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Drake Software User`s Manual: Tax Year 2010

1. State deposit amount Figure 5 52 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 52 is inactive by default Direct Deposit of State 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 J _State city selection Figure 5 53 State City selection drop list 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 53 To have the refunds from all eligible state returns deposited into one account select A from the State city selection drop list GA ME Georgia and Maine have unique requirements for direct deposit Note the fields at the Refunds bottom of the DD screen if e filing a return for one of these states Foreign To indicate that an account entered is a foreign account mark the applicable box in the Accounts Foreign Account section at the bottom of the DD screen 144 Tax Year 2010 Drake Software User s Manual Electr
2. Real estate tax feCOVENY eee Personal property rental income Gambling winningg Alaska perm imide a Figure 5 59 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 three columns shown in Figure 5 60 158 Tax Year 2010 Drake Software User s Manual Election Options Amount available from carryforward Used prior to 2010 Used in 2010 Figure 5 60 LOSS screen columns for NOL carryback carryforward 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 N TES the WK_NOL worksheet To have the program 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 NOL Carryforward Only Figuring AMT 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 Sched
3. Tax Year 2010 C 7 Appendix C Keywords Drake Software User s Manual This page intentionally left blank C 8 Tax Year 2010 Drake Software User s Manual Appendix D Acronyms amp Abbreviations Appendix D Acronyms amp Abbreviations cA ack ack ACH ACRS AGI AMT ATIN B ack CAF CSM COGS CWU py ack DAN DCN DD DI DDM doc Tax Year 2010 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 Number 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 w
4. D acks can be caused by transmitting from multiple computers from a NOTE peer to peer network no dedicated server or if DCNs are not suffi ciently staggered See Staggering DCNs following Each computer assigns a Document Control Number DCN to every calculated 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 multiple workstations for data entry each workstation must adjust stagger its DCN counter IMPORTANT Stagger the starting DCNs before creating 2010 returns To stagger the DCNs complete the following steps on each workstation 1 2 From the Home window go to Setup gt Firm s Double click the firm or select it and click Edit Firm The bottom half of Firm Setup becomes active Change the DCN Serial Number Figure 7 4 Drake suggests choosing starting DCNs that are at least 2 000 numbers apart Tax Year 2010 Drake Software User s Manual E filing a Return pow rs ee ee ERO 20 Pa Federal EIN 1123456789 State ID Number EFIN 12345 DCN Serial Number 05000 Non Paid Prep Figure 7 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 ch
5. For information on the E1 card and filling out the E1 Visa Card Application see The El Screen on page 217 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 Tax Year 2010 223 Bank Product Transmission Drake Software User s Manual 1 Open the ECOL screen 2 Inthe Alternative Disbursement Methods section select either Check or Direct Deposit 3 Enter the taxpayer s banking information 4 Click Retrieve Account Information If the application is declined resolve any listed issues and re apply Other Required Information e Collect Specific Fields A Military Personnel Dependent Identifier section is included on the screens for those banks that offer loan products This section is required and must be completed before a bank product can be requested Most bank screens also 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 neces sary otherwise leave this field blank The ECOL screen has several fields that are specific to that screen only e 7216 Signature box This box must be marked if electronic Consent to Disclo sure and Consent to Use signatures are not present in other words if hard copies of the forms were signed To access the DISC and USE screens for electronic signatures
6. Maine mandate Rule 102 requires that any person with a combined tax liability to the state of 100 000 or more for all tax types must remit all Maine tax payments electron ically using the ACH credit or ACH debit method Tax Year 2010 Drake Software User s Manual Appendix E State E filing Mandates Maryland Massachu setts Michigan Minnesota Tax Year 2010 Effective July 1 2009 applicable to all taxable years beginning after December 31 2008 paid preparers who have prepared more than 300 qualified returns in the prior taxable year must e file their returns For tax year beginning after December 31 2009 preparers who filed more than 200 returns in the prior taxable year must e file For any tax year beginning after December 31 2010 paid preparers who prepared more than 100 returns in the prior taxable year must e file Paid preparers must under certain conditions e file all corporate S corp and partner ship 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 retur
7. ow When a course unit tutorial practice return or video has been viewed a green check mark replaces the red X next to the completed item See Figure 10 5 Tax Courses ETC offers basic return preparation courses for forms 1040 1120 1120S and 1065 An intermediate 1040 course is also available Courses consist of units that must be completed in order For a list of available courses and units click Tax Courses The Tax Courses page displays the units of the Basic Tax Course Figure 10 5 Tax Year 2010 Tax Year zl Course Basic Tax Course z Introduction Launch Course wv Unit 1 Filing Status Launch Course Vw Unit2 Dependents Launch Course x Unit3 Exemptions and Standard Deductions a E a ay Mb nation A TT N E a T E EE ST E Mone naplirrert Figure 10 5 Units of the Basic Tax Course To view units for a different tax year or course select an option from the Tax Year and Course drop lists 244 Tax Year 2010 Drake Software User s Manual Online Support 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 5 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 pau
8. 4 Begin entering or changing data to reflect the changes being planned or consid ered by the client See Entering Data on page 316 Note that the data in subse quent years adjusts to your entries 5 Click Save Planner gt Save or Save Planner gt Save As and select a name and location for the file Files are saved as DTP files unless you specify otherwise o The following sections describe actions that cause the data in cells to change Entering To make a direct entry in a cell click the cell and enter an amount Use this same pro Data cess to override the amount in a calculated cell You can also copy cut and paste amounts in a Tax Planner cell using typical Windows procedures for copying cutting and pasting data 316 Tax Year 2010 Drake Software User s Manual Tax Planner Using In some cases a worksheet is available for additional data entry Worksheets e The Detailed Worksheet is similar to the CTRL W worksheet in data entry To attach a detailed worksheet select the desired cell and press CTRL W Use the Detailed Worksheet dialog box to add edit and remove items for the cell f Drake Tax Planner Detailed Worksheet A Enter the description and amount for the item Click Add to place this item in the list below Item Description Amount R U Kurious 1725 Add S Description Edit Remove Exit Figure 13 12 Adding items to a Detailed Worksheet dialog box Fo
9. Applies overpayment to first voucher and refunds the remainder Makes the estimate equal to the overpayment Applies the overpayment to the 2011 estimate but does not print any vouchers Ajolm w Applies the overpayment to all four vouchers equally Underpayment of Estimated Tax By default the software calculates the estimated tax penalty but does not generate Form 2210 unless 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 disabled for all returns in Options Setup or it can be changed for a single return in the 2210 Options section of screen 1 Figure 5 48 2210 Options 2210 Code 2 z 2009 Fed tax 2009 State tax Figure 5 48 2210 Options section of screen 1 Tax Year 2010 137 Making Work Pay Schedule M Drake Software User s Manual 2210 Codes To print or suppress Form 2210 or Form 2210F for a return select one of the follow ing from the 2210 Code drop list Table 5 12 2210 Codes in Drake 2210 Code Program Action blank Uses the default setting in Setup gt Options gt Form amp Schedule Options tab X Calculates the estimated penalty produces Form 2210 if necessary Because this is the default setting you should select X only if the default setting has been glo bally disabled in Setup gt Options
10. If the check has already cleared there will be a date in the Clear Date field You can not reprint this check Contact your RAL bank for additional assistance 228 Tax Year 2010 Drake Software User s Manual Cancellations Tracking and Post Season Procedures Misfeeds and Paper Jams Ifa check is damaged and rendered unusable during printing write VOID on the face of the check and reprint it See Reprinting Checks on page 226 If you acci dentally print a check on something other than the check stock such as a blank sheet of paper reprint it and guarantee that the original check will not be cashed If the check is still usable you can reload and reprint it 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 227 Use a voided check return list available as VOID_CK PG in Tools gt NOTE Blank Forms to track all bank checks voided in the office Retain a copy of the form as a record In addition send a copy to the RAL bank along with the corresponding voided checks Cancellations Tracking and Post Season Procedures Cancelling a Loan Cancellation procedures vary by bank Check with your bank for the correct proce dures for cancelling a loan request and determine if the following instructions apply To cancel a loan that has been accepted by a bank some EROs must print compl
11. Printed Status Status Status Status Status Figure 9 1 Some statuses are set automatically as the return is processed Tax Year 2010 231 About Client Statuses Drake Software User s Manual 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 Custom Statuses Define up to five custom statuses Custom statuses must be set and changed manually We recommend creating custom statuses before tax season begins To define a custom status in the CSM 1 Click Customize The Customize Display dialog box is opened A tied 2 Under Status Settings select a status placeholder to rename Figure 9 2 Drake 2010 Customize Display Status Settings Enter new The Status Settings tab allows the user to modify the Status Descriptions that are available in Data Entry and the Client Status Manager To change a Status Description select the Status from the list and click Edit Column Layout Status Settings j Status Descriptions 1 Under Extension On Hold status d
12. 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 the step of typing a description by selecting pre established descriptions To set up default descriptions in the DDM 1 From the DDM menu bar click Setup gt Options The Document Manager Setup Options dialog box is opened Figure 13 4 Doane Nang ots bi Setup Options Use this screen to set configurations for Drake Document Manager Document Manager Data Path DrakeDDM Browse Use this scan device P Turn off scanner interface Vv Build index when DDM starts M Edit list of Common Documents Edit Common Reset list of Common Documents Reset EFIN Drake Password OK Cancel Figure 13 4 Options for commonly scanned documents in Document Manager Setup Options 2 Click Edit Common A txt file lists the default common document names Default names are W 2 Social Security Card and Driver s License In the exam ple in Figure 13 5 the user has added Birth Certificate to the default list Tax Year 2010 307 Document Manager Drake Software User s Manual PB common txt Notepad File Edit Format View Help Add Common Document Names on separate lines then save close this file w 2 Social security Card Driver s License Birth certificate J e E N E O E E R A e E EE
13. Tax prep fees to be withheld from the bank product are established in Firm Setup Banking Information section You can override these fees from the bank screen Tax preparation fees Override tax preparation fees to be WITHHELD O W Figure 8 4 Overriding the Tax preparation fees from the bank screen Opting Out If one taxpayer wants a bank product but the spouse doesn t complete the Opt Out section of the bank screen This section is present on the screens for those banks that offer RALs N DTE Remember if either the taxpayer or spouse chooses to opt out of the loan that person s name will not be printed on the check Security Information The Security Information section ECOL and E1 screens only contains questions intended for the preparer s clients to answer The taxpayer and spouse will need to be able to answer these same questions if they want to log in to the EPS Financial website espfinancial net and set up an online account Additional Disbursement Methods 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 the bank screen Note that the RTN Account number and Type of account must be entered twice for verification
14. To customize a filter to assign to a report 1 After making changes in the Step 1 window Figure 12 2 on page 290 click Next to open the Report Editor Step 2 window Figure 12 3 on page 291 2 Selecta filter from the Select a Report Filter drop list 3 Click Edit Filters to open the Filter Manager window Figure 12 5 The filter you selected is highlighted Filter Manager The Filter Manager allows you to customize the behavior of Report Filters in the tax software Each Filter is defined by several Basic Search Conditions and up to 10 additional Conditions The software uses this information to narrow down or filter the resulting list of clients Select a Filter from list on the left Edit the selected Filter s properties on the right Click Save to save the changes Available Filters Basic Search Conditions for the Selected Filter Clients with Schedule C a Non Fiter Return Type is Any Clients with Schedule D Edit Clients with Schedule E a Clients with Schedule F Copy Filter Clients with State Results Ms Zero Dus Rename Filter Additonal Search Conditions for the Selected Filter My Clients Business Client New is True Add Condition My Clients By Name My Corporate 1120 Clients z 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 E My Tax Exempt 990 Cli
15. on page 42 but you can override the defaults from Enhanced mode Tax Year 2010 Drake Software User s Manual Viewing and Printing a Return 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 4 AllFoms Sets EF EF Signature Client Preparer Federal New Jersey 7 gt ena Bete Figure 6 4 Example of a return that has five printer sets 2 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 Click Print again All of the selected items are printed Quick Enhanced mode allows you to print the document currently in view Printing a single Printing a form in this manner is referred to as quick printing Single Form 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 5 the 1040 form is selected for viewing All Forms Sets EF Figure 6 5 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 Jew or press CTRL Q D B 2 Data Entry Print Setup Archive Email Print Selected Form s Ctrl P Print Selected Form s to PDF Docum
16. 294 Tax Year 2010 Drake Software User s Manual Filter Manager Additional You can add as many 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 Click Add Condition See Figure 12 6 on page 294 2 In the Filter Condition Editor dialog box select a Keyword Name 3 Select a Comparison option and a Value if required Figure 12 7 Drake 2010 Filter Condition 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 tac Comparison is at least zl Value 50000 I Ask about this Condition each time the Filter is used Help OK Cancel Figure 12 7 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 4 optional To allow a user to modify this condition when running a report select Ask about this Condition each time the Filter is used 5 Click OK The new condition is
17. 6 Losses to Form 4797 Me 40 LG acca en A Figure 5 32 Some of the fields for shareholder s prior year unallowed losses Basis Worksheet screen Printed Basis worksheets are generated when the return is calculated A worksheet actually Worksheets consists of two pages page 1 shows the adjusted basis calculations page 2 shows the losses and deductions calculations do so mark the Force page 2 box at the bottom of the Basis Work sheet continued screen Tip You can force page 2 to be printed even if it does not contain data To Updating to The following basis information will be updated to the next year s software Next Year 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 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 Form 1065 F J 4835 e Schedule J 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 156 Schedule F Profit or Loss From Farming Screen code F Use screen F accessible from
18. Figure 13 5 Common document names user has added Birth Certificate 3 Add or edit names as desired 4 Click File gt Save or press CTRL S to save your changes 5 Click File gt Exit and then click OK Whenever you scan a document into the DDM you have the option of selecting one of the descriptions entered See Scanning a File on page 310 To reset the common document names list to the default names pro NOTE vided in the program click Reset in the Document Manager Setup Options dialog box The DDM Window The DDM consists of the file structure tree on the left side a list of files in the selected folder on the right and a menu bar and toolbar at the top 400006665 Document Name Type Description E CARTER WILLIAM 400 Archive PDF File 9 8 2010 12 20 03 Amended Return prior to review d Tax B 2009 a 2010 Archive 20100 Archive 20100 JD JE a bgt T Eton afit ae e ten L pA yi adhe anadai a ea item andenn pahan Figure 13 6 Part of the DDM interface Filing cabinets are organized 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 Select a folder to view a list of its files The DDM displays document names types dates modified and descriptions Click column headers to sort by columns Like
19. 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 88 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 126 e Education Expense Information See Education Expenses on page 122 e EIC Information and related due diligence questions See Earned Income Credit EIC on page 139 Tax Year 2010 Drake Software User s Manual Personal Service Income W 2 1099 MISC It could be necessary to override or further clarify dependent information entered on screen 2 Some examples are 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 Personal Service Income W 2 1099 MISC W 2 Screen code W2 2D Barcode Scanning Tax Year 2010 Use the W2 and 99M screens both accessible from the General tab to enter personal service income data from a taxpayer s W 2 and 1099 MISC forms respectively The W2 screen is designed to reflect the IRS Form W 2 Wage and Tax Statement Data entered on the W2 screen must match the client s W 2 form The foll
20. OK Cancel Figure 6 11 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 Figure 6 12 Drake 2010 Archive Manager a 6 Bi 2 O fi Restore Archive Delete Print Help Exit Archive Description User Name Original return before amendin 10 13 2010 02 52 40 PM NROGERS BO OE NS ee ae ee Ne Oe eNO oo Figure 6 12 Archive list The DDM and Archive Manager use your description to help identify specific archives The program creates an archive file name beginning NOTE with Archive followed by the date time stamp Example Archive 20100908153145 indicates September 8 2010 20100908 at 3 31 45 153145 in the afternoon Tax Year 2010 187 Archive Manager Drake Software User s Manual Restoring an Archived Return Ox Restore When you restore an archive you replace the open version of 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 1 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 th
21. Options Setup on page 21 ERO See ERO Setup on page 15 Pricing See Pricing Setup on page 31 Preparer s See Preparer Setup on page 16 Macros See Macros Setup on page 32 Directories Paths See Directories and Paths Letters See Introduction to Letters in Setup on page 20 Drake on page 34 Pay Per Return PPR clients only see PPR Colors See Color Setup on page 39 manual on CD or the Drake Support website Printing See Printing Setup on page 40 If you used Drake last year you can bring forward most required program settings from your 2009 program See Updating Settings on page 69 for details Logging in as an Administrative User Setting an ADMIN Password Shortcut Double click the ADM row to edit it Tax Year 2010 Log in as ADMIN to enter setup information The administrative login can access the following 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 and Setup gt Directories Paths e The Administrative Options tab of Setup gt Options e Additional tracking information on the TRAC 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 acc
22. Pacing Letters gte select Figure 2 3 Select network option 2 3 Click OK The server only system is now in place Tax Year 2010 11 Running Drake on a Network Drake Software User s Manual All Using the instructions in Installation on page 8 install Drake onto each workstation Workstations A single workstation should be designated as the server Each workstation must have access to the server workstation s drive through a single drive letter A network technician can map each work NOTE station to the server using the same drive letter All computers on the network must share the drive on which Drake is installed Map to the drive not to the Drake10 folder To establish the server 1 From the Home window in Drake select Setup gt Directories Paths 2 Select 3a This is the server and click OK Now that a computer is established as a server the workstations must be set up To set up the workstations complete the following steps from each workstation 1 From the Home window in Drake select Setup gt Directories Paths 2 Select 3b This is a workstation See item 1 in Figure 2 4 3 Select the drive letter for sharing client files See item 2 in Figure 2 4 4 optional To allow the workstation to access shared files other than client files mark Admin Override and select the shared drive letter for all other shared files See items 3 and 4 in Figure 2 4 pi
