayer for the entire year Complete the Months i
298. des a product selection section in the upper left corner Click a product box to select it If adding a state bank product select the state Each screen has one or more sections for entering and verifying the taxpayer s identi fication The address fields are overrides if an address is entered on screen 1 you do not have to enter it again on the bank screen Some fields require the taxpayer and spouse to produce one or more forms of ID driver s license passport etc and the preparer to enter information from these IDs on the screen Identification information is required and must be entered before the return can be transmitted and bank product accepted If the taxpayer s address differs from the one entered on screen 1 or if the screen 1 address is a P O box enter a physical address on the NOTES bank screen to help avoid delays in processing the application To scan copies of the IDs into the Drake Document Manager see Working With Files in the DDM on page 309 Prep Fee Override Field Tax preparation fees are calculated from fees established in Setup gt Pricing and can be overridden from both screen 1 and the BILL screen Use the Tax preparation fees override field on your bank screen to override the fee amount that is to be withheld from the bank product Figure 7 4 Override the fees to be WITHHELD from the bank product Fait preparations Fee 22 a 250 Figure 7 4 Overriding the Tax preparation f
299. dow Home Window From the menu bar select Help gt E Mail The Inbox window is displayed 2 Click New to open a blank Compose Message window an 3 Click Add to open the Email Attachments dialog box Figure 10 19 on page 279 4 Inthe SSN EIN Search text box of the Client Data Files section enter the SSN or EIN ofthe file to send item 1 in Figure 10 19 on page 279 278 Tax Year 2012 Drake Software User s Manual NOTE Interactive Support arimo Attachments Data File 400006665 1040 Data File 400006665 1040 2011 Drake 2012 Email Attachments Client Data Files SSN EIN search 1400006665 Search Attach Document Manager Files SSN EIN 400006664 C Search Drake Software program files Browse All other files Browse Diagnostic attachments for use with support System Drake Software Remove Information Printer Settings Program Settings Installation Info Figure 10 19 Enter an SSN or EIN and click Attach to attach tax returns item 1 Use Prior Year to attach prior year returns item 2 Use Document Manager Files to attach a PDF copy of a saved file item 3 Click Attach or press ENTER The file appears in the Attachments pane to the right Click Done You are returned to the Compose Message window with the file attached See Figure 10 18 on page 278 Complete the To and Subject fields and compose your message Click Sen
300. dress Select Use Alternate Reply to Address to replace your 1040 com address This address appears as the sender and reply to address on e mail messages you send Display Name Enter the name you want displayed on your e mail messages The program uses your Preparer Login name by default e Notification Message Options Two options are available To keep the Report Complete window from opening when compiling a Report Generated Recipient List select the Hide report results message for report generated recipient list To suppress the Open Attachment warning when you open a message that contains an attachment select the Hide attachment open warning check box NOTE Setup options are not available if you access the e mail program from within data entry 276 Tax Year 2012 Drake Software User s Manual Interactive Support Checking for E mail Message Storage Basic E Mail Tasks Attaching Files Tax Year 2012 Once you have selected Help gt E mail from the Home window you have three ways to check your Drake e mail select File gt Check Mail from the menu bar click Send Receive or press CTRL M To check only the status of your mailbox click File gt Check Mailbox Status or press CTRL S NOTES Messages are downloaded only once per EFIN If multiple computers are using the same EFIN consider designating one person to down load Drake e mail and forward it accordingly Downloaded messages a
301. ds you change this password at your earliest conve nience by going to Support DrakeSoftware com gt My Account gt Edit Account The new password must meet the criteria listed above Anytime you change your pass word it is critical that you update the password entered in ERO Setup in Drake Because of the new password system it s no longer possible to e mail returns using prior year Drake programs To e mail returns from prior tax years open the e mail program in Drake12 click Add or Attach and use the Prior Year function For details see E Mail Program on page 275 Program Enhancements Printing Updates PDF Attach ments Changes and enhancements to the program include Drake has made changes to its print engine as a part of an ongoing effort to create nearly exact replicas of tax forms on the many different makes and models of printers that are used in tax offices today Some of these changes are necessitated by the emer gence of stricter requirements enforced by some government tax agencies for paper processing Drake has provided a way for you to print a test page in the preferred Printer Com mand Language PCL mode to see if your printer is compliant with these software changes See Testing Your Printer on page 49 Binary or PDF files can now be attached to e filed 1040 returns in Drake Software These attachments are generally signature or third party documents such as a copy of a signed lease or a sign
302. e i Select a file in the Document Manager document list and click Copy Choose to copy to the clipboard copy to a location or copy to a CD If copying to the Copy clipboard use the Document Manager s Paste button to paste the document into another folder If copying to a location choose a location for storing the copied file and then click Save If copying to a CD follow the instructions pro vided on your screen 7 Use the Cut and Paste buttons to move documents from one folder to another og To copy a folder to another document use the Copy button Cut _ _ Use the Cut and Paste buttons to move documents from one folder to another C To copy a folder to another document use the Copy button Paste Access your SecureFilePro portal and options to Upload or Download files to the portal See SecureFilePro on page 362 for details Portal Select a file in the DDM document list or select multiple files using the SHIFT or Cr CTRL keys and click E mail Your default e mail program is opened with the E mail document added as an attachment Activate drag and drop navigation which allows cabinets drawers folders and files to be dragged and dropped within the Document Manager Right click an item and drag the selected item to the new location Click Drag On or Drag Off to turn this feature off and on 337 Setting up Your Document Manager Drake Software User s Manual Q Table 13 2
303. e ID number and client name and phone number return type balance due preparer name client status bank deposits client payments and the starting and completion dates for each return The CSM can be used for searching viewing organizing and printing data The logged in preparer can see his or her CSM data upon login using NOTE the Personal Client Manager PCM Much of this chapter applies to the PCM and the CSM see notes throughout these pages Accessing the CSM E CSM Choose one of the following methods to open the CSM e From the Drake Home window click the CSM icon in the toolbar e From the Drake Home window select Reports gt Client Status Manager e Press CTRL L on your keyboard You cannot access the CSM from data entry but you can change the client s status To do so click the CSM icon in the Data Entry Menu toolbar and select a new status About Client Statuses Tax Year 2012 The CSM categorizes clients by status A client status is the stage of a return in the return preparation cycle The CSM s predefined client statuses can be set automati 249 About Client Statuses Drake Software User s Manual cally as the return progresses through the cycle Figure 9 1 or manually as needed You can also define new statuses Enter new client s Begin entering tax Transmit e file Receive ack of Print copies of tax information return in Drake return accepted return return for client l
304. e S corporation and partnership returns and corporate extensions Additionally the Commonwealth of Massachusetts requires personal income tax extensions with zero payment or with payments of 5 000 or more to be filed and paid if applicable electronically For tax years beginning on or after January 1 2004 income tax return preparers who completed 200 or more original Massachusetts Forms and 1 NR PY including those e filed during the previous calendar year are required to use electronic means to file all personal income tax returns unless the taxpayer specifically directs on the paper form that filing be on paper The threshold is reduced to 100 returns for tax years beginning on or after January 1 2005 The preparer must continue using electronic means to file returns in all subsequent years unless the preparer completed no more than 25 original individual income tax returns during the previous calendar year Note Effective February 16 2004 software generated forms that are printed and mailed to the Department of Revenue must contain a 2 D barcode or the return will be sent back to the taxpayer unprocessed Tax preparers completing more than 10 personal income tax returns are required to e file all eligible returns that are supported by their software Preparers are required to e file all Minnesota individual income tax returns if they are in the business of preparing tax returns and reasonably expect to prepare more than 10 M
305. e dragged to create the desired order of columns Below this list is a sample of the report and the print format Select Title and Description Report title Call List for all Preparers Report description List of appointments for all preparers Select Report Columns Categories Available columns Selected report columns All Categories Appointment Date a Preparer Name Appointment Type Select gt Appointment Date City Start Time Client Type lt Unselect Torme i Comments axpayer Duration Duration Al lt lt Unselect All Phone Daytime ele Address Phone Evening Group Meeting Phone Cell Phone Cell Client Type Phone Daytime is Sample Report Landscape Call List for all Preparers Preparer Name Appointment Date Start Time Taxpayer Name Taxpayer ID Duration Pho lt w G Help Figure 12 2 Report Editor Step 1 window for formatting reports Tax Year 2012 315 Setting Up a Report Drake Software User s Manual 3 Revise the Report title and Report description as needed The Report descrip tion text box is limited to 70 characters Note that the new data appears in the Sample Report box as you type 4 Click Save or proceed to Assigning Columns following The program stores the report with the new title under My Reports Assigning Columns The various columns that make up your report are represented by keywords Select the columns and the order in which they are sh
306. e second Schedule C created in the return Ifa return has multiple instances of the selected form enter the instance of the form in the Multi form code field For example if there are two Schedule Cs and you want to associate an asset with the second Schedule C created in the return you would enter a multi form code of 2 See Figure 3 21 For Schedule E rental properties each property in other words each NOTE screen has a separate multi form code The MFC number for a Schedule E should refer to the property not the instance of the Schedule E Up to three properties are printed on a Schedule E When you split a joint return in Drake the program calculates three returns one for married filing jointly MFJ and two for married filing separately MFS Before splitting a joint return ensure that data on all screens clearly applies to either the taxpayer T or spouse S and make sure Ready for EF is not marked on the EF screen If this box is marked all three returns will be marked eligible for e file See EF Override Options in Data Entry on page 236 73 Data Entry Drake Software User s Manual To split a joint return 1 Open the return 2 Choose one of the following options amp e To compare returns for two individuals who lived together for the entire year click the Split button or press CTRL S To compare returns for two individuals who did not live together for the entire year cli
307. e A override fields payments Figure 5 42 Entering estimated taxes paid in 2012 Estimated Payments for 2013 Estimated payments for 2013 are shown on the payment vouchers in View mode Make estimated tax payments by debit card or credit card using the N DOTES Drake e Payment Center at www 1040paytax com E mail reminders can also be set up for the taxpayer on this website Printing Drake calculates the balance due and generates this year s payment vouchers Form Estimate 1040 V but it does not generate estimate vouchers for next year s payments by Vouchers default To have the program print estimate vouchers you must indicate this manually You can do this in one of two ways ere e Select an estimate ES code on the ES screen shown at left Sas e Select an ES code at the bottom of screen 1 Figure 5 43 Estimated tax e a Overpayment code Zs gt Invoice numbet FRE OPTI Ea ao vy ve e Figure 5 43 Estimated Tax ES code overrides on screen 1 Note in Figure 5 43 that the screen 1 fields are overrides If selections are made on both screens the program disregards the ES screen selection and uses screen 1 Estimate ES codes are shown in Table 5 11 ES Codes Table 5 11 Estimate Codes in Drake oe Description B Does not generate estimate vouchers in screen 1 drop list only Generates estimate vouchers with no dollar amounts X Generates estimate vouc
308. e Available Filters and can be edited Click Save at the bottom of the Filter Manager window To create a filter in the Filter Manager using an existing filter as a template oe SS Select a filter to use as a template Click Copy Filter Enter a unique name for the new filter Click OK Modify the search conditions as needed See Search Conditions on page 319 Click OK The new filter is added to the Available Filters and can be edited Click Save at the bottom of the Filter Manager window Tax Year 2012 Drake Software User s Manual Report Viewer Renaming a Filter To rename a filter in the Filter Manager Select a filter to use as a template Click Rename Filter Enter a new name for the filter Click OK The renamed filter shows in the Available Filters and can be edited Click Save at the bottom of the Filter Manager window Pe YS Viewing a Report from the Report Manager To view a report from the Report Manager 1 Locate and select the report in the report tree 2 Click View Report If a Basic Search Conditions box appears make any desired changes and click Continue If a previously saved version of the report is detected you are prompted to e Click Yes to re create the report using the most current data e Click No to open the previously saved report If you clicked Yes a Basic Search Condition box might appear Make any desired changes and click Continue 3 Wait for the program to sear
309. e Compose Message window and click the To but ton on the tool bar Figure 10 21 on page 281 or click the To button to the right of the Send button Address books are shown the Address Book drop list 280 Tax Year 2012 Drake Software User s Manual Interactive Support Drake 2012 Email Compose Message B fj 2 Attach Help Drake Software Support Address Book Drake Software Client Address Book Local Address Book N Report Generated Recipient List Attachments Oe E a N gt Figure 10 21 Address Book drop list Support The Drake Software Support Address Book displays general federal and state sup Address Book port addresses at Drake To insert an address into the To field of your message dou ble click an e mail address and click OK NOTE Questions sent to Support via e mail are generally answered with e mail responses Client Ifa client s e mail address is entered on screen 1 of the return 1040 package only it Address Book an be accessed from the Drake Software Client Address Book To fill this address book for the first time you ll need to repair the index files first see Repair Index Files on page 291 Next return to the e mail program click New click To and then select Drake Software Client Address Book Double click a line to add the client s e mail address to the To field for recipients of the e mail message When finished add ing addresses click OK Local Address The Loca
310. e D Import r heet epreadshe Associated Field on Screen 8949 Column AE AMT Cost Basis AF US Real Property Note To have a check mark appear in this field enter any char acter into the spreadsheet column AG State Use Code AH State adjustment AJ State Cost or Basis To import the information Open the client s file to the Data Entry Menu and click Import gt Schedule D Import GruntWorx Trades from the toolbar The Schedule D Import Grunt Worx Trades instructions are displayed 2 Click Next to open the Step 1 dialog box 3 Click Browse to the right of the 1 Import File Name field to locate the file to be imported 4 Once you have selected the file to be imported click Open The data path and file name will be displayed with the transactions shown in the Schedule D Transac tion Information grid below it 5 From the Start import at field select the line at which to start the import For example if the Item 1 row in the transaction list is column header information choose to begin import at line 2 6 Click Next 7 After verifying that the information is correct click Import Sales of Assets 1099 S Transactions To enter non recaptured losses use the Part IV Recapture Amounts when business use drops section of screen 4797 For sold property listed on Form 4797 deprecia tion sometimes must be recaptured as ordinary income For more on depreciating sold assets in Drake see Dep
311. e Setup Drake Software User s Manual Electronic Filing Setup Enter Electronic Return Originator information below All General Information fields except Telephone Number are needed for e filing Click help for Connection Settings information General Information Account Number 00000 EFIN 000000 Drake Password Serial Number J Edit Serial Transmitter Name THE TAX DOOD Use Firm 1 Info Transmitter Address 1234 WEST MAIN STREET City State Zip Code FRANKLIN NC 287341001 Federal EIN 590000000 Telephone Number 828 524 8888 Connection Settings Choose the appropriate settings below If necessary consult with your technician or contact Drake Support for assistance 1 Always use my existing Internet connection DSL Cable LAN Dial up 2 Dial whenever an Internet connection is not present 3 C Not Recommended Always launch a new dial up connection When dialing use this connection Franchise Network Information Admin only Master EFIN Fee Name Disclosure or Use of Tax Information by Preparers of Returns Need consent to disclose tax return information to this franchisor network Help Install Dialer OK Cancel Figure 2 4 Setup gt ERO Click the Use Firm 1 Info button Figure 2 4 on page 22 to import the NEW FOR information for the first firm listed in Setup gt Firm s directly into the 7017 General Information section
312. e User s Manual E filing a Return The program immediately logs in to Drake and performs the following tasks e Checks for new acknowledgments e Transmits files to Drake e Retrieves pending acknowledgments of the transmitted files if available e Checks for Drake e mail if this option is selected see following note e Logs out of Drake Transmission notes appear in the Communications box of the Transmit Receive window as transmission progresses When transmission is complete all returns trans mitted through Drake are forwarded to the correct IRS processing center 6 Click Exit to close the Transmit Receive box To have the system check for Drake e mail during transmission go to Tip Setup gt Options EF tab and select Check for e mail during EF transmit receive Receiving To check for acknowledgments without transmitting any files to Drake go to Acks Only EF gt Transmit Receive and click Acks Only The program checks for federal and state acknowledgments bank product acknowledgments and check authorizations See Step 4 Process Acknowledgments following for more on acknowledgments Step 4 Process Acknowledgments When Drake receives a transmission it immediately returns a one letter acknowledg ment or ack When the IRS Submission Processing Center receives the return it sends an ack to Drake which you can pick up by logging in to Drake Ack To process acks go to the Home window and select
313. e asset Tax Year 2012 Drake Software User s Manual Depreciation Indicating Sec 179 Expensing Tax Year 2012 The limitation occurs when the total of the expensed assets reaches the established limit for the current year again regardless of schedule To conform with IRS mandates Drake reports section 179 expense on the first Form 4562 generated with the return If multiple activities have section 179 expensing a section 179 summary is produced on the first Form 4562 All additional 4562 forms produced have only the Section 179 expense deduction lines completed NOTE Section 179 expense cannot be claimed on assets related to a passive activity Indicate section 179 expensing on the 4562 screen In most cases you do not have to use screen 6 which contains override fields for Form 4562 Part I Election to Expense Section 179 If screen 6 contains a section 179 expense override clear that field and enter the amount on the 4562 screen The entry appears on Form 4562 To expense the entire amount of an asset under section 179 select EXP as the depreci ation method To expense only a portion of the tangible property under section 179 enter all information as if depreciating the full amount then enter the amount to expense in the 179 expense elected this year field Figure 5 53 An amount in this field overrides system calculations 179 expense allowed this yeal eee 179 expense elected in pri
314. e audit log records the action the date the action was taken and the user who performed the action It also shows the document name and path and has a field for entering a document description To access the Document Manager Audit Log select a file from the Document Man ager document list and choose Properties from the right click menu or click F9 If desired enter a description of the document in the Audit Log s Description field Setting You can choose a status for any document in your filing system The status will be Document listed in the Status column in the Document Manager window Status To change the status of a document 1 Select a document from the document list and choose Properties from the right click menu or click a document and press F9 The Audit Log is displayed 2 From the Status drop list choose Final Review or Draft Figure 13 13 T Audit Log Audit log for 10_Resources dat Status Path CADRAKE12 DT 3 6D96DCD 1 documents Description Right click and go to Properties to enter Description Actions taken on this document Action Date By Whom New File 12 11 2012 10 52 08 esutton Imported from C Users esutton Docum 12 11 2012 10 52 08 esutton Figure 13 13 Choosing a document 3 Click OK Adding To add new statuses Statuses 1 From the Document Manager menu bar click Setup gt Options The Options dialog box is opened Figure 13 14 on page 351
315. e calendar types Cal endar for current date Weekly Calendar and Preparer Calendars Designed for the receptionist and others who manage appointments but do not prepare tax returns front office mode allows the user to set up viewing options and manage appointments Front office mode is the default setting for users with administrative rights but it must be assigned manually to other personnel To assign front office mode to an employee 1 Log in to Drake as an administrative user and go to Setup gt Preparer s Select a preparer and click Edit Preparer Click Security gt Front Office Scheduling Only Click Save APON IMPORTANT Preparer logins and front office mode assignments must be estab lished in Drake before the Scheduler can be used effectively Accessing the Scheduler Scheduler Tax Year 2012 From the Home window select Tools gt Scheduler or click the Scheduler icon The Appointment Scheduler has four main sections see Figure 4 10 on page 86 e A toolbar across the top e A calendar overview in the left column e Tabs for selecting calendar types not available for ADMIN login e The schedule grid which shows scheduled appointments for each calendar type Figure 4 10 on page 86 shows the Appointment Scheduler window in preparer mode 85 Scheduler Drake Software User s Manual lt Collapse lt Current Calendar Date 9 10 11 12 13 16 JDS 19 20 23 24 25 28 27 8 9 15 16 18
316. e correct client file or SecureFilePro portal 6 Optional Click Form Options to go to the Form Options dialog box and change the forms to be included in the organizer or the proforma When finished click Ok 7 Optional To view one of the organizers or proformas in View mode click View From View mode you can print or e mail the individual organizer or proforma Click Exit to return to the Print Organizers Proformas dialog box 8 Click Print 9 Inthe Print Selections dialog box choose a printer and any other options desired 10 Click Print and then click Print again If printing a PDF document click Save If printing proformas for multiple return types additional Proforma Options dialog boxes appear Select additional options and click Pro NOTES cess 1040 1120 11208 1065 etc to proceed Preseason letters can also be printed in batches apart from proformas and organizers See Letters on page 301 Print Options for Organizers As noted above you can choose send the proformas or organizers to a printer to the Document Manager or to the SecureFilePro portal By sending it directly to your SecureFilePro portal you save yourself several steps in getting an organizer into the hands of your client Plus SecureFilePro sends your client an e mail alerting him or her that the organizer is ready for download and then sends you an e mail when your client accesses your SecureFilePro portal When t
317. e depreciated you can link like kind exchange information to the appropriate depreciation details To enter an asset as a like kind exchange 1 2 3 Open the 4562 Depreciation Detail screen for the asset that the taxpayer traded or gave up Make an on screen notation to indicate that the asset was traded for example type an A before the description in the Description field Open the 8824 Like Kind Exchanges screen and complete the fields for the like kind exchange Tax Year 2012 Drake Software User s Manual Sales of Assets Screen code 4562 4 Calculate the return In View mode view Form 8824 and note the amount calcu lated for the Basis of like kind property received line Generally this amount becomes the adjusted basis of the new asset unless an additional amount was incurred in obtaining it 5 Open the 4562 screen for the new asset In the Description field make a notation to indicate that the asset was traded such as an A before the description As an example if a Ford 150 is traded for a Chevy Blazer the descriptions on the 4562 screens might be A Ford F150 and A Chevy Blazer This notation makes the traded assets easier to identify 6 Enter any increase in basis as the beginning cost The depreciation on the old asset continues over the remaining life and depreciation for the new asset starts using the 8824 basis for the correct number of years Basis of Primary Resi
318. e ene n nen n ete e eens 224 aT Gc catcanssasansenactannaacoreasanseeiiienesibennen nape eee 227 Preparing to e Filner cessed poe eed masa aed Rae SR RENE wR D Gee E Aa eRe Rte ae wees 228 E filinga Retti 23 c3 nei4 Sterne bbs aeib E E wae eebebse ees ocean oela nes webekhs 229 EF Override Options in Data Entry 20 ett n teen nen 236 EF Database 22 cia sores Ghee ee nce keon BOS WAS eek HOS ee HONS A AN Sa Rdg deo ees 239 Online EF Database sc ica 0 end ob eee ted bine had dae wide Abe One dR eae Mek mallee gious 241 Copying EF Data sc cciedina banaa 4 dua AATE A hers enue GEE Doge GERA due E N A A as 247 About State e Filing i eres cob ned sa wav adhe s hed eee ude e ews ede dake dda ea eas os 248 Client Status Manager ciate acs csacs eetca ad cacaacnectcaa easement teedicaeeeeeecdaians 249 Accessing the CSM 222 e2 0 4 50eeeeneenes Sabu eles AF ee eee Es Bae Ee Ree Beas 249 About Chent Statses o 2c0ch2dsaedaedad botadad a adhe dha wae dod sain a a a 249 Setine StASeS su wind oad Ge de bbw Ride hw Se ee aed Kees oe A E be AAE eae ead 251 Adding a Client to the CSM 6 eee n nnn nent eens 252 Opening a Return from the CSM 0 eee 252 Customizing the Display 0 0 0 0 ee ene ene tenn ene ees 252 Searching Updating and Filtering and Viewing 0 e eee cee eee ees 253 CSM Reports 2 0 es ccna chen cote kt ed eed cele God 4 See E Ged mothe ewe da EO aves 255 Exporting CSM Dita ateses od tod be dood ce hed ee BAT
319. e field column order note that the column names do not have to match the field names exactly 113 Sales of Assets Drake Software User s Manual Table 5 2 Spreadsheet Columns for Schedule D Import Spreadsheet Associated Field on Screen 8949 Column TSJ F State City mojoj gt Date of Sale or Exchange Gn Date of Acquisition Type of gain or loss I O Stock or other symbol Quantity Sold J Proceeds from sale of stocks bonds or other capital assets K Loss not allowed based on amount in box 2 Note To have a check mark appear in this field enter any character into the spreadsheet column r Cost or other basis Federal tax withheld Wash sale loss disallowed Description State State ID State tax withholding Basis not reported Form 1099 B not received Form 8949 Adjustment 1 Code Adjustment 1 Adjustment 1 AMT Form 8949 Adjustment 2 Code Adjustment 2 Adjustment 2 AMT Form 8949 Adjustment 3 Code SM lt lt sl Ss lt ee 4 a a v o 2 e Adjustment 3 AB Adjustment 3 AMT AC Amount for 28 AD All 28 rate Note To have a check mark appear in this field enter any character into the spreadsheet column 114 Tax Year 2012 Drake Software User s Manual Sales of Assets Importing Saved Data Table 5 2 Spreadsheet Columns for Schedul
320. e file Return be e filed in lieu of these required paper documents and that these required documents be mailed Form 8453 must indicate which forms are being mailed sepa rately To produce Form 8453 for the paper documents to be mailed 1 Open the return and go to the EF screen accessible from the General tab 2 Select the appropriate forms in the Form 8453 Paper Document Indicators box Figure 8 7 on page 239 238 Tax Year 2012 Drake Software User s Manual EF Database Form 8453 Paper Document Indicators I AppendixA l Form 8283 Select all paper document indicators that apply For I Form 1098 C l Form 8332 more information on the paper document indicators Form 3115 l Form 8858 click the Screen Help button at the top of the screen I Form 3468 l Form 8864 To mark the Power of Attorney PDI go to the MISC screen and fill in the Power of Attorney M Form 4136 Form 8885 l Form 5713 l Form 8949 Figure 8 7 Form 8453 section of EF screen When the return is generated Form 8453 shows which forms are to be mailed To mark the Power of Attorney as a PDI on Form 8453 go to the MISC screen and complete the Power of Attorney section mark the check NOTES box and enter the name of the person functioning under the power of attorney For more information on Form 8453 go to Screen Help for the EF screen EF Database The EF database is a searchable database that displays information about all returns your of
321. e it and then type data directly into the field Drake 2012 Grid Entry 400006665 Carter William amp Carter 243243243Amelia Saeen Help ko o Ea First Name M I Last Name Suffix SSN Relationshi Months Date of birth Childcare Paid 1 Frank 400 00 6666 STEPCHILD 12 01 01 2010 2 Jami DAUGHTER 12 02 02 2001 3 Junior a 4 1g AIP Rk TE E aa N EE N TEE E E OO pant atch Figure 3 10 Entering data directly with grid data entry To access grid data entry from full screen mode press F3 Press F3 again or click Item Detail to return to full screen mode To delete a row in grid data entry select a row number and click Delete or press CTRL D At the prompt click Yes Existing The Existing Forms List is displayed if more than one instance of a screen has been Forms List saved in a return H Existing Forms List E Rent and Royalty Income Lo ea e lis Kind of Propert Income T cabin in woods 555 End of the Road j T lake house 12 Trout Lane A new Ne ee ne ST N a T ee Awe Figure 3 11 Existing Forms List To open a screen from the list double click a row or select it and click Open To open a new blank screen select New Record Grid data entry replaces an Existing Forms List if grid data is the NOTE established default in Options Setup Disable the default from Setup gt Options gt Data Entry tab Multiple Many clients require multiple in
322. e left click on the desired form to highlight Click View or Print State forms in red cannot be printed by state mandate Tip To select multiple forms hold down the Control key while selecting a a Individual Corporate SubS Partnership Fiduciary TaxExempt Estate lt lt rganizers porama Official Name Description a Alabama 1040 PG U S Individual Income Tax Return J Arkansas 1040 PG2 U S Individual Income Tax Retum Arizona 10404 PG U S Individual Income Tax Return Califomia 10404 PG2 U S Individual Income Tax Return Colorado 1040EZ PG Income Tax for Single and Joint Filers Connecticut F 1040EZ PG2 Income Tax for Single and Joint Filers District of Columbia 1040NR PG U S Individual Nonresident Income Tax Return Delaware 1040NR PG2 U S Individual Nonresident Income Tax Return wilmington 1040NR PG3 U S Individual Nonresident Income Tax Return Florida 1040NR PG5 U S Individual Nonresident Income Tax Retum Georgia 1040NR PG4 U S Individual Nonresident Income Tax Return ae 1040V PG Individual Payment Voucher Idaho Form 1040X PG Individual Amended Income Tax Return T P 1040 Individual Amended Income Tax Ri Indiana categories 1045 F Application for Tentative Refund FOR Kansas 1045 orm Application for Tentative Refund Form descriptions Kentucky 1045 Nnames Application for Tentative Refund Louisiana 1045 Application for Tentative Refund Massachusetts 1098_C P Contributions of Motor Vehicles Boats and Airplanes
323. e more than 100 individual state income tax returns annually and prepare one or more using tax preparation software including preparers residing or with an office out the state to e file all individual income tax returns A 50 per return penalty may be assessed for each return filed on paper that should have been e filed unless the failure to e file is due to reasonable cause and not willful neglect Reasonable cause can include a taxpayer s election not to e file No practitioner waivers are available Connecticut agency regulations Section 12 690 1 require tax preparers who prepared 50 or more CT income tax returns during any calendar year to e file all CT income tax returns Preparers may obtain a one year waiver from the e filing requirement by establishing that they cannot e file a return without experiencing an undue hardship Regs Section 12 690 1 A corporation in Florida must file and pay its income tax electronically if it paid 20 000 or more in tax during the State of Florida s prior fiscal year July 1 June 30 File Florida corporate income tax with the Florida Corporate Income Franchise Tax Return Form F 1120 and file through the IRS s 1120 Federal State Electronic Filing Program using approved software Effective January 1 2012 paid preparers who file more than ten 10 IL individual income tax returns must file those returns electronically The majority of returns more than 62 are already e filed e Filed
324. e of Form 1040 Do not duplicate the 99G entries on screen 3 Tax Year 2012 131 Social Security and Railroad Benefits Drake Software User s Manual Social Security and Railroad Benefits Screen code SSA Use the SSA screen to enter data from Form SSA 1099 If this form was not distrib uted use screen 3 to enter the following Social Security or equivalent benefit amounts see Figure 5 31 e Social Security benefits that apply for the current year e Lump sum benefits from prior years total received and taxable portion e Railroad Tier 1 benefits for the current year g senllipies Brontam wilhsemitetaxable portionof 2012 RSMON CHIE a mn cea aetna aa Dense a te a Figure 5 31 Screen 3 fields for Social Security benefit amounts These figures are combined with any Social Security or equivalent benefit amounts from the SSA screen calculated and displayed on the Social security benefits line of Form 1040 NEW FOR To treat Medicare premiums as self employed health insurance mark the Treat Medicare premiums box on the SSA screen to have the 2017 Medicare premiums flow to the Self Employed Health Insurance Deduction Worksheet WK_SEHID instead of Schedule A Screen code RRB To enter data from the federal RRB 1099R form use the RRB screen This screen reflects the federal form NOTE Railroad Retirement Board payments should be reported on the SSA screen Other Income The Other income fields on screen 3
325. e of last change transmission date acknowledgment code or date and phone number To sort records click a column header NOTE The PCM operates much the same as the CSM For specific instruc tions on using these tools see Chapter 9 Client Status Manager Activating To activate the PCM for logged in preparers an administrative user must go to Setup the PCM gt Options Administrative Options tab and select the Enable logged in preparer s Personal Client Manager box located under Main Dialog Options General Navigation You can use both the mouse and the keyboard for navigating within the software Left button mouse Move the pointer over an item and click the left mouse button to select that item When this manual instructs you to click or double click an item on the screen use the left button on the mouse e Right button mouse While in data entry right click the mouse anywhere on the screen to display a menu of common program functions Right click a specific field to view the return in View mode use macros undo an entry reset the field cut copy paste delete add worksheets use the calculator view help for that field or flag the field for later review Shortcut keys keyboard Use shortcut keys to accomplish tasks without using the mouse Press ALT to display the underlined shortcut key and press the desired shortcut key For example from the Home window you can press ALT F O F
326. e online If you plan to e file business returns this year after filing only 1040 IMPORTANT returns in the past you must update your e file application online or your e filed returns will be rejected by the IRS To register as an e Services provider online through the IRS website 1 Go to wwwirs gov 2 Click the For Tax Pros tab 3 Inthe Getting Started section click Become an Authorized e file Provider 4 Follow the directions on your screen Be aware that processing can take up to 45 days To request federal e file program fingerprint cards contact Drake s Education Depart ment at education DrakeSoftware com call Drake at 828 524 8020 or contact the IRS e Help Desk at 866 255 0654 Once your application is processed the IRS assigns you an EFIN If your firm has applied for an EFIN but does not have one yet Drake will assign you a temporary EFIN Your temporary EFIN cannot be used to e file returns but it does allow you to transmit Drake test returns When you receive your EFIN or make changes to the ERO status forward a copy of the response letter from the IRS to accounting DrakeSoftware com so we can update your Drake customer account 228 Tax Year 2012 Drake Software User s Manual E filing a Return Testing Transmission Once you have an EFIN Drake strongly recommends that you run an initial transmis sion test to become familiar with the e filing process and ensure that your system is working properly
327. e or City Refund To have a state or city refund deposited into an account select the state abbreviation from the State city selection field for the account If this field is left blank no state refund will be deposited into the account Federal selection Figure 5 50 State City selection drop list Tax Year 2012 159 Electronic Payment Options Drake Software User s Manual Multiple Ifthe taxpayer receives refunds for more than one state or city return and wants to State deposit refunds into separate accounts indicate this on the DD screen by choosing a Refunds code from the State city selection drop list for each account Figure 5 50 on page 159 To have the refunds from all eligible state returns deposited into one account select A from the State city selection drop list GA ME OH _ Georgia Maine and Ohio have unique requirements for direct deposit Note the sec Refunds tion near at the bottom of the DD screen if e filing a return for one of these states Foreign State purposes only To indicate that an account entered is a foreign account mark Accounts the applicable box in the Foreign Account section at the bottom of the DD screen Electronic Payment Options Electronic payments can be made by credit card debit card or electronic funds with drawal direct debit Pay Balance Due with Credit or Debit Card Drake offers two options for paying a balance due with a credit or debit card Master Card V
328. e return is calculated upon exit the Status column will be automatically updated Setting a Status from the CSM To set the status of a return from within the CSM 1 Right click a return record in the Client Status Manager list 2 Select Set Client Status A status list is displayed 3 Select a return status from the list ad CSM The status is updated in the Status column Tax Year 2012 251 Adding a Client to the CSM Drake Software User s Manual Setting a Status from Data Entry To set the status of a return from within data entry click the CSM button from the ad i Data Entry Menu toolbar to display a status list and then select a return status from Eat the list The status is automatically updated in the CSM Adding a Client to the CSM If your client has a data file in Drake he or she will have a record in the CSM New client records can be added to the CSM in two ways e From the Home window click Last Year Data gt Update 2011 to 2012 and update the return The client s record goes into the 2012 version of the CSM e Create the return using the File gt Open menu from the Drake Home window Opening a Return from the CSM Returns can be opened or created from the CSM Shortcut Press To open a return from within the CSM highlight a client record from the list and click Sj A a Open or double click the record to open in Client Quick View and then click Open entry See Quick View on page 238 The ret
329. e return was filed or complete Form 3949 A and mail it to Internal Revenue Service Fresno CA 93888 Drake Banking Department Contact Information for Drake Software s Banking Department e Mail Drake Software ATTN RAL Department 235 E Palmer St Franklin NC 28734 e Phone 828 524 8020 e Fax 828 349 5745 e e Mail RALS DrakeSoftware com Bank Partners Contact Information for Advent Financial e Mail Advent Financial 2114 Central Street Suite 600 Kansas City MO 64108 e Phone 866 655 2340 e Fax 608 229 9990 e e Mail support adventtax com e e Mail documents documents adventtax com Tax Year 2012 Drake Software User s Manual Contact Information Tax Year 2012 e Website www adventtax com e Check printing direct adventtax com Contact Information for Cardholder Customer Service e Mail Get It Prepaid MasterCard P O Box 413944 Kansas City MO 64141 e Phone 877 833 4818 Contact Information for El Card e Phone 866 331 8756 e Website www elcard com Contact Information for EPS Financial E Collect e Mail EPS Financial LLC PO Box 1484 Easton PA 18044 e Tax office support 484 546 2241 e Taxpayer support 877 503 0788 or 484 546 2242 e Spanish support 484 546 2243 e Tax office website www epsfinancial net e Taxpayer website www myecollect com Contact Information for Republic Bank e Mail Republic Bank P O Box 2348 Louisville KY 40201 e Tax office support 866 4
330. e software calculates the estimated tax penalty and generates Form 2210 if there is an underpayment and the form is required If Form 2210 is required mark the reason for the requirement in the upper left corner of the 2210 screen This default setting can be can be changed for a single return in the 2210 Options sec tion of screen 1 Figure 5 45 2210 Options Zen ene x 2011 Fed tax 2011 State tax Figure 5 45 2210 Options section of screen 1 Tax Year 2012 153 Earned Income Credit EIC Drake Software User s Manual 2210 Codes To print or suppress Form 2210 or Form 2210F for a return select one of the follow Prior Year Tax ing from the 2210 Code drop list Table 5 13 2210 Codes in Drake pa Program Action X Calculates the estimated penalty produces Form 2210 if necessary P Calculates the estimated penalty produces Form 2210 even if not required F Calculates the estimated penalty produces Form 2210F if necessary G Calculates the estimated penalty produces Form 2210F even if not required N Does not calculate the estimated penalty If this option is chosen no form for underpayment of estimated tax is generated with the return Ifa return is updated from the previous year the program displays the prior year tax by default in the Fed tax and State tax fields of screen 1 Figure 5 45 on page 153 To override an amount shown enter a new amount Based
331. e to return to the Archive Cabinet Updating the The DDM Update Manager allows you to check for download and install DDM Archive updates in a few simple steps Cabinet To get and install Archive Cabinet updates 1 From the Archive Cabinet menu bar select File gt Update Manager The DDM Update Manager dialog box is displayed 2 Click Update to initiate the connection to Drake and check for needed updates 3 Once the program has located any available updates click Get Updates 4 When updates have been downloaded click Install The Archive Cabinet is closed while updates are downloaded It is reopened once the download is complete NOTE If an error or unexpected occurrence keeps you from installing found updates contact Drake Support at 828 524 8020 for assistance To have your computer automatically update the Archive Cabinet 1 From the Archive Cabinet menu bar select File gt Update Manager The DDM Update Manager dialog box is displayed 2 Click Automatic to open the Automatic Update dialog box 3 Enter a time for the Document Manager to automatically search for Archive Cabi net updates and install them 4 To stop the Document Manager from searching for Archive Cabinet updates whenever Windows is restarted mark the check box on the bottom of the Auto matic Update dialog box 5 Ifyou wish to update the Archive Cabinet as you set up an automatic update time click Update Now 6 Click Hide The Automatic Upda
332. ear beginning January 1 2015 W V Code of State Rules 110 10D 9 3 a Under this procedural rule the Commissioner has the authority to carve out certain tax types from the e file requirement Personal income tax is the tax that will likely be carved out of this requirement Practitioners who filed 50 or more Wisconsin individual income tax returns in prior years are required to e file returns A practitioner can ask for a waiver from the e fil ing requirement if the requirement causes an undue hardship If a taxpayer wishes to file a paper tax return the practitioner is not required to e file that return The taxpayer should write no e file by his or her signature on the tax return Combined Corporate returns must be e filed Drake Software does not support e filing of Combined or Apportioned corporation returns A waiver request can be e mailed DORWaiverRequest revenue wi gov faxed 608 267 1030 or mailed to the state at Mandate Waiver Request Wisconsin Department of Revenue Mail Stop 5 77 P O Box 8949 Madison WI 53708 8949 The state DOR has mailed letters to corporations and partnerships that are required to e file The Wisconsin Administrative Code provides that the DOR may require any corporation franchise or income tax return or any partnership return to be e filed Drake Software User s Manual This page intentionally left blank Tax Year 2012 Drake Software User s Manual Appendix F Addenda Pages fo
333. eat ing customized reports For example you might decide to use Mise Code 1 to track the different ways that clients learned of your service For each return you might enter Ad Flyer Referral etc whichever is applicable into the Code 1 field Later when designing a report of all clients in the Report Manager you would select Misc Code 1 as one of the columns The report displays the information from the Misc Code 1 field on screen 1 for each client and you would be able to see at a glance which clients were referred which responded to an advertisement or flyer etc N OTE To create customized drop lists for miscellaneous code fields see Cus tomized Drop Lists on page 35 Notes about the Return Screen code Use the NOTE screen to ensure that specific reminders in the forms of notes and EF NOTE messages appear for specific returns By default all notes from the NOTE screen are printed on the NOTES page generated with the return Entering a To include a note with a return go to the NOTE screen and enter all relevant informa Note tion in the fields provided at the top of the screen item 1 in Figure 5 65 on page 188 The screen includes fields for names dates and any screen or form to which the note refers Tax Year 2012 187 Binary Attachments Drake Software User s Manual Date Date Screen Form Note taken by completed Completed by 11 17 2012 Schedule A T Smith Hol
334. ect NOTE to Withholding should be entered on either the 2555 screen the NR screen or in the Other income field on screen 3 Gift Tax Returns Screen code 709 Form 709 U S Gift Tax Return consists of several parts and schedules all located on the 709 menu accessible from the Taxes tab See Figure 5 58 on page 178 Tax Year 2012 177 Requests Claims and Other Forms Drake Software User s Manual Pricing for Form 709 Attached Statements 709 Election Options Extension Request for Form 709 Drake 2012 Data Entry 400006665 Carter aea Calculate View Print Split General 41 General Information y A Computation of Taxable Gifts f B Gifts from Prior Periods ATT Attached Statement ELEC Election Options for 709 S C RE TPR Figure 5 58 Menu for Form 709 Gift Tax Click an item to open it or type its code into the selector field and press ENTER NOTE Forms 709 and 8892 cannot be e filed They must be paper filed To set up pricing for Form 709 go to the Home window and select Setup gt Pricing By default the pricing list is for individual 1040 package forms From the State City drop list select GF Gift Tax 709 to display a list of the gift tax forms Dou ble click a form name to adjust the pricing If Form 709 requires an attachment for example if an election option requires the amounts in question to be identified use the ATT screen on the 709 menu The ELEC screen El
335. ection Options for 709 provides a series of check boxes for electing certain optional ways of treating some income and exclusion amounts Form 4868 covers extension requests for both a 1040 and a 709 return No separate extension request is required For more information see Extensions on page 176 To request an extension for Form 709 only complete Form 8892 This form is not available in Drake but can be accessed from the IRS website See IRS instructions for more on submitting a 709 extension request to the IRS Requests Claims and Other Forms 178 The screens described in this section are all available from the Other Forms tab of the Data Entry Menu Most forms listed here are e filable unless otherwise specified and most can be obtained in Drake from Tools gt Blank Forms Tax Year 2012 Drake Software User s Manual Applications and Requests Requests Claims and Other Forms Table 5 21 lists additional screens for application and request forms Table 5 21 Application and Request Forms Available from Other Forms Tab in Drake Screen 970 Form Form 970 Application to Use LIFO Inventory Method Notes Use the SCH screen for required attachments select the appropriate code on that screen 1045 Form 1045 Application for Tentative Refund Press PAGE DOWN to access the NOL screen This form is not e filable See Net Operating Losses on page 173 for more on the NOL screen 4506
336. ed click Yes Be sure to read through the replacement letter to ensure that the information is current Use the Color Setup feature to tailor Drake screens to meet your firm s preferences TIP If you used Drake last year consider customizing colors to make your 2012 program look different from your 2011 program If you must open the 2011 program during tax season customized colors will help you avoid entering data into the old program by mistake To customize program colors 1 2 From the Drake Home window go to Setup gt Colors Under Program Colors choose one of the following options e Use Windows System Colors Program screens inherit the color scheme used by the operating system e Use Custom Created Colors The Program text color and Program background color boxes to the right become available Click a box to view the Windows color palette and choose a color Tax Year 2012 Drake Software User s Manual Software Setup 3 Click OK Data Entry To change the color of a specific area in data entry Colors akon s Printing Setup From the Drake Home window go to Setup gt Colors Click a color box in the Data Entry Colors box to open a Windows color palette Select a color and click OK Once all color selections are made click OK To restore the original color settings in Setup gt Colors click Restore and then click OK Use the Printer Setup to Establish the printer to be used
337. ed used have available and that you re spending on the current job are listed to the right side of the window in the Token Information section Amounts are adjusted after each job and with each purchase of new tokens from Support DrakeSupport com NOTE Only PDF documents may be uploaded The amount of time it takes to upload documents can range from a few minutes to sev eral hours depending on the number of documents you re uploading To check on the progress of the upload click the GruntWorx button and from the GruntWorx win dow select the Job Status tab Figure 13 19 Gw GruntWorx opac Submit Jobs Job Status Client Name 30471 Crawford Paul 9876 30470 No Name Found 30469 Gardner David 1047 30466 Phlox Sara 1039 30465 Gardner David 1047 30464 Paul Peter 2014 Once a job is completed it is available to download To show previously downloaded jobs clear the Hide downloaded jobs box E Hide downloaded jobs Status Date Sent Date Download Downloaded 12 26 201 12 27 2012 12 Downloaded 12 26 201 12 26 2012 12 Downloaded 12 26 201 12 26 2012 12 Downloaded 12 20 201 12 21 2012 12 Downloaded 12 20 201 12 21 2012 12 Downloaded 12 20 201 12 21 2012 12 30463 Dahlia Oscar amp Viola 1038 Downloaded 12 20 201 12 21 2012 12 Right click on downloaded jobs to download again Token Information Tokens Purchased 1008
338. ed 46 Fees Projected Bank Fee 30 Total Preparer BeOS so 46255065 sae a 345 ae Te Wn cabanas heme aeet bean anaes siwabh aes o Sotiware Wee e a eee ae eR 14 ee ee ee eee ar ES Figure 6 4 Calculation Details tab Click Print at the bottom of the Details window to print the details displayed Viewing and Printing a Return Shortcut Press Ctrl V or Ctrl P 196 View or print a return from either the Home window without opening a return or from within a return To view or print from the Home window or from the Data Entry Menu click View or Print To view or print a return from a data entry screen press CTRL V to view or CTRL P to print or right click the screen and select View Return or Print Return If results are first displayed in Calculation Results click Continue to proceed To view or print one or more returns from the Home window 1 Click the View or Print icon or select File gt View or File gt Print from the menu bar The Return Selector lists all recently calculated returns available for viewing or printing 2 Click the boxes to the left to select one or more returns 3 Click View or Print If the Calculation Results window is displayed at this point it depends upon your set options click Continue Returns can be viewed in either Enhanced mode or Basic mode these modes are described in detail in the following sections In Enhanced mode expand the tree view as n
339. ed Health Insurance deduction Verification fields activated from Setup gt Options gt Data Entry help ensure that wage and withholding amounts are correct by requiring re entry of federal and state wage and withholding amounts at the bottom of screen W2 Figure 5 5 Wages and Withholding Verification To ensure the accuracy of wages and withholding amounts re enter the amounts from boxes 1 2 16 and 17 of the client s W 2 Federal State1 State 2 If applicable 1 Wages tips 2 Federal tax wih 16 ST wage 17 STtax 16 ST wage 417 STtax Figure 5 5 Verification fields for federal and state wages and withholdings An EF message is generated if a verification amount does not match the correspond ing amount entered Amounts must be corrected before the return can be e filed New for 2012 To indicate a foreign employer on screen W2 enter the city in the city field of the employer address and in the Foreign ONLY section enter the province or state select a country from the Country drop list and enter any relevant Postal Code See example in Figure 5 6 on page 103 Tax Year 2012 Drake Software User s Manual Screen code FEC Personal Service Income W 2 1099 MISC Employer information is required for e file 52 5252525 Pepe s Powerful Perfumes Street 1234 RuelaPue Chee Paris U S ONLY State ZIP Province State County Postal Code Er x 75002 Foreign ONLY Ile de France
340. ed appraisal statement possibly a divorce decree or bank ruptcy papers In some instances the IRS requires that a document be attached to an e filed return in other instances a document can be attached voluntarily to support or explain an entry in the return In either case a PDF must be available to be attached to the return in order to be e filed with the return The link to the PDF Attachments screen is on the right side of the Data Entry Menu or enter PDF in the selector field Tax Year 2012 Drake Software User s Manual What s New in Drake for 2012 Setup gt ERO Setup gt Data Locations Tax Planner Document Manager Organizers Tax Year 2012 For more on attaching PDF documents to 1040 returns go to item II of the FAQ screen of the 1040 package or see Binary Attachments on page 184 of this manual Redesigned Setup gt ERO to make setup easier and less confusing added a method of editing your serial number and added a new Use Firm 1 Info button to import the information for the first firm listed in Setup gt Firm s directly into the General Information section of the Electronic Filing Setup window For details see ERO Setup on page 21 Drake has redesigned its setup configurations for both stand alone computers and net works making the process easier and clearer The software now inspects your system and makes the best choice for you lessening the chance you make an incorrect choice o
341. ed forms signed electronically click the links provided on the screen The Security Information section of this screen contains questions intended for the preparer s clients to answer The taxpayer will have to able to answer these same ques tions if he or she wants to log in to the EPS Financial website espfinancial net and set up an online account The purpose of the Step 5 Disbursement Method section is to establish how your client should be notified when funds have been loaded onto the E1 Card From the first drop list of this section select the notification method for contacting the taxpayer If you select SMS text messaging you ll also need to select the cell phone carrier from the Cell phone carrier drop list Be aware that charge may apply when using 215 Preparing to Offer Bank Products Drake Software User s Manual the SMS method The program uses the e mail address and cell phone number pro vided on screen 1 An entry for e mail or cell phone is necessary for a client to be MPORTANT notified when funds are loaded If no e mail address or cell phone number can be found the taxpayer will not be notified automati cally when funds are loaded E1 Payment As Step 5 of the process enter the 12 digit PRN as shown in the window of the E1 Reference Card envelope Re enter it for verification purposes Number PRN Apply for E1 Card As the final step in the E1 Card application process click the Activate Card b