23. Paper filing Printing Additional Letters From the Drake Home window go to Setup gt Letters Click Open and select the package and letter to be generated for the client Place the cursor on the line where you want the custom paragraph to appear POND 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 Ifa 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 25 To indicate one or more state returns select state abbreviations from the drop lists provided New in 2010 you can select up to 10 states In the Figure 2 25 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 NV EF _IEE M EF 1040 Federal Extens
24. Report Viewer on page 297 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 7 3 sn at get nee m met JO gt OT te TOE v a gt Total Tax Owed 2 566 Ra Eligible For E F EF sees J Back Continue Figure 7 3 EF Select button at bottom of Calculation Results window f q k 4 fA By clicking EF Select you can send federal returns federal returns with state piggy back returns and direct state returns directly to the e filing queue NOTE The option to pause at the Calculations Results window must be selected in Setup gt Options Calculation amp View Print tab Tax Year 2010 193 E filing a Return Drake Software User s Manual 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 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 to the EF screen in the return In the EF Ready box at
25. States are not available on this shipment Click Next 5 Select a drive or select New to install to Select a drive or select New to install a new location Optional Select Install to a new location Click Next test returns if you are going to test e fil ing capabilities Click Next Tax Year 2010 Drake Software User s Manual Step Installation Table 2 1 CD Installation First CD Shipment Enter your serial number located on your software packing slip Click Next Subsequent CDs Enter the serial number 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 DDM in Step 4 select an 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 2010 Softwa
26. TRAC Screen Reports on page 172 Use the TRAC screen to track the data shown in Table 5 24 Table 5 24 TRAC Screen Information Type of Information Description Fee and Payments Amounts are updated from prior year First came in interview Used in timed billing optional feature Preparer Contribution Used to track which preparers made con tributions to the return preparer entry Reviewer Contribution 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 Tax Year 2010 171 Other Special Features in Data Entry Drake Software User s Manual Table 5 24 TRAC Screen Information Type of Information Description Prior year bank product data Dates and amounts are retained from prior year fields are completed automati cally Software stats for the return admin users only These fields are completed automatically EF transmission data admin users only These fields are completed automatically Current year bank product data Number and amount of check are com pleted automatically preparer must enter the date the check is picked up Bank code admin users only This field is completed automatically Note that some TRAC screen fields are automatically filled with data from elsewhere while other fields require di
27. e Files saved in a client s folder can be attached through the Drake e mail program or sent as a PDF attachment to a return 1120 1120S 1065 and 990 packages only see manual supplements for these packages to be published in early 2011 Doc Mar 304 Tax Year 2010 Drake Software User s Manual Document Manager DDM Security at Startup Tax Year 2010 To implement the Drake document file structure 1 From the Home window go to Setup gt Printing gt Document Manager to set the Document Manager Location See Figure 13 3 The default location is the DRAKEDDM folder in the same drive as Drake10 If this location is incorrect click Search and click Yes when the program displays the correct location In the Folder Structure section select Allow Drake to set up Document Man ager client folders Recommended If this box is not marked you must specify the location where the DDM should store any printed return or scanned document optional Also in the Folder Structure section is the option to add a custom folder in addition to the default folders e Click one of the folders in the tree of folders to indicate where the custom folder should be stored in each client s main folder or in each client s 2010 folder See Figure 13 6 and Figure 13 7 for examples of folders in the file structure The new folder will be inserted one level below the selected folder e Click Add e Enter a custom folder name e
28. eS Sy S 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 294 Click OK The new filter is added to the Available Filters and can be edited To rename a filter in the Filter Manager 2 3 4 Select a filter to use as a template Click Rename Filter Enter a new name for the filter Click OK The renamed filter is added to the Available Filters and can be edited Viewing a Report from the Report Manager 296 To view a report from the Report Manager 1 Locate and select the report in the report tree Tax Year 2010 Drake Software User s Manual Report Viewer 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 search 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 go to the Home window and select Reports gt Report Viewer To view a
29. matted statements in Drake see Unformatted Schedules on page 170 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 NOTE Enter dependent care information on screen 2 Dependents Enter pro vider information on the 2441 screen 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 he or she can enter an amount of 250 1 child or 500 2 or more children for each month they were a student or disabled This information is entered on the 2441 screen in the Earned income for 2441 purposes ONLY field Figure 5 38 Figure 5 38 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 126 Tax Year 2010 Drake Software User s Manual Elderly Disabled Credit 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
30. 3 Click the arrow on the Email button and select Email to Drake Support If you selected any forms in Step 3 the Password Protect dialog box is opened click OK if not changing the password The Compose Message window is opened showing the attached files in the Attachment s list Figure 6 8 183 Setting Up View Print Options Drake Software User s Manual Drake 2010 Email Compose Message te gt 2 0 fi To Attach Help Exit To support drakesoftware con Send Cc Bec Subject 2010 Tax Return Information Attachments Add Attachment s 2010 Tax Return Documents PDF Print File 400001 002 1040 Data File 400001002 1040 a r ee ee E ee e a eee Le ae Figure 6 8 Attachments shown in Attachments s list of the Compose Message dialog box 4 Click the To button shown in Figure 6 8 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 Other Types of Files on page 256 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 allow
31. 300 Notes Page 289 EF Status 97 Form 1040x 1 Engagement Ltr 2 Form 1040 3 Form 10404 4 Form 1040EZ 5 Form 2210 91 Form 2210 6 Form 2210F 7 Schedule A 8 Schedule B 9 Schedule C 10 Schedule C EZ 11 Schedule D 13 Schedule E 14 Schedule E 15 Schedule F 16 Schedule A C Client Set C KI Set C Preparer Set Cancel C Federal Set Copy Reset Exit Help Instructions Click and drag the form names to put them in the desired order Figure 6 10 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 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 select Setup gt Allow Drag Drop Ordering while in Enhanced mode Other Setup Options The following prog
32. 400006665 PIN 1020304q 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 will now contain the downloaded information Purchase W 2 downloads in sets of 15 25 per set Each 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 1099 MISC Screen code 99M Use the 99M screen to enter data from Form 1099 MISC To associate the 99M infor mation with a specific line or form within the return make a selection from the For drop list at the top of the 99M screen If associating it with one of multiple forms enter a Multi Form Code See Associating One Screen with Another on page 62 for more on using the For and Multi Form Code features NEW FOR The 99M screen now has a check box to indicate that the Bo
33. 4562 ST Sec 179 5a 501C Contrib SP E 501C Contrib TP ba lt lt Unselect All Sample Report Portrait New Clients Taxpayer Name Taxpayer ID Return Type Taxpayer Daytime Phone Taxpayer Best Call Time Help Next gt Save Exit Figure 12 2 Report Editor Step 1 window for formatting reports Revise the Report Title and Report Description as needed The Report Description text box is limited to 70 characters Note that the new data appears in the Sample Report box as you type 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 shown 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 To establish the columns shown in a report 1 TIP 290 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 Place the mouse pointer over an Available Columns keyword to dis play a tooltip description of the item From the Available Columns list do
34. Choose the size of the envelope on which to print the addresses of the tax payer the IRS Service Center the state tax department and the city tax office Estimated payment coversheet Select this option for 1040 and 1041 returns with quarterly taxes An IRS Ser vice Center must be selected and this item marked to activate this option 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 template 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 36 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 Optional Items on Return To override the default letter for an individual client see Overriding Letters Setup on page 48 Options under the Optional Items on Return tab
35. Depreciation on page 150 Unemployment Compensation Tax Year 2010 Use screen 3 to enter full unemployment compensation for the current year Enter prior year amounts elsewhere in Drake as shown in Table 5 3 Table 5 3 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 See Pub 17 for guidance Field Other not subject to 2 limit 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 2010 115 Social Security and Railroad Benefits Drake Software User s Manual 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 line of Form 1040 Do not duplicate the 99G entries on screen 3 Social Security and Railroad Benefits Screen codes SSA RRP Screen code RRB Use the SSA screen also accessible as the RRP screen to enter data from Form SSA 1099 or Form RRB 1099 If this form was not distributed use screen 3 to enter the f
36. Documents 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 24 Tax Year 2010 Drake Software User s Manual Software Setup Table 2 8 Options Setup Optional Documents Option Federal filing instructions Description 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 to disable 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 address 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 to disable or use the PRNT screen to activate or disable on a single return Envelope Sheet address drop lists
37. For more information see 2D Barcode Scanning on page 89 Some of the 2010 screen changes you II see include Full time Student Check Box on Screen 1 Screen 1 now includes a check box to indicate that the taxpayer or spouse is a full time student Special Tax Treatment Codes Screen W2 now has a drop list for indicating special tax treatment codes to be applied to the Form W 2 Tax Year 2010 Drake Software User s Manual What s New in Drake for 2010 Additional DE Calc Changes EXT and ES Links on Screen 2210 Screen 2210 for Form 2210 Penalty for Underpayment of Estimated Tax now includes links to the EXT and ES screens to prevent double entry of amounts For more completing Form 2210 in Drake see Estimated Taxes starting on page 134 Changes to SCH Screen The SCH screen used for unformatted schedules that may or may not be e filed with a return has been changed for easier use See Unformatted Schedules on page 170 New BOND Screen This screen accessible by pressing PAGE DOWN from the DD screen is for taxpayers who opt to purchase Series I Savings Bonds with their refund A few other improvements in data entry and calculations are listed below Expanded Letter Functionality Client letters now include verbiage for tax payers making monthly payments using Form 9465 Installment Agreement Request and for taxpayers who file multiple city tax types For more information on cli
38. In the Data Entry Electronic Filing and Banking section of the General tab click the bank s name PMT Electronic Filing and Banking USE Consentto Use of Tax Return Info DISC Consentto Disclosure of Tax Return Info DD Direct Deposit Form 8888 Electronic Funds Withdrawal PIN 8879 8878 e file Signature EF EF Selections Figure 8 3 Electronic Filing and Banking section of General tab in data entry Tax Year 2010 221 Using Bank Screens in Data Entry Drake Software User s Manual Alternately you can type BANK BNK or the bank code into the selector field and press ENTER Bank codes are e AD Advent e ECOL e Collect e RCB River City Bank e RB Republic Bank e TPG Tax Products Group Taxpayer Application Complete an application agreement for every taxpayer applying for one of the bank ing options available see Taxpayer Requirements on page 213 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 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 U
39. Last Name First Name and Email Address Figure 10 17 257 Interactive Support Drake Software User s Manual 1 2 Sample Ella ellasample net net 3 Rogers Beau beaurogers net net 4 Sample Hugh hughsample net net 5 Duggan Regis regisduggan net net TST nO On rey eee era Figure 10 17 Row headings must be Last Name First Name and Email Address N Enter last names first names and e mail addresses of all individuals to be imported Click File gt Save As Browse to the desired location and assign a file name From the Save as type drop list select CSV Comma delimited csv Click Save eS 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 From the Import Address Book File window browse to the address book file and double click it or select it and click Open 4 Click OK Import 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 NEW FOR Yo
40. P Calculates the estimated penalty produces Form 2210 even if not required F Calculates the estimated penalty produces Form 2210F if necessary Because this is the default setting you should select F only if the default setting has been globally disabled in Setup gt Options G Calculates the estimated penalty produces Form 2210F even if not required Does not calculate the estimated penalty If this option is chosen no form for underpayment of estimated tax is generated with the return NOTE The program does not produce Form 2210 if the return is not e fileable Prior Year Ifa return is updated from the previous year the program displays the prior year tax Tax by default in the Fed tax and State tax fields of screen 1 Figure 5 48 on page 137 To override an amount shown enter a new amount Based 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 165 Making Work Pay Schedule M In 2009 the IRS introduced Schedule M Making Work Pay Credit Use screen M
41. 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 Firms You have completed the firm information required for e filing You can add more firms by going the Setup gt Firms Ex ERO ERO is missing some or all of the fields needed for e filing Go to Setup gt ERDI to complete the needed information You have completed the preparers information required for 2 P e iling for at least one of your preparers However one or reparers more preparers have incomplete information Go to Setup gt Preparers to complete this information aid als Cc tert cameras Pi ene Pili 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 Click Help gt Setup Assistant to return to the Setup Assistant at any time Running Drake on a Network Your network s designated server should meet the following minimum specifications e Windows 2000 or later for a peer to peer network e 500 MHz processor e A minimum of 64 MB RAM 128 MB is recommended As computers are added to the network RAM and processing speed of the server and the wor
42. 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 From the Drake Home window select EF gt Search EF Database and click the F4 Reject Code Lookup tab Figure 7 10 2 Select a federal return type 1040 1120 1120S 1065 or 1041 Tax Year 2010 Drake Software User s Manual EF Database 3 Enter the reject code in the Reject Code field 4 Click Go The IRS explanation of the code is displayed in the lower box Figure 7 10 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 X C 1065 C Bank Decline Reasons C IIRAL Reject Codes Reject Code Print 1040 FED Reject Code 50 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 tte ahah at a ape ae ee ee eS Figure 7 10 Looking up 1040 reject code on Reject Code Lookup tab 5 optional Click Print to print the code explanation To search for a state reject code
43. www4 irs gov e services Registration index htm LJ Revise Form 8633 as needed Authorized EROs do not have to file Form 8633 unless 1 their firm or filing information has changed since 2010 or 2 they will start e filing business forms this year Revise your Form 8633 at www irs gov after signing up for the IRS e services program U 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 Ll Check state requirements for business returns E filing
44. zl Foreign bank account zl Foreign trust Foreign country z Figure 5 11 Schedule B Part III fields on INT screen The Foreign bank account and Foreign trust items must be NOTE answered Both are Yes No questions If either is left blank a NOTES page will be generated Tax Year 2010 93 Passive and Investment Income 1099 DIV etc Drake Software User s Manual State The State specific information section has a drop list to designate Massachusetts specific Oklahoma or Tennessee for bank interest a field for state identification numbers for Information Michigan Minnesota and New Hampshire returns and choices for Illinois returns Figure 5 12 State specific information zl ESA o L CAT ee eae E ES S E E O ID number for use by MI MN amp NH SANS EE OEN COUR ES E E z IL Schedule M interest source description Figure 5 12 State specific fields on INT screen 1099 OID Enter interest from Form 1099 OID Original Issue Discount on either screen 3 Interest income field 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 are included on the INT and DIV screens e A section for foreign tax credit information e Ability to associate information from an INT or D
45. 1 From the Drake Home window 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 5 Tax Year 2010 Drake Software User s Manual File Maintenance 4 5 F _ Drake 2010 Backup p _ ell cll Back up Files 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 a XA Select the type of file s to back up Single SSN or EIN 9 Digits I All File Types Setup Files Pricing Setup Information Files System Files CSM EF Database IRS Bank and Scheduler Files Client Files 1040 1120 1120S 1065 1041 706 and 990 Figure 11 5 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 on contain only the file types selected For example if NOTE the Client Files group is not selected no client files 1040 1120 6 1120S 1065 1041 or 990 are displayed Click Backup Files are backed up to a folder a
46. 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 Basis 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 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 Tax Year 2010 Drake Software User s Manual Retirement Income 1099 R etc Section 121 Calculation Conversion to Business Use Exclusion for Surviving Spouse First Time Homebuyer Credit 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 t
47. 294 296 searching appointments 82 business codes 97 city codes 86 CSM 235 DDM 309 Drake Software User s Manual 1 EF database 201 federal and state publications 249 Help feature in Drake 250 Knowledge Base 241 preparers 20 reject codes 202 203 reports 294 student records ETC 247 section 179 expensing entering data for 151 153 for general partner on K1P screen 110 report of assets 298 security Document Manager 305 group 18 levels online EF database 205 of client files 273 preparer 17 selecting a filing status 85 self employment xix Index see also Schedule C Profit or Loss From Business adjustments 120 121 clergy see clergy foreign income 118 tax 120 Series I Savings Bonds 3 143 sets printing 180 setup procedures 13 43 Setup Wizard 9 sharing files 20 shipment letters 6 shortcut keys 53 57 Simplified General Rule Worksheet 103 Single Member Limited Liability Company SMLLC 97 Small Business Jobs Act of 2010 5 Social Security benefits 116 Social Security Numbers applying one number to two returns 275 changing 271 mismatch on W 2 91 printing on bill 26 test returns 65 verifying 22 soft fonts 41 266 Spanish result letters 49 screens 23 special tax treatments 103 splitting a return MFJ to MFS 62 SSN see Social Security Numbers ST field 62 staggering DCNs 196 state see also state programs see also state returns FAQ screens 209 mandates Appendix E registration numbers 16 state progra
48. 31 of Form 4797 for the recapture amount if any In rare cases two 4797 forms are created in a return If this happens the return may not be eligible for e file If recapture is necessary the NOTE two 4797 forms cannot be avoided and the return must be paper filed If there is no recapture delete the second 4797 form for the asset and recalculate the return Like Kind Exchanges Screen code 4562 Screen code 8824 Tax Year 2010 If an asset has been traded and requires continued depreciation and there is an increase in basis that must be depreciated you can link like kind exchange information to the appropriate depreciation details To enter an asset as a like kind exchange 1 2 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 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 101 Sales of Assets Screen code 4562 Drake Software User s Manual 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
49. 5 In the 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 number of copies per set below Valid Copy amounts are 0 9 Form Name Schedule C EF Signature Est Ext Client Preparer Federal E Doo Doo 3 F moO o Update Figure 2 21 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 You can make Sets changes on the fly in other words without going to Printer Setup but this will modify settings globally not just for the active return If you change your Sets settings on the fly you change the settings for all 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 48 If using Basic View access this feature by right clicking a form in Basic View and selecting Properties Use this option to view or change the order in which forms are printed 1 From the Drake Home window go to Setup gt Printing gt Printer Setup 2 Click Set Form Order at the bottom
50. 5 55 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 Yes on the PREP screen the PREP screen fields override 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 on the EF tab under Setup gt Options or the PIN of the preparer specified in the Preparer override field on screen 1 Signature A PIN signature date is requir
51. 6252 Installment Sales is not generated automatically if the Sales If sold fields are completed For information on entering installment sales see Installment Sales on page 100 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 2010 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 159 Tax Year 2010 155 Auto Expenses Drake Software User s Manual 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 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 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 62 for more on using the For and Multi
52. CSM Shortcut Press 2 Click Filters The filter list is divided into four sections as shown in Figure 9 4 CTRL L to view the filter list aa Filter by v reparers preparer Current Preparer All Status Types Work In Progress Filter by Completed Returns status gt EF Not Sent EF Pending EF Accepted EF Rejected Missing Files All Return Types 4ll Business Returns Individual 1040 Filter by A Corporate 1120 lt return type Sub 5 11205 Partnership 1065 Fiduciary 1041 Estate Tax 706 Tax Exempt 990 Hide or Hide Inactive Returns display gt Hide Completed Returns returns Display Deleted Records 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 Tax Year 2010 235 CSM Reports Drake Software User s Manual In the Status column a red File Not Found message indicates a NOTE deleted return Records of deleted returns files stay in the CSM for tracking purposes 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 Se Displayed are client information preparer and firm information significant dates and actions regarding the return and the amount of t
53. Click OK 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 click Edit To delete the new folder click Remove optional To password protect the DDM add and confirm a password Not all users have access to this feature For more information on passwords see DDM Security at Startup following Click Save and then click OK Custom folders are new in 2010 If a custom folder is added it will appear in the specified folders for all new clients in 2010 NOTES If the Drake file structure is introduced into an existing system the Drake structure is added to the existing system The Drake structure does not overwrite it DDM users with administrative rights can establish change and remove passwords required to open the DDM To establish a password for opening the DDM 1 2 From the Home window go to Setup gt Printing gt Document Manager Enter a password in the top text box of the DDM Password section Figure 13 3 Passwords are case sensitive Re enter the password in the bottom text box to confirm it 305 Document Manager Drake Software User s Manual A Drake 2010 Drake Document Manager Integration Options x Drake Document Manager Integration Options Use this screen to indicate where Drake Tax Software will access the Dra
54. Click Save ad Deleting a Report Only a report in the My Reports category can be deleted To delete a report 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 Tax Year 2010 The Filter Manager is used primarily in reports but is also used in other Drake func tions such as the Letters found at Tools gt Letters and the Fixed Asset Manager see Fixed Asset Manager on page 298 Access the Filter Manager from a Filter Selec tion box which is opened when you might have to narrow a selection of records To access the Filter Manager from a Filter Selection box click Edit Filters See Customized Filters on page 292 293 Filter Manager Drake Software User s Manual 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 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 Edit Condition Delete Match All Conditions C Match Any Condition Figure 12 6 Basic and Additional Search Conditions boxes Basic Search Basic search conditions described in Table 12 3 refer
55. Continue The Update Options dialog box is displayed 4 optional Select additional items to bring forward See Figure 4 2 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 2009 1 In the 2010 version of the program select Last Year Data gt Build EIN Name from 2009 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 2009 software settings to the 2010 program to save preseason prep aration time Once 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 2009 1 Inthe 2010 version of
56. Debt Indicators Starting with the 2011 filing season the IRS will no longer provide tax preparers and associated financial institutions with the debt indicator used to facilitate RALs Other Highlights of Federal Tax Law Changes Tax Year 2010 Some other highlights of federal tax law changes for tax year 2010 include e Patient Protection and Affordable Care Act of 2010 Some highlights are Credit for Small Employer Health Insurance Premiums Available to small employers who pay at least 50 of the cost of qualifying health care coverage for their employees Adoption Credit Now a refundable credit maximum credit raised to 13 170 per child up from 12 150 in 2009 In addition to filling out Form 8839 Qualified Adoption Expenses one or more adoption related documents must be included with the 2010 tax return Form 8839 cannot be e filed e Small Business Jobs Act of 2010 Highlights are Extension of 50 bonus depreciation Extension of 8 000 increase to auto depreciation limits For section 179 expensing the business income limitation increases to 2 mil lion the expense limit increases to 500 000 and taxpayers can expense up to 250 000 of the cost of qualified real property See Section 179 Expensing on page 151 Self employed health insurance costs are deductible in determining net earn ings from self employment for purposes of self employment taxes Provisions to Expire The following k
57. 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 e filing Mandates don t apply to taxpayers e filing 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 filing vary from state to state The state FAQ screens in data entry includes links to state e filing information Infor mation on individual state requirements are available at Support DrakeSoftware com and in Appendix E State E filing Mandates For explanations of direct piggyback and state only e filing and for NOTE information on how to override program defaults for state returns see Overriding Program Defaults for State Returns on page 199 Tax Year 2010 209 About State E filing Drake Software User s Manual This page intentionally left blank 210 Tax Year 2010 Banking For tax year 2010 Drake is working in conjunction with the banks listed in Table 8 1 to provide taxpayers access to bank products Table 8 1 Drake Banking Partners Bank Phone Website Advent Financial 866 655 2340 www adventafs com EPS Financial 877 801 4411 www epsfinancial net Republic Bank amp Trust 866 491 1040 www republicrefund com River City Bank 888 820 7848 www rcbral com Tax Products Group 800 779 7228 www cisc sbt
58. F9 405111111 MY CORP TEST OK Cancel Figure 6 1 Batch Calculation dialog box Tax Year 2010 173 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 the results of a return from data entry the Calculation Results window is displayed by default The Calculation Results window consists of a Sum mary tab and a Details tab See Figure 6 2 The pause option in Setup Options must be selected for the calcula NOTE tion results to be displayed For more information see Table 2 6 on page 23 Calculation Summary The Summary tab shown in Figure 6 2 has four main sections the calculation sum mary EF Messages Return Notes and Fee Type and Amount Also displayed are the DCN and the specific return results such as refund and balance due GummayPoetais come Taxable Income Total Tax Refund Balance Due Payment Method Eligible For EF 1 097 Check or CC 3 135 Check or CC Four divisions of Summary tab i i Results Summary Package Description right click for full
59. Firm and Revenue Firm E mail Address Firm Name Paid Preparer Fax Paid Preparer Name Paid Preparer Phone Figure 1 5 Prep Firm and Revenue keywords To view a keyword description hold the mouse pointer over a selected keyword Figure 1 6 Client Information Miscellaneous Prep Firm and Revenue Firm E mail Address a Firm Name Paid Preparer Fax Figure 1 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 34 C 2 Tax Year 2010 Drake Software User s Manual Appendix C Keywords 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 1 7 These Other Tax types generally refer to tax types other than income tax franchise tax composite tax etc that are required by certain states and cities RAAT a at dpe ere State Return Results State Amended Results State Estimates State Other Tax Paragraphs ST OtherT ax1 Balance Due Paragraph ST OtherT ax1 E Filing Paragraph ST OtherT ax1 Paper Filing Paragraph ST OtherT ax 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 Ze
60. 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 If a client record already exists in Drake enter the SSN EIN and press TAB The program automatically completes the Name Address Phone Client Type and Appointment Type fields If you replace data in an auto filled field in the Scheduler this information is not overwritten NOTES in the client record in 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 82 To access the Appointment Detail dialog box from data entry select Add Appointment from the right click menu 4 Assign the appointment to a preparer by selecting a name under Preparer s To clear a selection click the name a second time 5 optional Override selections made in Scheduler Setup by selecting or 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 Dail
61. OK Cancel Figure 6 7 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 they were entered on screen 1 6 Ifno further changes to the message are needed click Send A client must know the his or her return s password in order to open the return The default format for passwords is the first four letters of the client or entity name followed by the last five numbers of the SSN or EIN See Figure 6 7 for an example An administrative user can change the password format at Setup gt Options Admin istrative Options 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 the new password down so you don t forget it Sending Client Files to Drake Support Tax Year 2010 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
62. 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 a form code and press ENTER Status Bar General info on open return Prepare tax returns in Drake by entering pertinent information 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 56 Tax Year 2010 Drake Software User s Manual Data Entry Managing Screens Navigating Fields Grid Data Entry Existing Forms List Tax Year 2010 Use the following methods to exit save reset and delete screens in Drake 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 record has two 1099s an Existing Forms List is opened Select the screens to delete and then click Delete See Existing Forms List on page 57 You can also use the right click menu to take these actions A blinking cursor and yellow shading indicate an active field Click a field to
63. QTP and ESA Distributions You can now enter qualified education expenses and contributions to and distributions from a Qualified Tuition Program QTP or Coverdell Education Savings Account ESA Using this data the program calculates the taxable portion of distributions generates the calculated amounts on the return and produces a worksheet with the calculations See Additional Tax on Qualified Plans etc on page 131 Automatic Generation of Form 8880 When the Credit for Qualified Retire ment Savings Contributions can apply the program now automatically produces Form 8880 see Retirement Savings Contributions Credit on page 129 Date of Birth Requirement To help ensure that the program applies to the return any credits deductions and additional items for which taxpayers are eligi ble the full date of birth is now required for the taxpayer spouse and any depen dents entered in the return This information is entered on screen 1 for taxpayer and spouse and screen 2 for dependents Integrated File and Pay Your clients now have the option of paying their fed eral balance due by credit card using the Integrated File and Pay product With this enhancement the taxpayer s credit card is not charged until the return has been accepted See Electronic Payment Options on page 145 2D Barcode Scanner Capability For W 2 and K 1 forms with 2D barcodes you can now scan information directly into the program
64. 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 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 22 Tax Year 2010 105 Supplemental Income Drake Software User s Manual Additional Information for this Distribution J 1099 R for disability J 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 Firstyearof ROTH contribution J Was this 1099 R altered or handwritten Figure 5 22 Select box to carry 1099 R data to Form 5329 To access the 5329 screen directly from the 1099 screen click the Form 5329 link shown in Figure 5 22 Exception On
65. Return the Client s ID Number Double Clicking on a client will allow you tot appropriate selections click Continue to complete the process ID Number Status EF Return Selector i The EF Return Selector allows you to select clients for Electronic Fi Client Name oem SAMPLE ELLA B No EF Doc re MCCLURE JEREMY R No EF Doc Selected aa WRITERS NETWORK OF FRA No EF a for EF gt 1 THE COMPTON ROGERS TRU Ready For F SUMMERLIN HERBERT N amp No EF Docugi T amp L CRAWFISH FARM No EF Dog ED S EATS No EF Doc ws HARRIMAN ANGELA B No EF Doct Eligible ee BUTCHER GEORGE T amp KR No EF Doc for EF O ESTATE OF JACOB MARLEY Ready roth tees MONK STEVEN amp MEGHANN No EF Doc tlie nti paler ln aM pe eel Figure 7 2 Eligible returns are indicated by check boxes 2 Select the boxes of the returns to transmit Use the Select All or Unselect All but tons as needed Tip 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 including piggyback forms to be filed and allows you to finalize the spe cific 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
66. 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 P Drake 2010 Data Entry 400006665 Carter Wi B g a Calculate View Print Split General 4 General Information i A Computation of Taxable Gifts B Gifts from Prior Periods ATT Attached Statement ELEC Election Options for 709 an n yea Figure 5 61 Menu for Form 709 Gift Tax Click an item to open it or type its code into the selector field and press ENTER Form 709 has changed significantly from 2009 as it does not include the Generation Skipping Transfer Tax for 2010 Parts II and III of NOIES Schedule A and all of Schedule C do not apply for 2010 The software has been updated accordingly Forms 709 and 8892 cannot be e filed They must be paper filed Pricing for To set up pricing for Form 709 go to the Home window and select Setup gt Pricing Form 709 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 Attached If Form 709 requires an attachment for example if an election option requires the Statements amounts in question to be identified use the ATT screen on the 709 menu 709 Election The ELEC screen Election Options for 709 provides a series of check bo
67. 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 CARTER WILLIAM amp BAMEL PARTNERS IN GRIME CLEAN TED S TAX EXEMPT SEE CORP All Clients 1040 GREEN MONKEYS INC ganan 1120 C CORPORATION tuth seriat 11205 ABC CORPORATION ta sament AEF ESSBEEESS Amna 1041 SCORP FOR CAL aka ame 990 Help OK Cancel Figure 3 7 Open Create a New Return dialog box 3 Click OK The Data Entry Menu is opened for the selected return Tax Year 2010 55 Data Entry Data Entry Drake Software User s Manual Returns are prepared in data entry mode Access data entry screens from the Data Entry Menu See Figure 3 8 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 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 Data Entry Menu The Data Entry Menu Figure 3 8 is displayed when you open a return It consists of a toolbar tabs screen codes and names the selector field and the status bar telee Drake 2010 Data Ent
68. 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 and Copies Number of copies to print not available for labels or checks Checks aude deraut Tor Duplex Directs printer to print duplex Only forms that are approved for the Letterhead sou which allows you to print let rce tray duplex will be printed as duplex ters from a tray other than the Staple If the printer supports stapling after each print job select this one used for tax returns option to turn stapling on Show dialog Causes the Print dialog box to be opened before each print job 40 Tax Year 2010 Drake Software User s Manual Software Setup Table 2 15 Printing Setup Tab Field Description 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 mee ON page 180 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 sta
69. Tax 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 go to Setup gt Options gt Forms Returns amp Schedule Options and clear the Print Form 6251 only when required check box 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
70. Tax Year 2010 1 Introduction Welcome to the Drake Software User s Manual for the 2010 tax year The Drake Team has been hard at work in 2010 to help ensure that your firm has a successful reward ing filing season in 2011 Before getting started in the software please read this intro duction which includes information on how to use your manual and describes the software s new features for tax year 2010 About Your Drake Software User s Manual 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 on screen help features tutorials training and phone support Be sure to take advantage of our extensive index and the Adobe PDF search feature both of which will help you locate information more efficiently in 2010 This manual is also available as a paper manual that can be ordered from the Drake Support site Support DrakeSoftware com To keep your manual updated Drake Software publishes addenda pages as tax season progresses Check Appendix F Addenda Pages regularly with each CD shipment and throughout tax season so you l know what pages in the manual have been updated Addenda pages are shipped with each software CD and are available on the Drake Support site What s New in Drake for 2010 Tax Year 2010 Each
71. Template Individual Result Template Individual Result Template Individual Result Template Individual Result Template Individual Result Template Individual Result Template 10 Individual Result Spanish 11 Individual Extension Ls 12 Individual Amended EE N E N A Aes PP a eee T et T tl a T T Figure 2 24 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 Customized The default greeting for all letters is set in Letters Setup To override the greeting for a Greeting return go to the LTR screen and enter a new greeting in the Personalized letter greeting text box To begin the greeting with Dear enter it along with the name in the N DTE Personalized letter greeting field To have all letters for a package type begin with Dear or another greeting of your choice make the change in the actual template in Setup gt Letters Adding a To add a custom paragraph to a letter write the paragraph in the Custom Paragraph Custom field of the LTR screen By default the paragraph is printed at the bottom of the letter Paragraph To have a custom paragraph appear somewhere else within the letter Tax Year 2010 49 Making Changes on the Fly Drake Software User s Manual E filing or
72. V or Ctrl P View or print a return from either the Home window without opening a return or from within a return To view or print from a data entry screen click View or Print 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 Select one or more returns by clicking the box next to each return 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 needed 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 Viewing a Return Enhanced Mode 176 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 in Figure 7 see also Table 6 1 on page 177 e A viewing tool allows zooming and scrolling See item 2 in Figure 7 e Category tabs group documents within a return select a tab to view all documents within a category See item 3 in Figu
73. 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 Group The Group Security feature allows you to view and print two reports related to group Security security settings Reports 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 export ing the reports To access reports click Print in the Group Security toolbar The pro Print gram displays the Group Security report first To access the Group Preparers 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 Other features available under Setup gt Preparer s are the ability to create a pre Features 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 Tax Year 2010 19 Software Setup Drake Software User s Manual To create