342. eduler calendars 88 changing details of 94 on the Home window 62 overlapping 93 private 91 recurring 91 rolling over from prior year 92 scheduling 90 searching 93 Archer MSAs 133 archiving returns 207 208 ard xi assets depreciable 165 group sales 170 on Schedule C 111 sales of 111 section 179 expensing 167 sold 170 traded 116 associating two screens in data entry 73 attachments binary 184 186 DDM files 331 e mail 278 Form 709 178 PDF see PDF files unformatted schedules 189 audit log DDM 350 XX X Index auto expenses 171 172 automated backup of files 294 automatic updates 288 B backup and restore DDM files 344 Drake files 292 bank name database 72 bank products see also banking see also checks applying for 212 banking partners contact info x check register 223 depositing funds 213 direct deposit of 240 distribution of 213 eligibility for 212 in data entry 220 processing checks 221 service bureau 213 settings 33 transmission of data 221 withholding fees from 220 Banking 209 bank partners contact info x Drake Banking Dept x bankruptcy 112 368 basis in calculating K 1 amounts 127 batch calculations 193 letter printing 301 302 uploads GruntWorx 359 batch appointment generator 92 billing overriding setup options 54 blank forms 290 blindness 98 bonds purchased with refund 159 Briggs court case 140 business see also business use cancellation of debt 133 codes 110 depreciating home u
343. eeded and click the name of a form to view it In Basic mode view a form by dou ble clicking the label in the cascade of forms Tax Year 2012 Drake Software User s Manual Viewing and Printing a Return Viewing a Return Enhanced Mode Enhanced mode the default view print mode consists of five main components e A toolbar has icons for performing actions regarding the return See item 1 in Figure 6 5 see also Table 6 1 e A viewing tool allows zooming and scrolling See item 2 in Figure 6 5 e Category tabs group documents within a return select a tab to view all documents within a category See item 3 in Figure 6 5 e A tree view showing all documents in a return can be expanded or collapsed See item 4 in Figure 6 5 e A viewing panel displays the selected document See item 5 in Figure 6 5 7 2 JOP flO FI Setup Archive Emal Reftesh Basic View 8615Expot Help Select Forms to View Print Al Forms sets EF Federal Worksheets Miscelaneous Notes Messages NothCaoina X 3 ZORE 1 040 Department of the Treasury Internal Revenue Service 99 m U S Individual Income Tax Return 2012 omano 1545 0074 RS Use Only D0 natwrite or staple in this space For the year Jan 1 Dec 31 2012 or other tax year beginning 2012 ending See separate instructions Your first name and initial Lastname Your social security number s 4136 PG2 5 a36Pa3 William Carter 400 000 666
344. een W2 flows to Schedule C line 1c Corrected or Altered W 2 Near the bottom of the W2 screen are check boxes to indicate that a W 2 was altered handwritten non standard or corrected Select the applicable box to indicate that a W 2 has been changed Do Not Update New for 2012 The Do not update check box will affect the 2013 tax return If you select this box next year when you update your tax returns Last Year Data gt Update Clients 2012 to 2013 W 2 info from this year s return will not be carried into 2013 s W2 screen ITIN on Screen 1 Tax Year 2012 If a taxpayer has an ITIN for screen 1 the taxpayer s TIN from Form W 2 must be entered in the field at the bottom of screen W2 The program does not automatically 103 Personal Service Income W 2 1099 MISC Drake Software User s Manual use the ITIN entered on screen 1 and a return with an ITIN cannot be e filed unless this field on screen W2 is completed Substitute Form 4852 serves as a substitute for Form W 2 Form W 2c or Form 1099 R when a W 2 1099 R taxpayer either did not receive one of these forms or an employer issued an incorrect one Form 4852 is not generally filed before April 15 Screen code 4852 Use the 4852 screen accessible from the Other Forms tab to fill out Form 4852 NOTE The generated Form 4852 uses data entered on the corresponding W2 or 1099 screen for Form 1099 R W 2 Import _ If your client is an employee of a company
345. ees from the bank screen Additional Disbursement Methods 220 Each Drake bank partner offers more than one disbursement method or product offer ing and those selections are reflected on the various bank screens If a taxpayer wishes to have the proceeds of the bank product deposited into an account rather than distributed as a check or card enter the banking information in the proper section of Tax Year 2012 Drake Software User s Manual Bank Product Transmission the bank screen Note that the RTN Account number and Type of account must be entered twice for verification Application Signing Date Most bank screens include a field to indicate when the bank application was signed By default the current date is used in this field Enter a different date if necessary otherwise leave this field blank Bank Product Transmission Several transmissions occur when you e file the tax return with bank information using Drake e Drake transmits the tax return to the IRS and the appropriate bank e The IRS sends an acknowledgment ack to Drake If the return has been accepted Drake transmits the bank information to the bank e The bank sends an acknowledgment back to Drake The bank also posts a Fees to ACH Automated Clearing House acknowledgment when applicable to inform preparers that their fees have been distributed to their direct deposit account It is normally posted on the Thursday of the following week if t
346. eference by our company e Fujitsu fi 6130 e HP Scanjet 5000 e Fujitsu fi 6140 e HP Scanjet 7000 More details on these scanners are provided in Drake s online help Many TWAIN compliant scanners will work with the Document Manager Always review scanner specifications before purchasing a scanner Create a link between a Document Manager file and a document outside the Docu ment Manager The Document Manager maintains the link to the external document so that if the document is updated the link remains and you do not have to replace the document in the Document Manager To create a link to a file in the Document Manager 1 Select a folder in which to store the link 2 Click the Link File button from the Document Manager toolbar 3 Browse to and select the document to be linked and click Open The link is indi cated in the Type column of the Document Manager Figure 13 12 on page 350 Tax Year 2012 349 Working With Document Manager Files Drake Software User s Manual Document Name Type Last Modified Outline docx Linked doc File 9 10 2012 1 42 39 PM Lar Naa s ETON Figure 13 12 Link is indicated in Type column of Document Manager Double click the line in the document pane to open and review the linked file Using the Fach time an action occurs to a file the Document Manager makes note of it in an Audit Log audit log An action includes importing linking exporting copying moving open ing and renaming Th
347. elated Organizations and Schools xxvii Accepted Forms and Schedules Drake Software User s Manual This page intentionally left blank xxviii Tax Year 2012 1 Introduction Thank you for choosing Drake Software The Drake Team has been hard at work in 2012 to help ensure that your firm has a successful rewarding filing season in 2013 We appreciate the time you re taking to familiarize yourself with the Drake Software User s Manual for the 2012 tax year Please read the following introduction that includes information on how to use your manual and describes the software s new fea tures for tax year 2012 About Your Drake Software User s Manual Tax Year 2012 The electronic Drake Software User s Manual has been developed for Drake clients to provide clear up to date easy to find instructions and guidelines for using the soft ware Use this manual in conjunction with other Drake resources such as the online and onscreen help features tutorials training and phone support Be sure to take advantage of our extensive index and the search feature both of which will help you locate information more efficiently in the 2012 manual This manual is also available as a paper manual that can be ordered from the Drake Support site Support DrakeSoftware com gt Training Tools gt Manuals To keep your manual updated Drake Software publishes addenda pages as the tax sea son progresses Check Ap
348. ella neous tab in View mode See Comparing Data on page 186 for more on creating a tax return comparison in Drake WK_SSB Social Security Benefits Worksheet provided by IRS for Forms 1040 and 1040A allows taxpayer to see if any benefits are taxable Next Year Worksheet showing the depreciation to be carried forward to 2013 Depreciation List Overriding Other Setup Options Envelope Coversheets Tax Year 2012 When a return is generated Drake prints envelope coversheets if selected for mailing with copies of the return to the taxpayer and tax authorities Default settings for enve lope coversheets are set in Setup gt Options Optional Documents tab Use the PRNT screen to override coversheet options for a single return 53 Making Changes on the Fly Drake Software User s Manual Filing When a return is generated Drake prints federal and state filing instructions Default Instructions settings are established from Setup gt Options Optional Documents tab Use the PRNT screen to override the default and force or suppress the filing instructions Due FEIC due diligence information is entered on screens EIC1 EIC2 EIC3 and EIC4 Diligence The PRNT screen includes options to print EIC due diligence documents with a Documents selected return These options are set globally from the Administrative Options tab in Setup gt Options Dates onthe A default due date for filing is printed on returns and all lett
349. elling a house change in income clients can see how these changes can affect their finances and tax liability Because the different scenarios are set up using the same Drake Data Entry Menu and data entry screens you re already familiar with building your different scenarios is quick and easy The Tax Planner is installed when you install Drake Opening the Tax Planner Open the Tax Planner from data entry io 1 Open a client s return Tapio 2 Click the Tax Planner icon from the Data Entry Menu toolbar Tax Planner Window The Tax Planner window is opened displaying a toolbar the original return and any planners or scenarios you create Figure 13 15 Drake 2012 Tax Planner lt New Open Remove Compare il AGI Tax Income Total Tax Orginal Return 2012 77724 77724 50624 1111 13899 Birth of a child 2012 77724 77724 64343 4878 10132 Sell rental house 2012 77724 77724 50624 1111 13899 i N TN a ee Samedi e E ROOM anh eae Af ar nnn agnmnnastim Figure 13 15 Tax Planner toolbar and scenario pane The items on the toolbar are explained in Table 13 4 Table 13 4 Toolbar of the Tax Planner Tool button Function Click New to begin new scenarios for different tax years or to plan a new scenario based on a previous scenario Tax Year 2012 353 Tax Planner Drake Software User s Manual Table 13 4 Toolbar of the Tax Planner Tool button Function Open Click
350. els for clients whose birthdays fall within a specified range Firm address Print one or more address labels for a firm EF service centers Print address labels for e filing service centers IRS mail to address Print labels for IRS mailing addresses State mail to address Print labels for state mailing addresses User defined Print user defined mailing labels Labels for folders Print labels for folders Prior year clients Print address labels of prior year client addresses 4 5 6 Enter the requested information if necessary and then click Next If the Filter Selection dialog box is opened Set desired filters and click Next See Filter Manager on page 319 for more on filtering Select any Basic Search Options and click Continue For more on search conditions see Search Conditions on page 319 Position the mailing labels as needed Options are described below Print to a label printer Select to print to a label printer Number of copies of this label This option is available only when printing a single label Number of labels to be printed For example if you enter a 5 five labels will be printed Position of the first available label Position of first label on the available sheet If the first label is missing you can enter 2 to have printing begin in the position of the second label Vertical adjustment Enter a positive number E
351. em om in the desired order 6 Form 2210F 7 Schedule A 8 Schedule B aT ee ee Figure 6 15 Sort Form Order dialog box 2 Select a printing set Default is Normal 3 Click and drag the form names to put them in the desired order The document at the top of the list if it has been generated with the return will be printed first 4 Click Save To restore the default settings click Reset in the Sort Form Order dialog box Setting Up Drag Drop Ordering Drag and drop ordering is available in Enhanced mode This feature allows you to drag a form in the directory tree to another area of the tree and drop it into the new location To drag a form press and hold the mouse button on the form to be moved 206 Tax Year 2012 Drake Software User s Manual Archive Manager and then move the form up or down the tree To drop the form into the new location release the mouse button To activate drag and drop ordering while in Enhanced mode select Setup gt Allow Drag Drop Ordering Other Setup Options The following programs and setup options are also available in both Basic and Enhanced modes e Pricing setup See Pricing Setup on page 37 e Printing setup See Printing Setup on page 47 e Printing sets setup See Printing Setup on page 47 Archive Manager Use the Archive Manager to archive returns and to review restore or delete the archived returns This mean
352. emove i Compare Help Exit 2012 Scenario 2013 Scenario Tax Income Total Tax 77724 77724 50624 1171 13899 0 77724 77724 64343 4878 10132 0 Income Year Selected Scenario Drake 2012 Tax Planner Creation Please enter the name for the 2012 scenario Sell rental house Figure 13 16 Click New choose a tax year and then name the scenario 354 Tax Year 2012 Drake Software User s Manual Tax Planner Varying Scenarios Setting up Scenarios Comparing Scenarios Compare Tax Year 2012 You can make different versions of a scenario For instance you might make a sce nario in which the taxpayer has a child You could make another version of that same scenario in which the taxpayer has two children or has a child and buys a house or has a change in income To make various versions of already created scenarios 1 Select a scenario from the scenario pane 2 Click the New button and from the drop list click Selected Scenario 3 Enter a name for the new scenarios and click OK This makes a copy of the origi nal scenario that you can adjust See Setting up Scenarios following After you ve created as many scenarios as you like it s time to set up the scenarios by changing adding or removing data from screens likely to have an impact on the cus tomer s tax situation For example for the birth of a child you would most likely fill out or add to screen
353. en the 2012 program double click the Drake 2012 icon on your desktop The Login window displays the Preparer Login box Figure 3 1 system and drive infor mation and the current date Logging In and Out Log in using the Preparer Login box on the Drake Login window Figure 3 1 Enter a Preparer ID and Password if one has been designated and click Login to open the Drake Home window see Figure 3 2 on page 62 Preparer Login Preparer ID Password Login Figure 3 1 Preparer Login box on Drake login window If logging in for the first time after installation enter ADMIN not IMPORTANT case sensitive for Preparer ID For Password enter the serial number from your packing slip To log out without closing the program click File gt Logout Preparer from the Home window To close the program click Exit then Yes The Home Window The Drake Home window Figure 3 2 on page 62 has the following features Tax Year 2012 61 The Home Window 62 Drake Software User s Manual Menu bar and toolbar items 1 and 2 in Figure 3 2 These tools allow you to accomplish tasks in the program Recent Returns item 3 in Figure 3 2 Lists the last nine returns opened in the program Appointments item 4 in Figure 3 2 Shows the preparer s schedule and pro vides a link to turn appointment reminders on and off Notifications item 5 in Figure 3 2 Lists e mail messages that must be down loaded update
354. endar tab is selected the Report Viewer displays all appointments for the week of the current date Exporting The Export feature sends the data for the selected tab to an Excel spreadsheet To export schedule data directly from the Appointment Scheduler click Export select Tax Year 2012 89 Scheduler Drake Software User s Manual the starting and ending times and click OK Results are displayed as a printable spreadsheet Scheduling Appointments Appointments can be scheduled for an individual preparer or a group of preparers Preparer schedules and appointments are carried forward each year NOTE Go to Last Year Data gt Update Settings 2011 to 2012 and select Preparer Schedules Foran To schedule an appointment for a preparer Individual From the Appointment Scheduler toolbar click New Appt or double click an appointment time in the schedule grid The Appointment Detail dialog box is displayed If you accessed the dialog box by double clicking a time in the sched ule grid it is opened to that date and time Figure 4 14 Drake 2012 Appointment Detail E s be A z BHO R aa amp fi Find Net Appt Save Delete Lookup Data Entry Organizer Proforma Help Exit Date 9 18 2012 Time 10 00 AM mcis Me Dre Preparers SSN EIN 400006665 Client type Retuming Y Appointment type ndividual z a a Name William Carter amp Amelia Cartei RHodor z reynolds Street 123 Main StevenK City FRANKLIN st NC z
355. enses The Pastor Carry 2106 amount to CLGY worksheet check box must be marked on screen 2106 e Appropriate self employment income to flow to the Schedule SE If the church provides a rental or parsonage allowance but no parsonage enter the Parsonage or rental allowance and the Actual expenses for parsonage If a separate utility allowance is provided enter the amount of the allowance in the Utility allow ance field and the actual utility expenses in the Actual expenses for utilities field Finally enter the Fair Rental Value of the housing used If a parsonage is provided enter its Fair Rental Value If a separate utility allowance is provided enter the amount of the allowance in the Utility allowance field and the actual utility expenses in the Actual expenses for utilities field Standard and Itemized Deductions Screen codes A 4952 8283 Schedule A Screen code A Generating Schedule A 140 Based on its calculations the program determines whether to apply the standard deduction or to generate Schedule A Itemized Deductions for a taxpayer If your cli ent is itemizing deductions enter descriptions and amounts on one of the following screens as applicable e Screen A for Schedule A Itemized Deductions e 4952 screen for Form 4952 Investment Interest Expense Deduction e 8283 screen for Form 8283 Noncash Charitable Contributions Access screen A from the General tab Access screens 4952 and 8283 from t
356. ent and resident aliens who cannot obtain a Social Security Number SSN Knowledge Base The Drake Software Knowledge Base is a comprehensive search able database consisting of support solutions and articles of interest providing support around the clock Limited Liability Company Modified Accelerated Cost Recovery System Megabytes Modernized e File Multi form code text box on certain screens that allows you to indicate the instance of a form with which the screen s data should be associated Married Filing Jointly Married Filing Separately Multi Office Manager Net Operating Loss Processing a successful transmission Passive Activity Number Personal Client Manager Portable Document Format Personal Identification Number Payment Reference Number Pay Per Return Preparer Tax Identification Number Reject transmission Refund Electronic Transfer bank product Refund Transfer bank product Routing Transit Number A number assigned by the Federal Reserve to each financial institution Single Member Limited Liability Corporation D 3 D 4 SSN ST Sub S T ack TS TSJ TILA txt TY UNVER XIs Drake Software User s Manual Social Security Number State code generally a drop list at the top of an applicable screen S corporation Test transmission Taxpayer or Spouse Taxpayer or Spouse or Joint Truth in Lending Agreement File extension for text files Tax Year
357. epare to Offer Banking Options L Choose your bank Complete a bank application at the Drake Support site L Decide which disbursement methods to use For example EPS Financial offers e Collect Basic Deluxe and Elite Also the E1 Visa Prepaid Card can be used in conjunction with banks other than EPS L Complete other required applications Complete any application or contract that your chosen bank may require in addition to the bank application at the Drake Support site L Order check and or card stock L Test print check After installing the software test print a check LJ Set bank fees and complete Firm Setup in the software Review Equipment Staff Needs U Learn about tax law changes Do online research visit and study the IRS Web site and state tax departments sites A 2 Tax Year 2012 Drake Software User s Manual L Learn new phaseout limits Be prepared to explain to your clients why they no longer receive benefits they ve received in the past m Review or learn EIC rules Prepare for EIC due diligence interviews m Review staffing needs Set staff software security levels m Train your staff Make sure everyone understands his or her duties and is familiar with the soft ware Train your staff through Drake ETC Upgrade computers as needed Ensure that your computers comply with system requirements Test printers and modems to be used with Drake Software Check phone
358. eport lists returns that have taken longer than a specified number of Old Returns days to complete Problem Returns For this report the CSM scans client files for File Deleted and File Missing Files Not Found statuses Many reports rely on data entry for accuracy To take full advantage of the CSM s reporting features you must use the data entry screens mentioned in Table 9 2 Generating a CSM Report To generate a report from the CSM Tax Year 2012 255 Exporting CSM Data Drake Software User s Manual 1 Select Reports Select a report from the Select Report drop list in the CSM Reports dialog box Reports and enter the requested data 3 Click Report The report data is displayed in the Report Viewer You can print the report export it into another program or customize the display For information on using the Report Viewer see Report Viewer on page 323 To access the CSM Reports dialog box from the Home window select NOTE Reports gt Report Manager Next under Other Report Options dou ble click Client Status Manager Reports Exporting CSM Data lt a To export CSM data into Notepad or CSV format suitable for Microsoft Excel and Microsoft Access click Export in the CSM toolbar A worksheet of the data is aoa opened automatically Admin only Features Users with administrative rights can delete records from the CSM display restore CSM data and remove duplicate entries Deletin
359. eports in My Reports can be deleted To delete a report select it and click Delete Report or choose Delete Report from the right click menu Drake 2012 Help includes descriptions of all standard reports in the Report Manager Click the link at the top of the Report Manager win NOTE dow to see the complete list You can also click Help on the Report Manager window or from the Drake Home window toolbar click Help and search for Report Descriptions Sample Report Window Before generating a report you can preview the report title and column headers to see how the report will fit on the printed page The report preview is displayed in the Sample Report window at the bottom of the Report Manager See Figure 12 1 Also included is a brief description if available of the selected report To preview a report in the Report Manager click the title of the report to preview As shown in Figure 12 1 the report title and column headings are displayed The display reflects changes as report details are updated The Sample Report box also indicates a report layout of Portrait Landscape or Potentially too wide A layout of Potentially too wide means that some data could be 314 Tax Year 2012 Drake Software User s Manual Setting Up a Report cut off in the printed report due to the number of columns A report that is Potentially too wide can still be exported as a CVS file or to Excel where it is possible to widen columns change f
360. epreciation Amt Depreciation Book Depreciation Tax Schedule Code Date Disposed Section 179 Assets Asset list of items expensed during the current year Asset Number Department Number Description and Date Placed in Ser vice Cost Section 179 Expense Prior Year Carryover Current Year Sec 179 deduction Dispositions Asset list of items disposed of within the current year Asset Number Descriptions Date Acquired Date Sold Gross Sales Price Depreciation Amount Cost or Other Basis Loss or Gain Department Summary Asset summary report sorted by depart ment or schedule Department Number Description Cost Federal Basis Current Section 179 expense Federal Depreciation State Depreciation Alternate Depreciation Book Depreciation 324 Tax Year 2012 Drake Software User s Manual Report Type Year Summary Fixed Asset Manager Table 12 3 Fixed Asset Manager Report Types Report Description Summary report of assets on a yearly basis grouped by department Each department has a summary line for each year up to 10 years prior Also totals depreciation for 11 years and prior Sorted by department then year Items on Report Year Acquired Cost Prior Federal Depreciation Current Federal Depreci ation Total Federal Depreciation State Prior Depreciation State Current Depreciation and Total State Deprecia tion Asset Category Sum mary Summary report of asset
361. epresenting the program packages and one representing all state updates and one for the Drake Tax Planner Click column headers to sort data in ascending or descending order Tax Year 2012 287 Update Manager Viewing Release Notes Drake Software User s Manual 2012 Drake Tax Software Version P1 11 30 2012 0 Ea Drake Update Manager Use this screen to keep your software up to date If you wish to install state programs use the Tools gt Install State Programs menu Manual Updates Automatic Updates 1 Auto Updates is currently tured off Get Updates 2 Auto Update Settings Double click on an item below for information about updates currently installed 1040 amp Program 1120 1120 5 1065 1041 990 706 Gif ames TexPemer Description epost No Released _ Update 09 07 2012 _ 1040 Program Updates 08 1 20 HT e File Update 07 19 2012 1040 Program Update id 07 17 2012 1040 State Update 84 06 26 2012 1040 e File Update 83 06 06 2012 Bank and 1040 Program Updates 82 05 24 2012 General Update 81 04 26 2012 General Updates 80 04 18 2012 1040 Program and e file Updates 79 04 17 2012 1040 Program and State Updates 78 04 16 2012 1040 Program Update 7 04 1 2 2012 1040 Program and State Updates 76 04 10 2012 Figure 11 1 Update Manager dialog box 2 Click Get Updates item 1 in Figure 11 1 and wait while the program checks for updates e Ifno updates are found click Exit to ret
362. equirements Described in Table 5 14 these screens contain interview questions and fields that must be com pleted if required by a selection made at Setup gt Options gt Administrative Options tab regarding EIC Table 5 14 EIC Due Diligence Screens Screen a Screen Name Description Code EIC1 EIC Due Diligence Qualifying Child Screen contains questions pertaining to the age relation ship and residency tests for up to three qualifying children EIC2 EIC Due Diligence Income Screen contains questions concerning the taxpayer s reported earned income including income earned from a legitimate business EIC3 EIC Due Diligence Head of Household Screen contains questions pertaining to the tests for mar riage qualifying person and cost of keeping up a home for Head of Household filing status EIC4 EIC Due Diligence Additional Notes Screen contains space to record data about other inquiries made in verifying the taxpayer s information These screens are supplemental to the required EIC Preparer Checklist 8867 screen At Setup gt Options gt Administrative Options tab you can select the option to require that the screens be filled out You can also select to print these due diligence documents See Options Setup on page 27 See Screen Help FAQs and online help for further information and links to IRS doc uments and other resources relating to EIC EIC due diligence requirements must be custom
363. er Tax Year 2012 Drake Software User s Manual Software Support In Drake s Tax Software Blank Forms Beyond 415 e Call 828 488 1950 extension 203 e Go to DrakeSoftware com and from the blue sidebar menu bar select Partner Program gt Business Planning Group When the Business Planning Group window is opened from the right side of the window click Business Planning Group Several blank banking and checking forms are available through Drake Support including state specific bank disclosures cancellation requests lost check affidavits check registers and voided check lists Beyond 415 an automated system of managing such post filing issues as IRS notices letters audits account balances and unpaid balances is available through the Drake The Beyond 415 technology is designed to help tax practitioners understand handle and settle IRS issues quickly The system includes step by step instructions and pro vides images of the specific IRS letter for download The system allows tax profes sionals to customize their responses to IRS issues and automatically fills in applicable IRS forms customized cover letters worksheets cover sheets and document request forms all in the IRS s accepted formats Drake customers can get a free trial and access to some of the features in Beyond 415 For more information see the Beyond 415 website at Attps www beyond415 com or from the Drake Support website click Resource
364. er Click Delete in the Appointment Detail toolbar Click Yes to confirm the deletion Click OK to return to the Appointment Scheduler Searching Appointments Find Scheduled Appointment Search Appts 94 Find scheduled appointments by searching keywords from the Appointment Details information for all clients To search for a client s appointment in the Scheduler Open the Scheduler and click Search Appts to open the Scheduler Search Enter one or more keywords in the Enter Search Terms field The program will search all Appointment Detail information for these keywords Select a date from the Start at this Date drop list The program searches for all appointments scheduled for that date and after Click Search Results are displayed in the Scheduler Search window as shown in the example in Figure 4 18 Drake 2012 Scheduler Search x Enter search terms 400006665 Start at this date 9 19 2012 Date Name ID Num Prep Name Time 09 18 2012 Wiliam Carter amp Amelia 400006 dood 10 21 AM 01 14 2013 William Carter amp Amelia 400006 dood 11 00 4M Open Search Cancel Figure 4 18 Scheduler search results Tax Year 2012 Drake Software User s Manual Scheduler Double click an appointment row to view appointment details Creating Appointment Reports The Scheduler works with the Reports feature in Drake to provide reports based on appointment data To generate a Scheduler report
365. ering the carryover of operating expenses This field is located in the lower right quadrant of the screen An entry in this field flows to the Rental Limitation on Deductions worksheet WK_E Enter income from casual rental on personal property on screen 3 Enter expenses if any on screen 4 in the Expenses from casual rental of personal property field under line 36 Do not use screen E If you do have a Schedule E with the return enter this casual rental income on screen E and not on screen 3 Screens for Schedule K 1 are accessible from the Income tab The program contains three types of K1 screens K1P for partnership income K1S for S corporation income and K1F for fiduciary income Enter information directly into a K1 screen or export K 1 information from a pass through entity into an individual return The K1P and K1S screens include 6198 At Risk tabs for tracking part ITE ner or shareholder basis for at risk activities For more information on using these tabs see Tracking At Risk Basis on page 129 Two screens are used to complete the lines on a Schedule K 1 see Figure 5 26 From the Data Entry Menu the first page of the selected K1 screen is displayed 1065 K1 1 12 1065 K1 13 20 Basis Worksheet Basis Worksheet continued 6198 q Schedule K 1 for 1065 ts f se z city pan 2 Parnarship CIN cnn p sees ee a 41 4141414 j POTS Na Partners in Grime Cleaning For state use only a OSSEE re
366. ers and filing instructions Return generated with a return Use the PRNT screen to override this default date These changes cannot be set globally from Setup Override the default date by entering an alternate due date in the Date to print on returns or Due date to print on letter and filing instructions fields in the Print Overrides section of the PRNT screen Return By default the program displays certain indicators such as Hurricane Katrina on Indicators applicable returns Use the PRNT screen to force certain indicators to be displayed If a return qualifies for special treatment due to a disaster the N DTE required literal should be entered in the Disaster designation field An entry here will be printed at the top of the main federal form and will be included in the transmission file for e filed returns Billing The following global setup options are set from Setup gt Options Billing tab and can Format be changed on the fly by using the BILL screen in data entry Table 2 18 Billing Options That Can Be Changed on the Fly Option Choices Billing Statement Format Total only Forms and total Forms prices and total Bill by time Charge per form Custom Paragraph None Top of bill Bottom of bill For more on the BILL screen see Overriding the Bill Amount on page 56 NOTE Write the custom paragraph for the bill in the Custom Paragraph field at Setup gt Options Billing tab 54 Tax Year 2012 Dra
367. es Update To update all returns in a package not recommended Returns Globally 1 From the Home window select Last Year Data gt Update 2011 to 2012 2 Click Next 3 Select filters optional and then click Continue The Update Options dialog box is displayed 4 optional Select additional items to bring forward See Figure 4 2 on page 78 5 Click Update 1040 All returns are updated according to selections in the Update Options box L AUTI DN Once returns have been updated the updates cannot be reversed To avoid oversights update each return individually Once the program has updated the returns it displays a report listing the updated returns Click Exit to close the Report Viewer Building the EIN Name Index Each time an employer is entered on a screen for a Form W 2 W 2G 1099 R 1099 G 8283 or 2441 that employer s name EIN and corresponding information is automat ically added to the EIN database To update the EIN name database from 2011 1 Inthe 2012 version of the program select Last Year Data gt Build EIN Name from 2011 2 From the Build EIN Database and Name Index dialog box select the indexes to update and click Continue 3 Wait for the program to finish scanning the files This update takes about one minute for every 2 000 client files 4 Click Exit Updating Settings Apply your firm s 201 1software settings to the 2012 program to save preseason prepa ration time Once
368. es and Fee Type and Amount Gummai Details Total Income Taxable Income Payment Method Eligible For EF Federal 91 655 58 806 7 974 13 732 0 RT Check NCD400 91 655 75 655 4 883 0 3 105 Check or CC Suppressed Four divisions of Summary tab gt EF eligibility and summary gt EF Messages gt Return Notes NC Electronic Filing NOT Allowege gt Fee Type and Amount Fee Type ai l Amount NC Electronic Filing NOT allowed See Message Page Projected Bank Fee 29 95 Total Preparer Fees 345 00 Total Other Fees 13 95 Net Check 13 343 10 4 i DCN 00 904113 06665 3 Total Tax Refund 10 627 Current Program Calculation Complete Eligible For E F Back Continue Description Press lt ENTER gt key or Click Here to Continue Bak Conie Figure 6 2 Calculation Results window 194 Tax Year 2012 Drake Software User s Manual Calculation Results EF Messages Return Notes Fee Type Amount Tax Year 2012 The Summary shows total income taxable income total tax refund amount balance due payment method and e filing eligibility If the return is eligible for e file a green check mark is displayed If a portion of the return is ineligible for e file a red X is dis played and a message appears in EF Messages Figure 6 3 Summary Details Eligible For EF VS O 4 Return is ineligible for e file EF messages are displayed Description rig
369. es K 1 is the shareholder s or partner s pro rated share of the totals from line 21lof Form 8825 Rental Real Estate Income and Expenses of a Partnership or an S Corporation The resulting attachment K 1 Rental Real Estate Activity listed as K1_ 8825 in View mode includes the shareholder s or partner s name ownership percentage address of the property the property type as selected from the Type of Property drop list on screen 8825 in Drake see Figure 14 2 and the total from line 17 of Form 8825 the resulting net income or loss Form 8825 Rental Real Estate Property Information 7 Mark this box to include in self employ ype of property Land Mi t oy 28 Liy AE oe a T ET tite analy Address Multi Family Cy ean Vacation Commercial U S y Foreign Province State Country Postal Code Royalties x Fal Varma diye ea ek ee aoe LUL A Personal use days eae I Property disposed of during 2012 a Figure 14 2 Selecting Land as property type on screen 8825 Preparers should be aware Attachment K1_ 8825 is generated automatically whenever Form 8825 is gener ated If the property type selected from the Type of Property drop list on screen 8825 Figure 14 2 is Land type 5 or Self Rental type 7 this type of property is recharacterized by the IRS as active income if there is a net profit Net losses are subject to passive li
370. es in this text box Any additional changes in income will be incorporated into the amended return To apply for an extension using Drake _ Open the return for which an extension application is being filed From the Other Forms tab click EXT Extension Forms 4868 amp 2350 Make the applicable selection from the 4868 drop list if filing Form 4868 or the 2350 drop list if filing Form 2350 Selections are described in Table 5 20 Table 5 20 Extension Forms Screen Selections for Forms 4868 and 2350 Code Description Produces Form 4868 or Form 2350 whichever is selected Produces Form 2350 Firm information rather than taxpayer information is printed on the return label section Produces Form 2350 Taxpayer s name and address are printed at the bottom of the form Produces Form 2350 Taxpayer s name preparer s name and firm address are printed at the bottom 4 Enter all applicable information For further instructions see the Screen Help for the EXT screen If e filing an extension application complete the EXT screen and then select the applicable form number on the EF screen accessible from the General tab For more information on the EF screen see EF Override Options in Data Entry on page 236 Tax Year 2012 Drake Software User s Manual Special Returns ETD When e filing a 1040 extension it is necessary to clear all of the errors shown on the Messages ETD MSG page
371. es on the PREP screen the PREP screen entries over ride any third party information in Setup If you select Yes but leave the other fields blank the third party section of Form 1040 will be blank Signing the Return An e filed tax return must contain electronic signatures of both the taxpayer and the ERO in order to be accepted Electronic signatures are produced using PINs Form 8879 Form 8879 an electronic signature document used to authorize e filing allows tax payers to select a PIN signature or have the software choose a random number for them It also authorizes the ERO to enter the taxpayers PIN signatures authorizing electronic withdrawal of funds for tax payments The signed Form 8879 does not have to be mailed to the IRS It must NOTE instead be retained by the ERO for three years See Form 8879 instruc tions for more information Screen codes Use the PIN screen accessible from the General tab to complete Form 8879 The 8879 PIN generated return uses both the taxpayer s PIN and the ERO s Practitioner PIN The PIN entered must match either the PIN of the Default ERO IMPORTANT selected at Setup gt Options gt EF tab or the PIN of the preparer specified in the Preparer override field on screen 1 Signature A PIN signature date is required at the top of the PIN screen If no date is entered an Date FF message is generated and the return cannot be e filed Tax Year 2012 163 Signing the Return Obtai
372. etter where you ve stored the configuration settings from the Share settings drop list 3 Click OK By default all prior year files are stored on the individual workstations If your work stations should share the prior year files 1 From the Home window in Drake go to Setup gt Data Locations 2 In the Location of client folders section of the Data Locations dialog box enter the drive letter of the server workstation in the Location for 2011 client files drop list 3 Click OK All computers on the network must have access to the server s drive the drive on which the tax returns are stored and from which the returns will be e filed Map to the server s drive not to the Drake12 folder IMPORTANT All drives properly mapped and with Drake Software installed will appear in the Tax returns are stored here drop list and the Share settings drop list If the drive of the server does not appear in these lists consult an IT professional Drake cannot provide technical support for the network itself f AUTI IN Do not change the Data Locations settings during tax season If a change is necessary contact Drake Support Software Setup 18 Perform setup procedures before attempting to prepare or e file returns Some setup procedures are required others are optional Table 2 3 Setup Procedures Required and Optional Required Setup Procedure Optional Setup Procedures Firm s
373. eturn and the soft ware tracks and updates the adjusted basis amounts going forward e Adjusted Basis Zero or Less If the adjusted basis is zero or less based on cur rent and prior year entries amounts flow to page 2 of the printed Adjusted Basis Worksheet see Printed Worksheets on page 129 to determine how much loss is allowed in the current year Disallowed amounts are stored and updated to the next year The first Basis Worksheet screen contains fields that are necessary to properly calcu late adjusted basis for the 1040 return Figure 5 29 on page 128 shows the adjusted basis fields for a partnership 127 Supplemental Income Drake Software User s Manual Partner Basis 1 AOE E Oe a TE a eae a a eee er ne ree ee 2a Gamirecognized on coniibulion of property ee ee b Additional capital contribution and other current year increases Adsrsted basis OF property COMMA Clon as a ee d Partnership interest acquired other than by cash OF PrOperty ceececccsesssssssseesssssececcecececcessssnssssssnnenenseeeseceeecees 3j Increase for excess depletion adjustment 3 Galt OM Secon TFS ASS US POSIT Debt Basis 4 amp 7 RU Partners Share of parler taigy Mics tamil 00 0 ee ee B Partner s share of partnership liabilities from prior YOON eeeeeececsssscsseesseceesececeecececcncecossnsnennenessseccecececeesesenss IR CI Sa eS NA ER eee Figure 5 29 Partner Basis fields on Basis Worksheet scree
374. eturn is selected the Quick Estimator will not override previous entries 3 Enter all applicable information for the return Press F1 in an individual field for help on that field 4 Press ESC to save the data exit the screen and view the return Depending upon your setup options you may be able to click CTRL C to calculate or CTRL V to calculate and view Please note the following points when using the Quick Estimator e Because the total of interest dividends and other income are entered in one field Interest dividends Other income the bank product and preparer fees might not be accurately reflected on the bill The income could be overestimated or underestimated e The Quick Estimator produces only one return if calculating a Married Filing Separately return A separate return must be generated for the other spouse e Because the names of dependents are not entered in the Quick Estimator the indi vidual names are not shown on the return The appropriate credit amounts are indicated if all applicable fields are completed in the Quick Estimator e Select ERC if the taxpayer would want an Electronic Refund Check when the IRS deposits the refund e A Preparation fees withheld from Bank Product entry overrides the Tax prep aration fee field on the BANK screen 310 Tax Year 2012 Drake Software User s Manual Quick Estimator Remember the Quick Estimator should be used only for estimating NOTE taxes A full return should
375. eviously prepared return regarding income taxes credits deductions banking etc a Exit the CHK screen and calculate the return 4 In View mode view the EF message page Figure 5 64 on page 187 which shows where discrepancies occurred Tax Year 2012 Drake Software User s Manual Binary Attachments ELECTRONIC FILING MESSAGES MUST be corrected before electronic filing is allowed Your social security number Name s TEST O MAPLE 400 00 1005 5152 Info on CHK screen WAGES did not match the return 5162 Info on CHK screen TAX did not match the return m tte gh teh ncn ten chile na Pan nt alae thet A ASAE dh a ON Figure 5 64 EF message showing that CHK screen amounts do not match those in Drake NOTE If pre prepared data entry was used the CHK screen already contains data Comparing The Tax Return Comparison screen is used for comparing a current year tax return Tax Returns with data from the two prior tax years The screen itself has parallel columns of data entry fields one column for the prior year and one for the year before that Screen code If a return was updated from the prior year the COMP screen already contains data If COMP not the screen must be completed manually for an accurate comparison When a return is generated the COMPARE worksheet displays the data comparisons Miscellaneous Codes The Miscellaneous Codes fields on screen 1 are for use in tracking returns and cr
376. f Setup gt Options e Additional tracking information on the ADMIN screen in data entry An ADMIN password is not required If your firm chooses to have an ADMIN pass word keep a record of the password Drake cannot retrieve lost or forgotten login passwords To set a password for the ADMIN account optional 1 From the Drake Home window select Setup gt Preparer s 2 Click the Administrator ADM row and then click Edit Preparer 3 Enter a password in the Password field under Login Information A password can be up to eight characters alphabetic and or numeric and is not case sensitive 4 Re enter the password in the Password Repeated field 5 Click Save and then click Exit If no PTIN has been entered you will be asked if you want to exit the NOTE window without entering a PTIN Click Yes or click No and enter a PTIN before saving and exiting A PTIN is required for e filing 19 Software Setup Firm Setup 20 Drake Software User s Manual Firm setup must be completed before preparing and e filing returns If data is inaccu rate or missing tax returns might be e filed with incorrect information NOTE To ensure that all information needed for e filing is entered for a firm firms with incomplete information are highlighted in red in the Setup gt Firm s grid Fields required for e filing are marked by red text With the click of a button you can now import the information from your firm
377. f the return Rounding amounts Interest and Penalty Calculation Select Dollar or Penny rounding Dollar rounding is required for e filing Penny rounding prints penny amounts on all forms Calculate penalties and interest on returns filed after the due date based on interest rates entered For more information see Penalty and Interest Calcu lation on page 181 Tax Year 2012 31 Software Setup Drake Software User s Manual Billing Options under the Billing options tab are described in Table 2 10 Option Print taxpayer s SSN on the bill Table 2 10 Options Setup Billing Description Select this option to print the taxpayer s SSN on the bill Show preparer fees withheld from bank product Select this option to print on the bill the preparer fees withheld from the bank product amount Print taxpayer s phone number on the bill Select this option to have the taxpayer s phone number entered on screen 1 printed on the bill Print taxpayer s e mail address on the bill Select this option to have the taxpayer s e mail address entered on screen 1 printed on the bill Sales Tax Enter the sales tax rate to add to each bill Number must be greater than 1 For example 4 5 would represent a sales tax rate of 4 5 Billing statement format Select among seven formatting options including Billing by time preparing bill based on time spent preparing return mult
378. fault Duplex Directs printer to print duplex Only forms that are approved for ee ee duplex will be printed as duplex tray which allows you to print letters from a tray other Staple If the printer supports stapling after each print job select this than the one used for tax option to turn stapling on returns Show dialog Causes the Print dialog box to be opened before each print job F6 Sets Setup Tray Default is Main Paper Source Change the default if you have displays the current a multiple tray printer and will not be printing from the main tray default printer and the differ ent types of sets that can be Duplex Directs printer to print duplex Only forms that are approved for printed see Printing Printer duplex will be printed as duplex pele On page 20 Duplex all Directs printer to duplex print all forms approved or not Not available for sets to be mailed to the IRS or a state Staple If the printer supports stapling after each print job select this option to turn stapling on Print set Indicates which sets should be available for printing after a return is calculated Watermark Watermarks to be displayed on the Client and Preparer copies text respectively Defaults are Client Copy and Preparer Copy F7 Options PCL soft font Many printers require soft fonts to be downloaded before tax used to set up advanced option forms can be printed Select the desired downloading option printing options n
379. feature to have the program automatically back up client setup and system files at a specified time each day Two types of backups are avail able a full backup backs up all selected files and an incremental backup backs up only those files that have changed since the last backup To activate automatic backup 1 From the Home window select Tools gt File Maintenance gt Backup 2 Click Automatic at the bottom of the Backup dialog box shown in Figure 11 4 on page 293 The Automatic Backup Settings dialog box is displayed Figure 11 5 Drake 2012 Automatic Backup Settings Le Automatic Backup Settings These settings affect the automatic backup program Please select a time and location to back up your files as well as which file types you would like to back up V Activate Automatic Backups Backup Operation Select Files to Back Up Select time to perform jy Client Files 1040 1120 automatic backup 1120S 1065 etc 1 00 4M Select backup type r Setup Files Pricing Setup All files Information Files Select a backup location System Files CSM EF a cs I Database IRS Bank and Scheduler Files This will not change the location of manually backed up files Free space on disk is 26 0GB Help Save Cancel Figure 11 5 Automatic Backup Settings dialog box 3 Place a check mark in the Activate Automatic Backups box 4 Inthe Backup Operation box choose a time type
380. fice has e filed for the current tax year To search the EF database 1 From the Home window click EF gt Search EF Database 2 Enter an SSN EIN or name in the SSN EIN Name To Search For field of the Search EF Database window Figure 8 8 To browse all records leave this field blank SSN Name Taxpayer 400001002 TEST A SPOUSE lt EAU DE TOILETTE Spouse 400002002 SN EIN To Search For 400001002 Go F1 General Information F2 Bank Direct Deposit Info F3 Fees Miscellaneous Info F4 Reject Code Lookup Figure 8 8 Search EF Database window A 3 Click Go To scroll through the records for that taxpayer use the arrows at the bot tom of the screen or press PAGE UP or PAGE DOWN on your keyboard To close the EF database click Exit Database Content The EF database stores data about the return and the associated bank products fees and reject codes Different types of data are stored under tabs See Figure 8 8 General The F1 General Information tab displays basic taxpayer information along with Information Tax Year 2012 239 EF Database Bank Direct Deposit Info Fees Misc Info Reject Code 240 Lookup Drake Software User s Manual e IRS acknowledgments Federal code and date transmission date filing status and refund amount or balance due are displayed in the left column This data is from the federal accepted record otherwise the most recent
381. for Automatic Extension 164 176 Form 4952 Investment Interest Expense Deduction 140 141 Form 4970 Tax on Accumulation Distribution of Trusts 149 Form 4972 Tax on Lump Sum Distributions 149 Form 5405 First Time Homebuyer Credit 117 118 Form 5695 Residential Energy Credits 143 Form 5884 Work Opportunity Credit 146 Form 6198 At Risk Limitations 111 122 Form 6251 Alternative Minimum Tax Individual 29 141 Form 6252 Installment Sale Income 115 171 Form 6478 Credit for Alcohol Used as Fuel 146 Form 6765 Credit for Increasing Research Activities 146 Tax Year 2012 Index Form 6781 Gains and Losses From Section 1256 Con tracts and Straddles 112 Form 8082 Notice of Inconsistent Treatment or Adminis trative Adjustment Request 139 Form 8275 Disclosure Statement 179 Form 8275 R Regulation Disclosure Statement 179 Form 8283 Noncash Charitable Contributions 140 141 Form 8332 Release of Claim to Exemption for Child of Divorced or Separated Parents 179 Form 8379 Injured Spouse Allocation 179 Form 8396 Mortgage Interest Credit 146 Form 8453 U S Individual Income Tax Transmittal for an IRS e file Return 238 Form 8582 Passive Activity Loss Limitations 111 122 125 Form 8582 CR Passive Activity Credit Limitations 145 Form 8594 Asset Acquisition Statement Under Section 1060 180 Form 8609 Low Income Housing Credit Allocation and Certification 146 Form 8611 Recapture of Lo
382. for File O for Open to open the Open Create a New Return dialog box or ALT L O L for Last Year Data O for Open to open the Organizer Client Selection dialog box Figure 3 3 0 Drake 2012 Tax Software File EF Tools Reports Setup Help co Organizers S585 Proformas Hoel Sos TREL Update Clients 2011 to 2012 Build EIN Name from 2011 Update Settings 2011 to 2012 Pl A a a Recent Returns 1120 T eee a me aaa Figure 3 3 Underlined shortcut keys in menu bar of Home window e Key combinations Use key combinations as another way to accomplish tasks without using the mouse They are written as two or more key names connected by a plus sign Press and hold down one key and then press a second key Key combinations are shown to the right of each menu item Figure 3 4 on page 64 Tax Year 2012 63 General Navigation Screen Hyperlinks Drake Software User s Manual File JEF Tools Reports Open Create Returns Ctrl O Calculate Ctrl C hal Print ce o View Ctrl V T Forms Based Data Entry Ctrl E Quick Estimator Ctrl Q Exit Esc Logout Preparer Seay s Trucking and Shi 6 Autobots 72 OP APE apna a gnostic Figure 3 4 Key combinations Hyperlinks in data entry allow easier more concise data entry Hyperlinks are avail able in all packages and fall into two categories links and screen tabs Links Use links to move quickly from one screen to a
383. for forms and related Instructions and or schedules other 6198 At Risk Limitation 6252 Installment Sale Income The following chart identifies forms and schedules that can be e filed with a 990 return for the 2012 tax year Form Form Form Name Form Name Number Number 990 Exempt Organization Busi F Statement of Activities Out ness Return side the United States 990 EZ Short Form Return of Tax G Supplemental Information Exempt Organization Regarding Fundraising or Gaming Activities 990 N Exempt Organization Post H Hospitals card E Filing 990 PF Organization Exempt from l Grants and Other Assis Income Tax Private Foun tance to Organizations Gov dation ernments and Individuals in the U S 3115 Application for Change in J Compensation Information Accounting Method 4562 Depreciation and Amortiza K Supplemental Information on tion Tax Exempt Bonds 8868 Application for Extension L Transactions with Interested for Exempt Org Persons A Organization Exempt from M Non Cash Contributions Income Tax Sch A B Organization Exempt from N Income Tax Sch B C Political Campaign and O Supplemental Information to Lobbying Activities Form 990 xxvi Tax Year 2012 Drake Software User s Manual Tax Year 2012 Accepted Forms and Schedules Form Number Form Name Form Number Form Name Supplemental Financial Statements R Unrelated Partnerships R
384. formation preparer and firm information e file information and acknowledgements significant dates and actions regarding the return and the amount of the refund or balance due From the Client Quick View window click Print to print the data or click Open to open the return in data entry Click Exit to close the Client Quick View window N DTE To access Quick View from the PCM select a record and choose Quick View from the PCM s right click menu or press CTRL Q CSM Reports Seven predefined status and financial reports Table 9 2 are available in the CSM Table 9 2 CSM reports Report Title Description CSM Data Report is based solely on the data in the CSM current view Cash Receipts Report lists cash amounts from bank deposits resulting from bank products and client payments from the BILL screen in data entry Cash Receipts Report lists cash amounts received from bank deposits only The Bank Deposits data in this report is pulled from the EF database Cash Receipts Report lists amounts entered on the BILL screen in data entry Client Payments Completed Returns Report lists SSN EINs and client names of returns with a Complete status The program pulls the date completed from the ADMN screen which is automatically set when you select a status of Com plete An administrative user can manually set the completion date by completing the Date complete field on the ADMN screen Problem Returns R
385. from Worksheets 3 and 4 flow from the screen K1P K1S etc associated with the PACR screen Worksheets When a carryforward amount is linked from the PACR screen to another screen the 3 and 4 program produces one of two worksheets for the following lines of Form 8582 CR e Lines 3a and 3b for low income housing credits for property placed in service after 1989 e Lines 4a and 4b for all other passive activity credits NOTE In View mode these worksheets are WK_CR3 and WK_CR4 Each worksheet shows the name of the activity partnership S corporation etc the associated form the current and prior year credits and the total credits Figure 5 38 shows an example from Worksheet 3 for lines 3a and 3b WORKSHEET 3 For Form 8582 CR Lines 3a and 3b keep for your records Name Sokl Security No ELLA T SAMPLE 400 00 1001 Current Year Prior Year i A 7 Total Credits Name of Activity from Credits Unallowed Credits orm a Credit line 3a b Credit line 3b c Add cols a and b E amp S PARTNERSHIP 8586 I 1 500 617 2117 Figure 5 38 Drake displays the name of the entity such as partnership or S corporation with which the credit is associated in data entry Form 8582 CR Passive Activity Credit Limitations Form 8582 CR is calculated using the credit carryforward amounts from the PACR screen rather than from individual credit screens Use screen CR in Drake to access other fields for Form 8582 CR