74. activate it Following are keyboard only methods of moving from field to field e Press TAB to move the cursor forward one field e Press SHIFT TAB to move the cursor back one field e Press CTRL or CTRL T to move the cursor up or down one field respectively Grid data entry allows faster data entry for the Dependents INT DIV and 4562 screens In grid data entry mode click a field to activate it and then type data directly into the field Drake 2010 Grid Data Entry Press lt F3 gt to access the detail screen for the current item Click on a column header to sort data click again to reverse the sort To delete an item click on a row number and then press Ctrl D Hold the Control key down to select more than one item at a time First Name Last Name Suffix SSN Relation Months Date Of Birth Child Care Exp 1 Richard 400 00 6661 SON 12 10072001 2 Susan E 400 00 6662 DAUGHTER 12 06151999 i Seong tach lb hs Ags ORION gaan maps aa eee ey a T te nt get Figure 3 9 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 The Existing Forms List is displayed if more than one instance of a screen has been saved in a return Busting Forms Let 2 Dependents
75. 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 b 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 to a Client 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 182 Tax Year 2010 Drake Software User s Manual E mailing from View Print About Passwords 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 Figure 6 7 showing the password Figure 6 7 see About Passwords follow ing for more information on passwords Drake 2010 Password Protect PDF Attachment Password Protect PDF Attachment The default password is the the first 4 characters of the client s last name lowercase with no spaces followed by the last 5 digits of the SN Please select a password for the PDF attachment cart06664
76. an ene iea aaa ee EE EEE ebm Rates wwe Gaels EERE EEEE 67 Organizers and Proforma o4 5 ide 0 805 04 ose Fi daa wowed ew ka de bane awe tase wae 70 SCHEGUICE icy 0h dete touch be dom Seer diet a Brae el elton E EEE bear Wend A a Re es E ao eg haan ale wheat 74 E filing Preparation os ges cidere e er cea RAST Ce dee se eee ek Choe eek d Rha teh dene es 84 Return Preparato sisi cistiis siticcsssiedincnwendsresdarediiaai ee 85 Taxpayer Demographics 1 0 0 eee e nent tenn eee ae 85 Exemptions sesi eaen dress a toad AG dene Bene Aves Geddes aeons shea died ode ENET be 87 Personal Service Income W 2 1099 MISC 2 0 0 0 ccc eee ene ene e eens 89 Passive and Investment Income 1099 DIV etc 0 0 6 cece nee ne nen ees 92 Taxable RetundS ome tossud t biden see dad sabe td soda woud Goad nlde waded AEE 95 ANMOD a eeraa a a a a a a a a a a a a a a a i k 95 Self Employment Income Schedule C n on 00 cent teen eee n eee 96 Sales of ASSets mirrin nia eet E E E ha bad eh A eat A bo epee ae etd Bag ear eee BN 98 Retirement Income 1099 R etc 2 ce eee ent nent eens 103 Supplemental Income caisses proia He reds Hew eee hohe Ade Aen ade me eae den 106 Farm Incom s 3 04 ssucdu des cedadesd cod Gene CMa eed bee BEk Oda eh eee ed eee ea eed ness 114 Unemployment Compensation 0 0 0 0 eee een nent n teen nee 115 Social Security and Railroad Benefits 0 0 ccc ect teen ene neae 116 Other INCOme sumes eraa neire She RA oe ae OE OS
77. approved and in which account the refund must be placed If the application is declined or rejected an explanation is displayed in the text box at the bottom of the E1 screen After reviewing the explanation make any required mod ifications to the application and click Apply for E1 Card again to reapply Bank Denials A RAL can be declined for a number of reasons such as duplicate SSNs prior RAL debt SSN reported as deceased or MFS return To view a loan status code or bank decline reason 1 From the Home window select EF gt Search EF Database 2 Click the F4 Reject Code Lookup tab 3 Select Loan Status Codes or Bank Decline Reasons to view the corresponding codes in the lower window If you select Bank Decline Reasons specify a bank in the Category list A RAL switches or flips to a non loan product see Table 8 3 if an application is denied Preparing to Offer Bank Products 218 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 Tax Year 2010 Drake Software User s Manual Preparing to Offer Bank Products each year This application is separate from the application discussed in Application Forms on page 214 Banking Application Applying for a Bank Tax Year 2010 To offer a banking option through Drake you must submit a banking application annually Drake transmits the ap
78. are described in Table 2 9 Table 2 9 Options Setup Optional Items on Return Option Date on return Description 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 Select this option to print the signature dates on the return Print dates for taxpayer and spouse signatures excludes 1040 Taxpayer phone number Select this option to print the taxpayer s phone number entered on screen 1 Third party designee Select the third party designee to print on the main form of the return Tax Year 2010 25 Software Setup Drake Software User s Manual Table 2 9 Options Setup Optional Items on Return Option Rounding amounts Description Select Dollar or Penny rounding Dollar rounding is required for e filing Penny rounding prints penny amounts on all forms Interest and Penalty Calculation 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 165 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 Sele
79. 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 to refer to the payment method used enter the credit card type and the last four digits of the credit card number in Optional Letter Information sec 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 Tax Year 2010 145 Electronic Payment Options Drake Software User s Manual Program Defaults and Overrides Required Information Withdrawal from Multiple Accounts Direct Debit of Estimates 146 By default the program indicates that the entire balance due the Amount You Owe section of Form 1040 is to be electronically withdrawn on the return due date unless otherwise indicated using the override fields for each account entered See Federal override fields in Figure 5 54 If the return is e filed on or before April 18 the requested payment date cannot be later than April 18 If the return is transmitted af
80. be verified before e file is possible File extension for Microsoft Excel files Tax Year 2010 Drake Software User s Manual Appendix E State E filing Mandates Appendix E State E filing Mandates Alabama California Connecticut Florida Illinois Tax Year 2010 State e filing mandates for tax year 2010 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 calendar year 2010 then for that calendar year and for each subsequent calendar year thereafter all acceptable individ ual income tax returns prepared by that income tax preparer must be filed using elec tronic technology as defined in the Electronic Tax Return Filing Act as codified in Chapter 30 of Title 40 Code of Alabama 1975 If an income tax return preparer prepares 50 or more acceptable original corporate or partnership income tax returns using tax preparation software in calendar year 2010 then for that calendar year and for each subsequent calendar year thereafter all accept able corporate and partnership income tax returns prepared by that income tax pre parer must be filed using electronic technology An Electronic Filing as defined in Section 40 30 3 2 shall include pursuant to this regulation the technology commonly referred to as two dimensional 2 D barcode technology if such
81. 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 36 l Force itemized Force standard Figure 5 36 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 Use the Interest You Paid section of screen A to enter mortgage interest not reported 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 IMPORTANT enter an amount in the Home mortgage interest and points reported on Form 1098 field in the Interest You Paid section of screen A 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 Tax Year 2010 Drake Software User s Manual Alternative Minimum
82. compatible laser printers and allow preparers to produce federal and state tax forms By default fonts are down loaded with each print 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 1 From the Home window go to Tools gt Download Fonts 2 Click Download to open the Download Fonts dialog box 3 Click Download As downloading proceeds the font download status is shown 4 Click Exit when the download is complete To set up options for downloading fonts go to Setup gt Printing gt NOTE Printer Setup Under the F7 Options tab select an option from the PCL Soft Font Option drop list Blank Forms Some forms not available in data entry might be available as blank forms Many of these forms along with worksheets and interview sheets are available in Blank Forms If a state prohibits printing blank state forms contact the state revenue office to obtain blank forms 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 4 displays form categories names and descriptions for each package 266 Tax Year 2010 Drake Software User s Manual Click a column header to sort forms in ascending or descending order Repair Index Files Federal x Organizers F Frolomas Official Name Alabama 1040 PG Aikansa 1040 PG2 Arizona 10404 PG Califor
83. 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 Anticipation Loan Refund Electronic Transfer bank product Refund Transfer bank product D 3 Appendix D Acronyms amp Abbreviations Drake Software User s Manual RTN SMLLC SSN ST Sub S T ack TS TSJ TILA txt TY UNVER XIs D 4 Routing Transit Number A number assigned by the Federal Reserve to each financial institution Single Member Limited Liability Corporation 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 Unverified field Fields flagged as UNVER must
84. description EF Messages Federal The asset s with the bad date has been ignored for the Return Notes and Federal Form Wi 2 The following fields must be significant Hang g ee Fee Type and Federal gileed Federal Amount Federal plieate Federal it infertfas an invalid RTN R outing Transit Number eT Dies TE REE ELS ET ra 4 Tr Return Notes NC Electronic Filing NOT allowed See Message Page Preparation Fee DCN 00 999053 07260 1 Total Tax Owed 4 232 Current Program Calculation Complete SEE MESSAGE PAGE e i i Back Continue Description Press lt ENTER gt key or Click Here to Continue Figure 6 2 Calculation Results window 174 Tax Year 2010 Drake Software User s Manual Calculation Results EF Messages Return Notes Fee Type Amount 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 EN Total income Taxablelncome _ TotalTax Refund Balance Due Payment Method Eligible For EF Federal tiiit 51 777 6 929 0 1 097 Check or CC NCD400 HEL 61 777 3 912 0 3 135 Check or CC Return is ineligible for e filing EF messages are displayed Double click on any highlighte
85. elected in prior years 179 expense allowed in prior years Bonus depreciation Additional Depr Elections Prior bonus depreciation cee eseceseceeseeeeee Figure 5 56 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 151 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 56 will be updated based on system calculations If the taxpayer expenses assets using section 179 the program produces a WK_1179L worksheet Section 179 Business Income Limit with the return 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 Land Cost The Asset number and Department number fields on the 4562 screen are for track ing purposes in the Fixed Asset Manager see Fixed Asset Manager on page 298 and can be used in reports The Land cost field on the 4562 screen is for the cost basis of the land The amount entered here should
86. eligible federal and state forms for e filing Use the EF screen to override program defaults on a per return basis 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 filing 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 filing To suppress e filing of 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 filing of federal return see Figure 7 6 e Do NOT send any states suppresses e filing of all state returns see Figure 7 7 e Suppress federal state EF and all bank products suppresses e filing of both the federal and state returns plus any bank products The selected returns are not e filed until the selected check boxes are cleared 198 Tax Year 2010 Drake Software User s Manual EF Override Options in Data Entry E filing Special Returns and Forms The EF screen includes the options to e file the following forms on y without e filing any other
87. entity pack ages in Drake s tax software for tax year 2010 All Entity Packages Tax Year 2010 The following items have been added to all entity packages except where otherwise specified e Ability to e File Amended Returns The program now supports e filing of amended 1120 1120S and 1065 tax returns e New Schedule L Screen In the past two screens were used to complete Sched ule L Balance Sheets per Books In 2010 the L and L2 screens have been consol idated into a single screen for easier data entry Links to the SCH2 screen are still provided for those items that require a subsidiary schedule 1120 1120S and 1065 only 319 Entity Packages 1120 1120S 1065 990 Drake Software User s Manual More EF Trapping To prevent IRS rejections new programming in all packages will help the software catch more errors in business returns before the returns can be e filed EF Messages and NOTES Pages Many of the EF message and NOTES pages have been rewritten for improved clarity and to better help with troubleshooting returns Improved Calculation Results Window The Calculation Results window now contains more links to EF messages and enhanced messages EF Messages for Accepted Returns For returns that have been e filed and accepted by the IRS the program produces EF messages to remind you not to file the return again Form 8941 As with the 1040 package Form 8941 Credit for Small Empl
88. file Packages Available E file Requirements Due Dates Payments and Deposit ax e omments N A Due Dates Penalties 1040 04 15 2010 04 15 2010 N A 15th day of the 3rd Month after Extensions Products by Package 1120 03 15 2010 03 15 2010 the close of the taxable year Same Web Information 11205 03 15 2010 03 15 2010 1h day of the ieee uta Same H 1065 04715 2010 04715 2010 1th day of the ioe after same Qika Forum 1041 0411572010 04715 2010 1th day of the Ath month after same Extension 10 15 2010 Figure 10 9 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 9 from which to choose Click the state taxing authority link item 2 to go to that 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 First time users must register before participat ing read the text on the Forums page regarding registration requirements and then click Click here to Register Follow the instructions provided on your screen Once registered for the Forums click Click here to Login on the Forums page After logging 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
89. filing are indicated by red text e General Information Enter contact and identification information includ ing 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 NOTE 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 2010 returns For instructions on staggering DCNs see Staggering DCNs on page 196 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 e Banking Information Choose a bank and include add on fees If you 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 219 Select a bank and enter the applicable fee and receiver information For more on available o
90. filing season 2011 This appendix will be 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 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 1 1 provides a record of the changes made to the manual throughout the season the instructions are for printed manual users only Table 1 1 Addenda Pages for 2010 New Replaces Explanation Page Page 3 4 3 4 Updated introductory information 7 10 7 10 Revised information regarding minimum system requirements for using the program 101 104 101 104 Removed reference to disaster relief on Special Tax Treatments screen No 2010 dis tributions can qualify for disaster relief so this section was removed from the screen Also revised Basis of Primary Residence section to reflect screen changes 121 122 121 122 Added information about the Tuition and Fees Deduction fields which have been reac tivated in the program due to the recent extension of this deduction under the 2010 Tax Relief Act 141 142 141 142 Updated section on First Time Homebuyer Credit to reflect recent screen changes 145 146 145 146 Updated EPAY screen details and added new information about website to check pay ment statuses using IFP
91. for Microsoft Excel and Microsoft Access Saving To save a set of report criteria for future use Report Criteria 1 Click a category button to select a report category Figure 7 11 2 Enter the report criteria 3 Type a report name in the Save Report As field 4 Click Save In the future when you want to view reports that meet those criteria select the report name and click Load Deleting When you are ready to delete a saved report select the Options tab and click Man Reports aged Saved Reports Reports are displayed in columns on the Report Administra tion page Select a report and click Delete Sort reports by clicking column headers 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 NEW FOR Hierarchies are now built and maintained through the Enterprise Office Manager EOM For more information on using the EOM see Bank 70l ing Application on page 221 A separate manual and video tutorial are also available on the opening window of the EOM website https eom 1040 com click Help Setting Security Levels Security settings allow you to password protect reports in the online EF database To define security settings Tax Year 2010 205 Online EF Database Drake Software User s Manual Log in to the online EF database See Online EF Database on page 204 Click Options Click Confi
92. for an individual return select 1040 and then select the state from the Category drop list before entering the reject code To view Loan Status Codes wording varies by bank select that option 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 Leaving the EF Database Take one of the following 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 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 IMPORTANT view the EF database you must enter the drive letter of the trans mitting machine in the Shared Drive Letter field in Directories and Paths Setup See Directories and Paths Setup on page 20 Tax Year 2010 203 Online EF Database Online EF Database Drake Software User s Manual The online EF database displays real time data on e filed returns You can run reports on returns loans 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
93. form code boxes in Drake Prior Year s Mileage The Prior Year s Mileage field Figure 5 58 allows you to keep a running total of the mileage covered 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 calculate the business cost and sales price when the vehicle is sold Prior Year s Mileage 4 Business Total eee Figure 5 58 Prior Year s Mileage fields 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 4562 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 2016 and Schedule K 1 for Partnership Select the form type from the For menu at the top of the 8829 screen 156 Tax Year 2010 Drake Software User s Manual Office in Home Use the Multi form code box as needed default is 1 See Associating One Screen with Another on page 62 NEW FOR Fields that apply to day care facilities are now grouped under the Day Ali Care Facilities Only heading on the 8829 screen Special The multi form code information must be modified slightly if the 882
94. gt F Client Information Federal Return Paragraphs BE 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 Ajian Mtepsion Results draaie aani atn Conditional paragraphs H H Figure 2 19 Category tree left pane of Client Communications Editor 35 Software Setup Drake Software User s Manual 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 Available Letters 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 277 Letter Template Result Letter Table 2 14 Letter Templates Available in 2010 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 Let
95. gt Printing gt Printer Setup 2 Select the F8 Edit Printer Settings tab 3 Select the printer being used to print the checks Once a printer is selected all other fields are activated 4 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 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 printer 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 8 5 Reprint Not Allowed Too Late The Check on this record was originally printed on 11 05 2009 IF you have the check listed in YOUR possession you may reprint the check by clicking Ok and then pressing F5 Check Number 00503300 Check Date 11 05 2009 Check Amount 925 00 Figure 8 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
96. 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 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 Screen code 8812 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 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 calculating EIC type No into either of the EIC Blocker fields in Drake EIC blocker fields are located on screens EIC and 5 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 automa
97. i Sacco evesnnnacaceceeencabhidaanceceescaseace 231 Accessing the CSM ince bcos erit ere eE a E ba woke Rede eed weet vere bed EEEE 231 About Client Statuses 0 0 t bene tebe n nent EG 231 Setting Statuses eset Hehe ee oes Be Gee BO hee oe SERRE SR ee BE Se ee ee 233 Adding a Client to the CSM eect n teen nent e eee 233 Opening a Return from the CSM eee t nnn tees 233 Customizing the Display s ersin eriei eain E bata ee debian eiacbianedeian ger enangaww reso 234 Searching Updating and Filtering and Viewing 0 cece e eee eee eee ees 235 CSM RGDOMS omstart e tia Oe eee Dee eae ees GRC Cae eee eres eae 236 Exporting CSM Data 2 0 0 eee n tenet e teen nee 237 Admin only Features si 060o0c0s0beidsc0ds eda cath eb ebb ibe wb A e a a anda 237 Resources and Support vs veccecccccaassnnsnccaceavaecocssisaanneieecaneetieeniecdieaiaeens 239 Drake Software Manual 0 0 0 ccc eee nen e eee ee tena nn en sasse eneneeee 239 Online SUpport s 56560024 bleibh eed nel ebb Eb ehh eed aeetdie ec ete ES 240 SoftWare SUPPONE 1 sae ees Fe ered A eee CAA Mee EE E Mee dda see hea kad ied weed Wade ead ge 250 Interactive Supports ic sos ckeseata E eek chek Seva be el awche Goa eeaed vache Hehe EA 253 Fax Cover Letter for Supports s04 o24 2 34400 e hed EEEE ended abet ge tale we A Mae wae 261 Tax Year 2010 v Table of Contents Drake Software User s Manual TOOLS csr EEE EEEE 263 Update Manager nanan nnana annee 263
98. in Service Method amp Recovery Period Basis Current Depreciation Alternate Depreciation and the Preference Amount Auto Code Print Report based on the macro setup for each client selected Reports can comprise any of the described reports and any valid options associated with them See Using Fixed Asset Manager Macros on page 300 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 Asset Manager dialog box has drop lists for report types reporting options and sorting options Figure 12 10 a Drake 2010 Fixed Asset Manager Fixed Asset Manager Choose to run 4 report edit a macro or cancel E Federal gt Ful Schedule Help Run Report Edit Macros Cancel Figure 12 10 Fixed Asset Manager dialog box 2 Select a report type See Table 12 4 for available report types 3 Select a tracking format Options are e Federal Tracks federal depreciation methods e State Tracks state depreciation methods e Alternative Tracks alternative depreciation methods Book Tracks depreciation using book method 4 Select a sorting option from the drop list on the right Choose to print a Full Schedule to sort By Department or to sort by Form Schedule 5 Click Run Report Tax Year 2010 299 Client Status Manager CSM Reports Drake
99. 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 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 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 Insert date If D is part of a macro the program enters the current 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 64 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
100. 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 68 to perform an update Tax Year 2010 Drake Software User s Manual Creating and Opening Returns Creating a Return To create a return in Drake From the Home window click Open New 9 ali In the Open Create a New Return box enter the client s ID number penjNew Click OK Click Yes when asked if you want to create a new return In the New Return dialog box select the return type and enter a client name ee ll al a a Click OK Data entry screen 1 for the new return is displayed You may be required to verify the ID number for a new return Verifica NOTES tion is required for all Pay Per Return PPR clients The Name Entry section is displayed only if the DDM is integrated with the software See Document Manager on page 301 Opening a Return Recentlyaccessed To open an existing return in Drake returns can be Peace eg 1 From the Home window click Open New The Open Create a New Return dia list in the Home log box is displayed Figure 3 7 ae 2 Perform one of the following tasks e Enter the ID number of the return item 1 in Figure 3 7 e Select a return type item 2 in Figure 3 7 Returns are displayed in the grid to the left Click a row to select a return Drake 2010 Open Create a New Return ese Enter the
101. jumps to the cell of the corresponding tab Certain tabs are hidden by default For example the Schedule C tab is not initially vis ible but appears when the Schedule C cell is double clicked from the Income tab Hid den worksheets can also be accessed from the Go To list on the toolbar To move through the tabs click Next or Back on each screen click a tab at the bottom of the window or select Go to from the toolbar and select a tab Each tab includes a Notes box Figure 13 11 for recording any comments To clear a Notes box select the box and then select Clear Contents from the right click menu Preferences and Options Tax Year 2010 Set planner preferences before you begin working in the Tax Planner Planner options are available for exporting data selecting case options and changing the source direc tories and paths used with the Drake program 315 Tax Planner Drake Software User s Manual Planner Multi year planning provides planning for up to seven years Multi case planning pro Preferences vides current year planning with up to seven user defined scenarios The Tax Planner allows you to save two planners one multi year and one multi case for each client To choose a planning preference 1 Open the Tax Planner for a client By default the planner is opened to the Client Setup tab and displays client contact information 2 Click the cell to the right of the Planning preferences cell located near the bot to
102. 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 shortcut key combination 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 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 and their associated tasks 2 Edit the Data column for a macro listed All tasks listed can be edited Symbols for non character shortcuts are listed in Table 2 13 3 Click OK 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 Tip 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 Tax Year 2010 Drake Software User s Manual Software Setup Table 2 13 Macro Symbols Symbol Action Move cursor back one field If the lt symbol is inserted in front of selected data
103. 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 DDM 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 Installation Using Windows Vista A system administrator or user with OS access must install your tax software tool to perform the backup Before installing your software close all open programs on your computer Table 2 1 outlines the installation process for the first and subsequent CD shipments Note that both the 2010 software and the DDM are installed by default If you don t want to install the DDM clear the applicable check box in Step 4 Table 2 1 CD Installation Step First CD Shipment Subsequent CDs 1 Insert the 2010 Drake CD into the drive Insert the 2010 Drake CD into the drive Wait for the Drake 2010 Software Pro Wait for the Drake 2010 Software Pro grams window to be opened grams window to be opened 2 Click Install Drake 2010 Tax Software Click Install Drake 2010 Tax Software 3 Accept the Drake Software 2010 Accept the Drake Software 2010 License Agreement Click Next License Agreement Click Next 4 Note that Install 2010 Drake Tax Soft Optional Select Install State Tax Pro ware is selected both this andthe DDM grams Click Next are marked by default
104. method Life Class life press F1 for a recovery period listing If EXP section 179 is selected as the depreciation method the useful NOTE life recovery period entered in the Life field is used to calculate depreci ation adjustments for Form 6251 AMT See Section 179 Expensing on page 151 for more on section 179 Business The default business percent use is 100 Enter a number in this field only if business Use 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 IMPORTANT marked The Method field must contain an acceptable IRS method for the recapture to be calculated correctly Listed A selection in the Listed Prop Type field is required for an asset that could be used Property for personal entertainment recreation or amusement purposes An entry here lists the Type asset as Listed property on Form 4562 Depreciation limitations could apply Prior The prior depreciation amount in this field is carried from the previous year if the Depreciation information is available Otherwise enter this information directly Section 179 Expensing Drake calculates the amou
105. of each IRS Service Center To access your online EF database from within the software Q 1 From the Home window click Support If you are already in the EF database Support 2 click F10 Online DB 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 from the drop list near the upper right corner of the page Above the tax year drop list is the SSN Lastname Lookup field To find information on a specific return enter the SSN or last name in this field and click Go To see a list of any available checks and outstanding acknowledgments Tip on the opening window of the online EF database every time you open it go to the Options tab click the Manage Summary Counts tab click Edit mark the Display check box and click Update Most of the buttons at the top of the online EF database screen are for viewing and running reports Reports available are listed in Table 7 4 Table 7 4 Reports Available from the Online EF Database Category Returns Description Pending accepted and rejected federal and state returns extensions Bank Products Loan status original and current type of bank product amount depos ited debt code Checks Reports by check status check data and EFIN Fees Preparer and bank fees Summary Summary reports by date EFIN pr
106. 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 more instructions on setting up article searches 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 2 241 Online Support Drake Software User s Manual e Drake Software KB a Banking g Broadcast Emails Oo Connections Authentication Failed When Trying to Transmit Folders 2 Internet Connection is Not Present Error When Em FA AOL Unable to Detect Dialup Connection FA AOL Browser Message Idle 20 Minutes FA Can t Connect to Drake FA Configuring A Firewall For Drake Software amp Dial Up Connection Timing Out j Articles within a folder FA Drake Dialer Error Message 678 OT Te Le a N ene Figure 10 2 Some folders and articles within the Browse tab Navigation From within each KB article you can use the icons at the upper right corner of the Icons 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 Related A Related Articles link at the lower left c
107. or press ENTER Tax Treatment Codes Screen C contains a Special tax treatment code drop list Figure 5 16 E v Special tax treatment code Schedule SE N Exempt notary income D Meals are subject to the DOT hours of service rules P Paper boy excluded from SE under age 18 R Qualifying income under the Military Spouses Residency Relief Act S SMLLC Figure 5 16 Special tax treatment code drop list on screen C Car and Truck Expenses Use the Auto Expense Worksheet AUTO screen to manage auto related expenses for Schedule C Note that the Car and truck expenses field on screen C is an adjust ment field Any number entered there is adjusted by calculations from the AUTO screen For more information on the AUTO screen see Auto Expenses on page 156 Depreciation Use the Depreciation Detail 4562 screen to enter depreciable assets for Schedule C Note that the Depreciation field on screen C is an adjustment field and that a number entered there is adjusted by calculations from the 4562 screen For more on entering depreciation in Drake see Depreciation on page 150 Business Mileage The standard business mileage deduction rate for 2010 is 50 cents per mile Enter business miles driven on screen C under Part IV Vehicle Information Tax Year 2010 97 Sales of Assets Loss on Schedule C Drake Software User s Manual If Schedule C shows a loss and all investment is not at risk the program
108. other Drake windows the DDM 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 also access toolbar selections from the menu bar To view a description of a toolbar button hold the mouse pointer over it Each toolbar button activates a different func tion and different buttons are available at different levels of the DDM For example from the Cabinet level you can add only drawers and cabinets so only these buttons 308 Tax Year 2010 Drake Software User s Manual Document Manager are available from the Folder level you can add folders 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 DDM enter part of the name in the Find text box and click Find The file location is highlighted in the tree Figure 13 7 ee a Figure 13 7 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 you are looking for Building A File Structure If building your own file structure map it out by hand before creating it in the DDM More cabinets drawers and folders can be added to a Drake integrated file structure As a level is created an icon representing that level appears in the DDM s left pane
109. other fields for Form 8582 CR Passive Activity Credit Limitations Child Tax Credit The Child Tax Credit is calculated automatically in the program See Additional Child Tax Credit and Combat Pay on page 141 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 NEW FOR When this credit can apply Form 8880 is produced automatically and a NOTE is produced stating that retirement plan contributions have 200 been carried to Form 8880 The NOTE also provides instructions for preventing Form 8880 from being generated Other Credits Table 5 7 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 Tax Year 2010 129 Other Credits Drake Software User s Manual Table 5 7 Other Credits Calculated in Drake Screen Form and Credit 4136 Form 4136 Credit for Federal Tax Paid on Fuels 3468 Form 3468 Investment Credit 3800 Form 3800 General Business Credit 5884 Form 5884 Work Opportunity Credit Form 5884 A Credits for Affected Midwestern Disaster Area Employers 6478 Form 6478 Credit for Alcohol Used as Fuel 6765 Form 6765 Credit for Increasing Research Activities 8396 Form 8396 Mort
110. other sections of the original return as needed The 1040X screen was redesigned for 2010 and now contains the following sections e 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 e 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 e Amounts and information for the AMENDED return These fields must be completed manually as applicable 160 Tax Year 2010 Drake Software User s Manual Special Returns e 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 e Part III Explanation of Changes Type an explanation of the changes in this text box Any additional changes in income will be incorporated into the amended return Attach a copy of the original return to the printed 1040X before mailing the amended return to the IRS Extensions To apply for an extension using Drake 1 Open the return for which an extension application is being filed Screen code EXT 2 From the Other Forms tab click Extension Forms 4868 amp 2350 3 Make the applicable selection from the 4868 drop list if filing Form 4868 or the 2350 drop list if filing Form 2350 Selections are d
111. preceded by an equal sign and display Adjustment red text Data entered in these fields replaces or overrides program calculations Fields ee 100 Direct entry field Pea 100 lt lt Override field tl 100 lt lt Adjustment field gt Figure 3 18 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 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 displaye
112. print addresses on postcards 280 Tax Year 2010 Drake Software User s Manual Amortization o Amortization Calculate Tax Year 2010 From the Home window go to Tools gt Letters gt Postcards Select filtering and sorting options from the Postcard Filter Selection box If a more complex filter is needed click Edit Filters See Filter Manager on page 293 Click Next Modify the Basic Search Conditions as needed and click Continue For more on basic search conditions see Search Conditions on page 294 From the Postcards dialog box update the postcard formatting as needed Click Help for more on individual fields Click Finish Set printer options in the Print dialog box as needed and then click Print The Amortization tool prepares loan repayment schedules for various loan scenarios To prepare a loan repayment schedule 1 2 3 4 From the Home window select Tools gt Amortization Enter a Schedule Title to be displayed at the top of the amortization schedule Complete all other applicable fields Fields are described in Table 11 4 Click Calculate The program creates the amortization schedule To print the schedule click Print To save it for later viewing using Reports gt Report Viewer click Save Table 11 4 Amortization Schedule Fields and Descriptions Amortization Baseradon Schedule Field P Loan Amount The original amount of the loan Amortization Periods T
113. print transmission 27 state return options 26 W 2 verification option 22 addenda pages Appendix F adding custom paragraphs 26 49 employer information 282 firm information 14 preparer information 16 statements explanations to a return 170 student records ETC 247 add on fees 14 address book Drake e mail 257 addresses change of 164 foreign 86 foreign for tax firm 14 in care of 86 Tax Year 2010 Index military 86 taxpayer 86 adjusted basis tracking 112 adjustment fields 23 61 ADMIN logging in as 9 administrative options setup 28 administrative rights assigning 18 administrator login see also ADMIN logging in as in CSM 237 in ETC 242 247 passwords 13 Scheduler options 75 adoption credit 2010 changes to 5 advance EIC payments 132 alimony 95 122 Alternative Minimum Tax AMT data entry of 125 amended returns 160 American Opportunity Credit 122 American Opportunity Tax Credit 6 amortization codes 154 schedules 281 applications for bank products 214 219 appointment reminders 79 appointments see also Scheduler calendars 77 changing details of 82 on the Home window 52 overlapping 81 private 79 recurring 79 rolling over from prior year 80 scheduling 78 searching 82 Archer MSAs 117 archiving returns 187 188 assets depreciable 150 group sales 155 on Schedule C 97 sales of 98 section 179 expensing 151 sold 154 traded 101 associating two screens in data entry 62 Vil Index attachments DDM fil
114. qualifying expenses provided by employe eee a T tet pe A ce el ee 8t as of 12 31 2010 Figure 5 2 Calculated age is displayed Information entered here flows to the Exemptions section of Form 1040 NEW FOR 70l The full date of birth for each dependent is required for e filing To open a new screen 2 press PAGE DOWN Start a new screen 2 for each dependent to be listed on a return Figure 5 2 shows the default screen 2 in Drake Grid data entry can Tip also be used for entering dependent information To switch to and from grid data entry mode press F3 Information is saved automatically when you exit a screen Note that the number of dependents entered is shown under the General tab of the Data Entry Menu General income Adjustments Creaig Name and Address Income Adjustments Payments ie om a Stimated Taxes ne Wm Figure 5 3 Number of Dependent screens that contain data Entering Dependent Last Names By default the taxpayer s last name is used for all dependents Complete the Last Name field on screen 2 only if the dependent s last name differs from the taxpayer s Tax Year 2010 87 Exemptions Drake Software User s Manual 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 in Home field on screen 2 only if the depen dent did not live with the taxpayer for a
115. report select the report to view and click View The report is displayed on the screen Tip Click column headers to sort the list in ascending or descending order 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 Figure 12 9 4 O Oi e amp fl ria Print Export First Previous Next Last Font Exit Print rt Scroll from page to page Change Total pages rapo in a multi page report font size in report Export report to Excel Exit Report CSV or Notepad Viewer Figure 12 9 Report Viewer Options NOTE Reports exported to CSV are saved in Drake10 Reports Select a dif ferent location by browsing from the Save CSV file window Depreciation List 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 Tax Year 2010 297 Fixed Asset Manager Drake Software User s Manual From the Home window select Reports gt Depreciation List The Depreciation List Client Selection dialog box is displayed Choose one of the following methods a Create a list Enter the SSN EIN and click
116. requirements vary Tax Year 2010 A 1 Appendix A Preseason Checklist Drake Software User s Manual Contact Drake E 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 Prepare to Offer Banking Options E E O O Choose your bank Complete a bank application at the Drake Support site 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 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 Order check and or card stock Test print check After installing the software test print a check Set bank fees and complete Firm Setup in the software Review Equipment Staff Needs A 2 E E Oo O OoOvo O m Learn about tax law changes Do online research visit and study the IRS Web site and state tax departments sites Learn new phaseout limits Be prepared to explain to your clients why they no longer receive benefits they ve received in the past Review or learn EIC rules Prepare for EIC due diligence interviews Review staffing needs Set st
117. returns Drake Advisory Group Learn more about the Drake Advisory Group which can help you help your clients with tax reduction business continuation and restructuring and retirement plan ning See Drake Advisory Group on page 250 Practice returns Use our practice returns to learn program navigation and data entry Drake Website Add Support DrakeSoftware 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 RIA online Review the features offered by RIA Checkpoint Online EF database Review and practice using the online EF database Execute your marketing plan Consider running radio spots hanging posters or banners and encouraging word of mouth marketing Drake Software offers marketing ideas online at Drake Software com marketing Prepare for e Filing A 4 E E E E Research and verify e file requirements Review any state e file mandates See Appendix E Complete settings Certain Preparer Firm and EF e filing settings in Drake are required Send test transmissions to Drake Use Practice Returns Access practice returns on the Drake Support site Training Tools gt Practice Returns Tax Year 2010 Drake Software User s Manual Appendix B E filing Overview Appendix B E filing Overview The flow chart on the following page shows an ov
118. s 2010 release This list does not represent product endorsement or preference by our company Pricing is subject to change e Canon DR 2050C 600 e Fujitsu FI 6130 900 e HP Scanjet 5590 300 e Xerox DocuMate 510 400 More details on these scanners are provided in Drake s online help Many TWAIN compliant scanners will work with the DDM Always review scanner specifications before purchasing a scanner Create a link between a DDM file and a document outside the DDM The DDM main tains 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 DDM To create a link to a file in the DDM 1 Select a folder in which to store the link 2 Click the Link File button from the DDM toolbar 3 Browse to and select the document to be linked 4 Click Open The link is indicated in the Type column of the DDM 311 Document Manager DDM Audit Log Setting Document Status txt doc xIls File 312 Drake Software User s Manual DocumentName Type X lastModified Consentto Use of Tax Return Information LINKED DOC File J 10 14 2009 13 51 50 Se oe ae ey NT N a pee sate O ninaiteh ln Aa Figure 13 9 Link is indicated in Type column of DDM Each time an action occurs to a file the DDM makes note of it in an audit log An action includes importing linking exporting copying moving opening and renam ing The audi