386. ftware To enter a forms based return in Drake 1 From the Home window go to File gt Forms Based Data Entry 2 Enter or select the desired return 3 Click a link to open the screen for a particular line Repeat for other lines 309 Quick Estimator Drake Software User s Manual 4 Once you ve filled in all return data click Exit to close the form If NONE is selected for Preparer on screen 1 the program applies the same designation for Firm and nothing is shown on the corre sponding lines of the printed return unless corresponding entries are NOTES made on the PREP screen In addition the program will print as the ERO the preparer selected as the Default ERO on the EF tab under Setup gt Options If the Preparer field is left blank the program will use the correspond ing information from Setup gt Preparer s respectively Note that the same toolbar from data entry is available in forms based data entry Quick Estimator Use the Quick Estimator to quickly calculate results for an individual 1040 return Do not e file or mail the return generated in the Quick Estimator to CAUTION the IRS or an amended return will be required PPR clients A return created in the Quick Estimator counts as one PPR return To use the Quick Estimator Shortcut Press 1 From the Home window select File gt Quick Estimator CTRL Q to open e Quick Estimator 2 Enter or select an SSN If an existing r
387. ftware User s Manual Available Letters Software Setup Table 2 14 lists all available letter templates All letters can be modified using the Cli ent Communications Editor Templates with an asterisk indicate letters that can be generated individually or in batches separately from the tax return See Letters on page 301 Letter Template Result Letter Table 2 14 Letter Templates Available in 2012 Description Provides return results for the filed returns gives info on bank products estimates due dates mailing instructions etc as applicable Result Template Contains the same keywords and paragraph tags as the Result Letter but no pre written letter template is provided Extension Letter Explains that an application for extension has been filed Amended Letter Similar to the result letter but for an amended return Estimate Payment Reminder Scheduled Appointment Reminder Provides details for making a 2013 estimate payment individual 1040 package only Informs prior year clients of this year s appointment date and gives instructions for preparing for the appointment individual 1040 package only Referral Coupon Offers client a discount for referring another client individual 1040 package only Preseason Letter Reminder to 2011 clients that tax season is coming up all applicable packages Post season Letter Customized Supplemental Le
388. ftware automatically determines if the disposal was at an overall loss or gain and prepares Form 8582 Passive Activity Loss Limitations and its worksheets accordingly Property Item 2 of screen E contains fields for indicating how much of a property was used for Usage fair rental and personal purposes and a check box to indicate that a taxpayer owned a property as a member of a qualified joint venture that is reporting rental income not subject to self employment tax 2 Fair rental days If multi dwelling unit and taxpayer occupies part enter occupied by taxpayer a To use Tax Court method to allocate interest and taxes check box and enter numbes of days owned s E ESTE i 3 J This is your main home or second home a ee Ye r ge we Oe E Figure 5 23 Item 2 of screen E Other property usage fields are e If multi dwelling unit If the taxpayer lives in one unit of a multi dwelling property while renting out the others enter the percentage occupied by the tax payer An entry here causes the software to take indirect expenses into account when calculating the return see Direct and Indirect Expenses on page 123 e To use Tax Court Mark the applicable check box see Figure 5 23 and enter the number of days owned in the text box next to it If the text box is left blank the program uses 365 as the default 122 Tax Year 2012 Drake Software User s Manual Supplemental Income e This is
389. g time Speakers or headphones are required To register for a webinar from DrakeETC 1 From the sidebar menu go to Webinars gt Available Webinars See Logging In on page 263 for details on logging in to DrakeETC 2 From the list of Available Webinars click Register on the right side of the win dow for the webinar you wish to attend See Figure 10 11 on page 268 267 Online Support Drake Software User s Manual Available Webinars goto My Webinars Date Time es Ta cost 2192042 11 00 2 5 EST 9 Continuing Education Requicements Jdejailsd aff aaa a 8 00 ag Reciiste 08 22 2012 2 00 p m EST Avoid Ethical Violations details 29 00 a 08 23 2012 11 00 a m EST EITC Due Diligence details S 15 00 08 24 2012 2 00 p m EST Federal Tax Law Update 3rd Quarter 2012 details A 15 00 ae 08 28 2012 11 00 a m EST IRAs details i vs 15 00 Register 08 28 2012 3 00 p m EST Federal Tax Law Update 3rd Quarter 2012 details g B 15 00 Register 08 29 2012 3 00 p m EST Filing Statuses details vs 15 00 Register 08 30 2012 10 00 a m EST Continuing Education Requirements details x A 0 00 Register 08 30 2012 11 00 a m EST CWU Getting Started details a DB 15 00 Register Figure 10 11 Signing up for webinars on the ETC webpage Complete the information requested on the Webinar Registration window Note that a unique e mail address one not already used by someone else must be pr
390. g a Record from the CSM Display When a record is deleted from the CSM display it is no longer visible in the CSM It still exists in the software however To delete a record from the CSM display right click the record and select Delete CSM Record This Client To view a deleted record click Filters gt Display Deleted CSM Records NOTE To delete a client file from Drake see Deleting Files from the Program on page 297 A record cannot be deleted from within the PCM Restoring Data When restoring data the CSM scans a client file calculates the return searches the EF database and updates the data To restore data from the CSM right click a record and select Restore CSM Data This Client Click OK Removing Duplicates To remove a duplicate entry in the CSM right click a record and select Remove Duplicate Entries Entire Database NOTE Duplicate CSM and PCM entries must be removed from within the CSM they cannot be removed from within the PCM 256 Tax Year 2012 1 0 Resources and Support Drake Software offers a wide range of support resources In addition to our unparal leled telephone support Drake has a variety of online and software help resources to give you 24 hour access to the latest information Help resources are available to assist you in making the most of your tax preparation software and using it successfully We do not however provide tax law advice Sup port is provided as an aid to tax return
391. ge 144 Taxable Refunds Screen code 99G Enter state and local taxable refunds for the current year on the 99G screen Form 1099 G Certain Government Payments Taxable refund amounts are calculated and carried to the Taxable refunds line of Form 1040 Because the amount shown on this line can be affected by limitations computed from the Drake worksheets the program allows you to adjust it Screen code 3 To adjust the taxable refund amount shown on the 1040 go to screen 3 and enter the amount of prior year state or local refund the taxpayer received in the current year Be aware that no calculations are done on the amount entered on screen 3 Use the 99G screen if you want the system to compute the taxable amount A flagged Taxable refund field indicates that the displayed amount was N carried forward from a prior year return To clear the field press F4 if UTES the amount is correct or enter a new amount Screen 99G is also called the Unemployment Compensation screen Alimony If the taxpayer received alimony enter the amount on screen 3 in the Alimony received field Enter paid alimony information on screen 4 Self Employment Income Schedule C Screen code C Screen C Self Employed Income covers Schedule C Profit or Loss from Business Sole Proprietorship Access screen C from the Income tab Several screens in Drake such as the 99M AUTO and 4562 screens can be associated with a Schedule C using the For and Multi
392. ges To test your printer take the following steps 49 Software Setup 50 N Drake Software User s Manual From the Home window of Drake go to Setup gt Printing gt Printer Setup Click the F8 Edit Printer Settings tab to open the Printer Setup dialog box Select your printer from the Select printer drop list This activates the fields below On the right center of the Printer Setup dialog box click Help Me Choose to open the Printer Test Assistant dialog box From Step 2 of the Printer Test Assistant dialog box click Send Printer Test Page to the Selected Printer item 1 in Figure 2 19 Drake Software Printer Test Assistant ix Drake Printer Test Assistant The Preferred Print Method PCL requires the printer support the HP PCL Se printer specification AND the Arial font This is due to requirements mandated by state Departments of Revenue Test Printers Step 1 Select a printer hardcopy AppDev1 z Step 2 Send a test page to the printer 1 Send Printer Test Page to the Selected Printer Step 3 Look at the test page and compare the printer output with the Arial font Sample Arial Font 2 Form 1040 U S Individual Income Tax Return Step 4 Does the printer output match the Arial font on the printed Test Page Yes it matches No it does NOT match Nothing printed Figure 2 19 Click Send Printer Test Page item 1 to test a printer for PCL co
393. ght be asked to send via e mail a client s data file a return a file stored in your Document Manager file Drake Soft ware program file or other kind of file Entire folders cannot be attached 277 Interactive Support Drake Software User s Manual From Data To e mail a client data file directly from data entry Entry 1 In Drake open the return you want to transmit a 2 Click Email The Compose Message window shows the client s data file attached 2 to the message Figure 10 18 mail r Drake 2012 Emaii Compose Message La E To Attach Help Exit To support drakesoftware com Send Cc an Attachments Data File 400006665 1040 Regarding our phone conversation about data entry on the K1P screen have attached the requested data file f Bec Subject Question about K1P Attachments Add Sincerely Danny Dood The Tax Dood TERO N satel galt niente ti rasan tie iQ saber nnn dl Ae nay E a Figure 10 18 Email Compose Message window with data file attached 3 Complete the To and Subject fields required and compose your message 4 Click Send The e mail with the client data file attachment is sent to the recipient You can add other attachments to the e mail using the Add button NOTE or the Attach icon in the Compose Message window For more information see From the Home Window following From the To e mail a client data file from the Home win
394. ging in click FAQ for further instructions Click User CP to set up a user profile NOTE The Drake Software Forums are strictly voluntary and should not be used as a Substitute for obtaining help from Drake Support The Download Center is available from Resources gt Download Center The Down load Center page displays the software packages and the education and training mate rials available for download Click an item to download it SecureFilePro provides secure client file exchange portals for your practice so you and your clients can exchange confidential tax documents securely and conveniently Send and receive client documents on your own secure site anytime from anywhere All transmissions are secured with 256 bit SSL encryption and files are encrypted at rest on the server Clients can view and access only their own documents Explanations and prices are on the window at Resources gt SecureFilePro as are links to sign up for a free trial or to purchase any of the regular SecureFilePro pack ages Purchase Drake s software manual the Client Write Up manual Update School vid eos or a subscription to The TaxBook WebLibrary See Tax Book on page 275 for more information Keep abreast of all the important tax and software information with Drake broadcasts The broadcast e mail messages that Drake sends out during the tax season are com piled and saved in the Broadcast Center These broadcasts are grouped by c
395. h administrative rights 2 From the Home window select Setup gt Data Locations 3 Look at the Location of 2011 client files field Figure 4 1 Pere oO ee oe ae ee ee ae vrs Prior year client fod Location for 2011 client files DRAKE11 DT MHS Figure 4 1 Ensure that the Path for 2011 Data field is correct antey 4 Ifthe correct path is not displayed enter the correct path and click OK NEW FOR For more on Drake s updated Data Locations setup see Single Work 2017 stations and Network Options on page 16 Tax Year 2012 77 Prior Year Updates Drake Software User s Manual Updating Client Files By default the following information is brought forward from the prior year e names and addresses depreciation e ages e filing statuses e occupations e dependent names e business names e installment sales e ID numbers You have the option of selecting other data to bring forward when you update client files as explained in the following sections To ensure that files are updated according to your clients needs NOTE update returns individually as you meet with your clients Drake does not recommend updating all returns in a package at once Update To update an individual return Returns Individually 1 Open the return in Drake 2012 An Individual Update Options dialog box lists all options for updating Figure 4 2 Individual 1040 Update Options Update Options First PLEASE read ma
396. h the amount from the 8606 screen If a taxpayer is covered by a pension plan use the 8606 screen instead of screen 4 If the program determines that the contribution amount exceeds the maximum allowed it generates a NOTES page with the return Tip If Form 8606 is not required but you want to generate it anyway go to the 8606 screen and select Print Form 8606 even if not needed Converting To report the transfer of an amount from a traditional IRA to a Roth IRA enter the toa Roth IRA amount on the ROTH screen Figure 5 19 Form 8606 Nondeductible IRA Contributions IRA Basis amp Nontaxable IRA Distributions TSJ z ST z Part Il Conversions from Traditional IRAs to ROTH IRAs 16 Amount of traditional IRA converted to 2 Roth RA o A Rodia 5 a Se 17 IRAbasis before conversion fs Soe ce Figure 5 19 ROTH screen field for amount to be transferred to a Roth IRA This amount is carried to the appropriate line of Form 8606 IRA Penalty Computations IRA penalties are calculated using data entered on the 5329 screen Form 5329 Addi tional Taxes on Qualified Plans Including IRAs and Other Tax Favored Accounts Carrying It might not be necessary to enter data directly onto the 5329 screen If a distribution 1099 R Data code of 1 Early premature distribution no known exception has been entered as to Form 5329 Dist code box 7 of the 1099 screen you can force the distribution amount from a 1099 R to
397. he return is sent by noon Thursday Your system picks up any new bank acks whenever you initiate a connection transmit or receive from EF gt Transmit Receive with Drake Processing the Check The following process is necessary for firms that print checks in house If your firm does not print the checks post the bank acceptance acks to the EF database so your database will always reflect the most current client status Testing Check Print Tax Year 2012 Before printing checks you might want to run a test print to ensure that checks will be printed correctly One test check for each bank is loaded into Drake when you test print a check the program uses the test check matching the bank that is set up for Firm 1 in Setup gt Firm s To print the test check 1 Ensure that paper for printing has been loaded into the printer Drake recom mends using a blank sheet of paper 2 From the Home window select EF gt Check Print If no checks are ready a mes sage prompts you to reprint any previous checks Click Yes At the bottom of the Reprint Checks dialog box click Test 4 Click Print in the Print dialog box a 221 Processing the Check Drake Software User s Manual Printing Checks for Bank Products Before you print checks Be aware that you cannot print checks until the appropriate IRS and bank acknowledgments are received Make sure the computer for EF transmissions has the correct date Ma
398. he Addi tional Itemized Deductions section of the Adjustments tab The program includes self employment losses when calculating the NOTE standard deduction To override this default per the Briggs court case go to the MISC screen and select Standard deduction by Briggs case method located in the Dependent filer special situation box Use screen A to enter data for Schedule A Itemized Deductions If screen A has been completed for a return the software determines which is more advantageous for the taxpayer itemizing or taking the standard deduction To select one or the other mark the applicable Force box at the top of screen A Figure 5 34 on page 141 Tax Year 2012 Drake Software User s Manual Alternative Minimum Tax Force itemized l Force standard Figure 5 34 Boxes at the top of screen A If screen A has been completed for a return Schedule A will be generated even if the standard deduction is being taken You can set up the option to have the software generate Schedule A only when it is required To do so go to Setup gt Options gt Form amp Schedule Options tab and select Print Schedule A only when required Mortgage Use the Interest You Paid section of screen A to enter mortgage interest not reported Interest Paid on Form 1098 Mortgage Interest Statement For mortgage interest that is reported on Form 1098 use the 1098 screen If using the 1098 screen to report interest from Form 1098 do not IMPORTA
399. he Help icon in the Scheduler Calendar To change the default colors displayed in the Scheduler calendar Colors 1 Inthe Scheduler Setup dialog box select the Calendars tab Default colors are displayed under Colors Colors Use application default colors C Use custom created colors Scheduler grid background color Preparer scheduled start time color Single appointment color BE E Multiple appointment color Figure 4 13 Colors section under Calendar tab in Scheduler Setup N Click a color to open the Color dialog box for that color Ca Select a new color 4 Click OK When you change a color note that the Use custom created colors button is marked automatically To reset the Scheduler to use the default colors click Use application default colors Printing and Exporting Preparer Schedules Drake allows you to print or export to an Excel file preparer schedules for a speci fied time range for a specific date or week Schedules are printed or exported for all preparers N DTE To print or export a schedule for a specified preparer see Creating Appointment Reports on page 95 Printing The Print feature prints the appointments for the selected date shown under the Cur rent Calendar Date From the Appointment Scheduler toolbar click Print select the starting and ending times and click OK Results are displayed in the Report Viewer from which you can print or export the data N DTE If the Weekly Cal
400. he Resources Overview page click Download Center or from the blue sidebar menu select Resources gt Download Center 4 From the Drake Software list on the left side of the Download Center page select Drake Software 2012 5 Read and agree to the License Agreement 6 Scroll to the bottom of the window and click the Drake Software 2012 link 7 When the File Download Security Warning window is opened select Save to save the software to your computer or server 8 When the download is complete double click the Drake12_Federal exe icon and then click Run and Yes to begin the installation process 9 Follow the steps to install the software to the drive of your choice You will need your account number and the serial number from your packing slip To download state programs open Drake Software go to Tools gt Install State Pro grams and choose the option to install states from the Internet Initial Login To open and log in to Drake for the first time B 1 Double click the Drake Software 2012 icon on your desktop 2 Inthe Preparer ID field of the Login window see Figure 2 1 type ADMIN not case sensitive a In the Password field type your serial number printed on your packing slip 4 Click Login Preparer Login Preparer ID ADMIN Password Type admin Enter serial number for initial login Click Login Figure 2 1 Logging in as ADMIN The Setup Assistant is opened automatically the
401. he client completes the organizer he or she can either mail it back hand deliver it or scan it and upload it to the portal SecureFilePro will alert you by e mail when the uploaded organizer is ready for you to download For more on SecureFilePro see SecureFilePro on page 362 You can also print organizers and proformas from the Scheduler From the Appointment Detail toolbar in the Scheduler click Proforma or NOTE Organizer and follow Step 3 through Step 10 in the procedure listed under Printing Organizers and Proformas for Clients on page 82 See Scheduler following 84 Tax Year 2012 Drake Software User s Manual Scheduler Scheduler Scheduler The Drake Scheduler is used to set up appointments for preparers You can set up schedules for individual preparers or for groups of preparers generate batch appoint ments and set up daily schedules for an entire office There are tools for customizing schedules and printing and exporting schedules Following are directions for setting up accessing and using the Scheduler Scheduler Modes Preparer Mode Front Office Mode Security The Scheduler offers two levels of access preparer mode and front office mode Using preparer mode a preparer has full access to his or her calendars Preparers can make appointments manage schedules and share calendars with other preparers Pre parer mode is the default setting for Scheduler users and has thre
402. her than your firm s name printed on the Bank Information Sheet line labeled Additional Fee withheld on behalf of Tax Year 2012 Drake Software User s Manual Preparing to Offer Bank Products Table 7 4 Options under Banking Information in Setup gt Firm s Item in Setup Description Waive add on fee e Collect only Mark this box to waive the add on fees for customers choosing the E1 card as their disbursement method For information on waving fees in restricted states go to Setup gt Options gt Administrative Options tab and click Program Help e Collect Basic e Collect only Mark this box if offering direct deposit disbursement only e Collect Basic Plus e Collect Mark this box if offering E1 card and direct deposit only disbursements e Collect Deluxe e Collect only Mark this box if offering paper check and direct deposit disbursements e Collect Elite e Collect only Mark this box if offering the E1 Card paper check and direct deposit disbursements Check with your bank for limitations on fees before setting up a new NOTE firm Once an amount is set and a bank application has been created the amount should never be changed The banks closely monitor the amounts charged for application fees Viewing in Once a banking option is selected and saved you can access it from data entry In the Data Entry Electronic Filing and Banking section of the General tab click the bank s name Figure
403. hers with payments rounded to nearest 5 Tax Year 2012 151 Estimated Taxes Drake Software User s Manual Table 5 11 Estimate Codes in Drake ES Description Code T Generates estimate vouchers with payments rounded to nearest 10 F Generates estimate vouchers with payments rounded to nearest 25 H Generates estimate vouchers with payments rounded to nearest 100 All vouchers include the taxpayer s SSN name and address Overriding The program divides the estimate amounts equally among the four vouchers To have Voucher different payment amounts displayed on the vouchers you must enter the amounts Amounts manually in the Estimate Amt fields of the ES screen shown in Figure 5 44 N DTE Use the ETA screen to enter estimate adjustments rather than overrides see Estimated Tax Adjustments following Estimated Tax Adjustments Screen code ETA Use the Estimated Tax Adjustments screen if the taxpayer expects a significant change in income the following year If entries are made on this screen the program generates an estimated tax worksheet WK_ES that shows the calculated estimates See the ETA screen help for more information Applying 2012 Overpayment to 2013 To apply part ofa 2012 overpayment to the 2013 estimate enter the total overpayment to apply to all estimates item 1 in Figure 5 44 on the ES screen The program applies the overpayment according to the overpayment OP code selected item 2 in
404. hich the group should have access Accessible features cannot be edited for the Full or Admin groups Click Check All to mark all boxes shown in all menu cat egories 25 Software Setup Group Security Reports taa Print Other Features 26 Drake Software User s Manual 5 Under the Assign Preparers tab select the preparers to be assigned to the group To select a preparer double click a name or click the name and click Select Selected preparers are listed in the Preparers in Security Group column 6 Click Save NOTE You do not have to assign preparers when creating a group Assign preparers at any time by returning to the Group Security dialog box To edit group settings or members select a group name and click Edit Group To delete a group select a group name and click Delete Group Note that a group must be empty must contain no preparers in order to be deleted The Group Security feature allows you to view and print two reports related to group security settings e Group Security report Lists group security settings for each group Groups are listed in order of creation with default groups first e Group Preparers report List all groups and their assigned preparers Reports are shown in the Report Viewer which allows options for printing and exporting the reports To access reports click Print in the Group Security toolbar The program displays the Group Security report first To acces
405. hing Other file types can be attached to an e mail message from the Attachments dialog Other Types box in the Drake e mail program See Step 3 of prior procedure and Figure 10 19 on of Files page 279 e To attach Document Manager files enter an SSN or EIN in the Document Manager Files fields of the Email Attachments dialog box Click Search to open the Add Attachment Document Manager window Select a file and click Open File is shown in the Attachments pane of the Email Attachments dialog box Click Done e To attach a Drake program file click Browse for Drake Software program files Locate the file in the Attach File window and then double click it or select the file and click Open The file is shown in the Attachments pane of the Email Attachments dialog box Click Done e To attach a file other than the types described above click Browse for All other files Locate the file in the Attach File window and then double click it or select the file and click Open The file is shown in the Attachments pane of the Email Attachments dialog box Click Done Removing an To remove an attached file select it in the Attachments list see Figure 10 19 on Attached File page 279 and select Remove from the right click menu Diagnostic Use these only at the direction of Drake Support Attachments Address You have several options for storing e mail addresses in an address book To access Books these options click New to open th
406. ht click for full description Federal Form 1040 10404 1040EZ At least one of the following fields must be Federal 5350 A PIN signature is required for all returns to be e filed A PIN has NC 4 Invalid county or no county name r OT Te Oe ee ee Se ee ee eee a ee alt aif Bt he Marinette Figure 6 3 Return in this example is ineligible for e file The EF Messages section lists e file message codes and descriptions by package EF messages pinpoint the reason a return is ineligible for e file Identified issues must be corrected for a return to be eligible for e file e Accessing full messages Some messages do not fit in the Description row To view a full message right click a row and select View Full Text Of EF Message e Accessing message links If an EF message is blue double clicking it opens the data entry screen that contains the error If applicable the field that caused the EF message is activated If you double click an EF message in black text a window with the full NOTE EF message is displayed Only messages in blue text link to screens within the return EF messages appear as red MESSAGES in View mode For more information on viewing and eliminating EF messages see E filing a Return on page 229 The Return Notes section see Figure 6 2 on page 194 displays informational notes about the return These notes provide details about the return but they do not require that changes be made and they do
407. hts Options Options under the Administrative Options tab are described in Table 2 12 Table 2 12 Options Setup Administrative Options Option Description Use customized data entry selection menu Tax Year 2012 Mark the check box click the top Customize box and then select the pack age and package type to customize Click Load Menu When the data entry screen is opened click uncheck items to disable them in the Data Entry Menu Click Save The selected unchecked items will not be visible or accessible to any user other than those with administrative rights See Locking Screens on page 34 33 Software Setup Drake Software User s Manual Table 2 12 Options Setup Administrative Options Option Customize user defined data entry fields Description Create option lists for the Miscellaneous Codes fields on screen 1 and the Adjustments and Payments fields on the BILL screen For step by step instructions on this feature see Customized Drop Lists on page 35 Use customized flagged fields on all returns Select this box click Flag and select a package type When the Data Entry Menu is opened click the desired screen and click each field to flag Click a field a second time to clear it Press Esc to save your changes Note This option is available for federal packages only Apply current year Admin flag set tings when updating from prior year Flags set globally in 2011 are set global
408. ick Delete Click Yes to continue APUN Click OK to return to the Home window Tip Since print files appear on the EF transmission selection list you may want to delete print files for returns that are not ready for e file Deleting To manually delete a client file from the database Client Files From the Home window select Tools gt File Maintenance gt Delete Client Files Enter the SSN or EIN of the client file to delete Click Continue Click Yes to continue Click OK Click Exit to return to the Home window AARON NOTE If you are not accessing files on a network the deleted files go to the recycle bin Changing Return Types A return can be changed to another file type without your having to create a new file When a return type is changed the following information is transferred e Name address including county and telephone number e Fiscal year e All depreciation data including screens 6 7 8 9 and 10 When a corporation return is converted to an S corporation return the balance sheet and Schedule A information are also transferred IMPORTANT Not all data is transferred Before using Change File Type back up the original file See Backup on page 292 To change a return type 1 From the Home window select Tools gt File Maintenance gt Change File Type 2 Enter the SSN or EIN of the file to convert and click Continue 3 Select the new file type Individual Corporate Sub S
409. ick a name or to press SHIFT or CTRL while selecting Preparers Ifk a RHodor reynolds Stevenk sdrevas Figure 4 15 Multiple preparers selected for a group meeting Tax Year 2012 91 Scheduler Drake Software User s Manual To clear a selection click the preparer s name a second time IMPORTANT In order to save the appointment a client name must be entered Batch The batch appointment generator reviews client and recurring appointments from the Appointment previous tax year and creates new appointments in the current year s Scheduler You Generator can set workday and holiday information that will roll forward or backward to an available appointment date This feature is available for users with administrative rights Appoint NOTE ments marked private see For an Individual on page 90 are excluded from the batch process To set up appointments using the batch appointment generator 1 From the Appointment Scheduler toolbar click Batch Appts and select Gener ii ate batch appointments The Batch Appointment Generator dialog box is dis Batch Appts played 2 Ifnecessary select a location from the Use last year s appointments found on drive drop list a Enter or select from the calendar a Begin date and an End date A Select the days that should be available for appointments for this year 5 Under Dates Not Available for Appointments click Add to add any holi
410. ided into four sections as shown in Figure 9 4 CTRL L to view the filter list v All Preparers Filter by gt Current Preparer preparers All Status Types Work in Progress Completed Returns Filter by EF not Sent status EF Pending EF Accepted EF Rejected Missing Files v All Return Types All Business Returns Filter by gt Individual 1040 return type Corporate 1120 S Corp 1120S Partnership 1065 Fiduciary 1041 Estate Tax 706 Tax Exempt 990 Hide Inactive Returns Hide or display returns gt Hide Deleted Returns Display Deleted CSM Records Hide Completed Returns Figure 9 4 CSM filter list 3 Select filters You can select one filter from each of the first three lists and any or all of the filters in the bottom list A selected filter is indicated by a check mark The CSM displays the files that fall within the selected filters In the Status column a red File Not Found message indicates a deleted return Records of deleted return files stay in the CSM for track NOTES ing purposes Filters are also available in the PCM select Filter Client List from the PCM s right click menu 254 Tax Year 2012 Drake Software User s Manual CSM Reports Quick View The Client Quick View window summarizes the CSM data for a selected record To open this window for a client in the CSM select a client row and click Quick View or Quick View double click the line Displayed is client in
411. ie Pape v Customized Supplemental Letter FederalAmended EF ff Paper y De LP 2 oe v Engagement Letter MV EF J Paper v D EF T Paper I Paper A per Paper gt Privacy Policy EF Paper z M EF J Paper z D EF J Paper z D EF Paper Figure 2 24 Select EF to force a letter to be printed as ifthe return is eligible for e file 59 Making Changes on the Fly Drake Software User s Manual Printing From Setup gt Options Optional Documents tab you can select to have the custom Additional ized supplemental letter engagement letter and privacy policy letter printed with all Letters returns To override the established defaults for a single return go to the return s LTR screen and select Yes or No for the desired letter types In Figure 2 24 on page 59 the user has selected not to have the engagement letter printed for the client In the 1120S 1065 and 1041 packages you can print K 1 letters for a NOTE return by entering the signing information on the LTR screen This is necessary only if the global option to print K 1 letters is not selected in Options Setup Overriding EF Setup The EF screen in data entry allows you to suppress federal and state e filing on a per return basis The program default in Setup gt Options EF tab is that all eligible forms will be e filed For more information on the EF screen see EF Override Options in Data Entry on page 236 60 Tax Year 2012 3 Basics D To op
412. ilable at http Support DrakeSoftware com Suppressing Forcing Documents The PRNT screen allows you to indicate which forms should and should not be gener ated for a return regardless of program calculations and established defaults Suppressing Table 2 16 lists items that can be suppressed using the PRNT screen Items from Being Table 2 16 Items That Can Be Suppressed from the PRNT Screen Generated Item Description 1040EZ Prevents Form 1040EZ from being prepared program prepares either Form 1040 or 1040A instead 1040A and EZ Prevents Forms 1040A and 1040EZ from being prepared program pre pares Form 1040 instead State short Forces state return to be printed on the state long form form 8801 Suppresses printing of Form 8801 Credit for Prior Year Minimum Tax Individuals Estates and Trusts if the form is not required This form is generated by default on certain returns that have a credit carryforward WK_PAL Prevents Passive Activity Deduction Worksheet from being prepared This worksheet shows how much if any the taxpayer is taking in passive activ ity loss deductions this year and how much is being carried over WK_6251B Suppresses exemption worksheet for Form 6251 Alternative Minimum Tax WK179LMT Prevents section 179 Business Income Limit Worksheet from being pre pared This worksheet shows the amount if any of section 179 deductions taken this year and how much is being carried over
413. ile Reference Description Required PDF FileName Pub 504 Divorce decree SILVERS DIVORCE DECREE PDF 3 Pub 4681 Insolvency worksheet INSOLVENCY PDF Browse Figure 5 63 A green check mark indicates the PDF document has been attached a red X indicates the PDF document has not been attached 4 Click the row of a document to attach a Click Browse 6 Browse to the proper folder where you saved the PDF document select the PDF file to attach and click Open or double click the file name Repeat for all documents with a red X When all documents have been attached to a completed return recalculate the return to make sure all EF messages have been cleared If so the return is ready to be e filed Comparing Data Cross checking Drake Calculations Screen code CHK 186 In Drake you can compare data between two versions of the same tax return You can also produce a tax return comparison worksheet that shows data for a client s returns for the current year and the two prior years The Checking Information screen allows you to cross check Drake calculations with amounts from a previously prepared return Any discrepancies between the Drake return and the previously prepared return are shown in an EF message Figure 5 64 on page 187 To compare a Drake return with a previously prepared return 1 Open the return to be compared and go to the CHK screen 2 Enter the information from the pr
414. in a single year use a separate 3903 screen for each move Press PAGE DOWN for additional screens Self Employment Adjustments Table 5 6 lists screens in Drake for entering adjustments to self employment income Table 5 6 Self Employment Adjustment Screens Screen Purpose SE Self Employment Adjustment Schedule SE SEHI SE Health Insurance Self Employed Health Insurance Deduction 4 Adjustments Adjustments to SE SEP SIMPLE and Qualified Plans Screen codes The SE and SEHI screens are located under the Adjustments tab Screen 4 is located SE SEHI under the General tab Self Employment Tax Schedule SE Schedule SE is required if net earnings from self employment exceed 400 108 28 for church employees If these conditions are not met the program does not produce Schedule SE with the return To force Schedule SE to be printed select the applicable Force Schedule SE box on the SE screen Data from Schedules C and F along with any self employment income from partner ships flow to Schedule SE of the return All other self employment income should be entered directly on the SE screen Short or Depending upon the employment terms the taxpayer must complete a short Schedule Long SE S page 1 or long Schedule SE page 2 Schedule SE Drake determines the form required and processes it accordingly To force the long form select an applicable Force Schedule SE box in the middle of the SE screen Figure 5 33 o
415. in the View Print window e A MESSAGES alert see item 1 in Figure 5 62 e AnEF PDF worksheet that lists all items entered on the PDF screen and any required attachments determined by the program see item 2 in Figure 5 62 e An Attach PDF button on the toolbar item 3 in Figure 5 62 E v r E ba lt gt v C Data Entry Print Setup Archive Email Refresh Select Forms to View Print List 5952 ATTACHING PDF DOCUME the PDF documents list 4 L FOLDR L FILEINST ENGAGE Men 1 In View mode ne aman ar Dentin HORA ty DRR Endogna Figure 5 62 Attaching PDF documents to a return 2 Click MESSAGES file to view EF messages which provide information on how to attach the required documents to the return 3 Click the Attach PDF button in the toolbar at the top of the window The EF PDF Attachments window displays the information entered on the PDF Attachments window in data entry A red X means the document has not yet been attached a green check mark indicates an attached document 185 Binary Attachments Drake Software User s Manual Drake 2012 EF PDF Attachments x Required PDF Attachments The list below contains PDF Attachments that are required for electronic filing Select an item from the list and click Browse to locate the associated PDF file Items with a green check mark already have the PDF file Items with a red are missing the required PDF F
416. in the Rename Letter dialog box and click OK The new name is displayed in the Client Communications Editor title bar To restore a template to its original default format open the template and select Setup gt Restore Original Letter 45 Software Setup Viewing Letters for Sample Return Bringing Forward a Template Color Setup Program Colors Use Define Custom Colors to create a new color 46 Drake Software User s Manual The preview feature allows you to open View mode and view a sample letter for one of 10 return types An e filed return with refund An e filed return with balance due A paper filed return with refund A paper filed return with balance due An e filed return with an extension An e filed return with an extension and balance due A paper filed return with a refund and an extension A paper filed return with a balance due and an extension A paper filed amended return with a refund A paper filed amended return with a balance due To access the preview feature click the Preview button in the toolbar of the Client Communications Editor To replace a current year template with a prior year one _ Fe PN From the Client Communications Editor click Open and select the template to replace Go to Setup gt Update Prior Year Letter and click OK Select the drive of the Drake program that contains the prior year letter Select a prior year letter Click Continue When prompt
417. in the following sections Consent to Use of Tax Return Information Screen code USE The Consent to Use of Tax Return Information explains the IRS Regulation 7216 requirement to the taxpayer It must be signed before the return is prepared e Paper Forms To generate paper forms log in to the Drake Support site Sup port DrakeSoftware com and from the blue sidebar menu go to Resources gt 7216 Sample Letters Click to open the generic Consent to Use of Tax Return Information or any of the bank consent forms in English or Spanish Print or save to your computer desktop Be sure to enter your firm s name at the top of the page Clients must sign and date this form manually Forms are also available in the software at Tools gt Blank Forms Electronic Signatures To obtain electronic consent the taxpayer and spouse if married filing jointly must enter their names and the date onto the USE screen See Figure 7 1 By signing below you including each of you if there is more than one taxpayer authorize us to use the information you provided to us during the preparation of your 2012 tax return to determine whether to present you with the opportunity to apply for these products and services Electronic signature s Name of taxpayer must be entered by the taxpayer Date William Carter 05 10 2013 Name of joint taxpayer must be entered by the taxpayer Date lia Carter ae E 05 10 2013 Fig
418. income data from a taxpayer s W 2 and 1099 MISC forms respectively Tax Year 2012 101 Personal Service Income W 2 1099 MISC Drake Software User s Manual W 2 Screen code W2 Links W 2 Verification Foreign Employers 102 The W2 screen is designed to reflect the IRS Form W 2 Wage and Tax Statement Data entered here must match the client s W 2 form The following fields can be com pleted automatically by the program e Names and Addresses If the employer s EIN is in your Drake database the employer s information is filled automatically once you enter the EIN The employee information is filled automatically once T or S is selected at the top of the screen Nothing needs to be typed into these fields unless the information dif fers from what was previously entered in the program e Wages and Withholding When wages are entered in box 1 boxes 3 6 are filled automatically These amounts should match those on the taxpayer s W 2 If after contacting or attempting to contact the employer you suspect NOTES fraud immediately contact the nearest IRS Criminal Investigation office or call the IRS s tax fraud hotline at 800 829 0433 Links are provided from the W2 screen to screens 2441 for entering Child and Dependent Care Expenses screen 8880 for entering data to calculate the Qualified Retirement Savings Contributions credit and screen SEHI for entering data to cal culate the Self Employ
419. indow select Reports gt Fixed Asset Manager Click Edit Macros to open the Fixed Asset Manager Macros dialog box This box has three columns of drop lists one for type of Report one for Depreciation method and one for Style Select a report type depreciation method and style for each report to be printed under the macro Click Save to save your changes and return to the Fixed Asset Manager dialog box Figure 12 8 on page 325 To run the macro select Auto Code Print as the report type in the left most drop list and click Run Report Client Status Manager CSM Reports For information on running CSM reports see Chapter 9 Client Status Manager Hash Totals 326 The Hash Totals report displays the number of forms and schedules generated on a selected return By consulting these totals the data entry operator can be reasonably sure that the correct values have been entered into the fields To generate a report of hash totals Tax Year 2012 Drake Software User s Manual Hash Totals Tax Year 2012 eO pS From the Home window select Reports gt Hash Totals Enter the SSN or EIN of a return Click Continue The report is displayed in the Report Viewer Click Exit to return to the Home window 327 Hash Totals Drake Software User s Manual This page intentionally left blank 328 Tax Year 2012 1 3 Suite Products Take advantage of these Drake tools that can be integrated with the tax software to
420. information G Approved pending state registration I Incomplete N Needs compliance training P Pending R Rejected available for correction and resubmission S Suspended contact the bank W Withdrawn Most status updates are available within hours of submitting the application Once your application has been approved contact the bank to order check stock and com plete any additional agreements Banking Options Setting Up Banking Options 218 Once you have chosen your banking solution activate your selection in Drake data entry so the correct screens are accessible from the General tab 1 From the Home window select Setup gt Firm s Double click the firm or select a row and click Edit Firm 3 Under Banking Information select your chosen banking option and enter addi tional information as necessary Options are described in Table 7 4 Click Save Table 7 4 Options under Banking Information in Setup gt Firm lt s Item in Setup Description Retrieve banking information Import banking information from your completed bank application in the EOM into Firm Setup Additional Fee Add on These fees are deducted from the taxpayer s refund and held for you by Drake in a separate bank account The balance of this account will be distrib uted directly back to you on a monthly basis during tax season and in mid November for after season balances Add On Fee Recipient Use this field to have a name ot
421. ing F2 Description Descending F3 AmountAscending F4 Amount Descending Title Schedule C line 8 Advertising Description Amount Radio 200 Television 2500 Newspaper 300 Pn mmeen lee 2 ae TA _ E ae mae o Figure 3 13 Detail worksheet with data entered 2 Enter or edit the worksheet Title 3 Enter a Description and Amount for each item Do not skip lines As needed use F1 F2 F3 and F4 to sort items in the list See Figure 3 13 4 Press Esc Drake saves your work and displays the total in data entry Note that the field is shaded to indicate a worksheet is present Default color is red see Figure 3 14 Part Il Expenses 8 ANNI Se 9 Carand truck expenses AUTO 10 Commissions and fees Figure 3 14 Shaded worksheet field Tax Year 2012 69 Data Entry Field Flags Global Flags 70 Drake Software User s Manual Detail worksheets are produced as overflow statements but are not e filed with the return To print a description on a statement without a corresponding dollar NOTES amount enter a slash in front of the description If you press CTRL W or double click in a Depreciation field the pro gram opens the associated 4562 Depreciation screen with the For and Multi Form Code boxes completed See Associating One Screen with Another on page 73 Use field flags to set certain fields apart for review Flagged fields are shaded default is green
422. into one From the Home window go to Setup gt Options Tip EF tab In the Session Options section select Combine EF Steps Select Transmit Post Acks You can still view the reports by going to Reports gt Reports Viewer from the Home window E filing a Return The e filing process can be said to consist of up to five main steps starting with return calculation and ending with the processing of bank products Tax Year 2012 229 E filing a Return Drake Software User s Manual Step 1 Calculate the Return Calculate the return to determine if it is ready to be e filed See Calculating a Return on page 179 for instructions on calculating returns in Drake Drake generates an EF status document and if necessary EF message pages shown in the Figure 8 1 directory tree and described in the following list All Forms Sets EF 3 Figure 8 1 EF related documents include EF messages and an EF status page e MESSAGES EF messages are generated only if issues within the return cause it to be ineligible for e file Messages include error codes descriptions of the issues and identification of fields that must be verified e EFSTATUS The EF status page shows which federal and state returns will be transmitted and which returns have been suppressed and will not be transmitted It also states whether any federal EF messages were generated N DTE Error codes above 5000 are Drake error codes All other codes are fe
423. ion A 706 and 7064 return can be created from a 1040 and a 1040 from either a 706 or 7064 Enter SSN EIN to convert 777223334 Tenge iiias rie tC ravits t1049 C Fiduciay 1041 Estate 706 Corporate 1120 Partnership 1065 Heir 7064 C Sub S Corp 1120S TaxExempt 990 111223333 File Type is Individual 1040 Select the type of return to convert to Help Continue Figure 11 8 Available return types are displayed 4 Click an option to select it and then click Continue 5 When asked if you want to keep the original return in addition to the new return click Yes 6 Click OK The SSN is now applied to both the original return and the new return In the future when you enter the SSN to open a return you will be asked which return you wish to open When you use other features of the program where SSNs are entered you will be prompted to indicate which return the program should use Importing Data from QuickBooks Tax Year 2012 Two main steps must be taken to import client data from QuickBooks into Drake 1 preparing the QuickBooks file and 2 performing the import Always back up Drake files see Backup on page 292 and the QuickBooks files before importing client files 299 File Maintenance Drake Software User s Manual Preparing a QuickBooks File Importing QuickBooks Data 300 Before you can import QuickBooks files into Drake Software you must first p
424. ions of these amounts Figure 5 17 on page 119 Tax Year 2012 Drake Software User s Manual Retirement Income IRA distributions received no 1099 received Taxable portion of IRA distributions above I Early distribution calculate penalty 15b l H 16a Pension distributions received no 1099 reCeIVEM 2 ee ecececceseenesesneseenenesneneeneneeneneenes 16a Taxable portion of pensions above Early distribution calculate penalty 16b Unemployment compensation enter the full amount from Form 1099 G Box 1 19 SE ee ee ew EY TS ee Sere or Lee oe oe a von Figure 5 17 Adjustment fields for IRA and pension distributions screen 3 These amounts are calculated with the corresponding amounts from the 1099 and 8606 screens and carried to the IRA distributions and Pensions and annuities lines of Form 1040 Do not duplicate entries made on the 1099 or 8606 screens Mark the applicable check box on this screen to have the program cal culate the penalty early distribution of the taxable portion of IRA distri N DOTES butions line 15b or pensions line 16b entered If the taxpayer did not receive a 1099 R for a pension annuity or IRA distribution the return cannot be e filed Substitute To file a substitute 1099 R Form 4852 refer to Substitute W 2 1099 R on 1099 R page 104 Rollover of Ifa 1099 R distribution should be excluded
425. iplied by preparer s hourly rate as defined in Setup gt Preparers Billing by form preparing bill based on forms necessary to complete return by price entered in Setup gt Pricing program prepares a bill summary along with the option selected here unless the Bill Summary option is cleared at Setup gt Options Optional Documents tab Header on bill Select among options for the header to be printed on the bill Custom Paragraph Choose to have a custom paragraph printed on the bill Select a location and then write the paragraph in the supplied text box States To select options for state returns select the States tab and then select a state abbrevi ation from the drop list When the options are displayed select to activate or disable them as desired and click OK Available options depend on the chosen state For more on specific states see the FAQ screen for each state program E filing Options under the EF tab are described in Table 2 11 Some can be adjusted for an individual return from the EF screen in data entry Table 2 11 Options Setup EF Option Auto generate taxpayer s PIN Description Have the software assign a randomly generated PIN 1040 only Require Ready for EF indicator on EF screen Requires that the Ready for EF indicator on the EF screen be marked before a return can be selected for e filing Lock client data file after EF accep tance Locks the client s da
426. irectly Use Settings to configure Drake specific options FIED Cas Tray Main paper source v __ Settings MEL IE Ni a Print a custom watermark Duplex E Staple E P Print Client Set watermark DDM Portal Options I Print Preparer Set watermark I Send to portal Password Protect Enter password Figure 6 8 Print Selection dialog box for Drake PDF Printer 4 optional The program is set up to password protect the PDF document By default the software uses the first four letters of the client s last name and the last five numbers of the taxpayer s SSN EIN as the password An administrative user can change this default in Setup gt Options Administrative Options tab To print the PDF document without having to enter the password clear the check mark from the Password Protect box Tax Year 2012 Drake Software User s Manual Viewing and Printing a Return Printing Printer Sets Quick Printing a Single Form Tax Year 2012 5 optional To have the program open Adobe once the PDF document is created click Settings and mark Launch Adobe after creating a Drake PDF 6 Select any other options as desired from the Print Selection dialog box Among the options in the Print dialog box is the DDM Portal Options for sending a PDF copy of the printed forms to the SecureFilePro por NOTES tal For more see Chapter 13 Suite Products If you are using a PDF
427. is not too high to qualify for the credit Home Energy Credits Screen code 5695 Use the 5695 screen accessible from the first Credits tab for Form 5695 Residential Energy Credits To learn more about the federal tax credits for energy efficiency and the products that qualify visit the U S Department of Energy s website A link to this site is available on the 5695 screen Tax Year 2012 143 General Business Credits Drake Software User s Manual General Business Credits Use screen 3800 to fill out Form 3800 General Business Credit This screen consists mostly of override fields for passive activity credits see Passive Activity Credits following data should be entered in the override fields only to override the program s calculated amounts from Form 3800 Part III General Business Credits or Eligible Small Business Credits Part III was added to the form to reflect all the general business credits NOTE reported on Form 3800 and to identify the type of credit being reported General Business Credits GBC or Eligible Small Business Credits ESBC The GBC screen is used for reporting the following types of information e Data for current year credits reported on forms Drake does not support To enter data for a credit programmed into Drake use the credit s screen For example use the 8820 screen for Form 8820 Orphan Drug Credit e GBC and ESBC carryforwards and carrybacks Passive Activity Credits The Pa
428. isa American Express or Discover e Integrated File and Pay IFP The preparer enters the taxpayer s credit card information and has the payment authorized prior to e filing the return Once the e filed return is accepted by the IRS the debit or credit card is charged e Drake e Payment Center Taxpayers can use the Drake e Payment Center located at www 1040paytax com to pay a balance due by debit or credit card after the return has been filed Using the Use the EPAY screen accessible from the Miscellaneous tab to pay a balance due EPAY Screen with IFP Use this screen after the return is completed but before e filing it In order to use IFP the taxpayer s first and last name SSN full address phone number including area code and e mail address must be entered on screen 1 IMPORTANT A return must be e filed and accepted within 21 days of card authorization in order to complete the payment transaction If a return is not accepted or is rejected within 21 days the authori zation is in effect cancelled Reauthorization would be required Screen codes On the EPAY screen indicate the form being e filed 1040 or 4868 extension recal EPAY or IFP culate the return then return to the EPAY screen and click the Authorize Credit Card button You will be directed to a website where you can enter the taxpayer s credit card information and authorize a hold on the card To have the client letter refer to the payment
429. ist NEW FOR For taxpayers with interest in more than one foreign account or distri 7017 butions from more than one foreign trust you can now press PAGE DowN and open a new screen for each country State The State specific information section has a drop list to designate Maine Massachu specific setts Oklahoma or Tennessee for bank interest a field for state identification num Information bers for Michigan Minnesota New Hampshire and Rhode Island returns a field for entering the amount of state tax withheld and choices for Illinois returns Figure 5 12 State specific information z Bank mure n EENE EE ETE TET T D reumber For wee by 0 N NER os a EEK a WANs AOD ee a ee E A A z IL Schedule M interest source description Enter on State tax exempt interes line above Hirano morosi MOME eee Figure 5 12 State specific fields on INT screen In the IA taxable interest income field on the INT screen enter the amount of tax able interest income from Iowa Figure 5 12 The DIV screen differs slightly enter the amount of taxable IA dividends 1099 OID Enter interest from Form 1099 OID Original Issue Discount on either screen 3 if less than 1 500 or the INT screen if 1 500 or more Foreign Interest and Dividends Use the INT and DIV screens to report interest and dividend income from foreign accounts and trusts As applicable this data flows to Form 1116 Foreign Tax Credit The following Form 1116 capabilities
430. isted here Several refer to the Drake Support site which is located at Support DrakeSoftware com Contact the IRS L Register for PTIN All tax return preparers must register for a Preparer Tax Identification Num ber PTIN and pay a 64 25 initial fee Preparers who already have a PTIN must renew their PTINs and pay a 63 renewal fee Attorneys CPAs and EAs are not exempt Sign up for a PTIN online through the IRS website www irs gov Click the For Tax Pros tab and from the Getting Started section click Apply for a PTIN The IRS has a special toll free telephone number 877 613 PTIN 7846 that tax professionals can call for technical support related to the online registra tion system L Pass RTRP Competency Test Paid tax return preparers with a PTIN have until the end of 2013 to take and pass the Registered Tax Return Preparer RTRP Competency Test To schedule a time for taking the exam from the IRS website www irs gov go to the For Tax Pros tab and go to the Testing amp Credentials section You can also call 855 IRS EXAM 3926 L PTIN Test Study and Prep Drake Software offers two online self paced courses to assist you in preparing for the required RTRP Test and earn some required CPE credits The RTRP Test Study Course offers an interactive way to study for the RTRP exam by covering the seven domain areas specified by the IRS as the content of the test Drake Software customers receive a dis counted price of 99
431. it and add custom conditions Click Save to save changes and continue Available Filters Basic Search Conditions for the Selected Filter Clients with Schedule C R New Filter Return Type is Any Clients with Schedule D es Clients with Schedule E Edit Clients with Schedule F Copy Filter Clients with State Results es apolar ee10 Dus Rename Filter Additional Search Conditions for the Selected Filter My Clients Business Add Condition My Clients By Name My Corporate 1120 Clients My Estate Tax 706 Clients Edit Condition My Fiduciary 1041 Clients My Individual 1040 Clients Delete My Partnership 1065 Clients a My S Corporate 11205 Clients My Tax Exempt 990 Clients Birthdays this Month Dependents Birthdays this Month Spouse oes this Month Taspates id Match all conditions C Match any condition Figure 12 4 Filter Manager window 4 Click Copy Filter Name the filter and click OK The new filter is highlighted 5 Modify the Basic Search Conditions and the Additional Search Conditions for your filter as appropriate there is a limit of 10 additional search conditions per filter See Search Conditions on page 319 6 Click Save The program returns to the Report Editor Step 2 window 7 Click Save again to save the report To close the Report Manager click Exit Selecting Additional Report Options Sort Summary Order Data Calculations Prior Year Data
432. its 132 Social Security Numbers applying one number to two returns 299 changing 295 printing on bill 32 verifying 28 soft fonts 48 290 Spanish result letters 58 screens 28 special tax treatments 118 splitting a return MFJ to MFS 73 SSN see Social Security Numbers ST field 73 staggering DCNs 234 state see also state programs see also state returns FAQ screens 248 mandates Appendix E registration numbers 23 state programs downloading prior year 271 setup options 32 state returns accessing 75 e filing 248 statutory employees 103 stolen checks 224 storing files in the DDM 336 342 344 349 print files 29 student full time 98 loan interest deduction 138 xli Index supplemental income 121 127 support see Drake Support suppressing documents on the fly 52 e filing of a return on the fly 237 e filing of returns globally 33 EIC calculations 157 Form 1116 Foreign Tax Credit 109 forms options for 29 system requirements 12 T tax courses ETC 264 Tax Planner 353 Tax Products Group contact info xii tax returns see returns taxable distributions 132 refunds 109 testing e file transmission 229 printing of checks 221 third party designee 162 163 tokens GruntWorx 358 tracking adjusted basis 127 tracking return data TRAC screen 190 Trades GruntWorx function 358 troubleshooting acknowledgments in e filing 234 check printing 224 e file transmissions 232 return selection fo
433. ity Because it is nonpassive the calculations from this screen do not flow to Form 8582 Option available on screens K1 and E only If A or B is selected the activity is considered a currently passive activity because A is rental real estate and B is other passive activity If the General partner box is marked on the K1P screen self employ NOTE ment income is automatically reduced by any amount entered in the Section 179 deduction field The unreimbursed partnership expense flows to a separate line on Part Il of Schedule E State K 1 In cases where the state K 1 amounts differ from federal K 1 amounts such as when a Am ounts state does not take the federal limits on depreciation indicate the difference in the If Different software so the correct K 1 amounts will flow to the correct federal and state forms By default the program uses the federal K 1 amounts for both federal and state calcu lations If the state K 1 amounts differ from the federal enter the state amounts in the State column fields of a K1 screen Figure 5 27 Amounts from K 1 Federal 1 Ordinary income or loSS 0 eee 2 Rental real estate income or loss 3 Other rental income or loSS 4 Guaranteed payments 5 Inisrestincome SU O T E A O E rS Figure 5 27 Some of the Federal and State K 1 columns from screen K1S Multiple In some cases an entity will issue Schedule K
434. ive Fuel Vehicle Refueling Property Credit 8912 Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds 8936 Form 8936 Qualified Plug in Electric Drive Motor Vehicle Credit 8941 Form 8941 Small Employer Health Insurance Credit Unreported Social Security and Medicare Tax In Drake use the 4137 8919 screen for Form 4137 Social Security and Medicare Tax on Unreported Tip Income and Form 8919 Uncollected Social Security and Medicare Tax on Wages Additional Tax on Qualified Plans etc Tax Year 2012 Drake s tax software automatically calculates the taxable income from Qualified Tuition Program QTP and Coverdell Education Savings Account ESA distribu tions The calculated amount flows to the following places in the tax return e Form 1040 line 21 Other income e Form 5329 Additional Taxes on Qualified Plans including IRAs and Other Tax Favored Accounts line 5 Distributions included in income from Coverdell ESAs and QTPs Enter qualified education expenses and contributions to and distributions from a QTP or ESA in the QTP ESA Taxable Distributions section of screen 5329 Figure 5 39 on page 148 147 Household Employment Taxes Drake Software User s Manual n pemn Tete ater sey Me apie adie fi inn Simi 4 Part Il Education Accounts Enter each distribution on separate screen QTP ESA Taxable Distributions Adjusted qualified education expenses for 2012 eee Gross dis
435. ized for each client based on the taxpayer s scenario The complexity of the law surround ing EIC prevents due diligence requirements from being standardized NOTE so a tax preparer must have a thorough understanding of EIC law in order to comply with these requirements Software can help provide guidance on fulfilling these requirements but it cannot replace the knowledge a preparer applies to each taxpayer s situation EIC and Combat Pay Screen code 8812 156 You can override the amount of combat pay from the W 2 that is included in the EIC calculation You can also select to include combat pay in the calculation of EIC To modify how combat pay is calculated for EIC open the return and click Add Child Tax Credit Combat Pay under the first Credits tab Enter a Combat pay Tax Year 2012 Drake Software User s Manual Additional Child Tax Credit and Combat Pay amount to override the W 2 amount To force combat pay to be included in calculating EIC select Include combat pay in EIC calculation Combat pay entered on the W2 screen Box 12 with a code of Q NOTE nontaxable combat pay is automatically accounted for in the pro gram calculation If you enter a combat pay amount on the 8812 screen this amount overrides the W2 amount Blocking EIC Calculations In some cases a taxpayer may not be eligible for EIC even though the information on the tax return indicates otherwise To block the program from ca
436. ke The letters program generates various types of client letters from engagement letters to the return s cover letter In some cases letter content is automatically based on data from the tax return For example if a return with a federal balance due has been e 40 Tax Year 2012 Drake Software User s Manual Software Setup filed and the client has opted to mail a check to the IRS the accompanying result letter will state the balance due amount provide the e filing information and give instruc tions for mailing the check Because so much of the letters program is automatic you may not have to edit the let ter templates at all If you do need to make changes Drake has provided numerous options for doing so Before making changes please continue reading this introduction to ensure that you understand how the templates and the Client Communications Editor are structured To view a list of Rich Text Format RTF keyboard shortcuts for letters NOTE from the menu bar at the top of the Home window select Help gt Drake Software Help or press CTRL F1 In the Contents tab double click Setup double click Letters then select RTF Guide Parts ofa A letter in the Client Communications Editor accessed from Setup gt Letters con Letter Tax Year 2012 tains three categories of letter elements keywords text and conditional paragraphs lt Current Date gt lt Taxpayer Name and Address gt iti Text lt Greeting
437. ke Software The returns will be either accepted or rejected Correct the rejected returns and resend them to receive acknowledgements Practice printing checks for the returns with a bank product The SSNs for the test returns run from 500 00 1001 through 500 000 1008 EF practice returns can be found on the installa tion CD through the software from the Drake Home window go to Help gt Online Resources and at Support DrakeSoftware com gt Training Tools gt Prac tice Returns For more information on how practice returns can help you see Practice Returns on page 266 76 Tax Year 2012 4 Preseason Preparation This chapter provides instructions for bringing forward information from last year printing proformas or organizers for clients mailing preseason materials and setting up schedules See Appendix A Preseason Checklist for a convenient list of tasks to consider as you prepare for tax season Prior Year Updates If your firm used Drake last year you can save time by updating prior year returns settings letters and EIN data Before updating you should 1 back up your files and 2 ensure that your program s 2011 data path points to your firm s 2011 data files By default Drake accesses the previous year s client files from the workstation s local drive If your prior year files are stored elsewhere enter the location at the bottom of the Network Setup window 1 Log in to the program as a user wit
438. ke Software User s Manual Making Changes on the Fly Penalty amp The following global setup options are for penalty and interest calculations on late Interest filed returns These are set from Setup gt Options Optional Items on Return tab Calculations and can be changed from within a return from the LATE screen on the Taxes tab Table 2 19 Penalty amp Interest Options That Can Be Changed on the Fly Global Setting Available Overrides Calculation of penalty If the global option is selected it can be suppressed for a single and interest on all returns return If the global option is not selected it can be forced for a single return Interest rates Penalty and interest amounts can be entered manually for a sin gle return to override program calculations based on updated or manually entered interest rates in Setup gt Options For more on the setting up the global option in Options Setup and on using the LATE screen see Features for Late Filed Returns on page 181 Listing a Different Firm Preparer or ERO on a Return By default the program prints the information shown in Table 2 20 on the return Table 2 20 Firm Preparer and ERO Data That Can Be Changed on the Fly Information Description Firm Firm associated with Preparer 1 in Setup gt Preparer s Preparer Preparer 1 as entered in Setup gt Preparer s ERO ERO selected in Setup gt Options EF tab default is Paid Pre parer
439. ke sure the check number on the computer matches the check number on the next available physical check Do not transmit from more than one computer unless the program is CAUTI ON on a dedicated server Transmitting and receiving from more than one computer can affect your ability to print checks correctly To print a check for a bank product 1 2 gt From the Home window select EF gt Check Print to open the Bank Product Selection box Choose to print checks or to print the Truth In Lending Agreement TILA disclo sures for non check bank products such as debit cards and direct deposit Click Continue The Selection window for checks or TILA shows the items available for printing Select the items to be printed or use Select All or Unselect All Click Continue The Check Print Options dialog box displays the client s name ID number check amount and check number Choose from the available options listed in Table 7 5 Table 7 5 Check Printing Options Option Description Print this check on ___ Prints the check on the displayed check number Delete this Client s check Deletes the check from the system The check will not be displayed for printing again Skip this Client s check for now Excludes the check from the current print job Print ALL selected checks start Prints all previously selected checks starting at ing on __ the displayed check number The first time you print
440. kets Credit 147 Form 8879 IRS e file Signature Authorization 163 164 Form 8880 Credit for Qualified Retirement Savings Con tributions 146 Form 8881 Credit for Small Employer Pension Plan Star tup Costs 147 Form 8882 Credit for Employer Provided Childcare Facil ities and Services 147 Form 8885 Health Coverage Tax Credit 147 157 Form 8888 Direct Deposit of Refund to More Than One Account 158 Form 8889 Health Savings Accounts 135 Form 8896 Low Sulfur Diesel Fuel Production Credit 147 Form 8903 Domestic Production Activities Deduction 139 Form 8907 Nonconventional Source Fuel Credit 147 Form 8908 Energy Efficient Home Credit 147 Form 8909 Energy Efficient Appliance Credit 147 Form 8910 Alternative Motor Vehicle Credit 147 Form 8911 Alternative Fuel Vehicle Refueling Property Credit 147 Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds 147 Form 8917 Tuition and Fees Deduction 138 Form 8919 Uncollected Social Security and Medicare Tax on Wages 147 Form 9325 Acknowledgment and General Information for Taxpayers Who File Returns Electronically 32 33 Form 9465 Installment Agreement Request 164 179 237 Form SSA 1099 Social Security Benefits Statement 132 Form W 2 Wage and Tax Statement 29 102 105 Form W 2G Gambling Income and Loss 133 Form W 4 Employee s Withholding Allowance Certifi cate 180 Form W 7 Application for IRS Individual Taxpayer Iden
441. ks Tax Year 2012 B 1 PROCESS E FILING FEDERAL RETURNS Drake compe Address the Test eee identified issue _ transmission aum successful T Review return to If NOT accepted a ensure that it is B R D or X ack oO ready to e file T ack x Drake Pick up amp process i L transmission Transmitting P T or B ack gt oe P ack successful g acknowledgments ACCEPTED Wait for IRS ack Mark ready for EF gt Transmit return A ack or ack l d l Drake Acknowledgement Codes ME eceive Transmit Transmit return transmitted gt if P ack Receive ack g P Processing Wait for IRS ack return acknowledgment to IRS T Test transmission successful Q Ready to e file B Bad transmission rejected by Drake Install updates and try again d IRS Acknowledgement Codes A Accepted by IRS R Rejected by IRS see reject codes op oO pocewe Transmit arr D Duplicate return is a duplicate of a previously filed return or DCN Rejected by IRS transmitted gt acknowledgment Lai E filing process X Problem with the transmission rotu completa E Imperfect return Ack file was not posted to your EF database Run Repair Index in D
442. l Address Book can be filled with e mail addresses of your choice Option Book pot available when accessing the e mail program from data entry To add an address fie 1 From the Email Inbox window click the Address Book button to open the Edit oo Address Book dialog box 2 Click Add to open the Email Address Book dialog box 3 Enter first name last name and e mail address Click Save 4 Click Done Importing You can also import addresses from a spreadsheet into your Local Address Book Addresses Your spreadsheet must have the proper headings before you can run the import To create a file to be imported into the e mail program 1 Using a spreadsheet program such as Microsoft Excel create three columns Last Name First Name and E mail Address Figure 10 22 on page 282 Tax Year 2012 281 Interactive Support Drake Software User s Manual A B 3 Sample Junior BR549 dnet net Regard Beau Beau dnet net Philbin Regis Star hollywood con Dillon Marshall Sixshooter Gunsmoke com Shakespear William BillyShakes literary com PP see dae ened asi Ales on nena a ee Figure 10 22 Row headings must be Last Name First Name and Email Address N Enter last names first names and e mail addresses of all clients to be imported Click File gt Save As Window Vista or Windows 7 users click the Office button at the top left corner and select Save As a Choose a location to save the file Assign a file name
443. l preparers are subject to a penalty of 50 for each return not filed in an electronic format with a maximum penalty of 25 000 per calendar year Preparers who file 51 or more returns a year are required to file at least 90 percent of their returns electronically The requirement applies to any paid preparer who prepares 51 or more Kansas individual income tax returns during any calendar year The com bined total of the returns prepared by all employees at all of the tax preparer s loca tions will be used to determine whether or not the tax preparer is subject to the e filing requirement The Secretary may waive the e filing requirement if it is determined that complying with the requirement would cause an undue hardship Tax preparers who file 11 or more individual income tax returns are required to e file their client s returns There are some exceptions to the mandate Form 8948 K Pre parer Explanation for Not Filing Electronically is used to explain why a particular return is being filed by paper The form should be attached to and mailed with the paper return The e filing mandate requires tax preparers filing more than 100 individual income tax returns to e file at least 90 percent of the returns as authorized by Louisiana Revised Statute 47 1520 Failure to comply with the e filing requirements will result in the assessment of a pen alty of 100 or five percent of the tax whichever is greater The e filing requirement may be waive
444. lace the QuickBooks files into an import file inside QuickBooks To create the import file from inside QuickBooks Pe w Pa Select Report gt Accountant amp Taxes gt Income Tax Summary Click Print to open the Print dialog box Select the option button to the left of FILE Select ASCH text file Press Print Enter a file name of eight characters or fewer with no spaces To import data from a QuickBooks import file into Drake Software 1 2 5 From the Home window select Tools gt File Maintenance gt QuickBooks Import Click Next In step 1 enter the name of the import file created from QuickBooks or click the button to the right of the text box and browse to the QuickBooks file The file extension is txt Drake searches the local hard drive for the import file In step 2 enter a Client ID Number SSN or EIN and click Next Drake 2012 QuickBooks Import Step 2 nen Client ID Number Enter the SSN EIN for the Client This number will be used in Drake Software to reference the tax return 1 Import File Name C QuickBooks Per1 0406 txt 2 Client ID Number 400100200 Help lt Back Cancel Figure 11 9 Step 2 Enter SSN or EIN The program searches for a Drake file with the same EIN SSN e Ifno Drake file is found you are prompted to choose a Business Type Make your selection from the drop list Figure 11 10 on page 301 and click Next Tax Year 2012 Drake Software User
445. lculating EIC type No into the EIC Blocker on the EIC screen Additional Child Tax Credit and Combat Pay The 8812 screen contains override fields for the following items e Combat pay that is applicable to Additional Child Tax Credit and EIC e Total earned income for Form 8812 Additional Child Tax Credit The program automatically calculates the amount for earned income If Form 8812 applies the program makes the calculations and generates the form Use the Addi tional Child Tax Credit section on the 8812 screen only if you must override the cal culation for total earned income See EIC and Combat Pay on page 156 Other Payments Use the following screens to enter other payments from credits Table 5 15 Other Payments from Credits Screen Name of Form 2439 Form 2439 Notice to Shareholder of Undistributed Long Term Capital Gains 4136 Form 4136 Credit for Federal Tax Paid on Fuels 8801 Form 8801 Credit for Prior Year Minimum Tax Individuals Estates and Trusts 8885 Form 8885 Health Coverage Tax Credit With the exception of the Form 4136 amount these amounts flow to the Credits from Form line of Form 1040 The amount from Form 4136 flows to the Credit for fed eral tax on fuels line Use the Other payments field on screen 5 to force an amount to flow to NOTE the Credits from Form line of Form 1040 Be aware that no documen tation justifying the forced amount is included with the re
446. le Menu items with a black check mark are both visible and accessible e Hidden Menu items with no check mark are not visible but can be accessed using the selector field 4 Click Save to save any changes or Cancel to close the menu with no changes saved Selections made here do not apply for users with administrative rights Your firm can create drop lists for the Miscellaneous Codes on screen 1 and the Adjustment and Payment description fields on the BILL screen Once you have cre ated a drop list it appears in the selected field In Figure 2 9 a drop list has been cre ated for Miscellaneous Code 1 and Code 2 on screen 1 As shown in the example Code 2 has the user defined referral codes BUSREF business reference and WOM REF word of mouth reference Miscellaneous Codes Arrow indicates drop lists User defined codes established in Setup gt Options gt Admin Options Figure 2 9 Screen 1 drop lists and user defined miscellaneous codes The instructions below explain how to create the drop list like the one in Figure 2 9 To create a drop list 1 From the Home window select Setup gt Options and click the Administrative Options tab 2 Click the second Customize button Figure 2 10 Data Entry Customization Options Use customized data entry selection menu Customize user defined data entry fields Figure 2 10 Click Customize to customize user defined data entry fields 3 Inthe Custo
447. letters and coupons to send with organizers Tax Year 2012 A 3 Drake Software User s Manual L Begin preseason scheduling Get a jump start on tax season Schedule clients who are eager to file early Ul Order mailers from Nelco if necessary Update and Configure Data LJ Choose the backup media type that best suits your needs U Familiarize yourself with the Update Manager features See Update Manager on page 287 L Update and back up settings Run the update routine see Prior Year Updates on page 77 and make a backup copy of the software setup see Backing Up and Restoring Files on page 292 Take Advantage of Drake Resources A 4 U e Training Center ETC For tax courses tutorials videos and testing go to DrakeSof ware com ETC LJ Tutorials The 2012 tutorials can be accessed through the Help menu or from the Drake Support site Training Tools gt Tutorials U Drake User s Manual Familiarize yourself with this manual and use it as a resource for learn ing how to use the software and prepare individual returns LJ Business Planning Group Learn more about the Business Planning Group which can help you help your clients with tax reduction business continuation and restructuring and retirement plan ning See Business Planning Group on page 271 m Practice returns Use our practice returns to learn program navigation and data entry m Drake Web
448. lication for Extension of Time to File U S Income Tax Return e Form 9465 Installment Agreement Request e Form 56 Notice Concerning Fiduciary Relationship Note that the electronic signature form is required with Form 4868 only if making a payment For Forms 4868 and 2350 the program produces Form 8878 IRS e file Sig nature Authorization for Form 4868 or Form 2350 N OTE Prior year AGI amounts are required to e file Forms 2350 9465 and 56 Enter this data in the Prior year AGI section of the PIN screen Special Conditions Power of Attorney 164 If the return is being signed by someone with Power of Attorney for the taxpayer indi cate this information on the MISC screen and complete the Power of Attorney section mark the check box and enter the name of the person signing Because Form 2848 is not e filable a transmittal Form 8453 is produced with the paper document indicator marked for Form 2848 Form 2848 itself is not printed automatically it must be completed IMPORTANT on the 2848 screen in order to be generated with the return Form 2848 must then be printed and mailed or faxed to the IRS Tax Year 2012 Drake Software User s Manual Depreciation Taxpayer Ifthe taxpayer is signing the return for the spouse mark the box in the Signing for Signing for Spouse section of the MISC screen and provide an explanation using the SCH screen Spouse code 013 See Unformatted Schedules on page 189 Depreciation
449. lick Upload Click OK to verify you want to upload the document When the Portal Upload Result dialog box is opened click OK ee ee a NOTE Only documents saved in the General folder in the Working Cabinet are eligible for upload or download as Public and Private files Any document uploaded to the Public folder is available to all your CAUTION clients Be very careful about which documents you upload to this folder 365 SecureFilePro Drake Software User s Manual This page intentionally left blank 366 Tax Year 2012 1 4 New Features in Other Packages This chapter lists some of the new features you ll see in Drake s corporation 1120 S corporation 1120S partnership 1065 tax exempt 990 fiduciary 1041 and estate 706 packages Details for using these packages will appear in the supplemen tal manuals to be published early in 2013 Individual Entity Packages The following enhancements have been made to one or more but not all of the entity packages Changes in Reporting of Capital Assets Screen codes 8949 D2 D Form 8949 Schedule D Form 1099 B Tax Year 2012 Significant changes have been made to the way capital assets are to be reported in the Corporation 1120 S Corporation 1120S and Partnership 1065 packages In the past capital gains and losses from stocks bonds mutual funds and other investments were listed on Schedule D Capital Gains and Losses Now they are to be
450. licking on a client will allow you to modify the EF documents tha click Continue to complete the process ID Number_ Client Name Status EF Documents Fed Selected for EF 400006665 Carter William amp Amel Ready ForEF 1040 NCD400 a C 402000000 DANDY 05 JIM ReadyForEF 1040 l J 111223333 Cann Mary Ready ForEF 1040 Eligible for EF O 414141414 Partners in Grime Clea Ready ForEF 1065 C 400500600 EssBeeEss Ready ForEF 11205 C 400400400 Seay s TruckingandSh ReadyForEF 1120 gt se be J 802000001 Fred s Fiduciary Ready For EF 1041 f Not eligible 533333333 State 3 Analysis No EF Docu a for EF C 884000220 AMT SIMPLE TRUST Ready For EF O 400001002 LIMTATION TEST amp Ready For EF TIP 1041 1040 ntas Mh Mie Athen Figure 8 2 Eligible returns are indicated by boxes pt AADAC nantes E i aC a 2 Select the boxes of the returns to transmit Use the Select All or Unselect All but tons as needed Click column headers to sort returns by column 3 optional Double click a return to open an EF Transmission Detail box for the return This box displays the client name ID number EF status and federal and state forms to be filed and allows you to finalize the specific returns 1040 4868 1120 etc to be transmitted Click Save to retain any changes you make 4 Click Continue The Report Viewer shows the EF Selection Report which lists all returns that are awaiting transmission See Report Viewer on p
451. lient data files print fles database files and transmission fies Location of client folders Location for 2012 client fles FADRAKET2 DT Location for 2011 cient fles F ADRAKETAOT W Drake is curently running from F ADRAKE12 Network Drive Network Setup Tax retums are stored here F Drake is running from this location Al avaiable dives are listed Share settings letters pricing preparer notes scheduler fims preparers macros and reports here FADRAKE12 Drake is running from this location _v Only dives with Drake installed are sted Help Ok Cancel Figure 2 3 Network information is entered at Setup gt Data Locations Networks Install Drake to your network s server or to all workstations of a peer to peer net work Table 2 2 shows a comparison of the two network options Table 2 2 Comparison of Network Option All Workstations Peer to Peer Setups Server Only Preferred Setup For firms with a robust network setup For firms without resources to use a single server 16 Tax Year 2012 Drake Software User s Manual Single Workstations and Network Options Server Networks Other Network Configura tions Tax Year 2012 Table 2 2 Comparison of Network Option Server Only All Workstations Preferred Setup Peer to Peer Setups Simplified setup and updates Updates must be installed to each computer No need to stagger DCN counter Could be necessary to stagger
452. lment sales see Installment Sales on page 115 Depreciation Elections Two screens are used for indicating depreciation elections Use screen 10 Additional Depreciation Elections to elect out of 50 bonus depreciation for some or all of the assets placed in service in 2012 You can access this screen for an asset by clicking the Additional Depreciation Elections link on screen 4562 for that asset Use the ELEC screen for other Form 4562 elections listed under the Form 4562 heading on that screen For more on the ELEC screen see Election Options on page 175 Federally Declared Disaster If the Disaster assistance property box in the Federal declared disaster area is marked the property will qualify for additional Section 179 deduction and also for 50 bonus depreciation A selection here will increase the section 179 limits on Form 4562 lines 1 and 3 accordingly Marking the GO Zone Extension property check box will not change any 2012 cal culations in Drake The box remains on the screen to alert the preparer if the asset is sold and anything must be recaptured due to additional GO Zone deductions in a prior year All federal GO Zone provisions have expired Auto Expenses Screen code The Auto Expense Worksheet AUTO screen accessible from the Adjustments tab AUTO is used for calculating automobile expenses related to certain types of income The program calculates the mileage rate automatically Enter data for Sched
453. losure of Tax Return Information 22 209 212 itemized deductions 140 K K 1 see Schedule K 1 KB Knowledge Base 258 key combinations 63 67 keyboard 63 keywords Appendix C Kiddie Tax 149 150 Knowledge Base KB 258 L labels 302 language Spanish 28 late filed returns 181 183 letterhead for bills and letters 44 letters about 40 43 available templates 43 batch 301 304 bringing forward from last year 46 Client Communications Editor 41 customized supplemental 31 default templates 31 due date to print on 54 editing a template 44 engagement 31 envelopes 305 estimate payment reminders 301 K 1 1120S 1065 1041 only 31 43 53 keywords Appendix C letterhead 44 mailing labels 302 margins adjusting 44 overrides LTR screen 58 overriding due date shown on 54 printing 302 privacy 31 restoring 45 setup 43 viewing 46 like kind exchanges 116 listed property types 166 live payroll see Client Write Up logging in as ADMIN 14 to Drake 14 61 to ETC 263 to online EF database 241 logging out of Drake 61 Tax Year 2012 Index long term care insurance 133 losses capital gains and 112 net operating NOLs 173 174 non recaptured 115 of assets screens for entering 111 on Schedule C 111 passive activity 124 using the LOSS screen 174 lost checks 224 lottery winnings 133 macros see also shortcut keys in the Fixed Asset Manager 326 setup 38 symbols used in 39 viewing from data entry 38 mailing labels
454. losure to Franchise Network V Consent to Disclosure of Tax Return Information to franchise network has been signed by the taxpayer and joint taxpayer if applicable l Consent to Disclosure of Tax Return Information to franchise network has NOT been signed by the taxpayer and joint taxpayer if applicable ee eee ae Figure 7 2 Check boxes on CONS screen for disclosure to franchise networks Electronic Signatures To obtain electronic consent the taxpayer and spouse if married filing jointly must enter their names and the date onto the CONS 211 Taxpayer Requirements Drake Software User s Manual screen The Consent to Disclosure of Tax Return Information is generated with the return and includes the name of the franchise or network from Setup gt ERO If your firm uses a franchise or network the CONS screen must be used even if the client refuses to sign the form If the client declines to give consent select the second box in the Paper Con IMPORTANT sent section of the CONS screen See Figure 7 2 on page 211 A franchise or network EFIN must be entered in Setup gt ERO in order to produce the correct letter from the CONS screen and ensure that consent can be obtained for every return See ERO Setup on page 21 Taxpayer Requirements For a taxpayer to be eligible for one of the banking options offered the return must be eligible for e file In most cases the taxpayer must be 18 or older If married filing joi
455. lowing actions to close the EF database or access another applica tion from within it e To close the EF database and return to the Drake Home window click Exit e To open the Online EF Database an Internet connection is required click F10 Online DB or press F10 The EF database in Drake remains open e To close the EF database and access data entry for a selected return click F5 Data Entry or press F5 Peer to peer networks only For non transmitting workstations to view the EF database you must select the drive letter of the IMPORTANT transmitting machine from the Select a network drive for Drake 2012 drop list on the Setup gt Directories and Paths window See Directories and Paths Setup on page 18 Online EF Database Tax Year 2012 The online EF database displays real time data on e filed returns You can run reports on returns bank products and checks search for e filing information for a single SSN or EIN access the Multi Office Manager MOM view CSM data for one or multiple offices and check the status of each IRS Service Center To access your online EF database from within the software 1 From the Home window click Support If you are already in the EF database click F10 Online DB 2 Enter your EFIN and password and click Log In 3 Go to My Account gt EF Database By default the database displays information for the current tax year To view another tax year select the year fro
456. lters available and the ability to create filters and add condi tions to each filter you have a variety of output options for reports Choose a filter from one of Drake s many pre defined filter choices You can edit an existing filter to meet other selected criteria Existing To assign a filter to a report Filters 316 Tax Year 2012 Drake Software User s Manual Setting Up a Report Customized Filters Tax Year 2012 1 2 3 From the Report Editor Step 1 window see Figure 12 2 on page 315 click Next The Report Editor Step 2 window is opened Figure 12 3 Drake 2012 Report Editor Step 2 Filtering of Reports Select a Filter to use for this report The Filter allows you to limit the information that is included in the report If you need to edit or create a filter click Edit Filters below Select any additonal options to apply to the report and click Save Filter Selection Select a report filter New Clients x Edit Filters Filter description Return Type is 1040 1120 1120S 1065 1041 990 706 Client Type is equal to New Appointment Date is between 01012012 and 12312012 Additional Report Options Sort summarize report by this field Preparer Name x Summarize the report data E r Report output file name AllAppl ee ERE E E UN a ee ee ae salen Figure 12 3 Report Editor Step 2 window top half Select a pre defined or custom filter from the Select a Repo
457. ly after updating data from Last Year Data gt Update from 2011 to 2012 Print due diligence documents Print due diligence documents generated from the EIC1 ElC2 EIC3 and EIC4 screens Require applicable due diligence screens to be completed Require that applicable fields on the EIC1 EIC2 EIC3 EIC4 screens be completed before the return can be e filed Enable logged in preparer s Per sonal Client Manager Display the Personal Client Manager on the Drake Home window for the logged in preparer check box is marked by default Display program update availability to Select which preparer groups can view update availability Selections are Administrators users with administrative rights and All preparers Bank Products State laws regard ing fees Charge ALL taxpayers the same fees Select this box to charge all clients the same supplementary fees software franchise network and additional fees regardless of whether a bank prod uct is included For more information click the Program Help link Drake PDF Printer Password Options Return Status Notification Programs Choose to automatically password protect any generated PDF documents Passwords can be assigned to PDF documents that are sent using the Drake e mail program The default password format is the first four charac ters of the client s name plus the last five digits of the client s ID The Default password drop list includes o
458. m the Tax Year drop list under the blue sidebar menu on the left side of the page 241 Online EF Database Drake Software User s Manual Below the tax year drop list is the SSN Last Name Search field To find information on a specific return enter the SSN or last name in this field and click the blue arrow Tip Any available checks and outstanding acknowledgments appear on the opening window of the online EF database every time you open it Most of the options in the blue sidebar menu of the online EF database screen are for viewing and running reports You can also access these options by scrolling down the screen and clicking the blue headings Reports available are listed in Table 8 4 Table 8 4 Reports Options Available from Online EF Database Category Description Returns Filtered by type status date with and without bank products EFIN Bank Products Filtered by type status date EFIN Checks Filtered by Disbursement status date EFIN Fees Filtered by status date EFIN preparer and as summary Summary Filtered by type EF preparer Zip code returns returns by Ack date and by date Tools 94x reports for Client Write Up users see 94x Reports on page 244 manage suppressed returns download ABCvoice Files generate client contact information lists Options Configure report security manage check suppression manage saved reports MOM Multi Multiple office reports see Multi Office
459. make your office run more efficiently The Drake Document Manager DDM and Client Write Up CWU programs can be installed from your Drake Software CD or from Drake Support website Support DrakeSoftware com gt Download Center The Tax Planner is installed with the software NOTE These products are included with the full Drake program Pay Per Return users must pay an additional fee for CWU Two other products GruntWorx and SecureFilePro can for an additional cost also integrate with Drake products to make document mobility and usage a lot easier Through GruntWorx you can e Organize multiple scanned imported or created documents into one PDF file e Extract data from certain forms and import that data directly to Drake data entry screens e Import information from certain 1099s and stand alone 1099 Bs from an Excel file directly into Drake through a process similar to Drake s Schedule D Import function NEW FOR Access GruntWorx from the Home window from the Working Cabinet of the Drake Document Manager or from a desktop shortcut See 2017 Shortcut to GruntWorx on page 338 and GruntWorx on page 357 for details Through SecureFilePro you can upload organizers proformas and any other docu ment to your online portal from which your clients can download the documents and upload their own for you to access saving you paperwork and postage Tax Year 2012 329 Changes to Suite Products in 2012 Dr
460. mas are designed to be internal documents and can be used during the interview process 2012 Form W 2 Wage and Tax Statement DEPOA JACON 7 g Ename nana sas y vai co meon meee pas OOOO EEPE oo g a e m M a a _ _ _ __ State State ID eee prea wie dots Local a aa ES U O NC 1111111 a A a a PE a 2011 state ax Local w Figure 4 5 Sample of W 2 page from a proforma Blank proformas and organizers can be viewed and printed from Tools gt Blank Forms See Printing Organizers and Proformas for Clients on page 82 for informa tion on printing for selected clients Entering Information from Proformas Tax Year 2012 Use proformas during the interview process or have a data entry operator enter tax information from proformas following the interview Each sheet in a proforma has special codes printed on the left side of the page For example the red circle in Figure 4 5 shows that the proforma code for the W2 screen is 2 6 As an alternative to the screen code of W2 the data entry operator or tax pre parer can use the screen s proforma code 2 6 To access a screen by entering its proforma code 1 From the Data Entry Menu press CTRL I to change the selector field 81 Organizers and Proformas Drake Software User s Manual 2 Enter the proforma code numbers one in each text box The Figure 4 6 example shows that a 2 and a 6 would be entered to a
461. may waive all or any portion of the penalty or may refund all or any portion of the penalty the tax return preparer has paid A paid preparer may complete the IT EF opt out form to request exclusion from the e filing mandate The requests will be reviewed and approved or denied on a case by case basis The taxpayer waiver is provided for taxpayers who do not want their tax return to be e filed The taxpayer must attach the completed and signed IT Waiver to his or her Ohio Form IT 1040 or IT 1040EZ The taxpayer must complete and sign the waiver each year House Bill 3166 expands the mandate for those tax preparers who must e file individ ual income tax returns from those who prepare more than 50 returns for the prior year to any specified tax return preparer The term specified tax return preparer has the same meaning as provided in Section 6011 of the Internal Revenue Code The provision which allowed a taxpayer to designate that they did not want their income tax return e filed has been deleted 68 O S 2385 House Bill 2071 extends the federal requirement to Oregon personal income tax returns Paid preparers who meet the requirements of the federal e file mandate must also e file Oregon personal income tax returns The federal mandate Preparers who anticipate preparing 11 or more federal individual or trust tax returns during the year must e file their returns Form 8948 Preparer Explanation for Not Filing Electroni cally
462. me 3 Scenario Name 4 Orginal ReteraBirt Sall house Number of Exemptions Income Wages salaries tips etc 108 866 108 866 108 866 Taxable merest and dvioends 5 432 Business income loss 3 501 3 501 2 501 Gans losses 152 152 110 959 Pension and IRA cistrintions Remal Pass Nrough income loss 45 408 45 408 45 408 Farm income Jos6 162 055 247 162 808 11 900 15 000 131 908 25 037 1 613 430 27 080 68 778 68 778 44 924 5 Figure 13 17 Comparing scenarios to original return NOTE For 2013 scenarios the calculations are adjusted based on the 2013 inflation indexed numbers Client Write Up Client Write Up CWU is free to Drake clients Pay Per Return clients must pay an extra fee for CWU and is shipped on every release of Drake Software You can use CWU to prepare and print both live and after the fact payroll and such forms as W 2 1099 940 941 943 944 941SS and 944SS A number of reports including multi column profit and loss reports pre posted reports comparative or single column bal ance sheets and payroll reports are also available Templates are included to allow easy creation of a Chart of Accounts and there is an export function to carry this information into Drake Software Install CWU from your Drake Software CD or from the Drake Support website Sup port DrakeSoftware com From the blue sidebar menu go
463. ment benefits e Through an approved E1 Card reload network partner As with e Collect the E1 Card is available to certain taxpayers who are 18 or older For more information on qualifying for the E1 Card visit epsfinancial net Informa tion on entering the required information for the E1 Card is provided in The ECOL Screen following The E1 Visa Prepaid Card is issued by The Bancorp Bank pursuant to a license from U S A Inc It can be used wherever debit cards are accepted The Bancorp Bank Member FDIC M P RTANT Obtaining Your Card The USA PATRIOT Act is a federal law that requires all financial institutions to obtain verify and record information that identifies each person who opens a Card Account What this means for you When you open a Card Account we will ask for your name address date of birth and other informa tion that will allow us to reasonably identify you We may also ask to see your driver s license or other identifying documents at any time The ECOL Screen 7216 Signature Security Information Deposit Notification Tax Year 2012 Use the ECOL screen to apply for the E1 Visa Prepaid Card or any of the e Collect bank products All 7216 forms must be signed by the taxpayer and spouse if applicable before applying for the E1 Card or any e Collect bank product If the paper option has been used to obtain the taxpayer signatures mark the box provided on the ECOL screen To have the requir
464. ment of 153 vouchers for 151 estimating 1040 results Quick Estimator 310 ETC see e Training Center e Training Center ETC 261 269 exempt notary income 110 exemptions see dependents existing forms list 68 expenses direct and indirect on Schedule E 123 exporting see also importing check register 223 client data 296 CSM data 256 Kiddie Tax data 149 Schedule K 1 data 126 extensions 176 F F federal code 73 FAQs 273 farm income 130 131 fax cover letter for support 285 Fax number for Support xii federal state facts 270 fees add on 21 calculated 195 charging for bank products 20 in EF database 240 minimum and maximum 38 pricing setup 37 reports 255 reports of bank and preparer 242 setting 235 Tax Planner 56 types of 195 Fees to ACH bank acknowledgment 221 fiduciary 1041 returns 60 131 field flags see flags file maintenance 292 301 files automated backup of 294 backing up 292 changing types 298 client vs print 297 deleting from Drake 297 e mailing client files to Drake 277 exporting 296 password protecting 296 restoring 292 structure of in DDM 336 342 344 unlocking 297 XXXIV Drake Software User s Manual filing instructions 30 late 181 status selection 97 filing instructions 54 filters and filtering see also reports CSM data 254 report data 316 firm setup 20 21 first time homebuyer credit 117 118 158 Fixed Asset Manager 324 flags activating 70 clearing 34 customizing 34 fonts f
465. ments in the Doc ument Manager You can add statuses here then apply them to the document For details see Setting Document Status on page 350 Setting Up The Common Documents feature is available to help your office save time while Common maintaining its naming convention Customizable default descriptions allow you to Documents eliminate t he step of typing a description by selecting pre established descriptions To set up default descriptions in the Working Cabinet 1 From the Working Cabinet menu bar click Setup gt Options The Options dia log box is opened Figure 13 3 ir 5 Options x Use this scan device X Tum off scanner interface W Common Documents list Show Hide e W 2 Social Security card Driver s license Birth certificate 1098 1099 DIV 1099 G 1099 INT 1099 MISC 1099 R Document Status list Figure 13 3 Options for commonly scanned documents 2 Click the Common Documents Show Hide button The common document names are shown in a small window of the dialog box 9 In the A example in Figure 13 3 the user has added Military ID to the list Add or edit names as desired 5 To save changes click Save Tax Year 2012 Drake Software User s Manual Setting up Your Document Manager Whenever you scan a document into the Document Manager you have the option of selecting one of the descriptions entered as a common document See
466. mes SSNs and export statuses for the return Figure 5 40 Drake 2012 Export 8615 x 8615 Export Utility This screen gives a list of children that are eligible to be exported Highlight the children and click the EXPORT button to continue First Name Last Name SSN Status Frank Carter 244556666 Not Exported Jami Carter 255446666 Not Exported william Carter 255255255 Not Exported r AET EN TN O TN ee A eT Figure 5 40 Dependents entered on return Tax Year 2012 149 Estimated Taxes 3 4 5 Drake Software User s Manual Mark the applicable boxes Ifa row is selected the parent s data is exported to that dependent s tax return in Drake Click Export Click OK Click Exit to close the Export 8615 dialog box The parent information is now ready to be imported into the dependent s return Importing After the 8615 data has been exported from the parent s return you will be prompted Parent to import the data the next time you open or when you create the dependent return Information To import parent data into a dependent return 1 2 3 From the Home window click Open New Enter or select the dependent s SSN and click OK You are asked if you want to import the return data Click Yes The return is opened to the General tab of the Data Entry Menu When you open the 8615 screen you will see that the parent information has been entered into all of the applica
467. ming the normal require ments for the exclusion are met To indicate that the surviving spouse is taking the exclusion mark the Recently widowed taxpayer eligible for MFJ exclusion box in the Miscellaneous section of the HOME screen If the First Time Homebuyer Credit was taken for the residence in 2008 or 2009 and there has been a disposition or change in the use of the residence or the credit is now being repaid complete the applicable fields in the Form 5405 Repayment Informa tion section of the HOME screen Retirement Income 1099 R Items Not Reported on 1099 R 118 Use the 1099 8606 and ROTH screens to enter most retirement income data Screens 3 and 4 include fields for entering retirement data directly into the generated 1040 Amounts entered in these fields are combined with any corresponding calculations from the 1099 8606 and ROTH screens Use the 1099 screen to enter data including distribution amounts from Form 1099 R The 1099 screen consists of two screens 1099 R and Special Tax Treatments The Special Tax Treatments screen has fields for the Simplified General Rule Worksheet qualified charitable distributions HSA funding distributions and public safety offic ers To access the Special Tax Treatments screen from the 1099 screen click the Special Tax Treatments tab at the top of the screen Use screen 3 for IRA and pension distribution amounts that were not reported on a 1099 R Enter total and taxable port
468. mitations The preparer must use this K 1 information when completing the individual shareholder s or partner s return Columns for Line 19 4797 and Line 20s Pass thru appear on the attachment but only a total will be included for those columns No other details will appear To explain details of the totals from the Line 19 and Line 20a columns of the K 1 Rental Real Estate Activity attachment lines 19 and 20a of Form 8825 to the shareholders or partners open Drake go to the K1 screen click the Supple mental Info tab and enter the information from the attachment Figure 14 3 on page 370 369 Individual Entity Packages Drake Software User s Manual K1 K1 con d Basis Wks upplemental Info 8805 Item M K1S Supplemental Information for Schedule K 1 243243243 Amelia Carter Use the K1G screen to enter global supplemental information for all K 1s Enter specific information for a single K 1 here Information entered here is added to global supplemental information entered on K1G screen Supplemental Information Partnership s rental property income From 4797 Land 9876 West Avenue Type 5 Total profit 12 345 From K1 S Commercial 454 N St Type 4 Total Profit 22 222 From K1 P Multi fam 565 West Rd Type 2 Total Profit 33 333 From K1 F Self Rental Siler St Type 7 Total Profit 44 444 ST aa a le Figure 14 3 Supply details to shareholders or p
469. mizable Dropdowns in Data Entry dialog box double click a field to customize or select a field and click Edit The Edit Entries dialog box is opened 35 Software Setup Drake Software User s Manual 4 In the fields of the Add Entry section Figure 2 11 on page 36 enter a Code eight or fewer characters and a Description 25 or fewer characters Selected Entry Add Entry Code BUSREF Description Business referral Figure 2 11 Enter code and description in the Add Entry fields 5 Click Add 6 Repeat the previous two steps for additional drop list items When added items are displayed in the Entry List on the left side of the dialog box Figure 2 12 Entry List Edit Remove Move Up Move Down Sort Ascending Sort Desc B Business Referral WOMREF Word of mouth referral NEWSREF Newspaper ad RADIOREF Radio ad CARDREF Business Card handout ending Neate sttetntn gat lOO ap mn senile Figure 2 12 Entry list of Edit Entries dialog box 7 Click Save Changes to close the Edit Entries dialog box Click Exit to return to the Administrative Options tab The drop list is now available in data entry The Edit Entries dialog box also offers the following options e Changing the order of a listed item Use the Move Up Move Down Sort Ascending and Sort Descending buttons to change the order of items in the drop list See Figure 2 12 e Removing a listed item
470. mode e View Mode View mode only e Print Mode Print mode only e EF message page e Notes page 205 Setting Up View Print Options Drake Software User s Manual To change the colors shown in the cascade of forms in Basic mode 1 Select Setup gt Color Configuration The View Print Mode Color Configura tion dialog box displays the default colors for Basic mode 2 Click a color box and select a new color from the Color palette You can also click Define Custom Colors to create any desired color 3 Click OK The corresponding color box changes to the color you selected To restore the default color palette click Restore Colors NOTE If the form background or text data colors are changed in one mode the changes apply in both Enhanced and Basic modes Setting Form Order To change the order in which the documents of a return are printed 1 In Enhanced mode elect Setup gt Form Order to open the Sort Form Order dia log box Figure 6 15 Drake 2012 Sort Form Order 1040 Series v Federal Y Normal Default C Client Set C K1 Set C EF Signature Set Preparer Set Cancel Estimate Extension Set Federal Set Copy _ 209 Messages Page 300 Notes Page Reset 289 EF Status 188 EF PDF Find 97 Form 1040x 1 Form 1040NR Exit 2 Form 1040 3 Form 10404 Help 4 Form 1040E2 Instructions 5 Form 2210 Pa a ei 210 Click and drag the form names to put th
471. mplate are spaces for client and preparer signatures Engagement letters can also be produced prior to completion of the return using Tools gt Letters gt Letters Include customized supplemen tal letter with returns Print a customized letter that can be used for various purposes See Table 2 14 on page 43 Include K 1 letter with returns Print the cover letter for individual K 1s 1065 1120S and 1041 packages Referral Coupons 3 per sheet Enter the number of sheets per return or the coupon amount NOTE To override the default letter for an individual client see Overriding Letters Setup on page 58 Optional Options under the Optional Items on Return tab are described in Table 2 9 Items on Return Table 2 9 Options Setup Optional Items on Return Option Description Date on return The default is the current date To change this date enter the required date on the PRNT screen If desired select to print dates for taxpayer and spouse signatures excluding 1040 Print dates for taxpayer and spouse signatures excludes 1040 Select this option to print the signature dates for taxpayer and spouse signa tures on the return excluding 1040 Select this option to print the taxpayer s phone number entered on screen 1 Taxpayer phone number Third party designee Select the preparer number of the preparer designated as the third party des ignee to be printed on the main form o
472. mpliance 6 7 8 9 Compare the text of the printed page to the Sample Arial Font of the dialog box item 2 of Figure 2 19 Click the appropriate button item 3 of Figure 2 19 e Yes it matches exactly Your printer is PCL 5e compliant and meets Arial font requirements The software selects the PCL method automatically e No it does not match Your printer doesn t appear to support Arial font and will use the Alternate Print Method GDI to produce acceptable results GDI will produce good print quality but may be slower under some condi tions Drake recommends you call your printer manufacturer to determine if Arial font can be added e Nothing printed Some printers that are not PCL 5e compliant will not accept the test print These printers will use the Alternate Print Method GDI to produce acceptable results Select another printer from the Step 1 Select a printer drop list and follow the same steps to test When finished click Exit to close the Printer Test Assistant 10 Click Update to save any printer changes Click Save to exit Printer Setup Tax Year 2012 Drake Software User s Manual Software Setup Printing Sets The Printing Sets feature allows you to print multiple sets of returns for different pur poses To define printing sets 1 From the Drake Home window go to Setup gt Printing gt Printer Setup 2 Click the Sets button to open the Copies Per Set dialog box 3 Selec
473. n The fields in the Partner Basis or Stock Basis for an S corporation and Debt Basis sections for the current year must be completed manually Data flows directly from the two K1 screens into the Current year NOTE losses and deductions column shown in Figure 5 30 on page 129 Data entry for this column begins on the first Basis Worksheet screen and continues to the Basis Worksheet continued screen Calculating Loss allocation percentage is calculated by Hea a Taking the total losses and deductions allowed b Dividing them by the total losses and deductions to figure the loss allocation percentage cC Multiplying the loss allocation percentage by each category of loss applicable to the return Once these calculations are complete e The product flows to column D Allowed Losses and Deductions in Current Year of the Adjusted Basis Worksheet e The difference between the total losses and deductions and the allowed losses and deductions flows to column E Disallowed Losses and Deductions in Current Year of the Adjusted Basis Worksheet The Shareholder s Adjusted Basis Worksheet WK_ISBAS and the N DTE Partner s Adjusted Basis Worksheet WK_IPBAS are generated when the return is calculated Prior Year Enter prior year unallowed losses in the Prior year carryover losses and deductions Unallowed column which spans the Basis Worksheet screen see Figure 5 30 on page 129 and LOSSES Basis Worksheet continued screens The prog