119. 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 others than your firm s name printed on the Bank Information Sheet line labeled Additional Fee withheld on behalf of Approved to participate in E1 Visa Card program TPG Repub lic only If this box is marked the E1 Visa Prepaid Card application section will appear on your bank screen e Collect Basic e Collect only Mark this box if using e Collect Basic to offer direct deposit disbursement only e Collect Deluxe e Collect only Mark this box if using e Collect Deluxe to offer paper check and direct deposit disbursements e Collect Elite e Collect only Mark this box if using e Collect Elite to offer the E1 Card paper check and direct deposit disburse ments Fee Withholding Charge Mark Up Advent only Contact Advent Financial for more details on fee restrictions 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
120. 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 Gains Losses Carryovers Screen codes Use screens D and D2 to enter data for Schedule D Capital Gains and Losses These D2 screens are available under the Income tab of the Data Entry Menu 98 Tax Year 2010 Drake Software User s Manual Sales of Assets Screen D Capital Gains amp Losses Screen D2 Carryovers amp Other Entries Use screen D for basic entries about short and long term capital gains and losses Fol lowing are guidelines for data entry on screen D e Description Although this field in Drake supports 32 characters only the first 15 are e filed By default the first 15 characters are displayed in black text on the screen additional characters are displayed in red e Date Acquired Ifa single date does not apply type VARIOUS for multiple dates or INHERIT for an inheritance If VARIOUS the program treats the item as a long term gain e Date Sold Ifa single date does not apply type BANKRUPT WORTHLSS or EXPIRED as applicable NOTE If Date Sold is BANKRUPT the return must be paper filed VARIOUS and WORTHLSS entered as dates are acceptable for e filing e Sales Price Enter the sale amount If only the gain amount is available enter the gain amount and leave Cost or Basis blank e Cost or Basis Enter the cost or basis If only the l
121. 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 available at http Support DrakeSoftware com Suppressing Forcing Documents Suppressing Items from Being Generated Tax Year 2010 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 Table 2 16 lists items that can be suppressed using the PRNT screen Table 2 16 Items That Can Be Suppressed from the PRNT Screen 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 Indi viduals Estates and Trusts if the form is not required This form is gener ated by default on certain returns that have a credit carryforward 43 Making Changes on the Fly Items to Be 44 Drake Software User s Manual Table 2 16 Items That Can Be Suppressed from the PRNT Screen Item WK_PAL Description Prevents Passive Activity Deduction Worksheet from being prepared T
122. that their return was not filed in the proper form and content and must be e filed Payment received with a paper return will be processed and credited to the taxpayer s account even when the return is not processed Any business that prepared more than 100 Minnesota individual income tax returns for the previous tax year is required to e file all individual income tax returns Prepar ers are encouraged but not required to e file property tax refund returns E 3 Appendix E State E filing Mandates Drake Software User s Manual Nebraska New Jersey New Mexico E 4 New York New York City Any paid preparer who prepares and files more than 100 individual income tax returns annually must file the returns electronically A 100 penalty per return will apply for each paper filed return after the 100 return limit has been reached All practitioners who prepared 25 or more 2007 returns are required to e file their cli ents subsequent returns When a tax practitioner meets or exceeds the threshold for prepared or filed returns in any year that practitioner will be required to e file all New Jersey Resident Income Tax Returns in subsequent years Preparers who prepared more than 25 individual income tax returns in the previous fil ing season are required to file all returns using electronic means Electronic means includes e filing or submitting printed returns with 2D barcodes Beginning January 1 2011 A preparer must e f
123. 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 link 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 portions of these amounts Figure 5 19 103 Retirement Income 1099 R etc Drake Software User s Manual IRA distributions received no 1099 received cece eeseeseeseeseeseeseesesseeneetesneeteereeetle Taxable portion of IRA distributions above I Early distribution calculate penalty Pension distributions received no 1099 received ccccsccscscccccccccessssesstsnsneemteesseeeee Taxable portion of pensions above Early distribution calculate pia ena E teat emma T EE LEO acct mal pl eS e EEE Figure 5 19 Adjustment fields for IRA and pension distributions screen 3 NEW FOR Penalties for early distribution can now be calculated automatically To have the penalty calculated for early distribution of the taxable portion 200 of IRA distributions line 15b or pensions line 16b entered on this screen mark th
124. the DDM program see DDM Secu rity at Startup on page 305 Other tasks that can be performed in the DDM are listed in Table 13 2 Table 13 2 Other DDM File Tasks Task Description Q Click the File button and select Open Rename or Delete in order to open tO z rename or delete a file respectively File F Select a file in the DDM document list and click Copy Choose to copy to a E t location copy to the clipboard or copy to a CD If copying to a location choose Copy a location for storing the copied file and then click Save If copying to the clip board use the DDM s Paste button to paste the document into another folder If copying to a CD follow the instructions provided on your screen i Use the Cut and Paste buttons to move documents from one folder to another 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 al To copy a folder to another document use the Copy button Paste 7 Select a file in the DDM document list or select multiple files using the SHIFT or Aa CTRL keys and click Email Your default e mail program is opened with the Email document added as an attachment Enable drag and drop navigation which allows files to be dragged and AY dropped from one location on the computer into the DDM You can also drag Drag and drop files within the DDM Use your mouse to drag t
125. the Income tab to enter data for Schedule F Profit or Loss From Farming 114 Tax Year 2010 Drake Software User s Manual Unemployment Compensation Screen F Defaults 1099 PATR The program s default accounting method item C is cash Select Accrual if the tax payer s accounting method is not cash The program s default position for material participation item E is that the taxpayer materially participated in the current year If the taxpayer did not materially partici pate select Did NOT materially participate option The program s default position for investments item 37b is that all investments are at risk If this is not true for your client select Some investment is NOT at risk Enter the distribution amount from Form 1099 PATR Taxable Distributions Received from Cooperatives in the Co op total distributions field line 39a 5a 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 for 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
126. the available rates for each applicable quarter Figure 5 65 Percentages should be entered using four digits with the last two digits coming after the deci mal for example you would enter 1 5 as 01 50 Interest and Penalty Calculation MV Automatically calculate penalties and interest on returns 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 11 ooo 7 1 9 30 12 ogo 10 1 12 31 13 0000 771 930711 oono 10 1 12 31 12 0000 171 331714 o0 10 1 12 31 11 00 00 1 1 3 31713 00 00 4 1 6 30714 00 00 1 4 3231 712 00 00 4 1 6 30 13 00 00 7 1 9 30714 00 00 4 1 6 30 12 00 7 4 9 30 13 00 10 1 12 31 14 00 00 Figure 5 65 Enter available rates for each applicable quarter Setup gt Options gt Optional Items on Return tab 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 all rates appear as 00 00 unless a new rate is entered Overriding The LATE screen has the following fields for overriding penalty
127. the file in the Attach File win dow that is opened and then double click it or select the file and click Open The file is shown in the Attachment s pane of the Attachments dia log box Click Done e To attach a file other than the types described above click the Browse button for All other File s see Figure 10 15 Locate the file in the Attach File window that is opened and then double click it or select the file and click Open The file is shown in the Attachment s pane of the Attachments dia log box Click Done 256 Tax Year 2010 Drake Software User s Manual Interactive Support Removing an Attached File Address Books Support Address Book Client Address Book Local Address Book tk li sA Ayia Book Importing Addresses Tax Year 2010 To remove an attached file select it in the Attachment s list see Figure 10 15 and select Remove from the right click menu When composing e mail messages you have several options for storing e mail addresses in an address book To access these options open the Compose Message window and click To Address books are shown the Address Book drop list Drake 2010 Email Address Books Address Book H Drake Software Support ddress Book Drake Software Support Address Book Drake Software Client Address Book len Support Sales FOE inc RON een thn Figure 10 16 Address Book drop list The Drake Software Support Address Book displays g
128. the macro to move from one screen to the next Gl 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 march to move from one screen to the next NEXT TAB 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 Tax Year 2010 Software Setup Drake Software User s Manual Introduction to Letters in Drake 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 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
129. the program allows you to adjust it 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 NOTES carried forward from a prior year return To clear the field press F4 if the amount is correct or enter a new amount Screen 99G is also called the Unemployment Compensation screen If the taxpayer received alimony enter the amount on screen 3 in the Alimony received field Enter paid alimony information on screen 4 95 Self Employment Income Schedule C Drake Software User s Manual 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 form Code boxes of those screens See Associating One Screen with Another on page 62 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 prog
130. then press a second key Key combinations are shown to the right of each menu item Figure 3 3 G B Drake 2010 Tax Software File EF Tools Reports LastYearData Setup Help Open Create Returns Ctrl 0 Calculate Ctrl C Print Ctrl P View Ctrl V Forms Based Data Entry Quick Estimator Exit Esc Logout Preparer Reportage Mary amp SBob 6 ON a ee eT eee Figure 3 3 Key combinations Screen Hyperlinks 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 Tax Year 2010 53 Creating and Opening Returns Drake Software User s Manual Links Use links to move quickly from one screen to a related screen without having to return Screen Tabs to the Data Entry Menu The example in Figure 3 4 shows that both the INT and DIV screens can be directly accessed from the Income screen screen 3 Form 1040 Income F E ST z cITy Description 7 Taxable scholarships mot reported OM N Other income reported on line 7 NOT W 2 wages l Foreignincome Householdincome Prisoner income 8a Interest income NO Schedule B required 8b Tax exempt interest NO Schedule B required 9 Dividend income NO Schedule B required ji a T a at a a a ia et a al sal Figure 3 4 Links from the Income screen to the INT and DIV screens Federal to state links serve as shortcuts to rel
131. this feature see Customized Drop Lists on page 29 Use customized flagged fields on all returns Apply current year Admin flag set tings when updating from prior year Print due diligence documents Require applicable due diligence screens to be completed Enable logged in preparer s Per sonal Client Manager Display program update availability to PDF Password Options 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 Click Esc to save your changes Note This option is available for federal packages only Flags set globally in 2009 are set globally after updating data from Last Year Data gt Update from 2009 to 2010 Print due diligence documents generated from the EIC1 EIC2 EIC3 EIC4 and 5405 screens Require that applicable fields on the EIC1 EIC2 EIC3 EIC4 and 5405 screens be completed before the return can be e filed Display the Personal Client Manager on the Drake Home window for the logged in preparer check box is marked by default Select which preparer groups can view update availability Selections are Administrators users with administrative rights and All preparers 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 clients name plus the last fi
132. 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 140 These screens are supplemental to the required EIC Preparer Checklist EIC screen In Options Setup Administrative Options tab you can select the option to require that the screens be filled out You can also select to view or not view these forms in View mode See Options Setup on page 21 Tax Year 2010 Drake Software User s Manual Additional Child Tax Credit and Combat Pay 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 customized 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
133. to the most common filtering Conditions criteria Return Type s Return Result Activity and Preparer and Firm Table 12 3 Basic Search Conditions Categories Category Description Return Type s 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 balance 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 2 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 4 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 5 Click OK to save the changes to the basic search conditions
134. unit and taxpayer occupies part enter occupied by taxpayer This is your main home or second home Figure 5 24 Item 2 of screen E When completing these fields described in the following list use whole numbers for percentages For example type 50 to indicate 50 usage Tax Year 2010 If property is used Enter the percentage if any of personal use of the rental portion of the property If the property was used for personal purposes dur ing the current year for more than either 14 days or 10 of the total days it was rented to others at a fair market rate enter the percentage of whichever is greater 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 following This is 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 107 Supplemental Income Drake Software User s Manual 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
135. wed Goes eae wend aw aoh dae ard el ode wlan 116 Tax Year 2010 iii Table of Contents Drake Software User s Manual Educator Expenses xiv scene s ood ae aati a a ene She Re a Ble Booed EEEE E EAE E Rees 118 Employee Business Expenses 00 0 n ent nent nents 118 Health Savings Account HSA Deduction 0 0000 e eee 119 Moving Expenses es erreti ee o eed Gee Rha Sh ES ee eA Se OS ed tes Coe es 119 Self Employment Adjustments 0 00 0 c ccc nnn nent teen ene n eae 120 Penalties ss sis aicacniesned sena ana a e a E Abate eogae AE gloves a Aa alta dba AGbew EAA A 121 Alimony Paid 4 2 scock lt p c6n tok ghd she be a deed nates E EA E AA eed ENA wank bh E 122 IRA Adjustments ccc aca bees nce nee Gace ce oe Sa ee wae aw ee boas Glee ae ee ee 122 Student Loan Interest Deduction 0 0 e nett een n ene 122 Education Expenses is is dica sc dees e es dohe de ads E E fonglaa dene qua dinca AE A OEE A 122 Domestic Production Activities Deduction 0 0 0 cect teen e eee ene 123 Other Adjustments pae taio aw des aes dee a Ate oh ia Ka a ha Aaa eR ae 123 Standard and Itemized Deductions 1 0 0 0 nett tenn ene 124 Alternative Minimum Tax i e sc vce ae eee net ites EAE Sad EREET ne be eR eRe 125 Foreign Tax Credit s srrsere rierren ced weaned binned eee eed cieenla gerne Geeteehs 125 Child and Dependent Care Expenses Credit 0 0 ccc ccc cette nent ens 126 Elderly Disabled Credit 2 0 0 0 enn e nnn n ee
136. 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 Tax Year 2010 Drake Software User s Manual IRS ITIN KB LLC MACRS MB MeF MFC MFJ MFS MOM NOL P ack PAN PCM PDF and pdf PIN PRN PPR PTIN R ack RAL RET RT Tax Year 2010 Appendix D Acronyms amp Abbreviations Internal Revenue Service Individual Taxpayer Identification Number A tax processing number for certain non resident and resident aliens who cannot obtain a Social Security Number SSN Knowledge Base The Drake Software Knowledge Base is a
137. 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 2010 For information on what s new in business and other packages see Chapter 14 New Features in Other Packages What s New in Drake for 2010 Drake Software User s Manual Financial Among the changes in banking and bank products Enterprise Office Manager Bank applications account information and other banking functions are now managed through the Enterprise Office Manager EOM Access the EOM from the Drake Support site Support DrakeSoft ware com My Account gt Bank Application or go to eom 1040 com For more information on using the EOM see Chapter 8 Banking Fee Structure Changes Certain fees related to bank products have changed this year These changes are reflected in the banking choices available in Firm Setup See Firm Setup on page 14 Further information about fees is available in Chapter 8 Banking Data Entry Calculation New Features Screen Changes This year s changes and enhancements include new data entry and calculation fea tures screen changes and improved letter functionality EF messages and notes New features to the 2010 program include Automatic Calculation of Taxable
138. your backup e 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 for an incremental backup e Location Click the backup location icon and browse to a desired location 5 Inthe Select Files to Back Up box choose which files should be automatically backed up e Client Files To back up client files located in the Drake10 DT folder 270 Tax Year 2010 Drake Software User s Manual File Maintenance Setup Files To back up pricing and setup information files e System Files To back up 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 see Figure 11 6 If an NOTE attempt at automatic backup is unsuccessful due to insufficient disk space the backup will be stopped and you will receive a message stat ing that disk space is insufficient 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 Ge w y 6 10PM Figure 11 7 Automated backup icon in system tray The automated backup program is also added to the Startup menu and will continue to be in operation after the mac
139. 0 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 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 15 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 500 00 series provided in the software CAUTION 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 oe ole 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 c
140. 0 Drake Software User s Manual Features for Late Filed Returns Owned separately Il I Owned jointly Ill I Signature but no financial interest IV Consolidated report V UPE TLD Val DLA ELOUDE aganti anturia in smamostormbeh MAINE LIDKBOWD p aennmnpintisns Figure 5 62 Select one box to indicate the nature of the account e Section 3 For Part III only This section must be completed only if Owned Jointly IID was selected See Figure 5 62 e Section 4 For Part IV V only This section must be completed only if item IV or V was selected See Figure 5 62 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 62 and page 3 covers only jointly owned accounts Page 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 Due to enhancements made to the program in the spring of 2008 Drake now calcu lates the late filing penalty late p
141. 06 Tax Year 2010 Drake Software User s Manual Supplemental Income The following fields are also located at the top of screen 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 109 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 Property was 100 disposed of in 2010 Mark this box if the property was sold or otherwise disposed of in the current tax year Property is an SMLLC Mark this box is 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 software 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 personal purposes 2 If property is used for personal purposes atleast 10 or 14 days enter personal If multi dwelling
142. 10 on page 299 To run the macro select Auto Code Print as the report type and click Run Report Client Status Manager CSM Reports Hash Totals 300 For information on running CSM reports see Chapter 9 Client Status Manager 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 1 From the Home window select Reports gt Hash Totals 2 Enter the SSN or EIN of a return 3 Click Continue The report is displayed in the Report Viewer 4 Click Exit to return to the Home window Tax Year 2010 1 3 Suite Products Integrate Drake suite products with Drake tax software to run your business more effi ciently The suite includes the Drake Document Manager DDM Tax Planner and Client Write Up CWU programs These products are free of charge and are installed from your Drake Software CD This chapter focuses on the DDM and Tax Planner For CWU instruction the Client Write Up Manual is available on the Drake CD and from Support DrakeSoftware com Document Manager The DDM is installed with the tax software and can be accessed by double clicking the DDM icon on your desktop Listed below are just a few of the new DDM features DDM you will see in 2010 e DDM Backup Restore Ability to back up folde