474. n return to My Webinars On the line of the webinar completed click Print CPE More information on hardware and software requirements registration pricing refunds CPE details and other webinar related topics are available on the Available Webinars and My Webinars windows Tax Year 2012 Drake Software User s Manual Other Resources at Drake Support RTRP Study Report Card Admin Logging Out Registers tax return preparers must take and pass a Registered Tax Return Preparer RTRP competency test as mandated by the U S Congress The test focuses on the ethical responsibilities of federal tax return preparers and on the preparer s ability to complete Form 1040 and related schedules and forms To help prepare you to take this test Drake is offering two study courses the RTRP Test Study Course and the RTRP Test Overview and Tips You earn CPE credits for taking either course credits that apply toward your annual CPE requirements For details on the two Drake courses or to register for either course from the sidebar menu of the DrakeETC window click RTRP Study Click Report Card from an ETC sidebar menu to view training progress test and quiz results and CPE credits earned for a selected year To reprint a CPE certificate scroll down to the CPE Credits section and click Print for the desired certificate The Administration page is available only for users logged in as Admin To access this ETC page click Administr
475. n access your clients information from the SecureFilePro website www secure filepro com You and your staff can also access SecureFilePro through the Docu ment Manager by clicking the Portal button from the Document Manager toolbar Figure 13 20 on page 364 Tax Year 2012 363 SecureFilePro Drake Software User s Manual Drake Document Manager Working Cabinet f File Setup Documents Help E e A G C gt aw o i UAE New Folder Archive GruntWor File Copy Cut Paste Portal X Import_Link File Scan E mail Drag Off Help Exit k Find Document Name Upload Description 5 Refresh Show 1099s Download 49 PM Right click and go to Properties to enter of I Carter Wiliam amp Amelia 6665 1900 Bs Go To Web Portal 17AM Received from client 1 3 13 P Email 2012 Organizer 7 pu7 49 AM Right click and go to Properties to enter P Not Tax Appendix D Symbols doc Linked doc File 8 15 2012 11 44 34 AM rf P Tax Fiminfomation2 pdf Linked pdf Fle 11 2 2012 8 48 56 AM Right click and go to Properties to enter L B 2012 Letter to Client DOC file 11 2 2012 8 58 46 AM Right click and go to Properties to enter D e IDs Schedule D Import TXT File 10 29 2012 11 53 23 AM Third Test File 10 13 112 dat Linked dat File 11 2 2012 8 51 08 AM Right click and go to Properties to enter Q 11 20 2012 1 21 44 PM_ Right click and go to Properties to enter L Se ce te ee ee ee Oe ee T oe eee ae Y
476. n Home field on screen 2 only if a depen dent did not live with the taxpayer for all 12 months If 00 is selected for the months in the home for a son or daughter the dependent is classified as one who did not live with the taxpayer due to divorce or separation If 00 is selected for another type of dependent parent grandchild etc the program applies the Other Dependent classification regardless of the relationship To over ride these classifications select the applicable boxes in the Additional Information section at the bottom the screen See Additional Dependent Information on page 101 100 Tax Year 2012 Drake Software User s Manual Personal Service Income W 2 1099 MISC Claiming a Dependent for Split Returns T Taxpayer If taxpayers are married and want to split the return to see if filing separately would be eee more beneficial than filing jointly use the TSJ drop list on screen 2 to assign the dependent information to the correct person See Figure 5 4 in the following section A TSJ code should also be selected if the state has an MFS Married Filing Separate combined option The program default is T Belongs to the Primary Taxpayer Entering State Data for a Dependent Select a state from the State drop list Figure 5 4 to specify which state should receive the dependent data This selection helps ensure that dependent credit informa tion flows to the correct state return This inform
477. n hours of IRS acknowledgments depending on volume Table 8 3 Bank Acknowledgment Codes Code Description Bank Product Accepted Bank product application has been approved Bank Product Declined Bank product application has been declined Check Print Checks are available for printing Prep Fees Deposited Preparer fees have been deposited State acknowledgment codes are not listed here as codes and processing times vary Trouble Described below are some troubleshooting steps for commonly received acks shooting Acks B A lt B ackcan occur for several reasons The reason for instance if program updates are missing is included with the acknowledgment If you receive a B ack correct the described problem recalculate the return and re transmit e R An R ack indicates that the return has been rejected by the IRS A reject code showing the reason for the rejection is provided Look up reject codes in the EF database see Reject Code Lookup on page 240 address the issue and re transmit Be sure to download and install the latest Drake updates see Update Manager on page 261 and check your Drake e mail for new tax developments e D A D ack occurs if a submitted return is a duplicate of a previously filed SSN or DCN Check the EF database to see if the return has been transmitted more than once If it was accepted previously you do not have to re transmit it D a
478. n older systems that limit file names to eight or fewer characters Customizing You can use the default Archive Cabinet s file structure or customize it as needed with File Structure new cabinets drawers folders and subfolders To add to individual subfolders to the Archive Cabinet s document file structure 1 Open the Archive Cabinet by clicking the Doc Mgr button from the Home win dow of Drake or from the Data Entry Menu within a return 2 From the Archive Cabinet menu bar go to Setup gt Custom Folders to open the Setup Custom Folders dialog box 3 Click one of the blue folders in the window to indicate where you want a new folder to appear Click Add 4 Enter a name for the new folder and click OK The new folder will be inserted one level below the existing folder Add subfolders to any existing folder in the same manner e Mark the Add custom folders to each client now check box if you want to insert the new folder or subfolder into all existing and new client files other wise the new subfolder will be inserted only into new client files If you mark the Add custom folders to each client now check box N TE and click Save the custom folder is automatically added to all clients If later you decide to edit or delete the custom folder you will have to edit or delete the folder one client at a time 342 Tax Year 2012 Drake Software User s Manual Setting up Your Document Manager e To change the name of the
479. n page 137 136 Tax Year 2012 Drake Software User s Manual Self Employment Adjustments Force Schedule SE page 2 instead Of page 1 cccsssecesesccssssecsececeseeeeeessvsseesevsvssvtsesesessssosesesnesenes E E Fame Schore SE tin DE ae E re cee ee eee E a a a Figure 5 33 Override SE printing for taxpayer left box or spouse right box A new section Statement for Partner Expenses at the bottom of NEW FOR the SE screen is for entering certain items that are deducted from self employed income that don t normally flow to the Schedule SE Part 7017 ner s Allowable Expense statement Enter these deductions in the fields at the bottom of the SE screen to have them appear on the state ment Church Code church income as C or P on screen W2 Select the correct code from the Spe Income cial tax treatment drop list at the top of the screen Any income entered in the Wages of church employee field of the SE screen will be added to the W 2 amount For more information on entering data for clergy see Clergy Expenses on page 135 and Ministerial Income Allocation on page 140 SE Health Insurance Deduction Enter insurance deductions for a self employed taxpayer in one of four places e Screen C or screen F Family Health Coverage field SEHI screen line An entry here overrides system calculations from screen C or F an entry might be required on line 4 to effect correct system calculations
480. nd click Edit Firm to activate the bottom half of the Firm Setup window 3 Edit the firm information See Adding a Firm on page 20 for information on individual fields 4 Click Save and then click Exit to close the Firm Setup window To delete a firm from Firm Setup 1 From the Drake Home window go to Setup gt Firm s 2 Select the firm to delete and click Delete 3 Click Yes and then click Exit to close the Firm Setup window To print a list of firms entered in the program From the Drake Home window go to Setup gt Firm s Click Print The Report Viewer displays the report on the screen Click Print to open the Print Drake Report dialog box Change any print options necessary and then click Print again ae ey SS Click Exit and then click Exit again to close the Firm Setup window An Electronic Return Originator ERO must complete ERO Setup in order to e file returns use the Drake e mail program download software updates and access the online e filing database Required fields for e filers are marked in the program by red text To set up your firm as an ERO in Drake 1 From the Drake Home window go to Setup gt ERO to open the Electronic Fil ing Setup dialog box 2 Inthe General Information section enter the account number EFIN Drake password name address ZIP code and EIN of the ERO Fields required for e fil ers are marked by red text See Figure 2 4 on page 22 21 Softwar
481. ndow select Tools gt File Maintenance gt Backup 2 Click Select a backup location and browse to the file storage location 3 Click OK to return to the Backup window Figure 11 4 on page 293 292 Tax Year 2012 Drake Software User s Manual File Maintenance 4 5 Drake 2012 Backup za Back Up Files Last Backup 10 03 2012 Enter a single SSN or choose one of the file groups to back up all files of the corresponding type To select specific files click the Advanced button Select a backup location 5 Ey Select the type of file s to back up Single SSN or EIN 9 Digits I AllFile Types I Setup Files Pricing Setup Information Files System Files CSM EF Database IRS Bank and Scheduler Files I Client Files 1040 1120 11205 1065 1041 706 and 990 Evel Help Automatic Exit Figure 11 4 Backup window Select the file or file types to back up by entering the SSN or EIN or by selecting All File Types Setup Files System Files or Client Files If you marked a box click Advanced The Advanced Backup dialog box lists all files of the selected type Filter or sort files as needed using the date and type fil ters on the right side of the Advanced Backup window The files listed contain only the file types selected For example if the NOTE Client Files group is not selected no client files 1040 1120 11208 6 1065 1041 or 990 are displayed Click Backup Files are backed up
482. ne database 241 override options 236 overview Appendix B PDF documents 184 186 PIN signature for 163 process 227 248 Schedules C and C EZ 111 Tax Year 2012 Index suppressing 33 test transmissions 229 transmitting a return 232 troubleshooting 232 234 EFINs setting up multiple 244 EFSTATUS page 230 EIN database about 72 307 editing 305 updating from prior year 79 EITC see Earned Income Credit election options 175 178 electronic funds withdrawal see direct debit games of skill 133 payment options 160 return originator see ERO e mail broadcast 275 checking during EF transmission 33 Form 9325 to taxpayer 33 in View Print 202 notification of new 62 program in Drake 276 284 sending a client file return to Drake 277 to Drake Support xii employee business expenses 134 employer information in EIN database 307 employers foreign 102 who use Talx W 2 eXpress 104 engagment letters 31 enhanced view print mode 197 202 enrolled agents 23 envelopes 30 53 305 EPS Financial contact info xi ERO Electronic Return Originator overriding defaults 55 setting the default 33 setup 21 228 error messages audible notification of 29 estate returns 299 371 Estimated 150 estimated payment coversheet 30 estimated tax adjustments ETA screen 152 applying overpayments to 152 codes in Drake 151 direct debit of 162 paid in 2008 150 payment reminders 301 payments for 2009 151 penalties 154 xxxiii Index underpay
483. new folder select the folder and click Edit To delete the new folder select the folder and click Remove e Click Save You will have to collapse the client s folder or close the Archive Cabinet and reopen it for the new file structure to take effect Be aware that while long file names can be used this naming conven tion might not function properly on older systems that limit file names to NOTES eight or fewer characters To avoid later restructuring determine the type of file structure you want to use before you begin storing items in the Document Manager Adding To add new clients to the existing file structure without going through Drake follow Clients these steps 1 2 Open the Archive Cabinet by clicking the Doc Mgr button from the Home win dow of Drake or from the Data Entry Menu within a return Click the Add Client button from the Archive Cabinet toolbar to open the Add Client dialog box Enter the name of the new client in the First name and Last name fields for indi vidual clients or the name of a business or estate in the Business Estate name field Enter the last four digits of the client s SSN or EIN in the Last 4 digits of ID number field Click Add NOTE Adding a client to the Archive Cabinet does not add the client to Drake Software or to the Working Cabinet Adding Cabinets are the top level of the filing structure The Drake filing system creates a Cli Cabinets ents cabinet but you c
484. ng and number of copies on a Per Form basis If the Form Information or Pricing is changed the return must be recalculated in order to see the changes _ Individual Income Tax Retum 1040 Form Information Number of Copies Fema EF Signature f0 Form Description U S indvidualincone Tex eum Esee Federal Record 2 Client fi Preparer fi Federal i State jo Pricing Apply to this return Apply to all returns Form Price poo ltem Price 0 00 Not available V Include on the Bill Figure 2 22 Pricing on the fly section of the Properties dialog box 3 Edit the description of the form if desired and edit the price listed per form or per item 4 Choose to Apply to this return or Apply to all returns Applying to all returns changes the pricing file globally in other words for all returns 5 Change number of copies if desired and then click Save You must calculate the return before you can view your changes on the bill Tax Year 2012 57 Making Changes on the Fly Drake Software User s Manual Overriding Letters Setup Default Result Letter 58 Letters options and defaults can be set from both Setup gt Options Optional Docu ments tab and Setup gt Letters Use the LTR screen accessible from the Other Forms tab to override global options on a per return basis The LTR screen allows you to make the following changes to the letters in a return
485. ning Client PIN Signatures Direct Debit Consent Drake Software User s Manual Ideally the client signs Form 8879 in your office If the client is not available to sign you can e mail Form 8879 as a PDF file to the client and have the client sign the form and return it to you The taxpayer can select his or her own PIN any five digit number except 00000 On the PIN screen have your client enter his or her PIN and then indicate either Tax payer entered or Spouse entered If the client is not available and you enter the PIN signatures leave the check boxes blank The taxpayer can elect to use the PIN generated by the software To NOTE turn off the option to generate PINs go to Setup gt Options gt EF tab and clear the check mark from Auto generate taxpayer s PIN 1040 Only option If there will be a direct debit from the client s bank account to make a tax payment selecting Direct Debit Consent on the PIN screen indicates that the taxpayer autho rizes funds to be electronically withdrawn from his or her account PIN Signatures for Forms Other than the 1040 By default Form 8879 is printed with Form 1040 If an electronic signature form is to be printed with any of the following other forms indicate this by selecting the applica ble box in the Select Form section of the PIN screen e Form 4868 Application for Automatic Extension of Time to File U S Individual Income Tax Return with payment e Form 2350 App
486. nistrators Government Entities People with hearing impairments e File application and help Help Desk U S Canada Help Desk International Refund hotline Order forms and publications Social Security Administration Taxpayer Advocate Service Suspected identity theft victims Following is contact information for the Internal Revenue Service Drake Support and Drake s banking partners followed by tables of shortcut keys and their uses that can help with data entry Also included is a list of the forms that are eligible for e file www irs gov 800 829 1040 800 829 4933 877 829 5500 800 829 4059 TDD 866 255 0654 800 876 1715 319 464 3291 800 829 1954 800 829 3676 800 772 1213 877 777 4778 800 908 4490 Contact Information Drake Software User s Manual Register for EFINs www irs gov gt For Tax Pros gt Getting Started gt Become an Authorized e file Provider Information on PTINs 877 613 7846 or www irs gov gt For Tax Pros gt Getting Started gt Apply for a PTIN N DTE To call write or visit the local taxpayer advocate office for your state refer to Publication 1546 on the IRS website www irs gov To report an individual or company that is not complying with the tax laws phone mail or visit your local IRS walk in office Phone From within the U S 800 829 0433 International callers 215 516 2000 Mail Send written correspondence to the IRS Service Center where th
487. not prevent e filing They appear as NOTES in View mode The Fee Type and Amount columns see Figure 6 2 on page 194 list the preparation fees and when bank products are present the bank fees and the net amount of any refund check or the total of all fees charged if the return has a balance due To have the fee type and amount displayed here the Display client fee on Calculation screen option must be selected from Setup gt Options Calculation amp View Print tab Fee breakdowns appear on the bank product information page in View mode when bank products are present 195 Viewing and Printing a Return Drake Software User s Manual Calculation Details The Details tab displays return amounts in an easy to read format Figure 6 4 Summary Details a Federal MIG EEEE APTENT TISTET TEETE 109876 J Pe aae R eer emeee 44 Pee EPEE EE ENES EES EETA cea eseSsiseEss 1567 4 PED eee VE See E O eeU Eee Eee 7697 Eis a a a eee a ee ee 91655 n aa sent a a n sesebee es o Eo Wl o E S E E EE ee 18049 E eee io eee Teme eee de a a ee eee S 7974 MI cs Ge det a O ss iota ees sci US ia le ees o TO anaa a WO ae ee 0 ME oe echt oi Sa ence tn Ie nen EME 5 ate nana ne en kaeW keen nada ARA 13732 NCD400 2 Adjusted Gross Incuma 2 5 91655 Income Allocable to the State 75655 MRS cee cee E eee eee tae eea eeeanse 4883 Palmers Dee on 62a ea hee eRe RAS ems 3105 Penney React Bhi ii eee pesca ee cus
488. ns Authentication Failed When Trying to Transmit Folders Internet Connection is Not Present Error When Em AOL Unable to Detect Dialup Connection FA AOL Browser Message Idle 20 Minutes 2 Can t Connect to Drake Configuring A Firewall For Drake Software Dial Up Connection Timing Out Drake Dialer Error Message 678 ba n apna Daehn e cy P rte ae a Figure 10 3 Some folders and articles within the Browse tab Articles within a folder From within each KB article you can use the icons at the upper right corner of the window to return to the previous article print or e mail the article save the article to a browser s Favorites folder save it to another location or copy it for pasting into another application such as a Word document A Related Articles link at the lower left corner of an article window takes you to a list of other articles related to the one you queried Some articles have an Attachments link that takes you to a list of attached documents that you can download and view The attached documents provide additional detail beyond that provided in the text of the article Drake encourages you to respond to any article you read in the KB Your suggestions are used to improve the KB s content for other clients In the lower left corner of an article window click Feedback to open the feedback window Enter your feedback and click Submit Drake s e Training Center ETC
489. ns enter appropriate two letter state code If field code is left blank program uses resident state ST 0 zero Exclude data from any state return Tax Year 2012 XV Shortcut Keys Drake Software User s Manual Table Q 5 Frequently Used Codes Field Code Application PY For multi state returns use PY as resident state code on screen 1 Do not use PY on any other screen C City code For city returns enter appropriate code to indicate source of income Multiple 1 999 For Form 4562 depreciation indicate appropriate schedule for depreciated item in the For field Indicate where information should be carried when there are multiple schedules Table Q 6 Search EF Database Key Function Instructions F1 General information View basic EF information about taxpayer taxpayer infor mation federal and state acknowledgement codes acknowledgement dates transaction date filing status refund amount or balance due F2 Bank information Access detailed loan information direct deposit informa tion Declaration Control Number etc F3 Fees miscellaneous Access miscellaneous information including Earned information Income Credit and AGI MISC field data firm and pre parer numbers and tentative fee distribution details F4 Reject code lookup Access the reject code lookup feature which allows you to search for federal and state reject code descripti
490. ns to Drake Practice returns See New for 2012 note below and e filing and banking prac tice files PDF Drake Software User s Manual Tax Year 2012 PDF Various informational fliers Software for state programs e filing banking the Tax Planner city tax rates and forms based entry are included in a subsequent shipment in January Federal and state programs are updated with each software release thereafter Solutions to the practice returns are now kept online so that we can make adjustments when changes to the software affect the solutions From the Home window menu bar in Drake go to Help gt Online NEW FOR Resources Internet access is required The practice returns and 7017 solutions are kept in the Practice folder You can also find the practice returns and the solutions at DrakeETC com Drake Resources gt Prac tice Returns and at Support DrakeSoftware com Training Tools gt Practice Returns gt Returns 11 System Requirements Drake Software User s Manual Your serial number and Drake customer account number are IMPORTANT required for installing the software and subsequent updates If you installed Drake Software from a CD the number was included on your packing slip with the CD shipment System Requirements To run Drake Software your computer operating system must be Windows 2000 or later and must meet or exceed the following system requirements Windows 2000 NT XP ME Vista 7 Wind
491. nt in the document pane to share From the menu bar go to Documents gt Share Document gt Copy to Location From the drop list at the top of the Select Location to Copy Files To win dow browse to the location where you wish to save the file Click Save You can also select a document then click the arrow next to the Copy button on the toolbar and choose Copy to Location e Attach to Email NOTE Select a document in the document pane to e mail From the menu bar go to Documents gt Share Document gt Attach to Email In the Untitled Message window enter the addressee subject and any text to e mail body Click Send You can also select a document and then click the E mail button from the toolbar e Upload to Portal Select a document in the document pane to upload to SecureFilePro From the menu bar go to Documents gt Share Document gt Upload to Portal In the Portal Login window enter the Portal username and Portal password Tax Year 2012 Drake Software User s Manual Tax Planner Click OK For details on using SecureFilePro see SecureFilePro on page 362 NOTE You can also select a document and then click the Portal button from the toolbar Tax Planner The Drake Tax Planner helps you assist your clients in planning for the future By comparing the client s current tax situation to different scenarios that could occur such as marriage the birth of a child buying or s
492. nt way to print a mailing or folder label from data entry To Client Label printa single label from data entry From Data Entry 1 Ensure that the label printer is installed properly per the manufacturer s instruc tions and that the label sheet is properly loaded 2 In data entry go to screen 1 of the return 3 Right click on the screen not a field and select Client Labels gt Name Format from the right click menu 4 Select the name format LastName FirstName or FirstName LastName 5 Right click on the screen not a field again and select Client Labels 6 Choose from the following label types e Mailing Label e Folder Label SSN EIN Name or Name only Unless you chose to hide the Preview Label Window in step 7 of the N OTE previous procedure see Mailing Labels on page 302 you will see the Preview Label window Click Continue 7 Select the label printer from the Print dialog box 8 Click OK to print the label This option is designed for use with a dedicated label maker such as the DYMO LabelWriter 400 Label Printer Data can be printed on any NOTE label size but DYMO Label Writer labels size 30252 are recom 304 mended because they work well for folder and mailing labels Size 30252 labels are included in the DYMO printer starter kit Tax Year 2012 Drake Software User s Manual Letters Envelopes Postcards You can also choose to print individual address and folder labels for a client or print la
493. nter Program Won t Allow Reprinting If trying to reprint a check that was printed before the current date you will get a Reprint Not Allowed message like the one shown in Figure 7 5 224 Tax Year 2012 Drake Software User s Manual Troubleshooting Check Printing Reprint Not Allowed Too Late The Check on this record was originally printed on 02 04 2011 If you have the check listed in YOUR possession you may reprint the check by clicking Ok and then pressing FS Check Number 00500246 Check Date 02 04 2011 Check Amount 732 50 Figure 7 5 Reprint Not Allowed If this happens click OK and then press F5 You will be asked if you have the prior check in hand A prior check must be physically in your possession in order for you to reprint a check If you have the check select Yes If the check has already cleared there will be a date in the Clear Date field You can not reprint this check Contact your bank for additional assistance Misfeeds and Paper Jams Post Season Tax Year 2012 If a check is damaged and rendered unusable during printing write VOID on the face of the check and reprint using a new check See Reprinting Checks on page 223 If you accidentally print a check on something other than the check stock such as a blank sheet of paper print the check again then guarantee that the original check cannot be cashed If the check is still usable you can reload and reprint it
494. nting to Drake PDF on page 200 optional In the Archive Cabinet section is the option of adding folders to the default Document Manager file structure To do so e Choose a folder level where you want the new folder placed e Click Add e Enter a custom folder name e Click OK The new folder will be inserted one level below the selected folder level e Mark the Apply this layout check box if you want to insert the new folder into existing and new client files otherwise the new folder will be inserted only into new client files e To change the name of the new folder select the folder and click Edit To delete the new folder select the folder and click Remove Click Save and then click OK To avoid later restructuring determine the type of file structure you want to use before you begin storing items in the Document Manager Tax Year 2012 Drake Software User s Manual Drake Software User s Manual Configuring Archive Cabinet Technical Require ments Tax Year 2012 Setting up Your Document Manager Because the Archive Cabinet operates outside of Drake Software there are a few set ting you ll need to enter in order to use it 1 Click the Doc Mgr button from the toolbar of either the Home window or the Data Entry Menu 2 From the Archive Cabinet menu bar go to Setup gt Options to open the Docu ment Manager Options dialog box The options are explained in Table 13 3 Table 13 3 Setting
495. ntly both taxpayers must be 18 or older Check with your banking partner for state specific age requirements Application Forms Both preparer and client must complete all parts of the appropriate application form Form names vary by bank Ifa bank is selected in Setup gt Firm s and a bank product is indicated in the return s bank screen the appropriate application is included in the forms produced with the return Blank application forms for Advent EPS River City and Tax Products Group are available at Tools gt Blank Forms Select the Federal tab and then choose the desired bank application Note that applications are multiple pages as shown in Table 7 2 Table 7 2 Application Forms for Banking Options Available in Drake Bank Application Form Advent AD_APPL PG through AD_APPL PG4 6 pages EPS EPS_APP PG through EPS_APP PG8 8 pages River City RCB_APPL PG through RCB_APPL PG5 1 page Tax Products Group TPG_APPL PG through TPG_APPL PG5 6 pages Banks typically have specific minimum and maximum refund requirements For more information consult the bank application Do not confuse the applications listed above with the bank application NOTE that an ERO must fill out online for Drake For more on the Drake bank application see Preparing to Offer Bank Products on page 216 212 Tax Year 2012 Drake Software User s Manual Franchise Network Requirements Franchise Network Requirements If you
496. nts or as percentages of the total Schedule B Some taxpayers with bank or other financial accounts in foreign countries must file Part IIl Schedule B regardless of the income amount This data along with other Schedule B data is entered in the Schedule B Part III section of the INT screen Figure 5 11 on page 107 This section has a field for indicating whether or not the taxpayer is NOTE required to file Form TD F 90 22 1 Report of Foreign Bank and Finan cial Accounts If the Schedule B Part Ill section is being completed a selection from this drop list is required 106 Tax Year 2012 Drake Software User s Manual Passive and Investment Income 1099 DIV etc Schedule B Part Ill Foreign Account Questions Enter on the first 1099 INT only Had interest in or signature over a foreign financial ACCOUME occ eee eeeeeeeeeeeeeeeee If YES is required to file Form TD F 90 22 4 o oo eeessesseseeseeseeneeneeneeneaee If YES required to file Form TD F 90 22 1 then name foreign country Received a distribution from or were grantor of or transferor to a foreign trust agen Figure 5 11 Schedule B Part III fields on the INT screen The foreign financial account and foreign trust items must be answered Both are Yes No questions If either is left blank a NOTE is NOTES generated alerting you to this fact If you do not have to file Form TD F 90 22 1 do not make a selection from the foreign country drop l
497. nual section on UPDATING before continuing Second BACKUP your 2011 data files just in case In addition to the standard update information you may update the following Additional Update Options a Just those returns that were altered in Prior Year Data Entry amp Calc Schedule 4 Descriptions Schedule B Descriptions Schedule C Other Expenses Descriptions Schedule E Other Expenses Descriptions Schedule F Other Expenses Descriptions O W 2 Alpha Information 1099 Alpha Information 1099 R 1099 M and 1099 RAB 2441 Child Care Provider Names and SSNs Update DD Direct Deposit Information Update Misc Codes on Screen 1 Name and Address screen Update Prior Year Tax Preparation Fee to the MISC Screen Update SCH Unformatted Schedule screen Update Preparer Firm Data Entry and ERO Number Information C Update the Custom Paragraph of the LTR Screen Update Employee s Info w2 1099 99M RAB Update 8283 s Donee s Information Update Child s Information on Form 8814 Update Taxpayer s and Spouse s PIN p C Update Bill Screen Information C Update Return Password Help Select All Unselect All Update 1040 Cancel Figure 4 2 Individual Update Options box m 2 optional Select additional items to update Click Select All to choose all items 3 Click Update 1040 Once updated the return is shown in the Data Entry Menu 78 Tax Year 2012 Drake Software User s Manual Prior Year Updat
498. o matic Update Manager dialog box is displayed 3 Choose one of the following options e Select On to turn on automatic updates If you select this option specify the hour minute and second each day that you want the program to check for updates The Status section alerts you to the last time the program checked for updates and the last time it downloaded updates e Select Off to turn automatic updates off 4 Exit the Automatic Update Manager dialog box by clicking either Hide if you turned automatic updates on or Exit if you turned them off If you clicked Hide a message informs you that the Update Manager will be hidden from view but that automatic updates will continue to operate normally Click OK to close the message and return to the Update Manager dialog box If you clicked Exit a message informs you that no update operation was set Click Yes to return to the Update Manager dialog box When you log in to the program you can see in the Notifications section of the Home window if program updates are available and ready for download even if automatic updates are not activated This feature can be accessed if all of the follow ing conditions are met e The program detects that the machine is connected to the Internet e You have security rights to install patches See Setting Up Preparer Security on page 24 e You have permission to see the message regarding the updates ready for down load You must be an
499. o vided Click the blue Register button Complete the credit card information on the Webinar Payment window and click Submit After your registration is processed you will receive A confirmation e mail message containing details of the upcoming webinar and a link you must click in order to join the webinar A calendar reminder you can save to your Microsoft Outlook e mail account Reminder e mail one day before the event and one hour before the event Attending To join the webinar click the link provided in the confirmation e mail and follow the Webinars included instructions or from the sidebar menu of the Drake ETC website go to Webinars gt My Webinars and click Launch CPE Credits To earn CPE credits attendees must respond to a series of polls conducted during the 268 webinar attendees must respond to at least 75 percent of the polls to be eligible for the credits and complete a short evaluation after the event Webinar attendees will receive an e mail notification when the CPE credits are made available usually within 48 hours After receiving the notification e mail follow these steps to complete the CPE process 1 From the sidebar menu go to Webinars gt My Webinars A list of completed webinars is displayed 2 Click Evaluation on the line of the webinar you completed 2 Complete the short evaluation and click Submit 4 When the certificates are posted 24 48 hours after submission of the evaluatio
500. o so 1 Browse to the drive where Drake is installed and double click Drake12 2 Double click the folder named DDM 3 4 From the right click menu select Send To gt Desktop create shortcut Right click the file named GruntWorx exe Tax Year 2012 Drake Software User s Manual Setting up Your Document Manager For more information on using GruntWorx see GruntWorx on page 357 Setting up the Archive Cabinet Integrating with Drake Optional Password Protection Tax Year 2012 Everything in this section will pertain to the use of the Archive Cabinet The Archive Cabinet is source to use for storing forms and documents accumulated over years for all your clients The files are saved in folders drawers and cabi nets to help make search and retrieval easy and fast And because the files are stored outside of Drake the Archive Cabinet can also be used as a stand alone document manager To integrate the Archive Cabinet with Drake Software take the following steps From the Home window of Drake Software go to Setup gt Printing gt Document Manager to open the Drake Document Manager Integration Options dialog box Figure 13 6 In the General Options section select Use Archive Cabinet N 3 Also in the General Options section mark the Allow Drake to set up Document Manager client folders check box item 1 in Figure 13 6 to use the default file structure for
501. of Person Claiming If anything other than box C is selected in Part of Refund Due a Deceased Taxpayer the screen or if box 2a is selected in Part Il the return cannot be e filed 2848 Form 2848 Power of Attorney and Declaration This form is not e filable of Representative 8275 Form 8275 Disclosure Statement To print Form 8275 R select 8275 R at the top of Form 8275 R Regulation Disclosure Statement the screen 8379 Form 8379 Injured Spouse Allocation By filing Form 8379 the injured spouse may be able to get back his or her share of the joint refund Tax Year 2012 179 Requests Claims and Other Forms Drake Software User s Manual Table 5 22 Statement and Claim Forms Available from Other Forms Tab in Drake Screen Form Notes 8594 Form 8594 Asset Acquisition Statement Under If this form is being amended state the reasons for Section 1060 the change in the field provided 8862 Form 8862 Information to Claim Earned Income To enter data for additional qualifying children Credit After Disallowance press PAGE Down to start a new screen 8862 To claim tax forgiveness for death in a combat zone or as a result of a terrorist or military action g NOTE ness Press F1 in that field Other Forms o to the MISC screen and select the applica ble code for Combat Zone Terrorist Military Action Tax Forgive for more information Table 5 23 lists screens for other forms available under the
502. of service rules meals subject to 110 downloading ABCvoice Files 245 automatic updates 288 conversion software 272 Drake tax software 271 e mail messages 277 fonts 290 prior year state programs 271 program updates 287 publications 272 W 2 information 104 drag drop ordering 206 Drake Document Manager see Document Manager Drake PDF password protection 200 printing to 198 Drake Software Banking Department x CD installation process 12 Tax Year 2012 Drake Software User s Manual contact information 284 online forums 270 partner programs 272 shipment letters 9 Drake Support 257 285 due date to print on letter and instructions 54 due diligence screens for EIC 155 E El Card contact info xi EA see enrolled agents Earned Income Credit EIC blocking EIC calculations 156 due diligence 155 in data entry 154 157 interview questions 34 preparer checklist 155 editing see also adding and deleting firms 21 letter templates 44 printer settings 47 52 education expenses 138 student loan interest deduction 138 educator expenses 134 EF database 239 241 messages 195 online database 241 status letter 301 status page 33 e filing acknowledgments 233 234 checking e mail while 33 combining steps for 33 delaying 188 eliminating EF messages 230 extensions 176 237 imperfect returns 236 installment agreement requests 179 mandates 8 see also state mandates marking Ready for EF 237 messages 195 onli
503. of the letter To have a custom paragraph appear somewhere else within the letter 1 From the Drake Home window go to Setup gt Letters 2 Click Open and select the package and letter to be generated for the client 3 Place the cursor on the line where you want the custom paragraph to appear 4 Click the plus sign next to Miscellaneous in the tree directory left column of window 5 Double click the lt Paragraph from LTR screen gt keyword The keyword appears in the letter template 6 Click Save When the return is generated the letter displays the custom paragraph as directed If a return has an EF message when calculated the return is considered ineligible for e file and the program generates a result letter for a paper filed return If the return is considered eligible for e file a letter for an e filed return is generated You can over ride these defaults for the federal and state tax returns and extension applications To override the defaults go to the LTR screen and select EF or Paper for the selected returns Figure 2 24 To indicate one or more state returns select state abbreviations from the drop lists provided In the Figure 2 24 example the letter will be worded as if both the federal and Arizona returns are going to be e filed even if the return is not eligible for e file Override Options Letter Paragraph Override Setup Options Override 1040 M EF W Paper Federal Extension EF ff Paper D
504. og box in the Call List for all Preparers and New Client Appointment reports only Select the parameters to the report from the Comparison drop list in the Pre parer Appointments report only Set the report s date range by typing start and end dates in the Value fields in the New Client Appointments report only Click Continue The report is displayed in the Report Viewer For more informa tion on reports see Chapter 12 Reports 95 e Filing Preparation Drake Software User s Manual Once you are in the Report Viewer you can print or export the report output The New Client List report does not pull data from other areas of NOTE Drake it pulls data only from the Scheduler itself To designate a client as anew client select New from the Client Type drop list in the middle of the Appointment Detail dialog box e Filing Preparation For details regarding preseason tasks for e filing see Chapter 8 e File 96 Tax Year 2012 5 Return Preparation This chapter focuses on using Drake to produce Form 1040 and the supplemental forms schedules and other documents that might be part of a tax return It is not intended as a tax course but rather as a primer for using Drake Software to prepare a 1040 return It assumes a fundamental knowledge of tax law and a basic understand ing of Drake data entry If you are not familiar with Drake data entry read Chapter 3 Basics before a
505. ogram calculate whether there is a NOL for the current year go to the NOL screen and select Calculate 1045 page 2 ONLY See NOL Carryovers on Form 1045 following NOL Carryovers on Form 1045 Screen code NOL Form 1045 Application for Tentative Refund includes Schedule A NOL and Sched ule B NOL Carryover Use the NOL screen accessible from the Other Forms tab to enter amounts for these schedules into Drake The Schedule A fields are override fields Entries override system cal NOTES culations for Schedule A To calculate only page 2 of Form 1045 select Calculate 1045 page 2 ONLY at the top of the NOL screen NOL To indicate that the taxpayer elects to carry a NOL forward and not back go to the Carryforward NOL screen and select Election to carry forward ONLY When the return is gener Only ated it includes an ELECTIONS statement stating that the taxpayer is electing under Section 172 b 3 to relinquish the entire carryback period Figuring Use the right hand column of the NOL screen to enter data for figuring Alternative AMT NOL Minimum Tax NOL When the return is generated the AMT NOL worksheet shows the current year AMT NOL 174 Tax Year 2012 Drake Software User s Manual Election Options Election Options The ELEC screen has check boxes to indicate elections from the IRS code If any boxes on this screen are marked a note listing the elections is generated with the return To attach an additional
506. ole proprietorship OF PArtMerSNip cseecsesecsseccsneersseessvecsseesensecsseessnersseeessecsnessseense Figure 5 36 Earned income fields on 2441 screen An entry in these fields affects Form 2441 amounts only and must be at least as great as the childcare expenses Employer Provided Dependent Care Benefits Dependent care benefits provided by the employer box 10 on the W2 screen adjust the credit by the amount provided Any amounts above the allowed credit appears on the Wages salaries tips etc line of Form 1040 with the notation DCB Ineligible Filing Statuses A taxpayer with a filing status of 3 Married Filing Separately 8 MFS Claiming spouse s exemption did not live with spouse one day of the year or A Claiming non resident alien NRA spouse s exemption on screen 1 is not eligible for the child and dependent care credit Carryover from Prior Year For a carryover of dependent care credit from the prior year enter the amounts and create a statement listing the circumstances and amounts Use statement number 108 on the SCH screen For more information on adding an unformatted statement in Drake see Unformatted Schedules on page 189 Elderly Disabled Credit Screen code R Use screen R accessible from the first Credits tab for Schedule R Credit for the Eld erly or the Disabled Tip If the credit does not show up in the calculated return make sure the taxpayer s AGI
507. ols gt File Maintenance gt Backup click the Automatic button and clear the Activate Automatic Backups check box Click the icon in the system tray click Stop and click OK Changing a Client s ID Number Changing a client s SSN or EIN in the program requires more than simply making the change in data entry To change a client s SSN or EIN in the software 1 2 D Pee From the Home window go to Tools gt File Maintenance gt Change SSNs on Return In the Incorrect SSN EIN box enter the ID number that is currently in the sys tem In the Correct SSN EIN box enter the new ID number Click Continue Click Exit or click Continue again to change another SSN or EIN As directed in the program repair the index files See Repair Index Files on page 291 CAUTION PPR clients If you change an SSN or EIN even on a practice return you will be charged for another return Clearing Drake Update Files Use the Clear BBS Files feature in File Maintenance to delete Drake update files after they have been downloaded to the computer To delete update files 1 2 3 Tax Year 2012 From the Home window select Tools gt File Maintenance gt Clear BBS Files Click Continue When the deletion process is complete click Exit 295 File Maintenance Drake Software User s Manual Exporting Data from Drake The exporting tool allows you to transfer client data and the EF database files to either
508. om eg eae eae Reed EEE EE Rabel 63 Creating and Opening Returns 1 0 teen eben teen eens 65 Data ENY cet nnek Mi skh ee ae ee ene ind meen taunt epae heal en e 66 State Returns aiec eee ie eee weeded See a ene Ha eG GS SG SE es Oe ee ee eee 75 Practice Returns and Test Returns 0 0 teen ene n enn eas 76 Preseason Preparation isis ccaveaintecriswnssucerssnsaseoeiennn donnntedsccsoutesdwanccesnnnaais 77 Prior Year Updates oeras cae eae eed baa oes beg ae eee bee edge Dee eee eee dee bee ae 77 Organizers and Proformnas sis 26 0d oie cc gees a a ano hd wand Gow ceo EE A A Wace A AOE 80 Scheduler a a tas caus caesar te Ae Goce ote ees Stee A E sea Grate Girdle arta Ghana a 85 eFiling Preparation sasies bd hed od ROG Mh Rea ed EAE wa awed aloes ale de 96 Return Pr paration caen E EE aeiaai 97 Taxpayer Demographics sessir cree gad entia ei EE ANE E E EE E EE E E EE E E Ea 97 Required Field5i a o 4 es gccca peso eiscis tage eaa aaa A EA E E glen EEA EEA 99 Foreron Addresses menaa pei eta a a ha oe Oe ene de Rie E O ETE eRe ee Mod ears 99 EXGMptlONs sersa eh eases Sede ead Eee aa Sees Blew ds ke HERMES aE a hE diese ead Base Ge 99 Personal Service Income W 2 1099 MISC 0 ccc ect e eee eens 101 Passive and Investment Income 1099 DIV etc 0 0 eee n ene nee 105 Taxable Refunds 5 535 046 h Poaredt bd dada host Oae bos alee Kl Gata dens doe oda 109 Tax Year 2012 iii Table of Contents Drake Software User s Manual ANMONY
509. ome 2106 Employee Business Expense 4 Adjustments Earned Income Credit 5 Payments 8867 EIC Paid Preparers Checklist b nN ES Estimated Taxes EIC1 EIC Due Diligence Qualifying Child gt 2441 Child Care Credit EIC2 EIC Due Diligence Income L EIC3 EIC Due Diligence Head of Household w2 Wages EIC4 EIC Due Diligence Additional Notes f W2G Gambling Income 1099 1099 R Retirement ectronic Filing and Banking DIV 1099 DIV Dividend Income Tax Products Group RT Information INT 1099 INT Interest Income Consent to Use of Tax Return Info 99G 1099 G Government Payments Consent to Disclosure of Tax Return Info 99M 1099 MISC Miscellaneous Income Direct DepositForm 8888 RRB RRB 1099 R Railroad Retirement Bbectroni pds Withdrays SSA 1099 SSA Social Security 8879 8878 e file Signature EF Selections PAD Preparer Notepad PDF Attachments NOTE Notes about the return FAQ Frequently Asked Questions Client Adjustments Enter Screen State or City Code Returm Status In Progress Return Type Individual Tax Return Current Package Federal 7 Figure 3 9 Data Entry Menu Working in a Tax Return Data Entry Toolbar Perform tasks and access program features Tabs Access data entry screens by category Data entry screens Click a screen name to open it Form codes Each screen has a unique code Selector field Type in a form code and press Enter Status bar General info on open return Prepare tax returns in Drake by entering pertinent info
510. on Adding or Editing Employer Information To add or edit an employer s EIN database information 1 2 3 4 5 From the Home window go to Tools gt Edit EIN Database if editing Enter or select the EIN to edit or begin typing the name of the employer and select it when it appears in the list below Click New if adding or Edit if editing Modify or complete the fields in the Edit EIN Employer Listing dialog box Click Save Deleting Employer Information To delete employer data from the EIN database 1 2 A From the Home window go to Tools gt Edit EIN Database Enter or select the EIN to delete or begin typing the name of the employer and select it when it appears in the list below Click Delete Click Yes when prompted to confirm the deletion Click Exit to close the EIN Employer Database dialog box Depending on your changes it might take several seconds to close as the database is updated Printing a List of EINs To print a list of EINs from the EIN database Print a Print Tax Year 2012 1 From the Home window go to Tools gt Edit EIN Database 2 Click Print The Print EIN Employer Listing dialog box displays sorting options 3 Select to sort the list by EIN Company Name City State or Zip Code 4 Click OK A preview of the list is displayed in the Report Viewer 5 Click Print to open the Print Drake Report dialog box 6 Click Print Export EIN data to another
511. on Expenses 4 c0c6 sc ea se eae ea eae Aen AE Se te a ee Gua Gud ea eee 138 Domestic Production Activities Deduction 0 usana aeneae 139 Other Adjustments si 254 6h04 tia eee ea a etd Gace Bdge a 8 Se BSNS tae Genin E dade Gea eas 139 Standard and Itemized Deductions 1 0 2 0 ccc cnt eet e nen nene 140 Alternative Minimum Tax 4 lt sc0e6 05000000 50 on ed Sao deed eee eee eed 141 Foreign Tax Credit 3 c 4 ch 04oe teien ee ede neta bie ede Bieta eee eb le neia 142 Child and Dependent Care Expenses Credit 0 0 ccc cece nent en enes 142 Elderly Disabled Credit cnie e204 cia ce0b hob etek Bev etek hele eses Go bee ae te eed ode Ged 143 Home Energy Credits s cece periere ret ogee ed EEE Shh ead cd Seed ed EE E bona eR eee 143 General Business Credits a s ce34rs e 4 caeenelanes cede cba eters ene neewenche eer ees coe ness 144 Passive Activity Credits ssi i64 0d00ci44 00046040040 bdda do eI ode edad a 144 Child Tax Credit oscdene sence oe ad an i a eed eae a a BGG Be hale GS aleg ed eG edad 146 Retirement Savings Contributions Credit 0 0 cee tenet nee eens 146 Other Credits sererai alan as E Ga a a deka GE ta sida aide EAS GEE AONE 146 Additional Tax on Qualified Plans etc nananana nnana 147 Household Employment Taxes nnana nna unenee 148 Other Taxes oreren o Bose eee BOS E a E CP ORES HS hE See RE OO ees 149 Estimated Taxes inneoin ei aby ded bahia dd eames Sew he ee Rabe ves aa nena
512. on fees Ifyou ve completed your online Drake bank application through the Enterprise Office Manager EOM click Retrieve to import your banking information directly from the bank application For information on the EOM see Banking Application on page 216 Select a bank and enter the applicable add on fee and the name of the per son or entity that will receive the add on fee This name will appear on the client s Bank Information Sheet generated with the return For more on available options see Table 7 4 on page 218 For more on indi vidual bank selections see Chapter 7 Banking Tax Year 2012 Drake Software User s Manual Software Setup Editing Firm Information Shortcut Double click a firm s row to edit firm data Deleting a Firm Printing a List of Firms eat Print ERO Setup Tax Year 2012 4 Click Save The program assigns a number for each firm entered in Firm Setup To view a report of the revenue you ve earned from the additional add on fees for e filing log in to Support Drake Software com and go to My NOTES Account gt Bank Application Log in to the EOM with your EFIN and Drake password then from the blue sidebar menu click Reporting These fees are listed when the returns are funded not as the returns are transmitted To edit a firm s information 1 From the Drake Home window go to Setup gt Firm s 2 Select the firm to edit a
513. on withdrawals Penalties on estimated taxes are covered in Estimated Tax Penalty on page 154 Early Withdrawal Penalty If the taxpayer is subject to the penalty for early withdrawal of savings enter the pen alty amount on screen 4 Do not duplicate entries in this field on the INT screen the 1099 INT form asks for the interest or principal that was forfeited due to early with drawal while screen 4 asks for the actual amount of the penalty IRA Withdrawal Penalty Screen code 5329 Use the 5329 screen to calculate what penalties apply regarding IRA withdrawals Exception numbers 01 and 06 Part I line 2 apply only to distributions NOTE from qualified employee plans not to those from IRAs annuities or modified endowment contracts See also IRA Penalty Computations on page 120 Alimony Paid Enter details about alimony paid in the Alimony fields on screen 4 IRA Adjustments To enter IRA adjustments see Retirement Income on page 118 Student Loan Interest Deduction Enter student loan interest deduction amounts Form 1098 E Student Loan Interest Statement into the Student loan interest deduction field on screen 4 Education Expenses Screen codes Entry fields for Forms 8863 Education Credits and 8917 Tuition and Fees Deduc a ce tion are located on the same screen The 8863 8917 screen should be used to enter information about the student and the educational institution the student attended
514. ons loan status codes and bank decline reasons F5 Return to data entry Opens return data entry for the client F10 Online Database View your online database from data entry or from your EF Database Table Q 7 e Mail Shortcut Keys Desired Action Keyboard Keys E mail a client data file from data entry F11 Check mail Send and Receive CTRL M Open a message CTRL O Edit address book CTRL E Create a new mail message CTRL N Print a message CTRL P Reply to a message CTRL R Forward a message CTRL F Delete a message CTRL D xvi Tax Year 2012 Drake Software User s Manual Shortcut Keys Table Q 7 e Mail Shortcut Keys Desired Action Keyboard Keys Send a message in the New Message window ALT S Open address book list in New Message window ALT T Attach a file to a message ALT A Check mailbox status CTRL S Table Q 8 Calculator Functions Desired Action Operator Instructions Access the calcula F10 With the cursor in the desired field during return tor in a numeric field data entry press F10 Clear a number Num Lock Press NUM Lock key or click the C button on the calculator Insert calculation F1 or With desired total in calculator s summary field total in data entry F1 Insert press F1 key or click F1 Insert Result on calcu field Result lator window Calculator is closed and calcula tion total is transferred to data entry field To exit the calculator Es
515. ons for 2012 clients C EF status for 2012 clients Engagement letter Figure 11 11 Letter choices in Client Letters dialog box 3 Click Next to open the Client Selection dialog box 4 Complete one of the following e Print a letter for specific clients Enter a client s SSN EIN and click Add Client Repeat for additional clients Click Next e Print a batch of letters Click Next to open Client Letters Filters Selec tion Select filtering and sorting options If a more complex filter is needed click Edit Filters See Filter Manager on page 319 Click Next for Basic Search Conditions Click Continue to Scan Client Files 5 Click Print Mailing Labels You can print mailing labels to a label printer To print mailing labels 1 Ensure that label sheets are loaded correctly into the printer 2 From the Home window go to Tools gt Letters gt Mailing Labels 302 Tax Year 2012 Drake Software User s Manual Letters Recommended labels are three across and ten down Avery 5160 or 8160 Tax Year 2012 3 Select a label type from the Select Label list Label selections are described in Table 11 3 Items with an asterisk may require filtering of data before printing Table 11 3 Label Selections Available in Drake Label Description Client addresses Print a batch of client address labels Single client address Print a label for a single client address Birthday addresses Print a batch of address lab
516. ons that are available in Data Entry and the status Client Status Manager To change a Status Description select the Status from the dropdown list and click description Edit Column Layout Status Settings Status Descriptions 1 Under Extension 2 On Hold 3 Under Review 4 Signed 5 Delivered 6 lt Custom Status 6 gt T 8 9 1 Drake 2012 Status Description Enter the Status description in the spafee below Click OK to continue Awaiting Payment lt Custom Status 7 gt lt Custom Status 8 gt lt Custom Status 9 gt 0 lt Custom Status 10 gt OK Cancel OK Cancel Figure 9 2 Creating custom statuses 3 Click Edit 4 Enter a status description in the Status Description text box Figure 9 2 and click OK To restore all original statuses click Reset NOTE When a custom status is changed or created in the CSM it is also changed or created in the PCM Setting Statuses Set return statuses at any time during the return preparation cycle A status can be set from within the CSM or from data entry For consistent and valid CSM status reports set statuses for each stage of a return You can ensure that the CSM Status column is always correct From the Drake Home window go to Setup gt Options Under the Tip Calculation amp View Print tab select Auto calculate tax return when exiting data entry When th
517. ont size or increase margins and be able to print reports that are potentially too wide to be printed directly from the Drake Report Manager Regardless of width the report can still be viewed in the Report Viewer using scroll bars Setting Up a Report When planning reports for your office consider beginning with one of Drake s pre defined reports which may already include most of the information you want You can create a new report if none of the predefined reports meet your needs The steps for these procedures are similar but it may be easier to learn how to create reports by working first from a pre defined report Several tasks some of them optional are involved in creating a report These tasks are described in the following sections Assigning a Title and Description The Report Title is displayed on the actual report the Report Description is for informational purposes and is displayed in the Report Manager s Sample Report box To assign a new title and description to a report in the Report Manager 1 Select the report to use as a template 2 Click Edit Report The Report Editor Step 1 window is opened Figure 12 2 Drake 2012 Report Editor Step 1 Sa Formatting of Reports Select the category of data and then the data itself When a keyword is highlighted its description will appear below Select that keyword by double clicking or using the select button Once the keywords are selected they can b
518. ontinuation and restructur ing When you work with BPG it serves as an extension of your practice Once you ve identified a need for services for example noticing that your client is paying taxes on Social Security you can begin the process of working with BPG For you as a pre parer this process has three main steps e Complete and submit questionnaire You and your client submit a simple questionnaire to BPG for review Based on that information BPG s professionals develop a plan and recommendations which they will discuss at length with you clarifying details answering questions and generally reviewing the facts to final ize a course of action for your client e Present a plan to your client Once the plan is approved you present it to your client If requested BPG s professionals can participate in the presentation but this is not required Implement the plan Although you and your client are responsible for imple menting the plan BPG is available throughout implementation and will continue to be available for follow up In addition to helping you guide your clients BPG can be a significant revenue source for your business because you can charge consulting fees for both your work and the time BPG spends on each case generally four to 10 times the number of hours as an accounting firm For more information on how BPG works and how you can work with its experts to benefit your clients you can eith
519. ood print quality but may be slower under some conditions Test Printer Click the Test Printer button to see if your printer is HP PCL 5e compliant See Testing Your Printer following Main paper Select the tray that is to be the main paper source for the source selected printer Alternate Select the paper source to be used when the main paper paper source source is not available Opt large paper source Manual feed Select the tray to be used as the optional large paper source Select the tray to be used for manual feed Testing Your While there has been a huge shift towards e filing there are still times when returns Printer Tax Year 2012 must be paper filed In an effort to process those paper returns electronically gov ernment agencies scan these returns allowing them to more efficiently and accurately move the paper returns into the electronic processing system Drake has made changes to its print engine as a part of an ongoing effort to create nearly exact replicas of tax forms on the many different makes and models of printers that are used in tax offices today Some of these changes are necessitated by the emer gence of stricter requirements enforced by some government tax agencies for paper processing Drake has provided a way for you to print a test page in the preferred Printer Com mand Language PCL mode to see if your printer is compliant with these software chan
520. opriate group e Admin Users with administrative rights group cannot be deleted e Front Office Front Office rights for non preparers Scheduler access only e Full Users with full access to everything except administrative features Choose one of the following options e To add a group click Add Group Under Security Group General Infor mation Figure 2 6 enter a Group ID and a Group Description e To add preparers to an existing group double click the group row near the top of the Group Security dialog box Group ID Description Admin Group can access everything including special Admin only sections FRONT OFFICE Front Office used for non preparers FULL Full access to everything except special Admin only sections Security Group General Information Group ID Main Office Group Description Data entry operators who work inthe main office ssts lt CST Security Settings Assign Preparers File EF Tools Reports LastYearData Setup Help Custom Preparer Security 4 a n Hatum Click the menu items to apply ae security 4 checkmark indicates L Print access is allowed Remove the Iv View checkmark to disallow access Forms Based Data Entry I Quick Estimator pattie nh att ltl allen RO cattle e a tune N marin ow gi Figure 2 6 Security Group General Information section of Group Security dialog box 4 Under Security Settings click to mark the boxes representing the features to w
521. or preparer must be entered in Setup gt Firm s or Setup gt Preparer s in order to show up as an option in the override drop lists on screen 1 The PREP screen in data entry allows you to override the following data for a return e Third party designee See Third Party Designee on page 162 e Federal preparer information if the preparer is not set up in Preparer Setup e State preparer information if the preparer is not set up in Preparer Setup If you make an entry in the Federal Preparer Information section of the PREP screen the program requires that full override information for both the preparer and the firm also be entered in this section The PREP screen also includes an option not to print the preparer s information on the letter bill or summary You can now enter state preparer registration information for California NOTE Maryland Minnesota New York Oregon and Virginia on the PREP screen You can also enter a firm s foreign address information in both the federal and state preparer information sections Overriding the Bill Amount 56 Overriding the Total Adjusting Individual Amounts Standard rates must be established in Pricing Setup but you can change the billing amount for a return either by overriding the total or by adjusting individual amounts To override the total amount on a client s bill go to screen 1 and enter the desired amount in the Fee Override field located in the Return
522. or printing tax forms 48 290 foreign account reporting 180 earned income 134 employers 102 interest and dividends 107 mailing address for tax firm 20 tax credit 142 Form 56 Notice Concerning Fiduciary Relationship 164 180 237 Form 706 U S Estate and Generation Skipping Transfer Tax Return 299 Form 706 A U S Additional Estate Tax Return 299 Form 709 U S Gift and Generation Skipping Transfer Tax Return 177 Form 90 22 1 Report of Foreign Bank and Financial Ac counts 180 Form 940 see Client Write Up Form 944 see Client Write Up Form 944SS see Client Write Up Form 970 Application to Use LIFO Inventory Method 179 Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 180 Form 1040 U S Individual Income Tax Return 97 192 Form 1040NR U S Nonresident Alien Income Tax Re turn 177 Form 1040X Amended U S Individual Income Tax Re turn 175 Form 1045 Application for Tentative Refund 174 179 Form 1098 Mortgage Interest Statement 141 Form 1098 C Contribution of Motor Vehicles Boats amp Airplanes 141 Form 1098 E Student Loan Interest Statement 138 Form 1098 T Tuition Payments Statement 139 Form 1099 B Proceeds From Broker and Barter Exchange Transactions 111 112 367 Form 1099 C Cancellation of Debt 133 Tax Year 2012 Drake Software User s Manual Form 1099 DIV Dividends and Distributions 105 108 Form 1099 H Health Coverage Tax Credit 135 Form 1099 INT Interest
523. or years 179 expense allowed in prior years Bonus depreciation Additional Depr Elections Prior bonus depreciation Safe Harbor ms Figure 5 53 On the 4562 screen select EXP 1 to expense entire amount under section 179 Use the 179 Expense fields 2 if expensing only a portion of the amount If the amount must be carried to a listed property make an entry in the Listed Prop Type field in the upper right section of the 4562 screen See Listed Property Type on page 166 For returns being prepared in Drake for the first time the prior section 179 expense must be entered manually for the IMPORTANT depreciation to be calculated correctly In the future the 179 expense allowed in prior years field see Figure 5 53 on page 167 will be updated based on system calculations 167 Depreciation Drake Software User s Manual Indicating Ifyou enter an amount in the first 179 expense elected in prior years Figure 5 54 Prior Year you must also enter an amount in the 179 expense allowed in prior years field If E your taxpayer was allowed the whole amount elected the entry in the fields should be I the same if the taxpayer was not allowed all the 179 expense elected enter the amount elected on the 179 expense allowed in prior years field pererau star Twp PE ee NY a Y 179 expense elected this year Additional Depr Elections Prior bonus depreciation Safe Harbor
524. orm in Basic View and selecting Properties Setting a Print Use this option to view or change the order in which forms are printed Order 1 From the Drake Home window go to Setup gt Printing gt Printer Setup 2 Click Set Form Order at the bottom of the Printer Setup dialog box to open the Sort Form Order window 3 Select a package series and choose a set type Forms are listed with their order number in parentheses to the left Normal Default is the established IRS order Tax Year 2012 51 Making Changes on the Fly Drake Software User s Manual 4 To change the sequence in which the forms are printed click and drag form names until the forms are listed in the desired order 5 Click Save NOTE To back up the print order and restore it to another machine choose to back up the setup files from Tools gt File Maintenance gt Backup Document For details on how to set up and use the Document Manager see Chapter 13 Suite Manager Products Setup Making Changes on the Fly When you make changes on the fly you override program calculations and defaults set by either the program or by the preparer in Setup for the open return The rest of this chapter focuses on actions you can take while in data entry to override these global settings in an individual 1040 return Comparable options for other packages such as the business packages are provided in the manual supplements for those packages ava
525. ot e filed until the check boxes are cleared e Filing Special Returns and Forms The EF screen includes the options to e file the following forms only without e filing any other forms e Extensions Forms 4868 and 2350 e Form 9465 Installment Agreement Request e Form 56 Notice Concerning Fiduciary Relationship To e file one of these types of forms 1 Open the return and go to the EF screen accessible from the General tab 2 Under Federal E file Override Figure 8 6 select the forms to e file FEDERAL E FILE OVERRIDE Select one of the options below M 1040 4868 2350 M 9465 only M 56 Do NOT send Federal Figure 8 6 Federal E file Override options in this example Form 56 will be e filed Be aware that if the 9465 screen is completed Form 9465 will be transmitted with the 1040 but if the 9465 only box is marked on the EF screen only Form 9465 will be transmitted the 1040 will not be transmitted Similarly by selecting the check boxes Tax Year 2012 237 EF Override Options in Data Entry Drake Software User s Manual for 4868 2350 or 56 you are indicating that the program should transmit on y the form you ve selected no other forms will be transmitted Leaving the 1040 box blank does not prevent the 1040 from being transmitted if it is otherwise ready to be e filed It will not be trans mitted however if you ve marked one of the other check boxes in IMPORTANT the Federal EF Override
526. ot related to a specific printer Classic print For preparers who prefer Basic View See Viewing a Return mode Enhanced Mode on page 197 Drake s Classic Print mode will be displayed when in Print mode 48 Tax Year 2012 Drake Software User s Manual Tab F8 Edit Printer Settings used to edit print settings for a selected printer Software Setup Table 2 15 Printing Setup Field Select printer Description Select the printer For printers other than Drake PDF Printer the fields listed below are activated If you select Drake PDF Printer you ll be given the option to launch Adobe after printing to the Drake PDF Printer Printer type Select the printer type from the drop list DPI override Change the dots per inch DPI setting Adjust margin Select this option if printed forms are running off the lower edge of the paper Check adjust ment vertical Use this field if text is being printed too high or low on checks Enter whole numbers to adjust the printed text 1 4 inch ata time Enter 1 to move the type 1 4 inch 2 to move 1 2 inch etc Positive numbers move the placement down negative numbers move the placement up Print Method PCL Printer Control Language is supported by most HP laser jet printers If your printer supports PCL the remaining fields on the screen will be filled automatically The Alternate Print Method GDI will produce a g
527. ount Accounts other than the account indicated for federal complete the fields in the Account 2 sec Tax Year 2012 161 Third Party Designee Drake Software User s Manual tion of the PMT screen To have a balance due from another state withdrawn from a third account complete Account 3 Direct Debit To indicate direct debit of estimate payments only select Estimates Only from the of Estimates Federal selection drop list By default the estimate payment amounts and dates see Figure 5 51 on page 161 are calculated from the information entered on the ES screen or in the override fields in screen 1 Use the fields on the PMT screen to over ride that data Third Party Designee To set up a preparer as a third party designee the preparer s PIN must first be entered in Preparer Setup A default third party designee can be set up for all returns You can override the default for a single return as needed For All Returns Default To set up the third party designee for all returns go to Setup gt Options gt Optional Items on Return tab and make a selection from the Third party designee drop list Options are shown in Table 5 16 along with descriptions of how the options affect the Third Party Designee section on page 2 of Form 1040 Table 5 16 Setup Options for Third Party Designee Selection Third Party Designee Section of Form 1040 None Blank No box is marked This default can be overridden from the
528. ount Options are shown in Figure 5 59 on page 181 Tax Year 2012 Drake Software User s Manual Features for Late Filed Returns For Parts Il Ill IV V Owned separately Il Owned jointly Ill Signature but no financial interest IV Consolidated report V Maximum value of gocount E S A m eae Unknown an me pdin andi teen Bee i ty T a t Ainaa Figure 5 59 Select one box to indicate the nature of the account e For Part III only This section must be completed only if Owned Jointly IID was selected See Figure 5 59 For Part IV V only This section must be completed only if item IV or V was selected See Figure 5 59 The program generates only those pages of the form that are applicable For example if Owned Jointly IID is selected only pages 1 and 3 of the form are printed since page 2 covers only accounts that are owned separately selection II in Figure 5 59 and page 3 covers only jointly owned accounts Page 1 contains taxpayer data Section 4 applies to either signature but no financial interest IV or consolidated report V If IV is selected and a First name is entered NOTE on line 36 the nine digit Account owner ID number from line 35 will be printed as an SSN If V is selected or if IV is selected and line 36 is blank the Account owner ID number will be printed as an EIN Features for Late Filed Returns Drake calculates the late filing penalty late payment of t
529. own by choosing and ordering the key words Columns are established from the Report Editor Step 1 window Note that the columns currently appearing in the selected report are listed in the Selected report columns box on the right See Figure 12 2 on page 315 To establish the columns shown in a report 1 From the Report Editor Step 1 window select a category from the Categories drop list The available columns for that category are represented by the keywords in the Available columns field Tip Place the mouse pointer over an Available columns keyword to dis play a tooltip description of the item 2 From the Available Columns list double click a keyword or single click it and choose Select The keyword column heading moves to the Selected report col umns field Note that the new column heading appears in the Sample Report box To remove a column heading from the Selected report columns field click it then click Unselect Click Unselect All to remove all column headings 3 Click Save or Next to proceed to Assigning Filters following to assign report filters The program stores the modified report under My Reports New reports overwrite existing reports of identical names in the Report NOTE View Print Utility To have multiple versions of one report you must rename the newer report Assigning Filters Filtering limits the information to be included in a report by screening out unwanted data With the many fi
530. ows NT users must have Service Pack 4 0 or higher available from www microsoft com Windows 2000 amp XP 300 MHz processor or higher 128 MB of RAM Windows Vista amp Windows 7 800 MHz processor or higher 512 MB of RAM Support for Super VGA graphics All Windows Operating Systems CD Drive 100 MB of available hard drive space plus 7 MB for each state program Internet Explorer 6 0 or newer Internet access HP compatible laser printer strongly recommended TWAIN compliant scanner Internet service is required for immediate updates If using Windows Vista or later you may need to upgrade your Adobe NOTE Acrobat Reader to version 8 0 or later Version 9 0 may be required if using the 64 bit version of Windows 7 To take full advantage of the software s features you must have A Hewlett Packard HP compatible laser printer High speed Internet access A backup media source such as a USB drive memory stick floppy disk etc A document feed scanner Drake supports all TWAIN compliant flat bed and document feed scanners for use with the Document Manager If you do not have Windows XP or 7 and want to back up your data on NOTE CD you must use your CD burner software not the Drake backup tool to perform the backup Installing from CD Using Windows Before installing your software close all open programs on your computer Table 2 1 Vista A system administrator or user with OS access must install you
531. p FRANK a sdrevas Phone day 828 524 4321 Evening 828 524 1234 Cell Barbara Ext Ext Ee M E mail Wearter dnetnet E mail Notification Comments M Add reminder I Private appointment Recurring appointment Figure 4 14 Appointment Detail dialog box 2 Select the appointment Date Time and Duration 3 Complete the applicable client information fields Ifa client record already exists in Drake enter the SSN EIN and press TAB Click Yes at the prompt and the program automatically completes the Client type Appoint ment type Name Address Phone and Email fields If you replace data in an auto filled field in the Scheduler this information is not overwritten in the client record in 90 Tax Year 2012 Drake Software User s Manual Scheduler Drake You can also use the Lookup feature to access data for a client For more on this feature see Finding a Client Record on page 93 To access the Appointment Detail dialog box from the Data Entry Menu within a return right click anywhere on the screen and select NOTES Add Appointment from the right click menu Click Yes on the Autofill prompt to complete contact information fields of the Appointment Detail dialog box 4 Assign the appointment to a preparer by selecting a name under Preparers More than one preparer can be selected To clear a selection click the name a second time 5 optional Override selections made in Scheduler Setup by selecting or
532. p gt E Mail 275 Interactive Support Drake Software User s Manual All broadcasts are also posted at the Drake Support site Resources gt Broadcast Cen ter Interactive Support Drake provides interactive support via e mail phone and fax E Mail Program The Drake e mail program allows you to send and receive messages using a 1040 com e mail address Use this program to send questions to Drake Support or to e mail your clients You can also use it as your everyday e mail program To access Drake e mail open the tax software and from the menu bar of the Home window select Help gt E Mail From data entry click the Email icon NOTE E mail addresses for Drake Support are listed in Contacting Drake Support on page xii of the Quick Reference chapter E Mail Setup Use the Setup menu to select a method of sending and receiving e mail change your reply to address and display name and suppress notification messages To view the Setup menu select Help gt E Mail from the menu bar of the Home window From the Email Inbox dialog box go to the menu bar and select Setup gt Options to open the Email Options dialog box Select from the options listed below and click Save when finished e Sending Method Two methods are available the default method compatible with most Internet Service Providers ISPs and the alternate method to use if the default method does not work for your office e Alternate Reply to Ad
533. pear in the Client Status Manager display To add a column select the item in the left hand list and click Select Column order can be changed by dragging an item up or down in the list Column Layout Status Settings Available Columns Columns in Current View Days a ID Number a Filing Status Select gt Client Name Extension a Type Bill Adjustment Description 1 Preparer Bill Adjustment Amount 1 SelectAll gt gt status Bill Adjustment Description 2 Started Bill Adjustment Amount 2 lt Remove Completed Bill Adjustment Description 3 Last Change Bill Adjustment Amount 3 Changed By Bill Payment Description 1 lt lt Remove Al fund Bill Payment Date 1 BalDue Bill Payment Amount 1 Reset Total Bill Bill Payment Description 2 l Bank Deposits Bill Payment Date 2 D Client Payments ee OK Cancel Figure 9 3 Column Layout tab e To add a column select an item in the left pane and click Select to move it to the right pane To add all items click Select All e To remove a column select an item in the right pane and click Remove to move it to the left pane To remove all items click Remove All e To change the column order drag items up or down the list in the right pane e To reset columns to the default view click Reset 2 Click OK to save your changes Other Ways to Customize the Display Other ways to customize the column display are listed below e Sort Click a column header to sor
534. pendix F Addenda Pages regularly with each CD shipment and throughout tax season so yov ll know which pages in the manual have been updated Addenda pages are shipped with each software CD and are available on the Drake Support site NEW FOR See the new Quick Reference section where you ll find contact infor mation for the Internal Revenue Service Drake Support and Drake s ZUI7 banking partners tables of shortcut keys and their uses and a list of the forms that are eligible for e file with Drake Software What s New in Drake for 2012 Drake Software User s Manual What s New in Drake for 2012 Each year Drake strives to offer the most efficient and comprehensive tax software in the industry while staying current with the latest technology Listed here are short descriptions of some of the more significant changes to the 1040 program and to the software in general for tax year 2012 Information on what s new in business and other packages is also detailed in Chapter 14 New Features in Other Packages Drake Passwords Drake E Mail Drake passwords have been reformatted for greater security Beginning with Drake12 the Drake password will consist of eight to 15 characters numerals and case sensitive letters No special characters will be allowed and at least one character has to be a numeral Passwords are assigned by Drake and included in your software packing slip or down load e mail Drake recommen
535. play 256 reports from My Reports 319 reports from online EF database 243 rows in grid data entry 68 screens in Drake 67 text from letter templates 44 update files 295 dependent of another 98 dependents child care expenses 142 claiming if married filing separately 101 EIC information for 155 kiddie tax 149 150 release of claim to exemption Form 8332 179 state related data 101 depreciation see also depreciation schedules see also section 179 expensing elections 171 in data entry 165 171 of farm assets 131 of home 169 173 xxxii Drake Software User s Manual of sold assets 170 of traded assets 116 reports and lists 323 326 stopping depreciation on an asset 170 depreciation schedules for 2009 29 generated in Drake 165 layout portrait or landscape 29 detail Ctrl W worksheets 69 70 direct debit balance due 161 consent Form 8879 164 from multiple accounts 161 of estimates 162 direct deposit of bank products 214 240 of refunds 158 160 to multiple accounts 159 direct expenses on Schedule E 123 directories and paths 27 disabling grid data entry 68 disaster payments farm 130 special tax treatment due to 54 disposal of property 122 distributions charitable 118 distributions HSA funding 118 dividends and interest 105 108 document control numbers see DCNs Document Manager printer setup 52 using 331 337 dollar rounding 31 domestic production activities deduction 139 DOT hours
536. ppear in the Inbox double click a message to open it Your mailbox includes a Sent Item box a Drafts box and a Trash box Figure 10 17 Drake 2012 Email Inbox File Message Folder Setup a A we 8 Send Receive New Figure 10 17 Sent Items Drafts and Trash boxes Click a box to open it Boxes are described below Sent Items Messages appear here after they have been sent e Drafts If you attempt to close a message before sending it you are prompted to save a draft of the message in your Drafts folder to be completed later To accept click Yes To discard the message click No e Trash Deleted messages are stored in Trash To permanently delete a message select it from Trash and click Delete Messages deleted from Trash cannot be recovered To compose a new message click New Enter an address in the To field a subject in the Subject field required and a message in the text box at the bottom optional To reply to a message click the message and then click Reply or with the message open click Reply The original message is included in the reply message To forward a message click the message and then click Forward or with the mes sage open click Forward To send a message click Send To delete a message click the message and click Delete or with the message open click Delete Deleted messages go to the Trash box When contacting Drake Support with an issue you mi
537. preparer fees deducted Banks provide certain products for state refunds Check with your bank for a list of eligible states Distribution Methods Bank products include refund checks printed in your office refunds directly deposited in your clients bank account and refund deposited onto prepaid debit cards All of Drake s banking partners offer variations of these products Show your client all bank documents explain all costs and check client ID to verify identity before offering banking services Bank Product Costs Fees are charged for each method of bank product disbursement Notify your client that the following fees can be subtracted from the refund amount e Tax preparation fees e Additional fees formerly Add on transmission fees e Bank fees Tax Year 2012 213 El Visa Prepaid Card Program Drake Software User s Manual e Software fee e Franchise network fee For specific details regarding each bank product go to the Drake Support site Support DrakeSoftware com and select Partner Programs gt Bank Partners NOTE A bank product option cannot be added once the IRS has acknowl edged the return Direct Deposit Most bank products include a direct deposit option If a taxpayer has a checking or savings account funds can be deposited directly into the taxpayer s account bypass ing a trip back to the tax office to pick up a paper check Cashier s Check The most frequently used method of bank
538. press a state return from being calculated select 0 from the Resident state drop list The second drop list for the resident city is activated if a city return is required School districts are available in the third drop list of the Resident state City School district line when needed Tip Press CTRL SHIFT S in the Resident city or School dist to search for options for those fields Indicating a Deceased Taxpayer 98 If the primary taxpayer is deceased 1 Enter the date of death in the taxpayer s Date of death field on screen 1 2 Inthe In care of field just above the Mailing Address section enter the name of someone surviving spouse child legal representative etc to whom all tax related information should be addressed For MFJ returns the name of the sur viving spouse should be entered NOTE If there is a name in the In care of field all correspondence generated by the program letters bills etc will be addressed to that person Tax Year 2012 Drake Software User s Manual Required Fields Required Fields New for 2012 Fields that require completion before a return is eligible for e file are highlighted in blue Figure 5 1 Fields required for e file Mailing Address Street address Figure 5 1 Required fields and foreign address fields Reminders appear when you try to escape from a screen on which required fields have not been completed You can set up the software to remind yo
539. printer besides the Drake PDF Printer you also will have the option storing the PDF document in the Document Man ager 7 Click Print to open the Save As dialog box 8 Ifnecessary assign a filename and select a location for the document the default location is the current year folder in the Document Manager 9 Click Save If you password protected the PDF document the password will be required for any one inside or outside of Drake who tries to open the file Default printer sets are established in Printer Setup see Printing Sets on page 51 but you can override the defaults from Enhanced mode To print specific sets of a return from Enhanced mode 1 Select the Sets tab All sets in the return are shown in the tree view Figure 6 9 All Forms l EF p EF Signature PS Client H 89 Preparer 0 Federal P North Carolina ae T a PNE wee Figure 6 9 Example of a return that has five printer sets N Select the sets to print 3 Click Print to open the Print Sets dialog box If you click the arrow next to the Print icon select Print Selected Forms 4 optional Select any printing options shown in the Print Sets dialog box 5 To change the number of forms to be printed click Sets Setup to open the Copies Per Set dialog box A change here changes the number globally for all returns For more information see Printing Sets on page 51 Click Save 6 Cli
540. product delivery is a cashier s check printed in the tax preparer s office See Printing Checks for Bank Products on page 222 Debit Card Drake s bank partners provide the option of delivering bank products via debit card These are listed on Table 7 3 Table 7 3 Bank Partners Debit Cards Bank Card Name Advent Get It Prepaid MasterCard EPS Financial E1 Visa Prepaid Card Republic Money Clip Prepaid Visa River City Futura Refund Access Card Tax Product Group Diamond Plus Prepaid Visa The steps to select a debit card for your clients are similar on most bank screens in Drake but the ECOL screen used to sign up for the E1 Visa Prepaid Card E1 Card also contains an E1 activation procedure The E1 Card is described in the fol lowing section E1 Visa Prepaid Card Program If you re offering the E1 Card you provide your client with the card at the time of tax preparation Once funds have been released your client can receive notification by e mail or text message The refund amount must be larger than the sum of the preparer 214 Tax Year 2012 Drake Software User s Manual El Visa Prepaid Card Program fees franchise network fees and any Drake fees A minimum first time load amount of 10 applies This card can be used year round and clients can reload it at any time using one of the following methods e By direct deposit of their payroll e By direct deposit of govern
541. quire that all tax return preparers must register for a PTIN and pay a 64 25 annual fee See Preparer Regulations on page 8 for details Obtain Circular 230 All tax preparers must comply with the standards of con duct set by Treasury Department Circular 230 See Contact the IRS in Appendix A for details Know the applicable banking requirements In addition to consulting your bank s handbooks and brochures see Chapter 7 Banking NOTE A detailed flow chart showing the e filing process as it occurs for most Tax Year 2012 tax preparers is included in Appendix B 227 Preparing to e File Drake Software User s Manual Preparing to e File In order to e file tax returns your firm or office must be an Electronic Return Origina tor ERO have an Electronic Filing Identification Number EFIN and be an autho rized IRS e Services provider ERO and EFIN information must be entered in ERO Setup before a return can be transmitted Applying for ERO Status The IRS accepts ERO applications throughout the year All new EROs must apply to the IRS to become an e Services provider in order to receive an EFIN If you are a new ERO and are not a CPA EA attorney banking official or officer of a publicly held company you must also submit a fingerprint card An established ERO must make changes to its e file application only if the informa tion in its original application has changed Changes should be mad
542. r reparers more preparers have incomplete information Go to Setup gt Preparers to complete this information Sru otionn abe Cotatie aasan ppp aane dn apaan Figure 2 2 A green check mark indicates a completed setup item a red X indicates an incomplete setup item and a question mark indicates a partially complete setup item You are not required to use the Setup Assistant To keep it from opening at program startup select Do not show Setup Assistant at program startup See Figure 2 2 Go to Help gt Setup Assistant to return to the Setup Assistant at any time Running Drake on a Network Tax Year 2012 Your network s designated server should meet the following minimum specifications N DTE The following specification are minimum requirements For best results Drake recommends upgrading your system above these requirements For Windows XP e 300 MHz processor e 128 MB RAM For Windows Vista and Windows 7 e 800 MHz processor or higher e 512 MB of RAM e Support for Super VGA graphics For all Windows operating systems e 200 MB of available hard drive space plus 7 MB for each state program e Internet Explorer 7 or higher e CD drive e Internet access required for regular updates An HP compatible laser printer and a TWAIN compliant scanner are also recom mended 15 Single Workstations and Network Options Drake Software User s Manual As computers are added to the network RAM and proces
543. r 2012 The Drake Software User s Manual is updated as changes are made to the software to reflect IRS changes and improve the user experience for tax preparers The manual is provided in electronic version on your CD online and as a hard copy which can be ordered from Drake Software for a fee To access the online manual e From the Drake Home window select Help gt Online Resources e From the Drake Support site select Training Tools gt Manuals and click the link for the 2012 manual Note to dial up users The PDF document is large and will take time to download We suggest that you use the version on your latest CD rather than downloading the PDF Addenda pages are provided throughout the season for those who use a printed ver sion of the manual These pages are provided on the CD and on the Drake Support site This appendix is a guide to the addenda pages added to the Drake Software User 5 Manual Tax Year 2012 during filing season 2012 This appendix is updated regularly throughout tax season To ensure that you always have the most up to date version of the manual we recommend using the online manual available from the NOTE Drake Home window go to Help gt Online Resources and on the Drake Support site If you use a PDF of the manual copied to your desktop we recommend periodically replacing your PDF copy with the updated online manual While Table F 1 provides a record of the changes made to the manual thro
544. r 99B codes D2 Loss Carryovers and Other Entries not an IRS form 2439 Form 2439 Notice to Shareholder of Undistributed Long Term Capital Gains 4255 Form 4255 Recapture of Investment Credit 4684 Tax Year 2012 Form 4684 Casualties and Thefts 111 Sales of Assets Drake Software User s Manual Table 5 1 Screens for Entering Gains and Losses Screen Screen or Form Name 4797 Form 4797 Sales of Business Property 6252 Form 6252 Installment Sale Income 6781 Form 6781 Gains and Losses From Section 1256 Contracts and Straddles 8824 Form 8824 Like Kind Exchanges HOME Worksheet for Sale of Residence not an IRS form 99C Form 1099 C Cancellation of Debt When forms require identical data such as when amounts from the 4684 and 6252 screens must be carried to Form 4797 Drake prints the data on the appropriate forms Capital Asset Reporting Screen codes 8949 D2 Form 8949 Schedule D Form 1099 B 112 Capital gains and losses from stocks bonds mutual funds and other investments are to be listed on the Form 8949 Sales and Other Dispositions of Capital Assets and summarized on Schedule D Information for these forms is entered on screens 8949 and D2 These screens are available under the Income tab of the Data Entry Menu Form 1099 B Proceeds From Broker and Barter Exchange Transac NOTE tions reports individual transaction information and contains cost ba
545. r Form 8903 Domestic Production Activities Deduction Entering Data from Multiple 8903 Forms Only one Form 8903 can be attached to a taxpayer s e filed return To e file data from multiple 8903 forms on a return calculate the total for each of the 8903 items and enter the combined totals onto the 8903 screen Other Adjustments Other adjustment related screens in Drake are listed in Table 5 7 These screens are all available from the Adjustments tab Table 5 7 Other Adjustment Screens Available from Adjustments Tab Screen Form or Worksheet Notes CLGY Ministerial Income Allocation See Ministerial Income Allocation following 8082 Form 8082 Notice of Inconsis tent Treatment or Administra tive Adjustment Request MFS Community Property Allocation Use for MFS in a community property state 8873 Form 8873 Extraterritorial Income Exclusion Tax Year 2012 139 Standard and Itemized Deductions Drake Software User s Manual Ministerial Income Allocation Rental Parsonage Allowance Parsonage Use the CLGY screen for taxpayers with housing allowance in the form of a parson age or rental or a parsonage allowance from the church generally reported on the W 2 box 14 The CLGY screen allows the following items to be calculated e Percentage of tax free income to be applied to Schedule C expenses marked with business code 813000 e Percentage of tax free income to be applied to Form 2106 exp
546. r e filing 232 TS TSJ field 73 tutorials 265 U unemployment COBRA 149 compensation 131 unemployment compensation 109 unformatted schedules SCH screen 189 unlocking client files 297 Update Manager 287 updates access to 34 289 automatic 288 installing 287 notification of available 62 updating CSM 254 from the prior year 77 80 NOTE screens from year to year 188 xlii Drake Software User s Manual V verification fields see flags verifying SSNs 28 W 2 amounts 28 102 Veriscom ABCvoice files 245 viewing see also printing bank decline reasons 241 blank forms 290 CSM filters 254 deleted records 256 earned revenue from add on fees 21 EF reports 243 letter keywords Appendix C loan status codes 241 processed acknowledgments 229 report keywords Appendix C reports 323 sample letters 46 scheduled appointments 93 tax returns 196 W W 2 import 104 watermarks 47 48 Windows operating system default printers 47 enabling standard keystrokes 28 using system colors 46 Windows operating system requirements 12 worksheets AUTO 171 carryover 30 detail Ctrl W 69 70 next year depreciation listing 53 sale of home HOME screen 117 sales tax 191 Z ZIP code auto fill 28 database 72 Tax Year 2012
547. r firm collects tax returns for e filing from outside companies or individuals it might be considered part of franchise or network formerly a service bureau Fran chises and networks can be required to provide additional information when applying for banking services A preparer or firm can be considered a franchise or network if e The preparer accepts returns from other businesses that the preparer does not own e A preparer issues Form 1099 for contract labor at other locations e A preparer contracts with another to provide e filing and banking options e A preparer issues W 2s to a non employee who performs functions as a preparer Your firm is not a franchise or network if it issues W 2s to employees who are under direct control of the firm and collect returns at the other locations Bank Products Bank products allow taxpayers a way to pay their preparation fees from their refund rather than having to pay their fees up front They also give taxpayers without bank accounts an alternate way to receive their refund proceeds To provide any bank product the bank sets up a temporary account for direct deposit of the taxpayer s refund Once the IRS deposits the refund into the temporary account the bank deducts applicable fees and issues the remaining funds to the taxpayer The taxpayer must understand that a bank product is not a loan The disbursement reflects the actual deposited refund amount with the NOTES bank transmitter and
548. r individual 1040 returns only estates and trusts must file Schedule E Part I to report rental income and expenses from crop and livestock shares Farm Asset Depreciation Use screen 4562 Depreciation Detail to create depreciation schedules for Schedule F and Form 4835 From the For drop list on screen 4562 select either F or 4835 as applicable For more on entering depreciation data see Depreciation on page 165 Unemployment Compensation Unemployment compensation amounts should be entered as applicable in the fields described in Table 5 4 Table 5 4 Entering Unemployment Compensation in Drake Unemployment Where to Enter in Drake Compensation Information from 1099 G Screen 99G Fields As applicable Any prior year amounts repaid Screen A to claim repayments Field Other not subject to 2 limit choose Claim See Pub 17 for guidance Repayment Prior year supplemental Screen 4 employer provided amounts Field Repaid sub pay previously reported Enter the repaid repaid amount Current year total Screen 3 Field Unemployment compensation adjustment field added to 99G amount Current year repaid Screen 3 Field Portion of above unemployment repaid in 2012 Note that the Unemployment compensation field on screen 3 is an adjustment field Any amount entered in this field is added to the amounts from the 99G screen and car ried to the Unemployment compensation lin
549. r savings accounts Also known as direct debit Earned Income Credit Earned Income Tax Credit A refundable individual income tax credit for certain persons who work Employer Identification Number Electronic Refund Check bank product Electronic Refund Deposit bank product Electronic Return Originator An authorized IRS e file provider that originates the electronic submission of returns to the IRS Electronic Tax Administration The office within the IRS with management oversight of the IRS electronic commerce initiatives Electronic Training Center Drake s online training center featuring tax courses tutori als and practice returns Electronically Transmitted Documents Electronic Transmitter Identification Number An ID number assigned by the IRS to a participant in the e file program Federal code generally a drop list at the top of an applicable screen Financial Management Service The agency of the Department of the Treasury through which payments to and from the government such as direct deposits of refunds are processed Head of Household Internal Revenue Code Internal Revenue Service Tax Year 2012 Drake Software User s Manual ITIN KB LLC MACRS MB MeF MFC MFJ MFS MOM NOL P ack PAN PCM PDF and pdf PIN PRN PPR PTIN R ack RET RT RTN SMLLC Tax Year 2012 Individual Taxpayer Identification Number A tax processing number for certain non resid
550. r tax software 12 on page 13 outlines the installation process for the first and subsequent CD shipments Tax Year 2012 Drake Software User s Manual Installing from CD Note that the Document Manager is installed by default If you don t want to install the Document Manager clear the applicable check box in Step 4 Step 1 Table 2 1 CD Installation First CD Shipment Insert the 2012 Drake CD into the drive Wait for the Drake 2012 Software Pro grams window to be opened Subsequent CDs Insert the 2012 Drake CD into the drive Wait for the Drake 2012 Software Pro grams window to be opened Click Install Drake 2012 Tax Software Click Install Drake 2012 Tax Software Accept the Drake Software 2012 License Agreement Click Next Accept the Drake Software 2012 License Agreement Click Next Note that Install 2012 Drake Tax Soft ware and Install Drake Document Manager are marked by default States are not available on this shipment Click Next Select a drive or select New to install to a new location Optional Select Install test returns if you are going to test e fil ing capabilities Click Next Optional Select Install State Tax Pro grams Click Next Select a drive or select New to install to a new location Click Next Enter your account number and the serial number located on your software packing slip Click Next Enter your account number and the serial num
551. r that yov ll set up a network incorrectly For more information see Single Workstations and Network Options on page 16 Drake has made extensive changes to the Tax Planner As always this tool allows you to show clients how such events as the birth of a child a marriage a divorce a new house or a new job will affect their finances and tax liability and help them make financial decisions The best new feature of the Tax Planner is its use of the same Drake Data Entry Menu and data entry screens you re familiar with to set up the various scenarios so there nothing new to learn For more information see Chapter 13 Suite Products The Document Manager was enhanced this year so it would more fully integrate with the tax software Save your tax source documents such as scanned or imported Forms W 2 8879 and 1099s Social Security cards and other forms of ID to the Document Manager s Working Cabinet or Archive Cabinet For details see Chapter 13 Suite Products If you use organizers to collect your clients tax information Drake s enhanced orga nizers can help make the process of getting the organizers to and back from the clients easier You can now download the organizers directly to your SecureFilePro portal Secure FilePro alerts your clients the organizer is ready for download and lets you know when the clients access the documents through the portal The clients can then print
552. rake D Drake Software User s Manual Appendix C Keywords Keywords are used in the Reports and Letters programs in Drake Report Keywords Report keywords appear as columns in reports Figure C 1 on page C 1 Reports are generated from the Report Manager Sample Client rt ada As of 08 28 201 Total Tax Return Type Total Income Refund Balance Due Return Type 1040 1040 1040A 500 00 1040A 1041 1041 1040 55 100 00 8 227 00 5 835 00 1040 1040 40 000 00 3 714 00 1 233 00 1040 aM cia eet e e E S a aT ET aS Figure C 1 Report keywords appear as column headers in reports To view report keywords select Reports gt Report Manager from the Home window and choose to either open a new report or edit an existing report The Select Report Columns section of the Report Editor Step 1 dialog box lists the available and selected keywords for each column category Figure C 2 on page C 1 shows the key words for the Return Results category Select Report Columns Categories Available Columns Selected Report Columns Return Results AGI Taxpayer Name Alimony Received Select gt Taxpayer ID Alt Min Tax Retum Type Applied lt Unselect Taxpayer Daytime Phone Taxpayer Best Call Time Balance Due Child Care Credit Child T ax Credit Child T ax Credit Additional Dividends Ordinary Total Education Credits lt lt Unselect All il Figure C 2 Keywords are
553. ram automatically updates prior year unallowed losses entered in the 2011 program 128 Tax Year 2012 Drake Software User s Manual Supplemental Income Printed Worksheets Updating to Next Year Tracking At Risk Basis Tax Year 2012 Prior year Current year Allowable carryover losses and losses and losses and deductions deductions in deductions current year Losses and Deductions a d 10 a Ordinary losses from trade or bUS NESS nnnnnnssssrnnnnnnsssnnnnnne sis i b Netlosses from rental real estate activities tis c Netlosses from other rental activities S O d Netshortterm capital losses i il d Netlong term capital losses s O E e Other portfolio losses o f Netlosses under Section 1231 5 _ O i O g Netlosses under Section 1256 g Net short term capital losses not portfolio y E i g Netlong term capital losses not portfolio ha g Losses to Form 4797 line 10 _ MLE eee Figure 5 30 Some of the fields for shareholder s prior year unallowed losses Basis Worksheet screen Basis worksheets are generated when the return is calculated A worksheet actually consists of two pages page 1 shows the adjusted basis calculations page 2 shows the losses and deductions calculations Tip You can force page 2 to be printed even if it does not contain data To do so mark the Force page 2 box at the bot
554. rds E mail 9325 Notice to Taxpayer automatic from Drake Processing Center Form 9325 Acknowledgment and General Information for Taxpayers Who File Returns Electronically is automatically e mailed to taxpayer when return is accepted E mail address must be present on screen 1 Default ERO Choose a preparer number Paid Preparer or None to indicate the ERO name that should appear on return documents This choice can be overrid den on screen 1 and the PREP screen in data entry Check for e mail during EF transmit receive The program checks for e mail received every time you transmit returns or pick up acknowledgments Combine EF steps Select Transmit Post Acks Combines all e filing steps Click OK or press Esc on selected returns to e file pick up any new acknowledgments and process the acknowledgments in one step Transmit return data to Drake for multi office web reports State EF Sends Client Status Manager CSM data sent automatically to the Multi Office Manager MOM during the EF process Suppress e filing of all state returns or select states to suppress while other state returns remain eligible EF Selection Report Options Customize EF selection reports by specifying which columns such as SSN EIN client name refund balance due etc should be included in the EF selection report Admin To access the Administrative Options tab a user must have administrative rig
555. reciating Sold Assets on page 170 Enter data from Form 1099 S Proceeds from Real Estate Transactions on the 4797 screen Mark the 1099 S transaction box located near the top of screen 4797 Installment Sales Tax Year 2012 The steps for entering an installment sale vary depending on the use of the 4562 screen If the 4562 screen is not used 1 complete the 4797 screen for the sold asset 2 indicate with a Y on this screen that the sale is also reported on Form 6252 and 3 follow the procedure below starting with Step 3 To enter an installment sale using the 4562 screen 115 Sales of Assets Screen code 4562 Screen code 4797 Screen code 6252 oN TIP 6 Drake Software User s Manual For the sold asset open screen 4562 and complete the Date sold field in the If sold section on the right side of the screen This causes the program to stop calcu lating depreciation Select as Property type IN for 1245 property or IS for 1250 property View the return checking to see if there is an amount on Form 4797 line 31 If line 31 contains an amount proceed to Step 4 below If it doesn t proceed to Step 5 Enter the amount from Form 4797 line 31 on screen 6252 line 12 Depreciation to recapture Complete screen 6252 by entering all other installment sale information Listed below are specific instructions and explanations for completing the separate parts of screen 62
556. red return claiming EIC Form 8867 has four parts e PartI All Taxpayers e Part II Taxpayers With a Child e Part III Taxpayers Without a Qualifying Child e Part IV Due Diligence Requirements In Drake Part II of this checklist is addressed on screen 2 Fields for Parts I II and IV are located on the 8867 screen The 8867 screen allows preparers to electronically track data related to NOTE IRS due diligence requirements for Form 8867 In the event of a due dil igence audit it provides an electronic record corresponding to the printed Form 8867 Screen codes To complete Form 8867 for a return go to the 8867 screen accessible from the Gen EIC 8867 eral tab and mark all required boxes EIC Due Diligence Screens Screen codes Because a thorough interview is necessary to ensure that all information is gathered pee EIC2 EIC3 about income deductions credits etc a comprehensive interview process should be part of a tax preparer s office operating procedures This same logic extends to EIC due diligence requirements Since individual tax scenarios change from year to year Tax Year 2012 155 Earned Income Credit EIC Drake Software User s Manual all clients including returning clients should be interviewed in order to obtain a clear picture for the current year tax return The EIC Due Diligence screens can be used as a tool for retaining the inquiries made of taxpayers to ensure that they meet EIC eligibility r
557. reen 2 must be completed for each qualifying dependent If item 13a is answered No items 13b and 13c can be left blank as shown in the Figure 5 46 example EIC Information NOTE Upon completion of the EIC Information section on all applicable dependent screens go to the 8867 screen and complete Parts amp IV Part Ill might also be required if no dependents have a qualifying child status Not eligible for EIC Yes No know GR Rss alkor OK Wine NE Wan ia Vv The child is unmarried OR The child is married can be claimed as the taxpayers dependent and is not filing a joint return except to claim a refund 141 Did the child live with the taxpayer in the U S for more than half of the year oo ccccsssssessessesmessssnonsseeeesmenssnnnsssseeeestnnssssnne M 13a Could another person qualify to claim this child 13b Child s relationship to the other Person eeseeeseecseecseeeseeceeeseeeseeeseeeneee 13c Ifthe tiebreaker rules apply would the child be treated as the taxpayers qualifying ChIHG 0 cece OOO L Figure 5 46 One example of a completed EIC Information section screen 2 Ifa child is not eligible for EIC this ineligibility must be specified by selecting the Not eligible for EIC box above item 10 Figure 5 46 Questions 10 11 and 13 can be left blank if this box is selected EIC Preparer Checklist IRS due diligence rules require that all paid preparers complete an EIC Checklist Form 8867 for each prepa
558. reparer 3 Under the Standard Schedule tab mark one or more boxes to select days pre parer is in the office item 1 in Figure 4 11 This activates the In and Out drop lists item 2 in Figure 4 11 4 Select the in and out times for the selected days time preparer arrives at the office goes to and returns from lunch leaves for the day etc 5 Click Apply item 3 in Figure 4 11 The preparer s in and out times appear in the Standard Schedule grid item 4 of Figure 4 11 6 Click Save Use the Detail Schedule tab to indicate where the schedule changes for a certain time for example if a preparer is going to be out several NOTES hours on a particular morning to meet a client In the preparer s Appointment Scheduler window the rows indicating the preparer s out times will be shaded a different color from the rows indicating the preparer s in times Calendar Calendar viewing options are shown in the Calendar Settings section of the Calen Settings dars tab of the Scheduler Setup dialog box Figure 4 12 on page 89 88 Tax Year 2012 Drake Software User s Manual Scheduler Calendar Settings Calendar view start time 8 00 AM z Default calendar tab displayed at login Selected Date v Figure 4 12 Calendar Settings section under Calendars tab These features are described with the Scheduler Setup features in Table 4 1 on page 87 For more information click t
559. rly rates must be manually entered in the 2012 program for late returns for tax year 2012 To enter quarterly rates manually 1 From the Home window select Setup gt Options gt Optional Items on Return 2 Enter the available rates for each applicable quarter shown in Figure 5 60 on page 182 Percentages should be entered using four digits with the last two digits coming after the decimal for example you would enter 1 5 as 01 50 3 Click OK to exit the screen and save the settings If the Automatically calculate box is marked the program applies the rates to all late filed returns If it is not marked the program applies the rates only if the LATE screen is used for a return NOTES If an interest rate is entered for a quarter that has received or will receive an automatic update the entry overrides the updated rate Updated rates are not visible in Setup gt Options gt Optional Items on Return tab all rates appear as 00 00 unless a new rate is entered Overriding The LATE screen has the following fields for overriding penalty and interest amounts Prog ram that would otherwise be calculated by the program Calculations e Failure to file penalty Enter the penalty amount for failing to file on time e Failure to pay penalty Enter the penalty amount for failing to pay e Interest Enter the amount of interest incurred Other Special Features in Data Entry Special features are available to help tax prep
560. rmation on specific data entry screens Entries are used to calculate the federal state and city tax returns To open a screen use one of the following methods e Keyboard From any tab type a form code in the selector field Press ENTER e Mouse Select a Data Entry Menu tab and click the screen name Managing Use the following methods to exit save reset and delete screens in Drake Screens e Press ESC to save your changes and exit a screen e Press SHIFT ESC to exit a screen without saving your changes e Press CTRL U to reset a screen to the last save e Press CTRL D to delete a screen If multiple occurrences of a screen exist for example if a return has two 1099s an Existing Forms List is opened Select the screens to delete and then click Delete See Existing Forms List on page 68 You can also use the right click menu to take these actions Navigating A blinking cursor and yellow shading indicate an active field Click a field to activate Fields it Following are keyboard only methods of moving from field to field e Press TAB to move the cursor forward one field Tax Year 2012 67 Data Entry Drake Software User s Manual e Press SHIFT TAB to move the cursor back one field e Press CTRL or CTRL 7 to move the cursor up or down one field respectively Grid Data Grid data entry allows faster data entry for the Dependents INT DIV and 4562 Entry screens In grid data entry mode click a field to activat
561. rms such as W 2s W 2 Gs 1099s K 1s this feature can save time shuffling papers and organizing these documents yourself You can also scan receipts logs and handwritten notes in the GruntWorx PDF file IRS documents are saved in the PDF in the following order Income documents Adjustments documents Deductions documents Credits documents Supporting documents not otherwise classified Poor Quality Handwritten Notes e Populate With Populate the data contained in certain Drake supported federal tax forms can be extracted from the forms and imported directly into Drake Soft ware saving you data entry time and expense From the Data Entry Menu tool Tax Year 2012 357 Additional Products Drake Software User s Manual bar in Drake Software click Import gt GruntWorx Populate Job The forms available for this service include W 2 1099 B 1099 SSN W 2G 1099 G 1120S K 1 1099 MISC 1099 K 1165 K 1 1099 INT 1099 R 1041 K 1 1099 DIV 1099 RRB 1098 NOTE Unreadable or handwritten data on a supported form will not be imported Trades With Trades brokerage information from consolidated 1099s and stand alone 1099 Bs can be extracted put into an Excel file and imported into Drake Software through a process similar to Drake s Schedule D Import function From the Data Entry Menu toolbar in Drake Software click Import gt Sched ule D Import GruntWorx Trades