143. 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 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 6 Tax Year 2010 2 Installation amp Setup Read this section before installing your 2010 Drake program The initial shipment of the software sent in early December includes e Drake Software CD with all federal packages 1040 1120 1120S 1065 1041 990 706 and 709 e 2010 year end update of Drake s Client Write Up CWU accounting payroll and accounts payable program The 2011 version is released in January e Shipment letter e E filing software for sending test returns to Drake e Practice returns and e filing and banking practice files PDF Drake Software User s Manual Tax Year 2010 PDF e Drake Software User s Manual Supplement Pay Per Return PDF e Various informational fliers Software for state programs e filing banking the Tax Planner the Drake Document Manager DDM city tax rates forms based data entry and RIA tax research are included in a subsequent shipment in January Federal and state programs are updated w
144. 12 17 Basis Worksheet Basis Work z P S corporation ID number S corporation name senha sonimni n hee eed atel nsaan fen ee e pen Figure 5 29 Enter 0 in the F text box and select a state from the ST drop list 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 it is necessary to enter all applicable state amounts even if they are identical to the federal amounts entered on the previous screen Click the link for the next page of fields see Figure 5 27 and continue entering state amounts if applicable Complete the For State Use Only fields To enter data for another state return to the first page of the screen press PAGE DOWN and repeat Step 1 through Step 7 above 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 An 1120S 1065 or 1041 return completed in Drake An individual return in Drake for the partner or beneficiary listed in the 1120S 1065 or 1041 return To export K 1 data into an individual return Open the 1120S 1065 or 1041 return that contains the data to be exported Click View to calculate the return and open View mo
145. 135 penalties 138 underpayment of 137 vouchers for 135 estimating 1040 results Quick Estimator 285 ETC see Electronic Training Center exempt notary income 97 exemptions see dependents existing forms list 57 expenses direct and indirect on Schedule E 108 exporting see also importing check register 227 client data 272 CSM data 237 Kiddie Tax data 133 reports to spreadsheet format 205 Schedule K 1 data 111 extensions 161 F F federal code 62 FAQs 250 farm income 114 115 fax cover letter for support 261 federal state facts 248 fees add on 14 calculated 175 charging for bank products 14 in EF database 202 minimum and maximum 32 pricing setup 31 reports 236 Drake Software User s Manual reports of bank and preparer 204 setting 196 Tax Planner 47 types of 175 Fees to ACH bank acknowledgment 224 fiduciary 1041 returns 50 115 field flags see flags file maintenance 268 277 files automated backup of 270 backing up 268 changing types 274 client vs print 274 deleting from Drake 274 e mailing client files to Drake 254 exporting 272 password protecting 273 restoring 268 structure of in DDM 309 unlocking 273 filing instructions 25 late 165 status selection 85 filing instructions 45 filters and filtering see also reports CSM data 235 report data 291 fingerprint cards 190 firm setup 14 15 first time homebuyer credit 6 45 102 103 142 Fixed Asset Manager 298 flags activating 59 clearing 28 custom
146. 163 164 163 164 Removed reference to Form 8914 Form is obsolete in 2010 Tax Year 2010 F 1 Appendix F Addenda Pages for 2010 Drake Software User s Manual New Replaces Table 1 1 Addenda Pages for 2010 Page Page Explanation 171 172 171 172 Added information about the STAX screen which has been reactivated in the program due to the recent extension of the sales tax deduction under the 2010 Tax Relief Act 217 218 217 218 Updated information on using the E1 E1 Card screen 223 224 223 224 Updated information on using the ECOL e Collect screen 321 322 321 322 Updated information on the 1041 Fiduciary and 706 Estate packages Tax Year 2010 Drake Software User s Manual Appendix F Addenda Pages for 2010 This page intentionally left blank Tax Year 2010 3 Appendix F Addenda Pages for 2010 Drake Software User s Manual 4 Tax Year 2010 Drake Software User s Manual Index Symbols adjustment fields 61 override fields 61 Numerics 2D barcode scanning 2 A a 97 ABC voice files 206 accessing see also opening appointments 52 recent returns 52 state returns in data entry 64 acknowledgments acks Fees to ACH 224 codes for 195 196 e filing overview Appendix B notification of 52 processing 195 activating automatic program updates 264 error message beeps 23 flags 59 heads down data entry 71 imperfect return election 27 macros 32 prompting for check
147. 2 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 Miscella neous tab in View mode See Comparing Data on page 167 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 Depreciation List Worksheet showing the depreciation to be carried forward to 2011 Tax Year 2010 Drake Software User s Manual Making Changes on the Fly Overriding Other Setup Options Envelope When areturn is generated Drake prints envelope coversheets if selected for mailing Coversheets 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 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 Dili
148. 2 5 Options Setup Data Entry Option Description Do not restrict minimum font size in This is a sizing option for computers using an 800x600 resolution If this 800x600 option is selected the program will not attempt a font substitution to retain readability Text on screens will shrink to fit as needed Language Options 1040 package Choose between English and Spanish for menus data entry screens field only 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 61 Adjustment field indicator Format adjustment fields in data entry see Override amp Adjustment Fields on page 61 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 screen 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 correspondin
149. 3 3 pages Republic RB_APPL PG through RB_APPL PG7 7 pages River City RCB_APPL PG through RCB_APPL PG5 5 pages Tax Products Group 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 218 Franchise Network Requirements 214 If your 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 Tax Year 2010 Drake Software User s Manual Types of Products Types of Products Traditional bank products include Refund
150. 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 This printer supports PCL 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 If your printer does not support PCL you must complete the remaining fields manually 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 Select the tray to be used as the optional large paper source Manual feed Select the tray to be used for manual feed Software Setup Printing Sets Sets Changing Print Sets On the Fly Setting a Print 42 Order Drake Software User s Manual 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 Select 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
151. 5 Form 1099 MISC Miscellaneous Income 92 Form 1099 OID Original Issue Discount 94 Form 1099 PATR Taxable Distributions Received from Cooperatives 115 Form 1099 Q Payments From Qualified Education Pro grams 117 Form 1099 R Distributions From Pensions Annuities Re tirement or Profit Sharing Plans IRAs Insurance Contracts etc 103 Form 1099 S Proceeds from Real Estate Transactions 100 Form 1116 Foreign Tax Credit 94 125 Form 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer 163 Form 2106 Employee Business Expenses 118 Form 2120 Multiple Support Declaration 163 Form 2210 Underpayment of Estimated Tax 137 Form 2350 Application for Extension of Time to File 149 161 Form 2439 Notice to Shareholder of Undistributed Long Term Capital Gains 142 Form 2441 Child and Dependent Care Expenses 126 127 Form 2848 Power of Attorney and Declaration of Repre sentative 17 163 Form 3468 Investment Credit 130 150 Form 3800 General Business Credit 130 Form 3903 Moving Expenses 119 Form 4136 Credit for Federal Tax Paid on Fuels 130 142 Form 4137 Social Security and Medicare Tax on Unre ported Tip Income 131 133 Tax Year 2010 Index Form 4506 Request for Copy of Tax Return 163 Form 4562 Depreciation and Amortization 24 150 155 Form 4797 Sales of Business Property 100 150 155 Form 4835 Farm Rental Income and Expenses 115 Form 4852 Substitute for Form
152. 5 This process consists of two main steps 1 exporting the data from the parents return and S615Expot 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 Go to 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 names SSNs and export statuses for the return Figure 5 42 Drake 2010 Export 8615 ssa 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 Status Carter 40000500 Not Exported Carter 40000666 Not Exported tte a pe ar a ee Te Figure 5 42 Dependents entered on return 3 Mark the applicable boxes Ifa row is selected the parent s data is exported to that dependent s tax return in Drake Tax Year 2010 133 Estimated Taxes Drake Software User s Manual 4 Click Export 5 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 return you will be prompted to Parent 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 Fro
153. 5 64 Suppressing calculation on the fly If the option to calculate penalties and interest for all late returns is selected in Setup gt Options and you want to sup press the calculation for a single return mark the Suppress box at the top of the LATE screen Figure 5 64 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 such as for returns affected by disasters or other IRS extended due date occur rences Date balance paid if different An entry overrides the calculated balance due If the global option is selected the program bases its penalty and interest calculations on the interest rate for the quarter You can override program calculations by manually entering penalty or interest amounts on the LATE screen You can also manually enter interest rates in Setup gt Options Drake automatically updates quarterly interest rates for the current and following year as they are announced by the IRS For tax year 2010 for example interest rates will Tax Year 2010 Drake Software User s Manual Other Special Features in Data Entry be updated for 2010 and 2011 After 2011 quarterly rates must be manually entered in the 2010 program for late returns for tax year 2010 To enter quarterly rates manually 1 From the Home window select Setup gt Options gt Optional Items on Return 2 Enter
154. 7 paper document indicators 201 Tax Year 2010 Drake Software User s Manual paper jams 229 parsonage allowance 123 see also clergy partner programs 249 passive activities 109 activity loss limitations 109 activity numbers PANs 108 income 92 126 password protecting client files 273 DDM files 313 e mails with PDFs 183 online EF database reports 205 Patient Protection and Affordable Care Act of 2010 5 pause option for calculations 23 Pay Per Return PPR 20 payment options electronic 145 payroll see Client Write Up PCM see Personal Client Manager PDF files e mailing forms as 148 saving returns as 187 penalties estimated tax 138 for early withdrawal of savings 121 for late filed returns 165 IRA 105 122 Pennsylvania city tax rates 283 penny rounding 26 pensions self employment 121 Personal Client Manager 28 52 PIN signatures auto generating for taxpayer 27 in data entry 148 149 of preparer 16 PMI private mortgage insurance 108 postcards 280 power of attorney 17 149 PPR see Pay Per Return practice returns 65 246 preparer checklist for EIC 139 mode in Scheduler 74 PIN signature 16 schedules 78 84 security settings 17 setup 16 20 tax identification number see PTIN pre prepared entry also forms based data entry 284 presidential campaign 86 previously passive activities 109 pricing for a single return 48 Tax Year 2010 Index maximum minimum fees 32 per item and p
155. 8939 Allocation of Increase in Basis for Property Acquired From a Decedent 322 Form 8941 Credit for Small Employer Health Insurance Premiums 5 Form 9325 Acknowledgment and General Information for Taxpayers Who File Returns Electronically 27 Form 9465 Installment Agreement Request 149 163 199 Form SSA 1099 Social Security Benefits Statement 116 Form W 2 Wage and Tax Statement 24 89 92 Form W 2G Gambling Income and Loss 117 Form W 4 Employee s Withholding Allowance Certifi cate 164 Form W 7 Application for IRS Individual Taxpayer Iden tification Number ITIN 163 forms blank 266 order of in printing 185 properties of 184 forms based data entry 284 forums 248 frequently asked questions see FAQs front office mode in Scheduler 74 full time student 86 G gains capital 98 grid data entry 57 group sales 154 group security settings 18 H heads down data entry about 71 macro for 33 toggling to basic data entry 72 health insurance COBRA 133 self employed 121 small employer credit 5 health savings accounts HSAs 117 home residence conversion to business use 103 credit for first time buyers 142 depreciation of 157 energy credits 127 months in 88 Tax Year 2010 Drake Software User s Manual office 156 sale of 102 using the HOME screen 102 Home window in Drake 51 Housing and Economic Recovery Act 142 HSA funding distributions 103 identify theft 86 imperfect r
156. 9 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 17 Table 5 17 Screen 8829 Multi form Codes for Form 2106 Primary taxpayer Enter this If the 2106 is for code 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 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 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 18 Table 5 18 Screen Screen 4562 Fields to Complete for First Year 8829 8829 Information or Text to be Entered For 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 62 Description Date Acquired Enter a description of the asset 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 D
157. 98 state tax returns 199 suppressing 27 test returns 65 test transmissions 191 transmitting a return 194 troubleshooting 194 196 EFINs obtaining 190 setting up multiple 205 EFSTATUS page 192 EIN database about 61 282 editing 281 updating from prior year 69 EITC see Earned Income Credit election options 159 162 electronic funds withdrawal see direct debit games of skill 117 payment options 145 return originator see ERO Electronic Training Center ETC 242 247 e mail address books 257 broadcast 252 checking during EF transmission 27 Form 9325 to taxpayer 27 in View Print 182 notification of new 52 program in Drake 253 260 sending a client file return to Drake 254 to Drake Support 6 employee business expenses 118 employer information in EIN database 282 employers foreign 90 who use Talx W 2 eXpress 91 engagment letters 25 enhanced view print mode 176 182 enrolled agents 17 xi Index envelopes 25 45 280 ERC Electronic Refund Check 215 ERD Electronic Refund Deposit 215 ERO Electronic Return Originator applying for status 190 overriding defaults 46 setting the default 27 setup 15 16 190 error messages audible notification of 23 estate returns 6 275 321 Estimated 134 estimated payment coversheet 25 estimated tax adjustments ETA screen 136 applying overpayments to 136 codes in Drake 136 direct debit of 146 paid in 2008 134 payment reminders 277 payments for 2009
158. Add Client Repeat for addi tional clients until all the desired clients are entered and click Next b Filter the client database Click Next to open the Basic Search Condi tions dialog box Edit settings as desired see Search Conditions on page 294 and then click Continue Choose to Print the depreciation list or to Export to File e Print Send the list to the printer When the Print dialog box is opened click Print e Export to File Depreciation lists exported to file are stored in Drake10 Reports as CSV files Click OK Fixed Asset Manager Use the Fixed Asset Manager to run reports based on client assets Eight report types shown in Table 12 4 are available Table 12 4 Fixed Asset Manager Report Types Report Type Depreciation Sched ules Report Description Depreciation list sorted by asset number assigned asset number and department number separated by a decimal example of asset number 122 01 Items on Report Asset Number Description Date Acquired Date Sold Gross Sales Price Depreciation Current Cost or Other Basis Loss Gain Listings Depreciation list sorted by asset number assigned asset number and department number separated by a decimal example of asset number 122 01 Asset Number Date Placed in Service Method amp Recovery Period Business Per centage Cost Federal Basis Current Year Sec 179 Prior Year Depreciation State Depreciation Amt Dep
159. Adjustments Enter a positive number Each number refers to a row If you enter a 2 printing will begin two rows into the label Horizontal Adjustments Enter a positive number Each number refers to a column If you enter a 2 printing will begin two columns into the label Name Format From the drop list select the name format to use Include or Resident statement Mark this box to have or Resident added to the client name This option is available only when printing labels in batches 7 Click Finish after the program has scanned the files 8 Click Print NOTE Tax Year 2010 The Mailing Labels tool can also be used to run reports See Chapter 12 Reports 279 Letters Drake Software User s Manual Printing a Drake provides a convenient 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
160. Anticipation Loans RALs and certain non loan products Table 8 3 Your client must understand that RAL checks are loans not actual refunds Explain the loan cost APR and any other disclosures to your cli ent Show your client the bank documents and explain all costs checks deposits and the timing of payments Check client ID to verify identity before offering banking ser vices Table 8 3 Available Bank Products in Drake Tax Year 2010 Bank RALs Non Loan Products Advent RD Refund Deposit Republic RAL ERC Electronic Refund Check ERD Electronic Refund Deposit River City RAL ERC RET Refund Electronic Transfer Direct Deposit Tax Products Group RT Refund Transfer RT Direct EPS e Collect 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 Refund Anticipation Loans RALs To qualify for a RAL a taxpayer must have an income source other than Schedule C The RAL amount is based on the taxpayer s anticipated federal tax refund and allows the taxpayer to receive a loan on the refund amount within a matter of days within 24 hours in many cases If the taxpayer s RAL application is denied the bank flips the RAL to a non loan product see Table 8 3 since the IRS has already acknowledged the return RAL eligib
161. Before making changes please continue reading this introduction to ensure that you understand how the templates and the Client Communications Editor are structured NEW FOR A list of Rich Text Format RTF keyboard shortcuts for letters is now available To view it select Help gt Drake Software Help from the 201 Home window In the Table of Contents under Setup gt Letters click RTF Guide Parts ofa A letter in the Client Communications Editor accessed from Setup gt Letters con Letter 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 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 16 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 T
162. DCB Ineligible Filing Statuses A taxpayer with a filing status of 3 Married Filing Separately 6 Taxpayer did not live with spouse even one day of the year or 7 Taxpayer did not live with spouse the last six months of the year on screen 1 is not eligible for the childcare 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 170 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 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 Passive Activity Credits The Passive 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 This
163. DDM Cabinets are the top level of the filing structure The Drake filing system creates a Cli Cabinets ents cabinet but you can 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 DDM A 1 Click New Cabinet f 2 Enter a cabinet name in the Input dialog box New Cabinet 3 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 ITE for Level 1 storage Drawers are for Level 2 storage and folders are for Level 3 storage DDM Add drawers to cabinets for file storage The Drake filing system uses drawers labeled Drawers 0 9 and A Z To add a drawer to a cabinet S New Drawer 1 Highlight the cabinet you want to use Click New Drawer Enter a drawer name in the Input dialog box PON Click OK The new drawer appears in the left pane Tax Year 2010 309 Document Manager Drake Software User s Manual Repeat these steps as needed to create more drawers DDM Folders Documents are stored at the folder level When you create a return in Drake and if you ve integrated your DDM with Drake the Drake filing system automatically cre ates the client folder with a subfolder labeled Tax and subfolders for the tax year To create additional folde
164. Don t I Not eligible for EIC Yes No know 4G naha of Bre folowsinng Wie 7 en Y ri 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 11 Did the child live with the taxpayer in the U S for more than half of the year wee eeseeesseeesseeesneessneesnseessneessnesssueesneessnessneeseeee Iv m 13a Could another person qualify to claim this CHIID oo eecccscsseeseceesesesseeeeee mea B 2 135 Child s relaionship u the oher poson a a z 13c Ifthe tiebreaker rules apply would the child be treated as the taxpayers qualifying CHIIG cece ec eee eee eeeecneeneenesneneeenennenees E E Figure 5 49 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 see Figure 5 49 Questions 10 11 and 13 can be left blank if this box is selected EIC Preparer Checklist Tax Year 2010 IRS due diligence rules require that the preparer complete an EIC Checklist Form 8867 for each prepared return claiming EIC Form 8867 has four parts e PartI All Taxpayers e Part II Taxpayers With a Child e Part II Taxpayers Without a Qualifying Child e Part IV Due Diligence Requirements 139 Earned Income Credit EIC Drake Software User s Manual Screen codes EIC 8867 In Drake Part II of this checklist is addres