562. ros key strokes to enter certain macro operators For instance click Record and e The ENTER key or the TAB key inserts the field forward gt operator SHIFT ENTER or SHIFT TAB inserts the field back lt operator e ALT D inserts the date D operator e ESC inserts the escape from screen operator e CTRL N inserts the heads down mode operator The following tables lists all the operators used in building macros Table 2 13 Macro Symbols Symbol Action lt Move cursor back one field If the lt symbol is inserted in front of selected data in a macro the pro gram moves the cursor back one field from the active field before inserting the data If inserted after the data the program inserts the data in the active field then moves the cursor back a field gt Move cursor forward one field If the gt symbol is inserted in front of the selected data in a macro the program jumps ahead one field from the active field before inserting the data If inserted after the selected data the program inserts the data first and then moves the cursor forward a field Tax Year 2012 39 Software Setup Drake Software User s Manual Table 2 13 Macro Symbols Symbol Action Escape If the symbol is inserted after the selected data in a macro the program inserts the selected data saves the data and exits the screen D Insert date If D is part of a macro the program enters the current
563. rs gov For Tax Pros and click Apply for PTIN Tax Year 2012 Information entered here determines what preparer information appears on the tax returns To add a new preparer in Drake 1 2 3 From the Drake Home window go to Setup gt Preparer s Click Add to activate the bottom half of the Preparer Setup window Enter General Information Fields required for e filers are indicated by red text Note that a PTIN is required by the IRS Enter Login Information Note that a login name is needed for e filing and use of a password is optional If applicable click Registration to enter your state registration ID California Maryland New York Oregon and Virginia only Click OK to save Indicate Return Signature Options e PIN Signature Enter the preparer s five digit PIN Signature e Use PIN for 8879 PIN Signature Select to activate the 8879 PIN signature Alternative Electronic Signature Select to automatically populate any field requiring electronic signature with the preparer s name The alternative electronic signature is printed on the Preparer s signature at the bottom of returns that have not been e filed and on returns where the preparer and ERO are different for exam IMPORTANT ple if an override field on screen 1 is used To have the alterna 9 tive electronic signature printed on a return that has been e filed you must re enter this number in the PIN for preparer s
564. rt Filter drop list Note the Filter Description displayed when a filter is selected Figure 12 3 Click Save Use a pre defined filter as a template for creating a customized filter Be aware that changing a pre defined filter affects every report in the program that uses that filter We recommend making a custom filter or copying a filter and giving it a unique name and then editing it to your specifications Before a change is made to a filter the program indicates which reports will be affected and offers the option of editing the existing IMPORTANT filter or editing a copy of it If you edit a copy the original filter and associated reports remain unchanged only the current report is affected To customize a filter to assign to a report 1 2 After making changes in the Step 1 window Figure 12 2 on page 315 click Next to open the Report Editor Step 2 window Figure 12 3 Select a filter from the Select a Report Filter drop list Click Edit Filters to open the Filter Manager window Figure 12 4 on page 318 The filter you selected is highlighted 317 Setting Up a Report Drake Software User s Manual Filter Manager You can customize reports using the Filter Manager Each filter is defined by basic search conditions and up to ten custom conditions The software uses the filter and conditional information to narrow the search of the report Select a filter from the list on the left If needed edit
565. s Quick FTP NG aisicc aaa nanei ix Contact Information sas seess ensant aeea a a E E A A E A E ERAS ix Shorteut KEYS ve soei ce ae a die a AE saad de aa a aE a ace ace wed E dee xiii Accepted Forms and Schedules 0 0 0 ccc net tenn nent eee n eee xviii Introductio M sis a a a a aaa 1 About Your Drake Software User s Manual 0 0000 eee 1 What s New in Drake for 2012 0 0 nett n ete e nent nents 2 Other Packages cst cca cs seid wks wen E Pew end co Bie te oe aed Kee Eoin Bee ee Robe ks 6 IRS Changes and Requirements 0 0 ccc cece een nett etn n nen 8 Contacting Drake Support 0 eee een eben tenn teen nen 9 Installation amp Setup cect erewscccerastnnwvtiandacaddrammanesbcccananesnnieesicercenctansdastieaannett 11 System Requirements 0 0 iese ie reee EE Hed E E E E AN dees Head 12 Installing from CD preeseansuncsene 28 sie de R EE Ghee E aa AA E EA A 12 Running Drake on a Network 2 0 0 eere 15 Single Workstations and Network Options 0 00 0c cece eee eee eens 16 Software Setup x eesictes enere Washed eA eed Sea thee Sea P bee le e Pek Hees 18 Making Changes on the Fly 0 nee beeen en en eee 52 ey circ cares peers achiev E ee a naleaad namnmecanneeiueis EEE 61 Logging In and Out 0 eee ene n ene e teen ene e ene ne 61 The Homie Window se orncs waned a5 we thnk aa a bol ghoe ng EEA Angad dale head dewatered awakes 61 General Navigation ais cce00 bor ewes ove oe Baten wed eed
566. s Date Range Disbursement Method or Report Options These criteria vary by report type The report pulls information from only those returns with records that fall within the date range and based on the criteria selected optional for multiple EFIN offices only Select Restrict to and choose an EFIN to filter the report by returns for a particular EFIN Click Run Report Click Download and Print respectively to export a report in spreadsheet format suitable for Microsoft Excel or to print the report To save a set of report criteria for future use 1 2 3 4 5 Click a category to select a report category Figure 8 10 Enter the report criteria Click Save Report Type a report name in the Save Report As field Click OK In the future when you want to view reports that meet those criteria select the report name from the Saved Reports drop list When you are ready to delete a saved report select Options from the blue sidebar menu and click Manage Saved Reports Reports are displayed in columns on the Saved Report page Select a report and click Delete Sort reports by clicking column headers Tax Year 2012 243 Online EF Database Drake Software User s Manual Using the Database for Multiple EFINs If your company has multiple EFINs you can provide different levels of access to the online EF database for different EFINs Hierarchies are built and maintained through the Enterprise Office Man ager EOM
567. s gt Download Center and on the right side of the Download Center window in the Product Developments section click Beyond 415 Software Support In Drake s Tax Software Several support resources are available from within the Drake program itself Access Frequently Asked Questions searchable help data entry help and broadcast e mails Frequently Asked Questions FAQs An FAQ screen is included with each tax software package in Drake Software acces sible from any tab on the Data Entry Menu or by typing FAQ into the selector field and pressing ENTER FAQ screen content varies by state and package Searchable Help Help Tax Year 2012 All Drake windows except the data entry screens have a clickable Help icon or but ton for accessing the Drake Help System a searchable Drake encyclopedia arranged in books and an index The Help System answers many of the most com monly asked questions about the software 273 Software Support In Drake s Tax Software Contents Index Search NOTE Drake Software User s Manual When you access the Help System it is opened for the window you are in For exam ple if you are in pricing setup Setup gt Pricing and click Help you are shown the Help information for pricing setup To print a topic click the Print icon in the toolbar If you encounter an error accessing the Help System run X Drake12 Help FixHelp exe on each workstation Replace X
568. s paoa a es TOUP EXPENSE Of SAIC eescscccccccceecsseeneeseeeneeeees Figure 5 55 Screen 4562 fields to complete for the first asset of a group sale 3 Open a 4562 screen for the next asset in the group sale 4 Complete the applicable fields for the asset In the If sold section only the Date sold Property type and Group sale number fields are required 5 Repeat steps 3 and 4 for all assets in the group sale Complete the Date sold Property type and Group sale number NOTE fields for all assets in a group sale The Group sales price and Group expense of sale are required for only the first asset listed The sales price and the expenses will be pro rated among the assets based on the cost basis of the assets and will flow to Form 4797 Sales of Assets Form 4797 If data is entered for Date sold and Property type the asset data flows to Form 4797 Sales of Sales of Assets If only the Date sold field contains data nothing flows to Form 4797 Assets For a Section 1250 property an entry in the Form 4797 line 26d depreciation field flows to that line of Form 4797 An entry in the Form 4797 other Part III deprecia tion field flows to the appropriate line of Form 4797 depending on the property type 170 Tax Year 2012 Drake Software User s Manual Auto Expenses Installment Unlike Form 4797 Form 6252 Installment Sales is not generated automatically if the Sales If sold fields are completed For information on entering instal
569. s Manual Letters Drake 2012 QuickBooks Import Step 3 Business Type Select the type of business from the list below 1 Import File Name C QuickBooks Per1 0406 tat 2 Client ID Number 400100200 3 Business Type 7 Corporation 1120 S Corporation 11205 Partnership 1065 Tax Exempt 990 Sole Proprietor 1040 Figure 11 10 Step 3 Choose one of the business types listed e Ifa Drake file is found you re asked to confirm the business type Click Yes to proceed 6 Click Finish to import the QuickBooks file into the Drake file After importing the QuickBooks files enter Inventory amounts and details for Other Deductions and items requiring details on the return If the QuickBooks file type does not match the one in Drake you are N DTE prompted to convert the QuickBooks file while importing for example if there is an S corporation file to import into the Drake 1120 package Letters The Letters tool allows you to print batches of certain client letters at a time These let ters listed in Table 11 2 are those that do not typically accompany a tax return Table 11 2 Letters Available from Tools gt Letters gt Letters Type of Letter Suggested Purpose of Letter Post season letter Thank clients for their business remind them that you are available for additional tax preparation assistance Preseason letter Make contact with last year s clients encourage clients to use
570. s NOL Select to Turn On ____ list if greater than Produce lists of these items W 2 W 2G 1099 M 1099 R dividends interest K 1 when the selected number in the drop list is exceeded NOTE Optional Documents Many of these settings can be adjusted on a per return basis See Making Changes on the Fly on page 52 Options under the Optional Documents tab are described in Table 2 8 Table 2 8 Options Setup Optional Documents Option Description Folder coversheet This option generates a folder cover sheet containing the taxpayers names and the name address and phone number of the preparer s firm Prior year s comparison form Select this option to produce a comparison sheet containing data from the cur rent and prior year returns Return summary Select this option to produce a return summary with every return prepared Bill summary Select this option to produce a summary of the taxpayer s bill with each return Federal filing instructions Displays detailed federal filing information including the date to file form to be filed address to file and payment amount The instructions are listed as FILEINST PG in View mode Activated by default Clear the check box to dis able or use the PRNT screen to activate or disable on a single return State filing instructions Displays detailed state filing information including the date to file form to be filed addre
571. s selected in Setup gt Printing gt Printer Setup EF All forms for e filing in addition to any EF messages Federal All forms for filing the federal tax return Worksheets All worksheets produced with the return Miscellaneous Such items as W 2 forms letters overflow statements depreciation lists bill summary direct deposit summary notes etc Notes Messages Notes and EF messages only State All forms for filing the state tax return Gift tax Form 709 documents if applicable A tree view directory of all forms worksheets and other documents in a return allows you to view at a glance the components of a return Expand or collapse the tree as necessary for your viewing needs The viewing panel item 5 in Figure 6 5 on page 197 provides a preview of a selected document within the return To preview a document click the document name in the tree view Printing a Return Tax Year 2012 TIP You can print selected forms selected sets of forms or individual forms in a return The instructions in this section refer to Enhanced mode If you are using Basic mode see the Fl Help resource in the program for printing instructions As explained in the procedure that follows you can opt to open Adobe when the PDF is created This option prevents your having to go to the Document Manager to locate the new PDF for viewing 199 Viewing and Printing a Return Drake Software User s Manual Printing Forms ina Return
572. s that must be installed and acknowledgments that must be pro cessed lets you know if your program is up to date NEW FOR 2UI2 Information on pending and completed GruntWorx jobs will also appear in the Notifications Status bar item 6 in Figure 3 2 Provides system information Personal Client Manager PCM item 7 in Figure 3 2 personalized version of the Client Status Manager see Personal Client Manager on page 63 for more information Enable Privacy Hides the recent return list the PCM and the preparer notes Click Disable Privacy to view the list again Preparer Notes item 8 in Figure 3 2 Use this section to write brief notes reminders to do lists etc Notes are visible only to the preparer who wrote them In other words one preparer s notes will not show up on another preparer s Home window Notes remain in this section until they are deleted Drake 2012 Tax Software ie EF Tools Reports Lest VearDate Setup Hep EET q m9 Ww ow Open Create Calculate CSM Scheduler Doc Mar GruntWors Tax Research Help Recent Returns Cann Mary gfi Started Completed 80 61 2002 02 20 2005 Updated From 2011 02 20 2005 02 20 2005 Updated From 2011 02 20 2005 02 20 2005 02 20 2005 02 20 2005 Updated From 2011 02 20 2005 02 20 2005 NA Updated From 2011 70 61 2005 Updated From 2011 04 04 1921 10 61 2011 ESTATE A NOTHER Updated From 2011 04 05 2010 02 06 2012 EssBeeEss ALNUT H
573. s the Group Prepar ers report click Exit in the Report Viewer toolbar Once the Group Preparers report is open click Exit again to return to the Group Security dialog box Other features available under Setup gt Preparer s include the ability to create a pre parer s daily schedule the ability to print a list of preparers and the ability to run a search on preparers To access these features use the following procedures To create a preparer s daily schedule From the Drake Home window go to Setup gt Preparer s Select a preparer and click Edit Preparer Click Schedule Select day and in and out times 2 Pe SS Click Apply and then click Save to save the schedule See Scheduler on page 85 for more information on using the Drake Scheduler To print a list of preparers entered into the program 1 From the Drake Home window go to Setup gt Preparer s 2 Click Print The Report Viewer displays the current preparer listing 3 Click Print and then click Print again 4 Click Exit to close the Report Viewer Click Exit again to close the Preparer Setup dialog box See Report Viewer on page 323 for more on using the Drake Report Viewer Tax Year 2012 Drake Software User s Manual Software Setup To search for preparers entered into the program A 1 From the Drake Home window go to Setup gt Preparer s BE 2 Click Search 3 Enter preparer information in the Fin
574. s the Honeywell Met rologic MS1690 Focus Use the 99M screen to enter data from Form 1099 MISC Select from the TS drop list at the top of the 99M screen to whom taxpayer or spouse this 1099 information belongs To associate the 99M information with a specific line or form within the return make a selection from the For drop list If associating it with one of multiple forms enter a Multi form code See Associating One Screen with Another on page 73 Passive and Investment Income 1099 DIV etc This section covers interest and dividend income from both domestic and foreign sources To enter rental income data in Drake see Supplemental Income on page 121 To enter foreign earned income see Foreign Earned Income on page 134 Interest and Dividends Tax Year 2012 The INT and DIV screens in Drake reflect the 1099 INT and 1099 DIV forms respectively Data from the INT and DIV screens is carried primarily to Schedule B Interest and Dividends and when applicable to Form 1116 Foreign Tax Credit 105 Passive and Investment Income 1099 DIV etc Drake Software User s Manual Income Less In general no Schedule B is required if interest and dividend income does not exceed than 1 500 1 500 amounts can be entered instead directly on screen 3 Income Figure 5 9 Ma en mamta Lats pan A pve ane Ps 7 Taxabl Scholarsnips not r ported on W2 7 Other income reported on line 7 NOT W 2 wages l
575. s you can save various versions of a return such as the amended return and the original return prior to amending The Archive Manager is accessible from both Basic and Enhanced modes Creating an Archive To create an archive of an open return 1 From View mode select Archive gt Archive Client Return or select Archive gt W Archive Manager and click the Archive icon in the Archive Manager toolbar 2 Inthe Archive Client Return dialog box enter a description of the archived file Figure 6 16 and click OK Drake 2012 Archive Client Return x Archive Client Return Please enter a description for the archived file The description is used in the Document Manager and in the Archive Manager to help identify specific archives Enter a description for the archived file Ex Original Return before Amending Original return before amending Cancel Figure 6 16 Archive Client Return dialog box 3 After the program has created the archive click OK again The program adds the archived return to the Archive Manager list The archived return is also saved to the client s file in Drake and to the NOTE client s Document Manager Reach the Document Manager from View mode by going to Archive gt Document Manager Tax Year 2012 207 Archive Manager Drake Software User s Manual Restoring an Archived Return Ox Restore When you restore an archive you replace the open version of
576. secscsis sev co2s a e dente iene sii wearin eae Gennes Bob dian a ape E emit ae Eine eR eee Reed 109 Self Employment Income Schedule C 2 0 0 0 cece ene n enn ene 109 Sales Of ASSCts n peia aee odie are E E ere Selene E E E Patows de AE en sae aaa ea needs 40 111 Retirement INCOME 20 0 ces scene e Eda R Sed WEES Wek CANE Se FEY Send Bee ee Roe ees 118 Supplemental INCOME Sessera dase how se wacked Hel a eed a a a ee A ee Re 121 arm Income 222 26 auscrde car E deae arene RAR ety Ala a E ae Guan Gia ane aaa 130 Unemployment Compensation 0 0 0 0 ce eee ent n nent n ene nee 131 Social Security and Railroad Benefits 0 0 0 0 ccc eect ence teenies 132 Other INCOME 4 55 5 cco ea Fade wd Bo Bond gh ech dD ec bh a a LORS aad Rah ACR EE E 132 Educator Expenses 0 een tenn eet EEA E 134 Employee Business Expenses 0 0 cc eee nent n ent e teen e eens 134 Health Savings Account HSA Deduction 0 00 00 e teen e nee 135 Moving Expenses co 3 co5 oie ghee Gb Ree Se Ee Caw how BOs Ok ea eee Reva aw ees 135 Self Employment Adjustments 00 0 tne eee een eee n ene 136 Penalties i noses eneret EE EE kee weno bebe aredis eins oeteened bnenehs 138 Alimony Paid sesa 644 odes ea Goede on ele Sale HELE fl EE had bona aed ek Wee ela 138 IRA Adjustments oyote serieei saga dies Gad ke PRE ae RA ea a de Gute dat ead wae ea 4 138 Student Loan Interest Deduction nnana 0c cent ent e nen n ene 138 Eduicati
577. sed for 169 expenses 134 mileage 172 use of home for 172 business use converting home to 118 percentage 166 172 XXX Drake Software User s Manual C C corporations changing from S corps 298 calculating tax returns 193 196 230 calculations batch 193 global options for 29 pause option for 29 calculator 75 calendars in Scheduler 88 cancellation of debt 133 capital gains and losses see also Schedule D Capital Gains and Losses carryovers from prior years 113 Cardholder Customer Service contact info xi carryback of net operating losses 173 carryforward of net operating losses 174 carryover worksheets 30 cashier s checks 214 casualties and thefts 111 CD shipments 12 change of address 180 changing client SSN or EIN 295 return types C corp to S corp etc 298 charitable distributions 118 check register 223 checks 219 lost or stolen 224 resetting check numbers 223 test printing 221 Child Tax Credit 146 child care expenses 142 143 church income see clergy city codes 73 tax rates for Ohio and Pennsylvania 309 clearing flags 70 clergy expenses 135 income allocation 140 indicating on W 2 137 self employment tax 136 Client Communications Editor 41 client files see files Client Status Manager 63 249 256 client statuses in CSM 249 Client Write Up 356 Client Write Up Support xii COBRA assistance 149 codes acknowledgment acks 233 234 activity type Schedule C 110 Tax Year 2012 Drake Software
578. set up letterhead for bills Changing Letter Margins 44 Drake Software User s Manual To edit a letter 1 2 NOTE In the Client Communications Editor click Open and select a package and letter to edit The pane on the right displays the selected template e To edit the letter contents add edit or delete text as you would in a program like Microsoft Word From the toolbar specify font properties typeface bold italic underlined and alignment and copy cut and paste e To add a keyword or conditional paragraph to the letter place your cursor where you want the new item to go and then locate and double click a key word or paragraph from the pane on the left To delete a keyword or condi tional paragraph select it in the letter template and press DELETE Click Save The Client Communications Editor does not allow you to save any letter in which text within angle brackets in other words the names of keywords or conditional paragraphs has been changed Arrange to have your firm s information and logo generated on client bills and letters To set up your letterhead 1 2 3 5 In the Client Communications Editor go to Setup gt Letterhead and Margins Select options from the Letter Bill Indicators section Designate Coordinates In the right column number settings indicate the position of the firm information and logo Settings for the default graphic are e Left most column for logo
579. sing speed of the server and the workstations should be upgraded to improve performance Your office s network must be properly configured for Drake to run cor NOTE rectly Drake cannot provide technical support for the network itself Consult an IT professional for network setup and support Single Workstations and Network Options New for 2012 Setting up Drake on stand alone computers or on networks is easier and clearer The software automatically sets up the location and data paths for you on the Data Locations dialog box Figure 2 3 The location where you install Drake see step 5 in Table 2 1 on page 13 or step 7 in Downloading the Software on page 13 will be the default location for all current and prior year client files and returns and the default location for such configuration settings as firm and preparer setup reports macros letters pricing files preparer notes and schedules Unless you have files stored in different locations or you have a unique network setup it shouldn t be necessary to make any changes to your data locations Administrators have the option of changing these data locations to conform to a par ticular network setup Drake 2012 Data Locations DRAKEI2 CF CONFIGI2 Data Locations Select the network sharing that is appropriate for your office Drake Software requires certain files be located on the same computer used to transmit tax retums This includes c
580. sis fields for brokers who are required to supply such information Enter 1099 B data on screen 8949 Screen 8949 has fields for Form 8949 Schedule D and Form 1099 B data Following are some guidelines for data entry on this screen first for 1099 B information and then for 8949 specific information Date of Sale or Exchange If a single date does not apply type Bankrupt Worthlss or Expired as applicable Select S or L from the Type of gain or loss drop list to have it treated as short term or long term If Expired is entered the return must be paper filed Date of Acquisition Enter the date acquired as an eight digit number using MMDDYYYY format This date is used to determine whether the sale is short term or long term Enter VARIOUS INHERIT or INH2010 as applicable Only Various Inherit and Inh2010 are acceptable for e filing Select S or L from the Type of gain or loss drop list to have it treated as short term or long term Type of gain or loss Select from the drop list to describe the gain or loss as long term or short term Stock or other symbol Enter the stock or other symbol for the security sold Quantity sold Enter the quantity of securities sold Proceeds from sale Enter the sale amount If only the gain amount is avail able enter the gain amount and leave the Cost or other basis field blank Tax Year 2012 Drake Software User s Manual Sales of Assets S
581. site Add Support DrakeSoftware com and the Drake Software blog blog Drake Software com to your Favorites list Drake Knowledge Base Practice using the Knowledge Base at the Drake Support site Drake Forums Sign up for the Drake Forums at the Drake Support site Online EF database Review and practice using the online EF database Ooveo vo Execute your marketing plan Consider running radio spots hanging posters or banners and encouraging word of mouth marketing Drake Software offers marketing ideas online Go to the Support page Support DrakeSoftware com and from the blue menu bar go to Resources gt Mar keting Kits or go to DrakeSoftware com marketing Tax Year 2012 Drake Software User s Manual Prepare for e Filing L Research and verify e file requirements Review any state e file mandates See Appendix E L Complete settings Certain Preparer Firm and EF e filing settings in Drake are required L Send test transmissions to Drake U Use Practice Returns Access practice returns on the Drake Support site Training Tools gt Practice Returns Tax Year 2012 A 5 A 6 This page intentionally left blank Drake Software User s Manual Tax Year 2012 Drake Software User s Manual Appendix B E filing Overview The flow chart on the following page shows an overview of the e filing process for most Drake preparers Included are definitions of acknowledgment codes ac
582. ss and fiduciaries who prepare reports for the trusts and estates they serve are not subject to the mandatory e filing requirement Pennsylvania Tax Update 157 08 01 2011 Any paid preparer who filed more than 100 RI tax returns during the previous calen dar year must e file all eligible tax returns A person employed by a paid preparer with multiple offices is required to e file if the total of all tax returns filed from all offices is more than 100 regardless of whether a single office of the same preparer files fewer than 100 returns If a paid preparer fails to abide by the e file mandate or otherwise causes clients RI tax returns to be filed falsely or improperly the Tax Administrator may after a hearing to show cause preclude such preparer from preparing and filing RI tax returns with the Tax Division Reg ELF09 01 Tax return preparers filing 100 or more returns of any package individual S corpora tion partnership etc must submit them electronically The mandate is separate for each package For example preparers e filing 100 individual returns are not required to e file 1120 returns unless the number of 1120 returns exceeds 99 All returns should be e filed if possible Tax return preparer refers to the business entity and not to the individual location or individual completing the return If compliance with this section is a substantial financial hardship a tax return preparer may apply in writing to the S C
583. ss to file and payment amount The instructions are listed as STINST PG ST refers to the state abbreviation for example OHINST PG for Ohio instructions Activated by default Clear the check box to disable or use the PRNT screen to activate or disable on a single return Labels Select this option to print a sheet of mail to addresses on Avery 5160 labels Envelope Sheet address drop lists Choose the size of the envelope on which to print the addresses of the tax payer the IRS Service Center the state tax department the city tax office and for Forms K 1 Estimated payment coversheet Select this option to print estimated coversheet payment addresses to envelope Nelco ENV500 dimensions for 1040 and 1041 returns with quarterly taxes 30 Tax Year 2012 Drake Software User s Manual Software Setup Table 2 8 Options Setup Optional Documents Option NELCO hyperlink Description Click this link to go to the NELCO website to order such Drake compatible prod ucts as envelopes IRS forms and checks Letter Options all packages Select the result letter templates to be used for each package Include privacy letter with returns Select this option to print the privacy disclosure letter with every return Include engagement letter with returns Select this option to print engagement letters for all packages when the return is calculated At the end of the letter te
584. ssive Activity Credit Carryover PACR screen allows you to enter passive activity credit amounts in a central location in the software rather than on individual credit screens thus streamlining data entry and increasing the number of passive credit carryforward amounts that can be updated from year to year Entering Credit Carryforward Amounts To enter credit carryforward amounts Screen code 1 Open the PACR screen Figure 5 37 accessible from the first Credits tab PACR Passive Activity Credit Carryover TSJ z ST z For z MFC E Form Amount Form Amount Figure 5 37 PACR screen 144 Tax Year 2012 Drake Software User s Manual Passive Activity Credits 2 After making TSJ and ST selections as applicable select a screen from the For list to indicate the screen with which the credit carryforward should be associated If the return has multiple screens for the form selected in the For NOTE drop list use the multi form code MFC text box See Associating One Screen with Another on page 73 3 Select a credit form from the Form drop list 4 Enter the carryforward amount for the selected credit When the return is calculated the carryforward amounts flow to lines 3b and 4b and 1b if applicable of Form 8582 CR and to the corresponding worksheets and the allowed credit amounts flow to Part III of Form 3800 NOTE Amounts on lines 3a and 4a credits
585. st year the IRS introduced Form 1099 K for merchant card and other third party income reporting and added lines to Schedules C E and F of the 1040 return and to the Income section of the business returns for reporting this income Drake incorpo rated data entry fields on screens C E and F for Schedules C E and F of the 1040 package and to the Income INC screens of the business packages in anticipation that these fields would be used however because the IRS required that a zero 0 be entered in these fields for tax year 2011 the fields were inactive grayed out in Drake This year the IRS reversed itself and removed those lines from Schedules C E and F of the 1040 and from the Income section of the business returns and Drake removed those Merchant Card and third party payments from Form 1099 K lines from screens C E and F in the 1040 package and from the INC screens of the business packages No special reporting of this income is necessary Other Packages Chapter 14 New Features in Other Packages lists additions enhancements and other changes to Drake s 1120 1120S 1065 990 1041 and 706 packages 8949 in Business Packages Significant changes have been made to the way capital assets are to be reported in the Corporation 1120 S Corporation 1120S and Partnership 1065 packages In the past capital gains and losses from stocks bonds mutual funds and other investments were listed
586. stances of such forms as Form W 2 In most cases Instances of press PAGE DOWN to open a new screen and enter data for a second form a Form Some forms have more than one page or screen If you are in a multiple screen form use the links provided to go to the next page If no links are provided press PAGE DOWN to move to the second page of the screen Press CTRL PAGE DOWN to open a new instance of the form Each time a new screen is produced Drake indicates the record number on the status bar of the screen The number of records is also shown on the Data Entry Menu Figure 3 12 on page 69 68 Tax Year 2012 Drake Software User s Manual Data Entry va seit Mee mse enean fe eet aafin Se J Over 18 and disabled M Ce I Not eligible for Child Tax Credit L I NotU S citizen or resident alien General income Adjustments 1 Name andAddress Dependents 2 3 Income A nu EU e pol Record 2 of 2 Press Page Down for New Figure 3 12 Multiple instances of a screen are shown in status bar and Data Entry Menu Detail Use detail worksheets to enter up to 30 items for a numeric field Totals are calculated Worksheet automatically To use a detail worksheet 1 Select the numeric field to which the worksheet will apply Double click the field press CTRL W or right click and select Add Worksheet to open a Detail Worksheet Detail Worksheet Sort Options F1 Description Ascend
587. statement detailing an election go to the SCH screen and select E Election Explanation for the type of schedule Both the list of elec tions and any designated election explanations are visible as ELECTION pages in View mode For more on unformatted schedules see Unformatted Schedules on page 189 Special Returns This section explains how to complete the following return types in Drake e Form 1040X Amended U S Individual Income Tax Return e Extension Applications Form 4868 Application for Automatic Extension of Time To File U S Indi vidual Income Tax Return Form 2350 Application for Extension of Time To File U S Income Tax Return For U S Citizens and Resident Aliens Abroad Who Expect To Qualify for Special Tax Treatment Form 1040NR U S Nonresident Alien Income Tax Return e Form 709 United States Gift and Generation Skipping Transfer Tax Return Amended returns cannot be e filed An electronic signature is required NOTE for all other returns and applications for extensions See Signing the Return on page 163 for more on electronic signatures Amended Returns Screen code X Tax Year 2012 A return must be established in Drake before the amended version can be created If the original return was created using a different program you must create the return in Drake and enter basic taxpayer information filing status address etc before amend ing the return Make sure you have a
588. such as Adobe Reader installed Many types of documents for instance documents created in Microsoft Word can be printed or saved as PDF files if you have a PDF printer Adding PDF To indicate in the software that a PDF file will be sent with the return Files 1 Go to the PDF Attachments screen in data entry 2 Fill out the columns on the screen See Table 5 24 for examples Table 5 24 PDF Attachment Window Columns Column Reference Source Description 184 Description Name or number of regulation publication or form instruction that makes attachments necessary Description of form or document to be attached Examples IRS Pub xxx 1 4 Form Instructions for 8332 Divorce decree Bonus depreciation worksheet Tax Year 2012 Drake Software User s Manual Binary Attachments Attaching Documents to the Return Tax Year 2012 Table 5 24 PDF Attachment Window Columns Distinctive easily recognizable file name followed by pdf Column Examples JohnsonDivorce pdf SmithInsolvency pdf File name 3 Exit the PDF screen Because you ve indicated that a PDF file is attached the program generates an EF message regarding the attachment when the return is calculated To attach a PDF file to a return 1 From the return click View If anything was entered on the PDF screen see Adding PDF Files on page 184 there will be three PDF related items
589. t a category from Form Categories Your selection determines which forms are displayed in the grid below 4 Double click a form in the list The default information for that form fills the text boxes above 5 Inthe boxes under each set name enter the number of copies of the form to be printed with each set For example to include three Schedule Cs with the Client set enter 3 under Client Enter the numb Form Name onies per set below Valid Copy amounts are 0 9 Schedule C EF Signature Est Ext Client Preparer Federal K 1 r Cee Figure 2 20 Example Three copies of Schedule C for client 6 Click Update 7 Click Save and then click OK Repeat this procedure for other forms as needed _ Changing You can make Sets changes on the fly in other words without going to Printer Setup Print Sets On but this will modify settings globally not just for the active return If you change the Fly your Sets settings on the fly you change the settings for a returns To change or add print settings on the fly complete the following steps while in Enhanced View mode for a return 1 Select a form from the directory tree 2 Select Setup gt Form Properties from the toolbar 3 Inthe Number of Copies section edit settings and click Save Pricing can also be changed using this option see Pricing for a Single N TES Return on page 57 If using Basic View access this feature by right clicking a f
590. t can be e filed with an 1120 return for the 2012 tax year Form Form Form Name Form Name Number Number 851 Affiliations Schedule 8832 Entity Classification Election 982 Reduction of Tax Attribute 8834 Qualified Electric Vehicle Discharge Credit 1118 Foreign Tax Credit 8835 Renewable Electricity Credit 1120 U S Corporate Income Tax 8844 Empowerment Zone Credit Return 1120 X Amended U S Corporation 8845 Indian Employment Credit Income Tax Return 1122 Authorization and Consent 8846 Credit for Employer SS amp of Subsidiary Medicare Taxes 2220 Underpayment of Estimated 8847 Credit for Contributions Tax Selected Community Devel opment Corps Tax Year 2012 Xix Accepted Forms and Schedules Drake Software User s Manual Form Form Form Name Form Name Number Number 2439 Notice to Shareholders 8866 Interest Computation Under Undistributed Long Term the Look Back Method Cap Gain 3115 Application for Change in 8873 Extraterritorial Income Exclu Accounting Method sion 3468 Investment Credit 8874 New Markets 3800 General Business Credit 8881 Credit for Small Employer Pension Plan Startup Costs 4136 Fuels Credit 8882 Credit for Employer Provided Childcare 4255 Recapture of Investment 8883 Asset Allocation Statement Credit Under Sec 338 4562 Depreciation and Amortiza 8896 Low Sulfur Diesel Fuel Pro tion duction Credit 46
591. t job If the printer is turned off however the fonts must be downloaded manually whenever the printer is turned back on To manually download fonts From the Home window go to Tools gt Download Fonts Click Download to open the Download Soft Fonts dialog box Choose a printer from the Printer drop list Click Download As downloading proceeds the font download status is shown Click Exit when the download is complete oe ey S When choosing a printer from the Printer drop list be sure to select the printer that needs the fonts NOTES To set up options for downloading fonts go to Setup gt Printing gt Printer Setup Under the F7 Options tab select an option from the PCL Soft Font Option drop list Blank Forms All forms and worksheets supported by the program are available as blank forms in Tools gt Blank Forms If a state prohibits printing blank state forms contact the state revenue office to obtain them To view or print a blank form in Drake 1 From the Home window go to Tools gt Blank Forms The Blank Forms window Figure 11 3 on page 291 displays form categories names and descriptions for each package 290 Tax Year 2012 Repair Index Files Drake Software User s Manual Click a column header to sort forms in ascending or descending order Tax packages Drake 2012 Blank Forms a Blank Forms Select the desired form category on left Singl
592. t records in ascending or descending order e Adjust widths Drag the edge of a column to the desired width e Size to fit Double click a column header s right border e Change column order Click and hold a column header drag it left or right and release to reposition the column This new order is saved upon exit and is automatically updated in the Customize Display dialog box Figure 9 3 Searching Updating and Filtering and Viewing The following tools will help you find and use data stored within the CSM Searching the CSM To find a return in the CSM click Search or press CTRL F to open the Find Client P Record text box As you type the client name or ID the CSM searches for and high lights the matching record Click Close to exit Search Tax Year 2012 253 Searching Updating and Filtering and Viewing Drake Software User s Manual Updating the CSM C To incorporate the latest return updates when the CSM is open either click the e Refresh button or press F5 on your keyboard Refresh CSM data is updated automatically through different components of the NOTE application Processes affecting CSM data include data entry changes return printing e filing and check printing functions Filtering Data in the CSM y Filters allow you to control which records are shown in the CSM To select filters Filters 1 From the Home window click CSM Shortcut Press 2 Click Filters The filter list is div
593. t require completion before a return is eligible for e file are highlighted in blue Figure 1 1 on page 5 You can change the colors at Setup gt Colors and turn off the warnings at Setup gt Options gt Data Entry tab Tax Year 2012 Drake Software User s Manual What s New in Drake for 2012 Foreign Addresses 8863 Changes Other Data Entry Changes Employer information is required for e file Figure 1 1 Required fields in blue Increased support for foreign addresses with new Foreign Address Only fields on multiple screens in all packages These fields are locked to keep incorrect data from being entered and must be clicked once to unlock them For more information see Required Fields on page 99 The IRS is increasing the amount of information it wants on Form 8863 concerning students and schools from taxpayers claiming education credits Drake has redesigned screen 8863 to conform to the new Form 8863 removing the Education Expense Information from the Dependents screen screen 2 and moving it to the 8863 screen Added to screen 8863 are fields for the student s name and SSN and fields for the school s name address and EIN For more information see Education Expenses on page 138 e Added FOR and MFC fields to screen 6478 Credit for Alcohol Used as Fuel so that the income from line 7 of Form 6478 can flow to the appropriate schedule e Added questions to the 8867 screen to meet
594. ta file once it has been e filed Opening a locked file requires you to acknowledge a warning screen before you can edit the return You can also access a locked file at Tools gt File Maintenance gt Unlock Client Files Print 9325 when eligible for EF Prints Form 9325 Acknowledgment and General Information for Taxpayers Who File Returns Electronically for every eligible return 32 Tax Year 2012 Drake Software User s Manual Software Setup Table 2 11 Options Setup EF Option Description Suppress federal EF Prevents e filing of the federal return Print EF status page Generates the EF Status page for any return that is eligible for e file Alert preparer when bank product is not included Alert the preparer via an EF message that a return does not include a bank product To override see Overriding Bank Product Alert on page 238 Activate imperfect return election in data entry Activates Imperfect Return Election check box on EF screen in data entry Allow selection for EF from the Cal culation Results screen Allows preparer to send the currently active return directly from the Calcu lations Results window to the e filing queue The return is then transmit ted automatically the next time you e file returns Enable prompting before automatic transmission of Check Print Records Allows program to notify you before it transmits the Check Print Reco
595. te any state K 1 amounts if different IMPORTANT from the federal must be entered manually See State K 1 Amounts If Different on page 125 Drake takes current year basis limitations into account when calculating K 1 amounts and tracks the adjusted basis for a K 1 from a pass through entity partnership or S corp The program also limits any losses based on the basis calculation and carries forward to subsequent years the adjusted basis and any disallowed losses When a return with adjusted basis data is calculated the amounts entered on the K1P and K1S screens undergo the basis limitation calculation The limited amounts are then used in at risk and passive loss limitation calculations if applicable Because amounts flow from both the K1 and Basis Worksheet screens to determine the amount of basis the taxpayer has for deducting losses from the K 1 it is necessary to enter all basis data on the Basis Worksheet screens These are accessed from either the K1P or KIS screen Tabs are shown in Figure 5 26 on page 124 If you calculate a return with K 1 information but have not entered any NOTE thing on the Basis Worksheet screens the program generates a note advising you to do so Once it is able to calculate the adjusted basis the program takes steps based on calcu lation results e Adjusted Basis More than Zero If the adjusted basis is greater than zero based on current and prior year entries amounts flow to the r
596. te manager is minimized and hidden in the task tray of the task bar at the bottom of your computer screen To stop the Update Manager from automat ically searching for and installing updates click task tray to restore the Automatic Update manager At the prompt click Yes 346 Tax Year 2012 Drake Software User s Manual Setting up Your Document Manager Archive Cabinet Window The Archive Cabinet window displays the file structure tree on the left side a list of files contained within the selected folder on the right and a menu bar and toolbar at the top Figure 13 10 E anne _ ELC z File Setup Documents Help a 5 wa 5 E tO lt a Ss 714 dh e i A H Add Client New Folder Backup File Copy Cut Paste Portal Import LinkFile Scan E mail Drag Off Help Exit Document Name Type Last Modified Description g Clients W 2s pdf File 10 24 2012 1 45 46 PM Right click and go to Properties fo enter Description a 1 1099 8 Jones Financial pdf Fle 10 29 2012 10 49 31 AM Right click and go to Properties fo enter Description A 1099s pdf File 10 24 2012 2 04 12PM_ Right click and go to Properties o enter Description Business 7216 Consent to Use pdf File 10 5 2012 9 46 59 AM Consent to use signed by both Cc 8867 Checklist pdf File 10 5 2012 8 55 02 AM EIC checklist Be Camden Calhoun 5432 Form 8879 pdf File 10 5 2012 8 51 14 AM e File signature authorization B Cann Mary
597. ted each year when the return is updated The Miscellaneous Notes also appear when the return is opened to data entry See TIP following To have notes appear when a return is opened go to Setup gt Options Tip gt Data Entry tab and select Show notes reminders to preparer when opening a return Preparer Notepad Screen code PAD The Preparer Notepad PAD screen accessible from the General tab offers an area for keeping more extensive notes and other pertinent return information The contents of this screen are brought forward each year when the return is updated and appear 188 Tax Year 2012 Drake Software User s Manual Binary Attachments when the return is opened to data entry provided that option is selected at Setup gt Options gt Data Entry tab See TIP above You can also access the PAD screen in the following ways e By pressing CTRL SHIFT N e By right clicking anywhere on a screen and selecting Preparer Notepad Press PAGE DOWN for additional PAD screens Unformatted Schedules Screen code SCH Optional Attachments Tax Year 2012 The SCH screen accessible from the Miscellaneous tab and via links from certain screens is available for adding statements and explanations not supported elsewhere in the return Not all unformatted schedules can be e filed Amounts entered on SCH screens do not flow to any other form or schedule For required attachments select the attachment information title and sta
598. tement num ber from the Type of attachment statement number and title drop list on the SCH screen For optional attachments use the Title and Statement number fields below the explanation pane and make a selection from the Type of attachment statement number and title drop list based on the information in Table 5 25 If an attachment is optional select the applicable category from the Type of attach ment statement number and title drop list Categories are described in Table 5 25 Table 5 25 Attachment Types and How They Appear in View mode ae View Type Description y yp P Print X Preparer s EFT note use for including voluntary information thatis EF_NOTE related to the tax return but unlike a statement is not required E Explanation for certain IRS code elections where no official IRS ELECTION form is designed for that purpose R Explanation for certain regulatory elections where no official IRS REG_NOTE form is designed for that purpose blank Statement to be added to the return STATMENT Note that a title is required for each unformatted statement to be attached to the return and that each statement should have a unique number Statement numbers can be a maximum of three characters Note that some statements are generated automatically with the number already assigned Verify this by reviewing the calculated return The program numbers required statements in the order in which you create them and provides
599. ter depreciable assets for Schedule C Note that on screen C the Depreciation field is an adjustment field and that an amount entered there adjusts the calculated amount from the 4562 screen that flows to the Depreciation and section 179 expense deduction field of Schedule C For more on entering depreciation in Drake see Depreciation on page 165 Loss on Schedule C If Schedule C shows a loss and all investment is not at risk the program produces Form 6198 At Risk Limitations If part of a loss may be disallowed enter the required data on screen 6198 If the taxpayer does not materially participate the loss could be limited by Form 8582 Passive Activity Loss Limitations This is computed automatically e Filing Schedules C and C EZ Only one Schedule C EZ can be e filed per return but up to eight Schedule C forms can be e filed per taxpayer If necessary to allow e filing keep the short form EZ from being Sales of Assets generated by selecting the Suppress EZ path box on screen C Screens for entering gains losses and sales of assets are listed in Table 5 1 These screens can all be accessed from the Income tab of the Data Entry Menu Screen 8949 Table 5 1 Screens for Entering Gains and Losses Screen or Form Name Form 8949 Sales and Other Dispositions of Capital Assets This screen also covers Schedule D and Form 1099 B and can be accessed from the selector field by using the 8949 D o
600. th the return Any refund amount could be adjusted as the return goes through exception processing if an exemption claimed is deemed invalid EF Override Options in Data Entry By default the program designates all eligible federal and state forms for e file Use the EF screen to override program defaults on a per return basis 236 Tax Year 2012 Drake Software User s Manual EF Override Options in Data Entry Marking Ready for EF At the top of the EF screen is a Ready for EF drop list If the option is selected in Setup you must select Ready for EF before the return is put into the send queue for e file even if it is otherwise ready to go Because you must manually indicate that each return is ready to be e filed selecting this option can help prevent accidental e filing of returns To choose this option go to Setup gt Options EF tab and select Require Ready for EF indicator on EF screen Suppressing e File To suppress a return that is otherwise eligible for e file 1 Open the return and go to the EF screen accessible from the General tab 2 Select one of the following check boxes as appropriate e Do NOT send Federal suppresses e file of federal return see Figure 8 6 Do NOT send any states suppresses e file of all state returns e Suppress federal state EF and all bank products suppresses e file of both the federal and state returns plus any bank products The selected returns are n
601. that will enter the data you choose Symbols for non character shortcuts are listed in Table 2 13 Click Save For instance if you wanted to create and use an address macro for 1234 Peachtree Street Atlanta GA 30331 Fulton County using keys ATL L for your macro 1 2 3 4 5 6 From the Drake Home window go to Setup gt Macros In the Setup Macros window double click an empty Data line line In the Edit Macro window enter 1234 Peachtree Street gt gt Atlanta gt Ga gt 30331 gt Fulton gt gt GA Click Save Go to screen 1 in Drake Click in the Street address field and press ALT L The macro enters 1234 Peachtree Street for the Street address line jumps the Apt field and enters At Lanta in the City field enters GA in the State field enters 30331 in the ZIP code enters Ful ton in the County field then jumps ahead two fields and enters GA in the Resident State field TIP If a single macro is to allow data entry in multiple fields use heads down mode and right angle brackets gt to jump to a field Example The macro EF gt 25 gt X gt would open the EF screen EF gt toggle heads down data entry mode to ON enter field 25 25 gt select the box to Suppress Federal State EF and all Bank Products x toggle heads down mode to OFF and save the data and escape the EF screen Recording New for 2012 Click the Record button on the Edit Macro window and you can use Mac
602. the Archive Cabinet 4 Optional Change the default location for saving documents in the DDM Loca tion field item 2 in Figure 13 6 if you desire Click Search to chose a new location Drake 2012 Drake Document Manager Integration Options Em Drake Document Manager Integration Options Use this screen to indicate where Drake Tax Software will access the document manager apply a password and customize the default folder layout General Options C Use Working Cabinet Use Archive Cainet 1 v Allow Drake to set up Document Manager client folders Recommended Archive Cabinet DDM Location C DrakeDDM Om Search a Basse ico gM Stage Agila ye ee Figure 13 6 Integrating the Archive Cabinet with the Working Cabinet Establish change or remove a password required to open the Archive Cabinet Set ting up and requiring a password is optional You can also use password protection for each individual file See Document Security on page 351 for details To require a password to open the Archive Cabinet 1 From the Home window of Drake go to Setup gt Printing gt Document Man ager to open the Drake Document Manager Integration Options dialog box 2 Inthe Archive Cabinet section enter a password in the top text box of the Add Password for DDM Startup text box Figure 13 7 on page 340 Passwords are case sensitive 9 Re enter the password in the Confirm Password text box to confirm it 4 Click
603. the Do not carry P amp I box Figure 5 61 Suppressing calculation on the fly If the option to calculate penalties and interest for all late returns is selected in Setup gt Options gt Optional Items on Return tab and you want to suppress the calculation for a single return mark the Suppress calculation box at the top of the LATE screen Figure 5 61 for that return Due date of return An entry here overrides the default of April 15 of the year the return is due An override would be necessary for a special circumstance Tax Year 2012 Drake Software User s Manual Other Special Features in Data Entry such as for returns affected by disasters or other IRS extended due date occur rences e Date balance paid if different An entry overrides the calculated balance due Interest Rates Ifthe global option is selected at Setup gt Options gt Optional Items on Return tab the program bases its penalty and interest calculations on the interest rate for the quar ter You can override program calculations by manually entering penalty or interest amounts on the LATE screen You can also manually enter interest rates at Setup gt Options gt Optional Items on Return tab Manually Drake automatically updates quarterly interest rates for the current and following year Entering as they are announced by the IRS For tax year 2012 for example interest rates will Rates be updated for 2012 and 2013 After 2013 quarte
604. the Home window of Drake Software go to Setup gt Options EF tab 2 Under Session Options select Transmit return data to Drake for multi office web reports 3 Click OK Any changes made in CSM will be transmitted to MOM during e file transmissions Running a To run a MOM report MOM Report 1 Inthe online EF database sidebar menu click MOM to view filters Figure 8 13 Options Data for Tax Year 2011 MOM Report Date Range Start Date 01 02 2012 f End Date 05 14 2012 Report Filters Restrict To EFIN oat Preparer Name kk All kk y k All k v Return Status Return Type EF Accepted CA Individual 1040 EA G Run Report Figure 8 13 Multi Office Manager MOM filters 2 Select an option from each filter and click Run Report The report displays all of the data columns available in the CSM Scroll down or across the report screen to view all the available data If a report contains more than a specified number of rows default is 25 it is pagi nated Page numbers appear in the upper and lower left corners The number of rows displayed per page can be changed via the Rows Per Page drop list above the report e To print the report click Print Only the data on the report is printed e To sort data based on the column selected click a column header e To view e filing details for a particular return click the record s ID number e To export the report into a spreadsheet
605. the Step 2 Job Options section select Populate and or Trades Each job automatically includes the Organize option and costs one token Populate and Trades each cost an additional token In the Step 3 Files to Submit with job section click Add Files and browse to the location of the files you wish to upload Select a document and click Open Select as many documents as you wish For documents not already saved to your computer put the documents in your scanner and click Scan Select Duplex Scanning if your scanner offers that option The scanned document is also saved to the client s GruntWorx folder To remove a document from the Files to submit with job pane select the docu ment and click Remove To have GruntWorx notify you when the jobs Organize Populate or Trades are complete mark the Step 4 Optional check box and enter your e mail address When all documents have been selected click the Step 5 Ready button f w GruntWon fo ea Submit Jobs Job Status Click to read instuctions Step 1 Job For Carter Wiliam amp Amel 6665 Step 2 Job Options Token Infomation Which option to choose Tokens purchased 1008 Organize document default Tokens used 115 V Populate includes tax data import 1 additional token Tokens available 893 a Sch D import file 1 additional token per Tokni iait 2 Step 3 Files to submit with job C DRAKE12 DT 5 4FE97D71 DOCUMENTS TAX 2012 1099S PDF Add Files CA DRAKE12 DT 5
606. the top of the screen for the next page see Figure 5 26 on page 124 and continue entering state amounts 7 if applicable Complete the For State Use Only fields on the second page To enter data for another state repeat Step 2 through Step 7 above K 1 Exports K 1 data can be exported from an 1120S 1065 or 1041 return in Drake to an individ ual return in Drake To export K 1 data you must first have the following items e An 1120S 1065 or 1041 return completed in Drake e An individual return in Drake for the shareholder partner or beneficiary listed in the 1120S 1065 or 1041 return To export K 1 data into an individual return 1 Open the 1120S 1065 or 1041 return that contains the data to be exported 2 Click View to calculate the return and open View mode 7 3 Click the K1 Export button in the View mode toolbar The Export K1s screen K 1 lists all taxpayer SSNs for exporting All rows are selected by default K1 Export 4 optional Click a row to clear it if you do not wish to export K 1 data to all indi viduals listed 126 Tax Year 2012 Drake Software User s Manual Supplemental Income Tracking Adjusted Basis How the Calculation is Applied Adjusted Basis Tax Year 2012 5 Click Export When the Export complete dialog box is displayed click OK The transferred data is highlighted in the K1 screen of each personal return that received the data Once the export is comple
607. ther format options These settings can be overridden during printing from the Print Selection dialog box New for 2012 Use this option to receive return status notification through TaxPoint or ABCvoice Select to generate 7216 consent forms for the cus tomer to sign Select to require contact information phone number and or e mail address on screen 1 or on the ABCV screen for ABCvoice or on the CALL screen for TaxPoint Locking Screens users An administrative user can lock selected screens making them inaccessible to other 1 Go to Setup gt Options Administrative Options 2 Select Use Customized data entry selection menu 3 Click Customize After loading a selected menu click a screen s check box to lock the screen or to make it visible or hidden Default is visible Examples are shown in Figure 2 8 and described below the figure 34 Tax Year 2012 Drake Software User s Manual Software Setup Customized Drop Lists Tax Year 2012 V ADMN Return Tracking LOCKAR V BILL ClientAdjustments Visible M CHK Return Checking Information V COMP Tax Year Comparison Hidden z ELEC Election Options n EPAY Integrated File and Pay M ESUM e File Summary M LOSS Worksheetfor NOL Carryovers M LTR Letter Customization meen E mbna gu g O Pssenm Figure 2 8 Locked Visible and Hidden screens Locked Menu items with a shaded check mark are not visible or accessible e Visib
608. therTax1 NYC 1127 NYC Employment C 6 Tax Year 2012 Drake Software User s Manual Table C 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Ohio Individual OtherTax1 School District OtherTax2 Commercial Activity Tax Corporation OtherTax2 Commercial Activity Tax S Corporation OtherTax1 Composite OtherTax2 Pass through Entity amp Trust Withholding Partnership OtherTax1 Composite OtherTax2 Pass through Entity amp Trust Withholding Fiduciary OtherTax2 Commercial Activity Tax Pennsylvania Individual OtherTax1 Property Tax Rebate OtherTax2 RCT 101 SMLLCs Partnership OtherTax1 20S65 OtherTax2 NR Composite S corporation OtherTax1 20S65 OtherTax2 NR Composite Philadelphia Individual OtherTax1 Business Profits Tax OtherTax2 Net Profits Tax Corporation OtherTax1 Franchise S Corporation OtherTax1 Business Profits Tax Partnership OtherTax1 Business Profits Tax Fiduciary OtherTax1 Franchise Rhode Island S Corporation OtherTax1 Composite Partnership OtherTax1 Composite Fiduciary OtherTax1 Composite South Carolina S Corporation OtherTax1 Withholding Tax Nonresident Income Tax Year 2012 C 7 Drake Software User s Manual Table C 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Tennessee Individual OtherTax1 Franchise and
609. therTax1 Unitary OtherTax2 Annual Report S corporation OtherTax1 Unitary OtherTax2 Nonresident Composite Partnership OtherTax2 Nonresident Composite Fiduciary OtherTax2 Nonresident Composite Michigan Individual OtherTax1 Michigan Business Tax OtherTax2 Homestead Property Tax Credit Home Heating Credit Minnesota Individual OtherTax1 Property Tax Credit Tax Year 2012 C 5 Drake Software User s Manual Table C 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Missouri Individual OtherTax1 Kansas City OtherTax2 St Louis Corporation OtherTax1 Kansas City OtherTax2 St Louis S Corporation OtherTax1 Kansas City OtherTax2 St Louis Partnership OtherTax1 Kansas City OtherTax2 St Louis Fiduciary OtherTax1 Kansas City OtherTax2 St Louis New Hampshire Individual OtherTax1 Business Tax OtherTax2 Interest and Dividends Corporation OtherTax1 Business Tax S corporation OtherTax1 Business Tax Partnership OtherTax1 Business Tax OtherTax2 Interest and Dividends Fiduciary OtherTax1 Business Tax OtherTax2 Interest and Dividends New Jersey S corporation OtherTax1 Composite Partnership OtherTax1 NJ 1065 OtherTax2 Composite Fiduciary OtherTax1 Composite New York Individual OtherTax1 IT 204 LL OtherTax2 MTA 6 MCTMT Corporation OtherTax1 CT3M 4M Partnership OtherTax1 IT 204 LL New York City Individual O
610. tion and amount e Financial product assistance fee Use this option item 0212 in Pricing Setup to add a charge to all returns that include a bank product This fee is not included on the bill if any of the following are true Tax Year 2012 37 Software Setup Minimum amp Maximum Fees Use the scroll bar or arrow keys to find forms Drake Software User s Manual The firm state is Arkansas Maryland Maine or New York See Program Help link in Setup gt Options Administrative Options tab In Setup gt Options Administrative Options tab the option to charge all taxpayers the same fees is marked In Setup gt Pricing the Include on Bill box is not marked for this fee To set minimum and maximum fees to be charged for a return 1 From the Home window go to Setup gt Pricing and select a package from the Form box All forms for that package are displayed in the grid below 2 Scroll down to Forms 0255 and 0256 the minimum and maximum fee settings 3 Double click a row and enter the fee Repeat for the other form if desired 4 Click Update and then click Save NOTE If incorrect charges are generated on bills check the minimum and maximum fees to see if the settings are affecting the totals Macros Setup Using Macros Creating New Macros To view a list of macros in data entry press CTRL SHIFT M 38 NEW FOR Macros are a series of commands and functions that allow a combina
611. tion of keys to accomplish tasks Also called shortcut keys some macros are already available in the program for example CTRL V opens View mode You can edit existing macros or create new ones to meet your office s needs You can also use macros for data that is used often by your office For example if many of your local clients use Small Town Bank you can arrange for the program to enter Small Town Bank every time you press a particular shortcut key combi nation The Setup Macros screen has changed slightly making it easier to 7017 enter longer macros and a new Record feature allows you to create new macros more quickly To insert macro data place the cursor in the field and press the applicable shortcut key macro combination To view available macros press CTRL SHIFT M from within a field to open the Data Entry Macros window To insert macro data from the list select a macro and click Execute or double click the row The Data Entry Macros window is closed automatically To set up your own macros in Drake 1 From the Drake Home window go to Setup gt Macros The Setup Macros dialog box shows the shortcut keys Hot Key column and their associated tasks Data column 2 Double click a line to open the Edit Macro window and enter a new macro or edit an existing macro Tax Year 2012 Drake Software User s Manual Software Setup 4 In the Edit Macro pane construct a simple formula or words and operators
612. tivate the appointment reminder establish how far in advance to receive a reminder of an upcoming appointment You can also select this option on the fly when setting up a preparer s appointment Open Setup Schedule for Set up a preparer s general daily schedule in out times ZIP code autofill for city and state information Activate the ZIP code autofill feature which automat ically displays a client s city and state information once the ZIP code has been entered Private appointment Mark all future appointments as private Private appointment details are not visible to other preparers or to users with administrative rights You can also select this option on the fly when setting up a pre parer s appointment Customer name autofill Establish how client names are displayed in the cal endar view Email Notification Set tings Enter the words you want to appear in Subject line of your e mail notifications Calendars Preparers in View From Preparers not in my view list select which preparer schedules you want visible by default Click the arrow to move the name to the Preparers in my view list on the right Calendar view start time Select the time to be displayed when the calendar is opened Default calendar tab displayed at login Select which calendar type will be displayed at login This choice not available to users with administra tive rights
613. to Tools gt City Tax Rates and select a state The City Tax Rate Editor for the selected state is displayed 2 Select a city or municipality from the drop list The city s details automatically fill the text boxes which you can edit as needed 3 Click Update to save any changes 4 Click OK The PA editor is designed for local city forms not including Philadelphia tax forms The default address from the database is the Zero Due address listed on Pennsylva nia s Municipal Tax Information website Balance Due and Refund addresses can be obtained from this site or from the paper form if provided by the municipality To find a tax rate or other county or municipality tax information click the Find Tax Rate and Address link If penny rounding is required for a specific municipality a Pennsylvania return 1 In data entry enter the desired amount rounding to the penny example 810 33 2 Press CTRL F The CTRL F action forces the program to allow penny rounding for that field only and for that return only Otherwise the program automatically rounds all numbers entered Penny rounding can be set globally from Setup gt Options gt Optional NOTE Items on Return Note that amounts on federal returns must be rounded to the nearest dollar in order to be eligible for e file Forms Based Data Entry Tax Year 2012 Forms based data entry allows you to enter a previously prepared 1040 return into the tax so
614. to a Client Tax Year 2012 To send a return to a client from Enhanced mode 1 Open the return 2 Click View or Print to access View mode 3 Select the forms to be included in the e mail In Enhanced mode select forms from the Forms tree in Basic Print mode click a form and choose Select Form from the right click menu 4 Click Email to use the default e mail method or click the arrow next to the Email button to choose a method The Password Protect dialog box is opened showing the password Figure 6 12 see About Passwords on page 204 for more infor mation on passwords Drake 2012 Password Protect PDF Attachment lt Password Protect PDF Attachment The default password is the first 4 characters of the client s last name lowercase with no spaces followed by the last 5 digits of the client s SSN Please select a password for the PDF attachment cartoe669 Cancel Figure 6 12 Password Protect PDF Attachment dialog box 5 Click OK The e mail message is opened in the desired e mail program with the selected return documents attached The client and spouse e mail addresses are automatically shown in the To field if the addresses were entered on screen 1 Any address you added in Email gt Setup will also be in the To field see Setting Up Preferences on page 202 203 E Mailing from View Print Drake Software User s Manual 6 Ifno further changes to the message are needed cli
615. to the EF screen in the return In the Ready for EF box at the top select X Ready for EF e Check to see if the return contains forms that are not e filable Step 3 Transmit Return Never transmit from more than one computer unless the software is installed on a dedicated server Calculating from more than one com CAUTION puter can lead to duplicate DCN rejections This can affect the abil ity to print checks and can prevent IRS acks from showing up in your EF database To transmit a return 1 Ensure that the Internet connection is working properly and that the returns are selected for e filing See Step 2 Prepare the Transmission File on page 231 2 From the Home window select EF gt Transmit Receive to open the Transmit Receive dialog box which displays the types of returns to be e filed Shortcut Press 3 optional To review and if necessary eliminate files from the send queue a er select a file from the File for EF pane and click Review The Transmit File Edi Receive dialog tor lists individual returns To remove a return from the queue select it and click box Remove 4 Click Send Receive The Report Viewer displays the EF Transmission Record 5 Click Exit The EF Transmission Record lists returns that are planned for NOTE transmission Because transmittal can be interrupted or a return denied this list is not suitable as a record of transmitted files 232 Tax Year 2012 Drake Softwar
616. tom of the Basis Work sheet continued screen in data entry The following basis information will be updated to the next year s software e Adjusted basis amount at the end of the year e Amounts in the Disallowed Losses column of the printed Adjusted Basis Work sheet page 2 At Risk Limit Worksheets can help track shareholder and partner basis for at risk activities Worksheets WK_IPRSK for partnerships and WK_ISRSK for sharehold ers are produced for each Schedule K 1 for both regular tax and AMT Use the 6198 At Risk tabs on K1P and K1S screens to enter data for these worksheets Tabs are shown in Figure 5 26 on page 124 The top half of the 6198 At Risk tab has the following groups of fields e Part I Profit Loss from the Activity Ifthe basis worksheet was used the amount entered there for Gain from Section 179 asset disposition will flow to line 2b of Form 6198 If that worksheet was not used then this field on the 6198 At Risk tab must be used If data is entered in both places then the amount on the 6198 At Risk tab will be used e Part III Simplified Detailed Computations If the Part III Detailed Com putation fields located in the following section on the screen are used then the program uses Part III to calculate the amount at risk for these fields If amounts are entered in this section only then Part II is used 129 Farm Income Drake Software User s Manual e Part III Detailed Comput
617. transmission record for the client file is displayed NOTE The Where is my refund hyperlink connects you with the IRS Refund Status Web page e State acknowledgments The State column displays the state code and date filing status and refund amount or balance due This data is from the federal accepted record otherwise the most recent transmission record for the client file is displayed e Reject Codes On the right side of the window are fields for the reject code form ID form number and sequence number Double click a reject code to jump to the F4 Reject Code Lookup tab See Reject Code Lookup following The F2 Bank Direct Deposit tab contains detailed data about any bank products e Bank product information is located on the left side of the window e Direct deposit information is located on the right side of the window This infor mation includes amounts paid to the bank amounts paid to the preparer and the dates of the payments e Account information be found at the bottom of the window Account type and number are displayed for each type of direct deposit The F3 Fees Miscellaneous Info tab contains general return information about the taxpayer the firm and fees distribution The F4 Reject Code Lookup tab is a search tool for accessing and understanding IRS reject codes To look up an IRS reject code for a federal return 1 Select a federal return type 1040 1120 1120S 1065 or 104
618. tribution from Qualified Tuition Program QTP Coverdell ESA Education account type 2011 contributions this ESA AP Sictributiogs imal tpi amovida enS PS mitten atten pti Figure 5 39 QTP ESA Taxable Distributions section of screen 5329 The program uses information entered in these fields to calculate the taxable portion of distributions and to generate the calculated amounts on the return Table 5 9 shows which fields are required in order to ensure correct calculations Table 5 9 Required Information for Accurate Calculation of Distribution Income To Calculate Income from an ESA To Calculate Income from a QTP Distribution Adjusted qualified education expenses 2012 Distribution Adjusted qualified education expenses 2012 Gross distribution from Coverdell ESA Gross distribution from QTP Basis in Coverdell ESA as of 12 31 2011 Portion of QTP distribution that is earnings Education account type Education account type 2012 contributions for this ESA Value of Coverdell ESA on last day of 2012 entered at top of screen 5329 Along with the automatic calculation the program produces the worksheet QTP_ESA which shows how the taxable amount was calculated The penalty is calculated and includes any amount that is income from a Coverdell ESA or QTP NOTE Household Employment Taxes Screen code H Use screen H under the Taxes tab for Schedule H Household Employment Taxes 1
619. tronic Games of Skill Not all states tax the gambling winnings from lotteries and electronic games Select boxes as applicable but first press F1 in a field to access further information on each item Other gambling winnings can be entered in the Gambling winnings field near the bottom of screen 3 Cancellation of Debt Screen code 99C Use the 99C screen accessible from the Income tab to enter data from Form 1099 C Cancellation of Debt From the For drop list at the top of the 99C screen select 1040 to indicate a non business debt Select one of the other available choices as applica ble to indicate a business debt The selections along with the line on the tax return where the cancelled debt amount flows are shown in Table 5 5 Table 5 5 Cancellation of Debt For i Where Flows on Tax Return Field Item 1040 Form 1040 Other income line C Schedule C Other income line E Schedule E Payments not reported line F Schedule F Other income not reported line 4835 Form 4835 Other income line 982 Form 982 Total amount of discharged indebtedness excluded from gross income line Tax Year 2012 133 Educator Expenses Drake Software User s Manual Foreign Earned Income Enter foreign earned income amounts on the applicable income screen W2 C FEC etc see Foreign Employers on page 102 Foreign earned income is calculated into the total income line of
620. ts Drake Software User s Manual More information on the STAX screen is available by clicking F1 in the individual fields The STAX screen includes a link to an IRS website where you can find NOTE information and guidance for understanding sales tax deduction and a sale tax deduction calculator From the STAX screen click Sales Tax Calculator 192 Tax Year 2012 Return Results This chapter covers calculating viewing and printing returns A return must be calcu lated before it can be viewed printed or e filed Calculate returns as often as needed Calculating a Return To calculate a return from data entry click Calculate By default results are dis 3333 played in the Calculation Results window See Figure 6 2 on page 194 Calculate To calculate one or more returns from the Home window without using data entry 1 Click Calculate The Batch Calculation dialog box Figure 6 1 displays the last nine returns calculated Each return is indicated by a function F key Drake 2012 Calculate Batch Calculation Enter the SSN or EIN and press the ENTER key to add it to the list of returns to calculate or press the corresponding F1 through F9 key to add recent returns that are listed on this screen Click OK to start the batch calculation To delete an item from the list highlight and press the DELETE key F1 400111111 Silver John F2 802000001 Fred s Fiduciary F3 400500600 EssBeeEss
621. ttempting to prepare a tax return in Drake Screens 1 through 5 of the program provide fields for entering data directly onto the 1040 Because many lines on the form require calculations from other forms and schedules some of the fields in screens 3 4 and 5 are treated as overrides or adjust ments to program calculations from elsewhere in the program Taxpayer Demographics Screen code 1 Use screen 1 Name and Address accessible from the General tab to enter data for the top section of a Form 1040 including the taxpayer s name mailing address and filing status Screen 1 also has fields to indicate contact information and other relevant details of the return Selecting a Filing Status Select a filing status from the Filing Status drop list at the top of screen 1 Press F1 in the Filing Status field to view explanations for the available codes Entering Taxpayer Information The taxpayer s name is entered when you create the return Other important taxpayer data such as date of birth occupation and contact information phone numbers and e mail address for the taxpayer and spouse if applicable is entered on screen 1 Note that not all fields in the Spouse column are activated if the filing status is something other than Married Filing Jointly fields that are activated should be completed Tax Year 2012 97 Taxpayer Demographics Drake Software User s Manual e File specifications require that no more than 35 ch
622. tter Engagement Letter Letter thanking 2012 clients for their business available for all applicable packages Fully customizable template that can be used to create a customer survey package or product offering sheet generic letter client coupon etc Standard engagement letter for tax services E file Status Letter Provides 2012 clients with an acknowledgment summary of their e filed returns available for all applicable packages Privacy Policy K 1 Cover Letter K 1 Amended Letter Grantor Trust Statement Generic privacy policy for clients Cover letter for a shareholder partner or fiduciary receiving a Schedule K 1 S corp partnership and fiduciary packages only Cover letter for a shareholder partner or fiduciary receiving a Schedule K 1 that has been amended S corp partnership and fiduciary packages only Cover letter for grantor trust statement fiduciary package only Letters Setup Use the Client Communications Editor Setup gt Letters to edit letter templates set up the letterhead for letters and client bills and preview letters NOTE Tax Year 2012 Use the Letter Outline tab to find individual letter paragraphs quickly 43 Software Setup Editing a Letter Template The Client Communications Editor opens to the last letter template viewed CTRL X deletes a selected item Setting Up Letterhead You can also use the Client Commu nications Editor to
623. tting Form Colors Enhanced Mode Basic Mode Tax Year 2012 Colors can be customized in both Basic and Enhanced modes The Form Color Background Color and Text Data Color can each be changed in Enhanced mode Drake default colors for these three items as shown in Figure 6 14 are black white and red respectively F Form color black s 4 0 40 Department of the Treasury Internal Revenue Service 9 U S Individual Income Tax Return For the year Jan 1 Dec 31 2011 or other tax year beginning Your first name and initial Background color white William If a joint return spouse s first name and initial Last name F Amelia Carter g Home address number and street If you have a P O box see instructions Text data color red 123 Main r saiit towp papostaitiosagitenand ZIE socal yohana tarian aiis Gloan Figure 6 14 Customizable colors in Enhanced mode To change colors in Enhanced mode select Setup gt Form Colors In the View Mode Color Selection dialog box click a color After selecting a basic or custom color from the color palette click OK To revert to the Drake default colors click Reset in the View Mode Color Selection dialog box Because Basic mode uses the multicolor cascade of forms it offers more opportunity for color configuration on the screen In addition to changing the form background and text data colors you can customize the following items in Basic
624. turn when using this field Tax Year 2012 157 First Time Homebuyer Credit Drake Software User s Manual First Time Homebuyer Credit Screen code HOME Taxpayers who bought a home in 2008 and took advantage of the first time homebuy ers credit must repay the amount in 15 equal installments beginning with the 2010 return If you have prepared the client s tax returns using Drake Software the Home screen keeps track of the amount repaid every year If you didn t prepare this taxpayer s return previously using Drake go to the Home screen and in the Form 5405 Repayment Information section on the right side of the screen enter the required information If the taxpayer no longer used the house as his or her main home enter the Date home ceased to be main home if not sold field For more information click Screen Help for the Home screen or select Screen Help from the right click menu Direct Deposit Screen codes DD 8888 Use the DD screen accessible from the General tab to indicate that a refund is to be deposited directly into the taxpayer s account The DD screen contains fields for completing IRS Form 8888 Direct Deposit of Refund to More Than One Account NOTES This section refers to refunds that are not in the form of bank products Enter account information for bank products on the applicable bank screen See Additional Disbursement Methods on page 220 Required Information The name of the fin
625. turns view or change the defaults for the various options available Options are categorized into tabs as shown in Figure 2 7 Only administrative users have the Administrative Options tab Drake 2012 Setup Options Data Entry Customize data entry functionality by indicating your preferences below Billing States EF Administrative Options Data Entry Calculation amp View Print Form amp Schedule Options Optional Documents Optional Items on Return Select to Turn On Language Options 1040 package only 7 Maximize data entry screens where possible for easier viewing Menus and data entry screens ay EN ee ee a a Te ro Figure 2 7 Tabs in Options Setup Tax Year 2012 27 Software Setup Drake Software User s Manual Table 2 5 through Table 2 12 describe the options available on each tab in Options Setup Data Entry Options under the Data Entry tab are described in Table 2 5 Options Table 2 5 Options Setup Data Entry Option Description Maximize data entry screens where possible for easier viewing Increase the size of the Drake screen to fill your monitor Effective at all monitor resolutions Size data entry screens to show most fields without scrolling Decrease the size of large Drake screens so they fit on your monitor Effective only when monitor resolution is set to 1024x768 or smaller Disable sizing of data entry screens Keep preparer from resizing
626. tware User s Manual Filter Manager fewer than nine characters You will use this name to locate the report in the Report Viewer See Report Viewer on page 323 Creating a New Report To create a new report not starting with a pre defined report in the Report Manager 1 Click the New Report button at the bottom of the Report Manager window 2 Select one of the following report types e E Filing and Banking For a report based on the EF database e Tax return data For a report based on data entry information e Scheduler For a report based on schedules set up in the Scheduler 3 Click OK to open the Report Editor Step 1 window 4 Using the instructions in Setting Up a Report on page 315 as a guideline enter the report formatting and filtering information and then click Save Deleting a Report Only a report in My Reports can be deleted To delete a report from the Report Manager dialog box select single click the report to delete click Delete Report and then click Yes to confirm the deletion If you have run the report you are asked if you want to delete the report from the Report Viewer Click Yes or No as applicable Filter Manager The Filter Manager is used primarily in reports but is also used for letters mailing labels envelopes see Letters on page 301 for Proformas and Organizers see Organizers and Proformas on page 80 and the Fixed Asset Manager see Fixed Asset Man
627. ty Default does not flow to Form 8582 The program default is option D Not a passive activity Select D or leave this field blank if this is not a passive activity Select option B to indicate a passive activity NOTE This drop list does not contain an option A or an option C Business Codes Press CTRL SHIFT S to search codes To locate a specific business code place the cursor in the Business Code box field B and press CTRL SHIFT S Enter a search term and click Go All codes that include the search term are displayed as shown in the example in Figure 5 15 Drake 2012 Data Entry Search o ea Results 511000 Publishing industries EXcept i TErDEL eenen 516110 Internet publishing broadcasting ae Ee ee ee ee Se aoe Figure 5 15 Example of a business code search on screen C Double click the desired code or select one and click OK or press ENTER Tax Treatment Codes 110 Screen C contains a Special tax treatment code drop list Figure 5 16 on page 111 Tax Year 2012 Drake Software User s Manual Sales of Assets Depreciation II E Special tax treatment code Exempt notary income Meals are subject to the DOT hours of service rules Paper boy excluded from SE under age 18 Qualifying income under the Military Spouses Residency Relief Act SMLLC unwo se tba Figure 5 16 Special tax treatment code drop list on screen C Use the Depreciation Detail 4562 screen to en
628. ty Text on screens will shrink to fit as needed Use grid data entry format on avail able screens Allows you to type information into a spreadsheet environment which can result in faster data entry This feature is available for the Dependents INT DIV 8949 D and 4562 screens Language Options 1040 package only Choose between English and Spanish for menus data entry screens field specific help text and error codes Letter case for data entry Choose between all uppercase letters and mixed case Override field indicator Format override fields in data entry see Override amp Adjustment Fields on page 72 Adjustment field indicator Format adjustment fields in data entry see Override amp Adjustment Fields on page 72 Display warning for missing required fields Choose to receive a warning whenever a required field is empty once per data entry session not at all Tax Year 2012 Drake Software User s Manual Software Setup Calc amp Options under the Calculation amp View Print tab are described in Table 2 6 View Print Options Table 2 6 Options Setup Calculation amp View Print Option Description Autocalculate tax return when exiting data entry Returns are automatically calculated every time you exit the return Display client fee on Calculation screen Allows the fees charged for return preparation to appear on the Cal culation Results
629. u every time you leave a required field blank to remind you only once per data entry session or not at all From the Home window go to Setup gt Options gt Data Entry tab From the Home window go to Setup gt Colors to change the color of the required fields Foreign Addresses New for 2012 Fields for adding foreign address information have been included on many Drake data entry screens These fields are locked to keep incorrect address data from being entered in these fields Figure 5 1 Click the field to unlock foreign address fields throughout the return Close the return and re open it to re engage the lock for unused screens To use the foreign address fields enter in the first field the name of the foreign prov ince or state as appropriate Select the appropriate foreign country from the drop list and then enter the postal code if appropriate Exemptions Screen code 2 Use screen 2 Dependents accessible from the General tab to complete the Exemptions section of Form 1040 Use a separate screen for each dependent press ing PAGE DOWN to open each new screen Data is saved automatically upon exiting a screen The number of active Dependents screens is shown on the Data Entry Menu Figure 5 2 on page 100 Tax Year 2012 99 Exemptions Drake Software User s Manual General income Adjustments Cr Name andAddress 1 2 Dependents 3 3 ncome 4 Adjustments Figure 5 2 Number of Depen
630. ucturing determine the type of file structure you want to use before you begin storing items in the Document Manager Configuring To set configurations for the Working Cabinet Working Cabinet 1 Click the Doc Mgr icon from the toolbar of either the Home window or the Data Entry Menu 2 From the Working Cabinet menu bar choose Setup gt Options to open the Options dialog box Figure 13 2 Options are listed in Table 13 1 on page 334 Options inden Use this scan device X Tum off scanner interface v Common Documents list l Show Hide Document Status list Save Cancel Figure 13 2 Document Manager Options dialog box Tax Year 2012 333 Setting up Your Document Manager Drake Software User s Manual 334 Option Use this scan device Table 13 1 Working Cabinet Setup Options Description By default the Document Manager chooses a scanner To choose a different scanner select it from the list Turn off scanner interface The software automatically uses the default scanner s set tings To change those settings click this box and when the scanner control box is opened make changes to the color dpi size or shape options Common Documents list Click Show Hide to edit names assigned to commonly scanned document types For more information see Setting Up Common Documents following this table Document Status list Click Show Hide to see the status of docu
631. ughout the season the instructions are for printed manual users only Table F 1 Addenda Pages for 2012 New Replaces Explanation Page Page 5 10 5 10 Inserting information on American Taxpayer Relief Act of 2012 to Introduction Print this addenda from the CD and replace pages 5 10 in your printed manual 15 60 15 60 Replacing Data Location information in Installation and Setup Print this addenda from the CD and replace pages 15 60 in your printed manual 113 116 113 116 Replacing the Schedule D import directions and Table 5 2 167 168 167 168 Removing outdated information due to American Taxpayer Relief Act of 2012 in Return Preparation Print this addenda from the CD and replace pages 167 168 in your printed manual 171 172 171 172 Removing outdated information due to American Taxpayer Relief Act of 2012 in Return Preparation Print this addenda from the CD and replace pages 171 172 in your printed manual Tax Year 2012 F 1 New Replaces Drake Software User s Manual Table F 1 Addenda Pages for 2012 Explanation Page Page p to 329 366 329 354 Chapter 13 was expanded by several pages to include new enhancements Print this addenda from the CD and replace Chapter 13 in your printed manual 367 372 355 358 Chapter 14 page numbers were altered due to additions to Chapter 13 Print this addenda from the CD and replace Chapter 14 in your printed manual Tax Year 2012
632. ule C TS or TSJ Select T if a screen applies to the primary taxpayer S if it applies to the spouse or J if it applies to each spouse equally Default is T e F All data on a screen is automatically carried to the federal return as applica ble Select zero 0 from the F drop list to prevent a screen s data from being car ried to the federal return e ST Code indicates whether the screen data should be used in calculating a spe cific state return If this field is blank the software uses the resident state by default The data is not carried to any state or city if a zero 0 is selected here e City Code indicates the source of the income on city returns Press F1 in a screen field to view all acceptable codes for that field Drake allows you to associate one screen with another such as when an asset on one screen should be associated with a Schedule C For example to associate an asset screen to a C screen complete the For field and the Multi form Code field if appli cable at the top of the asset screen For the For drop list select the form to be associ ated with the open screen as shown in Figure 3 21 Form 4562 For c T NA C E F 2106 4835 AUTO 8829 K1P K1S j Multi form code 2 1 999 1 is assumed if left blank Date Description Acquired Cost Basis ee ne a ae S onensatntter dan 220 mail wan EL ares ire ll Figure 3 21 In this example the 4562 screen is to be associated with th
633. ule C Part IV Information on Your Vehicle on the NOTE AUTO screen click the AUTO link on screen C Use the For and MFC fields to associate the AUTO screen with the correct C screen Applying Auto Expenses to a Form AUTO screens can be applied to Schedules C E and F and Form 4835 Use a sepa rate AUTO screen for each vehicle A WK AUTO worksheet is generated for each AUTO screen created Tax Year 2012 171 Office in Home Drake Software User s Manual To apply an AUTO screen to a specific form select the form type from the For menu Use the multi form code MFC box as necessary see Associating One Screen with Another on page 73 for more on using the For and Multi form code boxes in Drake Business Mileage The 2012 standard business mileage deduction rate for the 2012 tax year was 55 5 cents per mile Use the applicable field on the AUTO screen to enter business miles driven in 2012 Prior Years Mileage The Prior Years Mileage fields allow you to keep a running total of the mileage cov ered by the vehicle since being placed in service The total amount is used to calculate the cumulative business percentage for the life of the vehicle It is also used to calcu late the business cost and sales price when the vehicle is sold Prior year mileage data is updated each year when you update your system IMPORTANT The business mileage fields must be completed to compute busi ness use percentage for depreciation Form 456
634. ure 7 1 Names and the date as entered by clients on the USE screen Once the appropriate fields on the applicable screen are completed the Consent to Use of Tax Return Information will be generated with the return Consent to Disclosure of Tax Return Information 210 The Consent to Disclosure of Tax Return Information contains banking option infor mation and explains the IRS Regulation 7216 requirement to the taxpayer It must be signed before the return is e filed e Paper Forms Paper forms can be accessed by several means The software generates the disclosure form as part of the return The wording of the form reflects the banking option your firm has selected This form can be signed with other signature documents prior to e filing Login to the Drake Support site Support DrakeSoftware com and from the blue menu bar go to Resources gt 7216 Sample Letters Click to open the generic Consent to Disclosure of Tax Return Information or any of the bank consent forms in English or Spanish Print or save to your computer desktop Be sure to choose the correct form for your firm s selected bank Enter your firm s name at the top of the form before printing it Tax Year 2012 Drake Software User s Manual Tax Preparer Requirements Screen code DISC Consent to Disclose forms are also available in the software at Tools gt Blank Forms Electronic Signatures To obtain electronic consent the taxpayer an
635. urn is opened to the General tab in data entry When you exit the return you are brought back to the CSM To create a return from within the CSM Shortcut Press 1 Click the arrow next to the Open button and select New Client C Nt tie Open Client 2 Enter the SSN or EIN for the return in the Open Client File dialog box Pole dialog box 3 Press Open and then click Yes When prompted you can begin entering data for the new return Customizing the Display Because custom views are saved and displayed according to the logged in preparer each preparer can set his or her own display Changing the custom view in the CSM does not change the custom view in the PCM To change the PCM s custom view right click within NOTE the PCM window and select Customize Display from the right click menu This action opens the Customize Display dialog box This dia log box is also used for the CSM as described in the following steps To customize the CSM display Shortcut Press 1 Click Customize In the Column Layout tab of the Customize Display dialog E ER eal box Available Columns are listed in the left pane and Columns in Current Display dialog View are listed in the right Figure 9 3 on page 253 box 252 Tax Year 2012 Drake Software User s Manual Searching Updating and Filtering and Viewing Drake 2012 CSM Customize Display el Column Layout The Column Layout tab allows you to define the columns that ap
636. urn to the Update Manager dialog box e Ifupdates are found you will be prompted to install them Proceed to Step 3 3 Click Yes and then click Yes again to close the software The program contacts the server and displays a list of updates to be installed 4 Click Install When installation is complete click Exit to return to the Drake login window When updates are installed manually the program creates an installation log showing the file name release date and number of the update To view a release note double click the desired row in the Update Manager dialog box item 3 in Figure 11 1 Notes are displayed in the Report Viewer where you can print or export the notes as desired For more information on the Report Viewer see Report Viewer on page 323 Automatic Updates 288 Program updates can be performed automatically based on the update options selected With automatic updates you can indicate what time of day you want the updates to occur Automatic updates are not set by default you must set up the soft ware to receive updates automatically To view or change your automatic update settings Tax Year 2012 Drake Software User s Manual Update Manager Notification of Updates Tax Year 2012 1 From the Home window select Tools gt Update Manager The Update Man ager dialog box is displayed Figure 11 1 on page 288 2 Click Auto Update Settings item 2 in Figure 11 1 on page 288 The Aut
637. using Credit 8697 Interest Computation K 1 Shareholders Share of Under the Look Back Income Expense Items 8820 Orphan Drug Credit M 3 Net Income Loss Recon ciliation Tax Year 2012 Drake Software User s Manual 1065 Tax Year 2012 Accepted Forms and Schedules Form Form Form Name Form Name Number Number 8824 Like Kind Exchange N Foreign Operations of U S Corporations The following chart identifies forms and schedules that can be e filed with a 1065 return for the 2012 tax year Treatment Form Form Form Name Form Name Number Number 982 Reduction of Tax Attribute 8844 Empowerment Zone Credit Discharge 1065 Partnership Return 8846 Credit for Employer SS amp Medicare Taxes 3115 Application for Change in 8847 Credit for Contributions Accounting Method Selected Community Devel opment Corps 3468 Investment Credit 8864 Biodiesel and Renewable Diesel Fuels 4255 Recapture of Investment 8866 Interest Computation Under Credit the Look Back Method 4562 Depreciation amp Amortization 8873 Extraterritorial Income Exclu sion 4684 Casualties amp Thefts 8874 New Markets 4797 Sale of Business Property 8881 Credit for Small Employer Pension Plan Startup Costs 5884 Work Opportunity Credit 8882 Credit for Employer Provided Childcare 6252 Installment Sale Income 8883 Asset Allocation Statement 6478 Credit for Alcohol Use
638. ust a few of the IRS changes and requirements for tax year 2012 For a complete list see the IRS website www irs gov Preparer Regulations RTRP Test Preparation The IRS now requires all tax return preparers to obtain or renew their PTIN annually and pay a 64 25 annual fee The PTIN renewal period begins each year in mid Octo ber and all PTINs expire on December 31 Sign up for a PTIN online through the IRS website www irs gov Click the For Tax Pros tab and follow the links in the Getting Started section Tax return preparers with a PTIN have until the end of 2013 to take and pass the Reg istered Tax Return Preparer RTRP Competency Test Preparers are also required to earn 15 hours of CPE each year beginning in 2012 Drake Software offers two online self paced courses to assist you in preparing for the test and to earn up to 12 CPE credits The RTRP Test Study Course covers the seven domain areas specified by the IRS as the content of the test and includes e Study Guides Examples Quizzes and a Practice Test e Flexible online format and custom feedback and tracking e Access to the course that does not expire Re take the course as many times as needed to pass the exam e 10 hours of continuing education on federal tax law that applies towards the annual RTRP requirement The cost of the course is 149 but Drake Software customers receive a discounted price of 99 The RTRP Test Overview and Tips Course provides
639. ustom pa 5 Individual Result Template 6 Individual Result Template 7 Individual Result Template 8 Individual Result Template 9 Individual Result Template 10 Individual Result Spanish 11 Individual Extension 12 Individual Amended EA P O mane nal tinned on at es aten cap att apte Figure 2 23 Selecting the Spanish letter as the default letter for a return LTR screen To change the default letter for all returns go to the Optional Doc NOTE uments tab in Setup gt Options and select a template from the applicable package in the Result Letter section of the dialog box Tax Year 2012 Drake Software User s Manual Making Changes on the Fly Customized Greeting Adding a Custom Paragraph E filing or Paper filing Tax Year 2012 The default greeting for all letters is set in Letters Setup To override the greeting for a return go to the LTR screen and enter a new greeting in the Personalized letter greeting text box To begin the greeting for the letter with one return with Dear enter the greeting along with the name in the Personalized letter greeting NOTE field To have all letters for a package type begin with Dear or another greeting of your choice make the change in the actual tem plate in Setup gt Letters To add a custom paragraph to a letter write the paragraph in the Custom Paragraph field of the LTR screen By default the paragraph is printed at the bottom
640. utton The data retrieved allows Drake to know whether the card has been approved If the application is declined or rejected an explanation is displayed in the text box at the bottom of the ECOL screen After reviewing the explanation make any required modifications to the application and click Activate Card again to reapply e Collect If you re using EPS Financial as your bank and the taxpayer opts for a check or direct Options deposit not the EI Card take these steps to get approval from EPS 1 Open the ECOL screen 2 In Step 5 select either Check or Direct Deposit 3 Enter the taxpayer s banking information Note that the RTN Account number and Type of account must be entered twice for verification Preparing to Offer Bank Products To offer bank products you must set up your system with both Drake and the bank of your choice Your firm must also submit an online bank application through Drake each year This application is separate from the application discussed in Application Forms on page 212 Banking Application To offer a banking option through Drake you must submit a banking application annually Drake transmits the application to your selected bank for review Bank infor mation is managed using the Enterprise Office Manager EOM Multi offices must sign in with the Master EFIN and complete the IMPORTANT required settings before the sub offices can log in and access the EOM information 216 Tax Year 2
641. ved in the Document Manager See Archive Manager on page 207 for details e You can click the Doc Mgr button in data entry to open the Document Manager directly to the client s folder e Files saved in the Document Manager can easily be attached to e mail messages through the Drake e mail program or e filed with a return as a PDF attachment Backing up Restoring Updating Tax Year 2012 The Working Cabinet files are automatically backed up or restored whenever Drake files are backed up or restored See Backing Up and Restoring Files on page 292 Any updates needed for the Working Cabinet will be downloaded automatically wher ever Drake s tax software updates are downloaded The Archive Cabinet files are backed up restored and updated through the Archive Cabinet toolbar See Backing Up Restoring and Updating the Archive Cabinet on page 344 for more information 331 Setting up Your Document Manager IMPORTANT Drake Software User s Manual Document Manager is not available to users of pre Windows XP computer systems Those users will have to update to Windows XP Windows Server 2003 Windows Vista Windows Server 2008 or Windows 7 If you run Windows Server 2003 Windows Server 2008 Windows Vista Windows XP or Windows 7 but 1 have not kept up with regular Window updates and 2 have an older version of NET Framework you will automatically be directed to the Microsoft website where you can do
642. w Income Housing Credit 149 Form 8615 Kiddie Tax 149 Form 8801 Credit for Prior Year Minimum Tax Individ uals Estates and Trusts 52 146 157 Form 8812 Additional Child Tax Credit 157 Form 8814 Parents Election to Report Child s Income 149 Form 8815 Exclusion of Interest from Series EE and I U S Savings Bonds Issued After 1989 180 Form 8820 Orphan Drug Credit 146 Form 8822 Change of Address 180 Form 8826 Disabled Access Credit 146 Form 8828 Recapture of Federal Mortgage Subsidy 149 Form 8829 Expenses for Business Use of Your Home 172 Form 8834 Qualified Electric Vehicle Credit 146 Form 8835 Renewable Electricity Refined Coal and In dian Coal Production Credit 146 Form 8839 Qualified Adoption Expenses 146 Form 8844 Empowerment Zone and Renewal Community Employment Credit 146 Form 8845 Indian Employment Credit 146 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Employee Tips 146 Form 8857 Request for Innocent Spouse Relief 179 Form 8859 D C First Time Homebuyer Credit 147 Form 8862 Information to Claim Earned Income Credit After Disallowance 180 Form 8863 Education Credits 138 Form 8864 Bio diesel and Renewable Diesel Fuels Credit 147 Form 8866 Interest Computation Under the Look Back Method 180 XXXV Index Form 8867 EIC Preparer Checklist 155 Form 8873 Extraterritorial Income Exclusion 139 Form 8874 New Mar
643. window Print only one overflow statement per page Each overflow statement is printed on a separate piece of paper Go directly to form when accessing View or data entry mode Go from a data entry screen to the corresponding form in View mode when you go to View mode When the Data Entry button is clicked in View mode the program returns to the data entry screen Audible notification of calculation error messages When calculating a return the program produces a beep to indicate an error message Layout for depreciation schedule Select Portrait to produce the depreciation schedule vertically using 8 5 x 11 paper select Landscape to produce it horizontally Pause option for calculation Choose the circumstances under which the Calculation Results win dow appears allowing a review of calculation results before proceed ing to View mode Number of days to store print files Select to store print files from 1 to 9 days or to have them removed once the return is selected for e filing If a return is needed after the print file is removed recalculate the return to re create the print file Print sort options for Interest Dividends Choose how items entered on the INT and DIV screens are sorted when printed on Schedule B alphabetically numerically or not at all Form amp Options under the Form amp Schedule Options tab are described in Table 2 7 Schedule Table 2 7 Options Setup
644. with Drake Install a Print to PDF option that allows you to create PDF files See if your printer is HP PCL Se compliant Your Windows default printer is designated as the Drake default printer NOTE when Drake is installed You do not have to add or set up a printer in TIP Drake if the printer is already set up in Windows Printer settings are carried forward automatically each year Watermarks can be added on the fly via the Print Selection dialog box the box that is displayed when you click Print in Drake You can opt to print a custom watermark that you specify see Watermark Text in Table 2 15 on page 48 or to print Client Set or Preparer Set as a watermark Editing To edit settings for the printer used for printing tax returns Printer Settings Tax Year 2012 1 2 3 From the Drake Home window go to Setup gt Printing gt Printer Setup Enter setup changes as needed Details on each tab are provided in Table 2 15 on page 48 Click Save 47 Software Setup Drake Software User s Manual Table 2 15 Printing Setup Tab Field Description F5 General Setup Tray Default is Main Paper Source Change the default if you have displays the current a multiple tray printer and will not be printing from the main tray default printer for Tax Forms Reports Labels Copies Number of copies to print not available for labels or checks oe ae de
645. wnload at no charge the newest ver sion of NET If your system runs Microsoft s NET Framework v3 5 or later a newer version is not necessary and no further steps are needed Setting up Your Document Manager For the sake of clarity this part of the manual includes distinct sections for setting up the two sources of the Document Manager and for using certain tools to add cabinets and drawers and to back up restore and update the Archive Cabinet that aren t rele vant to the Working Cabinet Users opting for the Working Cabinet see Setting up the Working Cabinet following For information on using the Archive Cabinet see Shortcut to GruntWorx on page 338 Setting up the Working Cabinet File Structure 332 Everything in this section will pertain to the use of the Working Cabinet The Document Manager stores documents in Drake s tax software but the documents in those folders are displayed alphabetically in a tree in the Working Cabinet win dow Figure 13 1 File Setup Documents Help GW w New Folder Archive GruntWor File Find e Refresh _Hde CADEN TEST 1063 a CAESAR TEST amp CLEO 1015 4 B Calhoun Cedric amp Alaka Ol 6700 Camden Calhoun amp Caroline 5432 CANASTA JOE 4802 CANASTA JOE 4802 CANASTA JOE 4810 g CANASTA JOE 4810 Cann Mary 3333 DDMTempBumFolder i ng 2012 l H FpCABE LONG amp SPOUSE AIan
646. y as 10 additional search conditions Use the Additional Search Search Conditions feature to further specify the types of data to include in the report Conditions To add a new search condition in the Filter Manager 1 2 9 Tax Year 2012 Click Add Condition See Figure 12 5 on page 320 If you re changing a filter that is used in other reports the Filter Changes win dow is opened See Caution note on previous page In the Filter Condition Editor dialog box select a Keyword Name Select a Comparison option and a Value if required Figure 12 6 Drake 2012 Filter Condition Editor Filter Condition Editor To add a condition first select a keyword from the list below Then select the desired comparison and value Condition Filter Settings Keyword name AGI nd Comparison is at least ted Value 50000 7 Ask about this condition each time the filter is used Help OK Cancel Figure 12 6 Comparison is at least and Value 50000 selected for AGI keyword Ifa value is required the Value field appears A value can be alphabetic or numeric For example if AGI is selected with a comparison of is at least the value must be numeric Do not use commas when entering numbers If Tax payer s Last Name is selected with a comparison of starts with the value must be alphabetic optional To allow a user to modify this condition when running a report sele
647. you access to the reporting capabilities of the CSM and the Fixed Asset Manager and allows you to compile depreciation lists and hash totals Tax Year 2012 313 Report Manager Drake Software User s Manual As shown in Figure 12 1 the Report Manager uses a standard tree format Click to expand a category list click to collapse the list and hide the reports in the category r Drake 2012 Report Manager Drake Software Reports The list below contains several standard report options First select a category and then a report A sample of the selected report appears at the bottom of the screen When you have selected the report you wish to run click View Report to continue Click here for a complete list of standard report descriptions Client Reports EF Bank Reports Scheduler Reports amp Client Contact Call List for all Preparers New Client Appointments Preparer Appointments Preparer Call List My Reports Other Report Options Client Status Manager Reports Depreciation List Fixed Asset Manager Hash Totals F Sample Report List of appointments for all preparers Landscape Call List for all Preparers Preparer Name Appointment Date Start Time Taxpayer Name Taxpayer ID Duration Pho 4 w Help New Report Edit Report View Report Exit Figure 12 1 Tree view of Report Manager Only those r
648. your pati n oate w you Hetato re Please bring all tax related materials including W 2s 1099s charitable con i If you have any questions please contact us at lt Paid Preparer Phone gt To view available letter keywords select Setup gt Letters from the Home window and select any template to view The tree view of the Client Communications Editor lists the keyword categories Click to view specific keywords within a category In the example in Figure C 5 on page C 2 the Preparer Firm and Revenue category has been expanded Tax Year 2012 Drake Software User s Manual To view a keyword description hold the mouse pointer over a selected keyword Figure C 6 on page C 3 Prep Firm and Revenue Firm E mail Address Firm Name Paid Preparer E mail Paid Preparer Fax Paid Preparer Name Paid er Phone Preparation Paid Preparer Phone Phone number of paid preparer cman te a ans T E E a cat N Figure C 6 Place mouse pointer over a selected keyword to see the description Instructions for adding and editing report columns are provided in Introduction to Letters in Drake on page 40 OtherTax Keywords in Letters The result letters in the Client Communications Editor include keywords for other tax types for state and city returns as shown in the example in Figure C 7 on page C 3 These Other Tax types generally refer to tax types other than income tax franchise t
649. your main home or second home Select this box if the property is the taxpayer s main or second home If personal use is indicated and this box is marked mortgage interest is carried to Schedule A The program uses the percentages entered when calculating the busi ness percentage of expenses and taking deductions The remaining percentage of taxes entered is carried to Schedule A A taxpayer with more than 10 use of a rental can take expenses up to NOTES the amount gained regardless of percent use With 50 use for exam ple the system does not calculate 50 of expenses it instead calcu lates the gain and takes expenses up to that gain If the If multi dwelling unit box is marked a worksheet is produced for each property that lists expense types and divides expense amounts into personal rental and total amounts Direct and The program can take both direct and indirect expenses into account when calculating Indirect a return for a taxpayer who occupies one unit of a multi dwelling property while rent Expenses ing out the others Direct expenses are those that affect only the rental units Indirect NOTE expenses are those that affect both the rental units and the taxpayer s dwelling Indirect expenses can also be personal expenses Enter expense amounts using the columns on screen E Figure 5 24 Direct Indirect Expenses Expenses CRIS EEEE Auto amp travel AUTO Cleaning amp maintenance

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