165. Download Fonts sesser siers c cee e a ea E a E E 266 Blank Forms s 6 236262 ierre ba ae E E E EE a aia E EEEE EEE eae ed E 266 Repair Index Files 2 gie s04c ennei shawnee E eel barnes EO EEE EA 267 Fil Maintenant s esie ase doe bq ed atone eal tah doe Vali eater aig ea Adel peta aed Wed A lank da a Rae nee 268 Letters ics 3 08 28S eee bee ee es ee Be ed ee A es ee ee PANS Ole oe Bowes 277 AMOTUZALON 632 47 gop d aid nine ee ely VR and ae Ra need hv aS Vd Bae E epee eee O 281 EIN Databases 4hce0o o dre a a eer ae Peek wehia dadewig ee eet ney aed 282 Install State Proprams s lt seinere de bebe wh eee Ga ood ea ew daa ee e a aA Pawns 283 Scheduler a redre some Gach shat nes a Gacy I ain hata oe ag ene tae ea aoe eas 283 Forims Based Data Entry eccetera Gad do ae be a OAR eae date dae ae dee ba 284 Quick Estimator sis namena Gansneda eae el hate ES Ao WG eS SAGE OS E E HE 285 REPONS ene Ree Bee E ee rare tran rR nrg eee Mer RRC ere reece 287 Report Manager 0 1 een teen eben tenet e ee eee e ees 287 setting Up a Report os 6 i ener ca ddes cee eee bw bee e hee eee cd E Rod dake Mba een des weed 289 Filter Manager 24 n sceuces chit i niren E DEE pended engines ey Medd Sevens deer ede bese ds 293 Report VICWER is cus Orde es wkd eve Mids Eee ee On fo bbe sae hanes hae gag E 297 Depreciation Last ss cxco se sea diese aew gee Aneesh ee Gnas Rots add Hae doe bogs A ale eee eae o 297 Fixed AssetiManager a4 i6n00 2 cad bate Gaeta hi
166. Drake Software User s Manual If applicable 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 loan products The field facilitates compliance with IRS Regulation 7216 see Taxpayer Requirements on page 213 Click OK New to e filing Before transmitting live returns your firm must apply to the IRS for an EFIN If you have not yet received one IMPORTANT Drake assigns a temporary EFIN that you can use to test e filing and access Drake s online customer support resources For more on applying for an EFIN see Obtaining an EFIN on page 190 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 TIP Include data entry operators in Preparer Setup to 1 track data entry information and 2 easily set up Front Office preparers in the Sched uler See Scheduler on page 74 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 needed f
167. EIN is already associated with a password the Current Password field Figure 11 9 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 Tax Year 2010 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 189 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 273 File Maintenance Drake Software User s Manual Deleting Files from the Program 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 23 to view or change the number of days to store print files Deleting To manually delete print files Print Files 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 Click Delete Click Yes to co
168. 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 not an option for 4835 Activity is not a passive activity Because it is non passive the calculations from this screen do not flow to Form 8582 This is an option 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 General partner is selected on the K1P screen self employed 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 NOTE State K 1 In cases where the state K 1 amounts differ from federal K 1 amounts such as when a Amou nts state does not take the federal limits on depreciation it s important to be able to indi If Different cate the difference in the software so the correct K 1 amounts flow to the correct fed eral and state forms By default the program uses the federal K 1 amounts for both federal and state in
169. ILL screen When viewing a customized drop list in data entry click F1 to see the item descriptions 30 Tax Year 2010 Drake Software User s Manual Software Setup Pricing Setup Use the scroll bar or arrow keys to find forms Double click a form to select it quickly Two New Fee Options Tax Year 2010 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 15 pat edian yet re gt S Foma ae ve wd ForS fiy Tar TEN ey ae E E P TE er Pages 1 z Category Per Item Charges M Include on Bill Update C an Forms worksheets Statements Per Item Charges Miscellaneous 0001 Form 1040NR U S Individual Nonresident Income Tax Return NAA 0 00 4 x 0002 Form 1040 U S Individual Income Tax Return N A 0 00 2 x 0003 orm 10404 U S Individual Income Tax Return N A 0 00 x AAR Zden ree a a O ee aaa N a dar eee ae A Figure 2 15 Tabs allow you to view categori
170. IV 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 Foreign Tax The INT and DIV screens include a section for Form 1116 FTC information Credit Data Figure 5 13 shows this section as it appears on the DIV screen Form 1116 FTC Information 6 Feoreeicyes ae a l 1116 NOT required Form 1116 7 Foreign country Type of income x Date paid or accrued I Accrued EiG Figure 5 13 Form 1116 section of DIV screen 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 If data is entered in this section of the DIV or INT screen Form 1116 is generated automatically Associating Because the INT DIV screens include the most commonly used Form 1116 fields and Data with the because Form 1116 is generated if these fields contain data it may not be necessary to 1116 Screen enter anything onto screen 1116 If however a return has a less common foreign income factor such as a carryover you must enter that data on screen 1116 94 Tax Year 2010 Drake Software User s Manual Taxable Refunds Screen code 1116 Suppressing Form 1116 You can associate the DIV and INT screens to an 1116 screen so that the generated Form 1116 incorporates the applicabl
171. IVE 1120 Updated From 2009 CORP TAX RATES FOUR 1120 Updated From 2009 CORP TAX RATES ONE 1120 Updated From 2009 CORP TAX RATES THREE 1120 Updated From 2009 CORP TAX RATES TWO 1120 Updated From 2009 CORPORATE CORPORATION 1120 Updated From 2009 DD C Corp 1120 DEPDIF CORP INC 1120 DEPDIF CORP INC 1120 DUCOTE DRILLING INC 1120 EF SEL TEST SBS II 11205 GROUP THREE 1120 HOUMA PLAZA INC 1120 4 Completed 06 12 2003 Partners in Grime Clean Green Monkeys Inc C Corporation ABC Corporation Carter William amp 6Amel L E E 0 0 6 EssBeeEss SCORP FOR CAL Turn Reminders On Appointments Updated From 2009 Updated From 2009 Updated From 2009 In Progress Updated From 2009 Updated From 2009 In Proaress 11 26 2008 02 24 2009 02 17 2003 Notifications Preparer Notes Version P1 12 1 10 0 DriveC Windows 7 09 08 2010 Appointment Reminders are off Prep ADMIN 6 Figure 3 2 Drake Home window Personal Client Manager 52 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 date of last change transmission date acknowledgment code or date and phone number To sort records click a column header Tax Year 2010 Drake Software User s Manual General Na
172. 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 Go to the PDF 7216 folder on the Drake CD and open either the PDF or Word version of the form Be sure to print the correct form for your firm s selected bank Enter your firm s name at the top of the form before printing it Screen code Electronic Signatures To obtain electronic consent the taxpayer and spouse DISC if married filing jointly must enter their names and the date onto the DISC screen 212 Tax Year 2010 Drake Software User s Manual Taxpayer Requirements 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 NOTE See E1 Visa Prepaid Card Program on page 216 for information on disclosure form requirements for the E1 Card Consent to Disclosure Franchises Networks The Consent to Disclosure of Tax Return Information to franchises or networks for merly service bureaus is required for a 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
173. K 1 informa 72010 tion directly into the program For more information see 2D Barcode Scanning on page 89 Accessing Two screens are required for completing lines 1 through 20 of Schedule K 1 From the K 1 Data Data Entry Menu the first page of the selected K1 screen is displayed Fields Schedule K 1 for 1065 1065 K1 1 12 1065 K1 13 20 Basis Worksheet Basis Worksheet continued s Mar ls Elec Z Passive Activity No Partnership ID NUMDEer 41 4141414 Partners an Grime aji Figure 5 27 In this example the program is opened to the first page of the K1P screen Click the applicable link to open the screen containing the fields to complete In Figure 5 27 you would click 1065 K1 13 20 to complete lines 13 through 20 Activity The K1 E and 4835 screens feature an Activity Type drop list for designating an Types activity as passive or non passive A selection from this list controls what income data if any goes to Form 8582 Passive Activity Loss Limitations Available activity types are described in Table 5 2 Tax Year 2010 109 Supplemental Income Drake Software User s Manual Table 5 2 Activity Type Selections for K1 E and 4835 screens Activity Type A Active Rental Real Estate Description 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
174. Lo a tt First Name ionship Date of Birth Child Care 1 Richard 400006661 SON 10072001 2 Susan 400006662 DAUGHTER 06151999 m a E tn clin amines mentees cam ntti eter N aang E T sagehmntonn Figure 3 10 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 57 Data Entry Drake Software User s Manual An Existing Forms List does not appear if grid data is the established NOTE default in Options Setup Disable the default from the Data Entry tab in Options Setup Multiple Many clients require multiple instances of forms such 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 I en Oa Atia Stitt fT a Sh M Over 18 and disabled M Chil General income Adjustments Cw Not eligible for Child Tax Credit or i I NotU S citizen or resident alien M ot Name and Address 1 2 Dependents 2 3 Income 4 Adjus
175. 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 Client Reports EF Bank Reports Description Criteria for these reports consist of data that is not directly related to e filing including client contact data preparer and revenue data return details status and tracking data and summary data 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 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 2010 287 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 Drake 2010 Report Manager Drake Software Repo
176. Manual Appendix A Preseason Checklist 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 listed here Several refer to the Drake Support site which is located at Support DrakeSoftware com Contact the IRS L New Preparer Regulations All tax return preparers are now required to have a PTIN Those without one must register for one and pay a 64 25 annual fee Those who already have a PTIN must also sign up and pay the annual fee Access the online application system through the Tax Professionals tab at www irs gov Receipt of a PTIN is immediate after successful online registra tion The IRS has a special toll free telephone number 877 613 PTIN 7846 that tax profession als can call for technical support related to the new online registration system L Apply for Electronic Filer s Identification Number EFIN All new EROs must complete and submit Form 8633 Application to Participate in the IRS e file Program to the IRS 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 Begin the registration process at https lal
177. N 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 e Error Code 0504 A dependent s SSN or name on Form 1040 does not match the SSN or name on the IRS master file Tax Year 2010 197 EF Override Options in Data Entry Drake Software User s Manual The IRS will accept such returns with these error codes as imperfect returns but you must set up the program to allow e filing of 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 Because IRS acceptance is not guaranteed for an imperfect return no NOTES piggyback returns or bank products can be e filed with the return Any refund amount could be adjusted as it goes through exception pro cessing if an exemption claimed is deemed invalid EF Override Options in Data Entry By default the program designates all
178. N database information 1 From the Home window go to Tools gt Edit EIN Database 2 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 3 Click New if adding or Edit if editing 4 Modify or complete the fields in the Edit EIN Employer Listing dialog box 5 Click Save Deleting Employer Information To delete employer data from the EIN database 1 From the Home window go to Tools gt Edit EIN Database 2 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 3 Click Delete 4 Click Yes when prompted to confirm the deletion 5 Click Exit to close the EIN Employer Database dialog box Printing a List of EINs To print a list of EINs from the EIN database 1 From the Home window go to Tools gt Edit EIN Database Print 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 z 4 Click OK A preview of the list is displayed in the Report Viewer a 5 Click Print to open the Print Drake Report dialog box 6 Click Print Export EIN data to another program if desired From the Report Viewer NOTE click the down 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 Ex
179. NT Click Setup Checks to choose a bank and set up the check range You can also use Setup Checks to change the check number if necessary 7 Click Continue and then click Print 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 TAB or click ENTER The Reprint Checks dialog box dis plays any previous 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 226 Tax Year 2010 Drake Software User s Manual Troubleshooting Check Printing Check Register To access a detailed register of checks prin
180. Name or Name only 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 mended because they work well for folder and mailing labels Size 30252 labels are included in the DYMO printer starter kit Envelopes To print addresses on envelopes Ensure that envelopes are loaded properly into the printer From the Home window go to Tools gt Letters gt Envelopes 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 293 Click Next Modify the Basic Search Conditions as needed and then click Continue For more on Basic Search Conditions see Search Conditions on page 294 In the Envelopes dialog box update the envelope formatting as needed Click Help for more on individual fields Click Finish 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 Postcards Always test print an envelope before printing an entire batch Before printing ensure that the postcards are loaded properly into the printer To
181. PFS Shared drive letter for all other shared files EF Firm Pricing Letters etc optional x Help OK Cancel Figure 4 1 Ensure that the Path for 2009 Data field is correct If the correct path is not displayed click the Admin Override check box to acti vate the field Make the necessary changes and click OK Tax Year 2010 67 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 2010 An Individual Update Options dialog box lists all options for updating Figure 4 2 f Drake 2010 Individual 1040 Update Options gt Update Options First PLEASE read manual section on UPDATING before continuing Second BACKUP your 2009 data files just in case In addition to the standard update information you may update the following Additional Upda
182. 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 C 6 Tax Year 2010 Drake Software User s Manual Appendix C Keywords Table 1 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Tennessee Individual OtherTax1 Franchise and 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
183. QuickBooks files into an import file inside QuickBooks To create the import file from inside QuickBooks 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 ASCII text file Press Print ee Sy S Enter a file name of eight characters or fewer with no spaces To import data from a QuickBooks import file into Drake Software 1 From the Home window select Tools gt File Maintenance gt QuickBooks Import 2 Click Next 3 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 4 Instep 2 enter a Client ID Number SSN or EIN r s Drake 2010 QuickBooks Import Step 2 o E S 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 Per10406 txt 2 Client ID Number 400000000 Help lt Back Next gt Cancel K E E Figure 11 11 Step 2 Enter SSN or EIN Tax Year 2010 Drake Software User s Manual Letters 5 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 12 an
184. R To indicate that a taxpayer wishes to make a Series Savings Bond purchase from the tax refund press PAGE DOWN from the DD screen 20i and fill out the BOND screen If the taxpayer wishes to receive the remainder of the refund disbursed as a paper check mark the applica ble box on the BOND screen 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 223 Required Information 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 The RTN Account number and Type of account information must be entered twice Figure 5 50 or an EF message is generated and the return cannot be e filed Name of financial institution RTN Account number Type of account l l M Checking Savings Repeat account information Checking Savings Figure 5 50 Repeat account information for RTN account number and type of account Direct Deposit of Federal Refund 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 For
185. Rename Letter dialog box Restoring a Template 38 Drake Software User s Manual Drake 2010 Letterhead and Margins Setup x Letterhead Logo Setup Letter Bill Indicators Select desired options Coordinates Specify the top left position of the LOGO and FIRM INFORMATION Bitmap Path Filename Either type the path filename OR Browse Letter Bill Indicators Coordinates Use Logo on Letters Left most Column for Logo a I Use Firm Info on Letters Top most Row for Logo Bo F Use Logo on Bill Left most Column for Firm Info 25 I Use Firm Info on Bill Top most Row for Firm Info a Bitmap Path Filename Path Filename for Bitmap Logo Browse F DRAKE10 CFSLOGO BMP Note Leave blank for no logo To print a logo a full path and filename are required Left Margin Adjustment Enter a value to increase the left margin for all letters m Note Values are in inches and may be entered in 1 10th oF aninch increments Entering 0 will use the default margins Help OK Exit Figure 2 20 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 margin one tenth of an inch to the right see example in Figure 2 20 3 Click OK The appearance of the margin in the lett
186. 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 288 Tax Year 2010 Drake Software User s Manual Setting Up a Report cut off in the printed report due to the number of columns 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 template 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 listed in Table 12 2 and are described separately in the following sections Table 12 2 Tasks Involved in Creating a Report Task Window Used Assign report title and description Assign columns keywords Report Editor Step 1 Formatting of Reports Assign filters Assign sorting summary order Have program summarize report data Have pro
187. Schedule SE Short or Long SE 120 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 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 Depending upon the employment terms the taxpayer must complete a short Schedule SE 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 a Force Schedule SE box in the bottom section of the SE screen Force Schedule SE page 2 instead of page 1 L E Force Schedule SE to be printed siani E D E Figure 5 35 Override SE printing for taxpayer left box or spouse right box Tax Year 2010 Drake Software User s Manual Penalties 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 119 and Ministe
188. Season Letter PRIVACY Privacy Policy Letter ENGAGE Engagement Letter MIREFERRAL aglan Cou ON as apinasta iinn nanta one uh hn mat ia A minden i Figure 4 9 Select forms to print from the Batch Printing dialog box 5 Select the individual forms to print 6 Click Print and then click Print again If printing proformas for multiple return types additional Proforma Options dialog boxes appear Select additional options and click Pro cess 1040 1120 1120S 1065 etc to proceed In the Options dialog box you can click Test Print to test print a pro N DOTES forma or organizer In the Batch Printing dialog box you can click Detail to preview the documents to be printed Preseason letters can also be printed in batches apart from proformas and organizers See Letters on page 277 Tax Year 2010 73 Scheduler Drake Software User s Manual Scheduler The Drake Scheduler is used to set up appointments for preparers It has the following new features in 2010 Scheduler e Ability to print proformas and organizers directly from the Appointment Detail dialog box See Organizers and Proformas on page 70 e Amore user friendly calendar view that displays date being viewed See Figure 4 10 on page 75 e Anew easier process for applying a preparer s scheduled times to multiple days of the week See Establishing Daily Schedules on page 76 e Ability to create a report generated list for e mailing ap
189. 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 In Setup gt Options Administrative Options the option to charge all tax payers 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 ae 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 32 A macro is a combination of keys that allow you to accomplish tasks faster Edit exist ing macros or create new ones to meet your office s needs Also called shortcut keys macros are already available in the program for example CTRL V opens View mode You can also use macros for data that is used often by your office For example if
190. Software User s Manual 6 Inthe 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 294 and click Continue 7 Select an option for displaying the depreciation list e Print to Printer Send the list to the printer When the Print dialog box is opened click Print e Export to File Save the report as a CSV file To open the saved file go to your Drake10 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 From the Home window select Reports gt Fixed Asset Manager 2 Click Edit Macros to open the Fixed Asset Manager Macros dialog box This box has three drop lists one for type of Report one for Depreciation method and one for Style 3 Select a report type depreciation method and style for each report to be printed under the macro 4 Click Save to save your changes and return to the Fixed Asset Manager dialog box Figure 12
191. Spouse Head ot borse bokd wit qualityhg person See page 15 Nte qualtiyg person k achiki brtactyourcepeack at ertr thls chikis name bere O Depenck its soclal securty number Depenck its ch relationship byor bre 00 00 661150n_ Bomes checked o 6a and 6b lt No otchikires on 6c who ineciwitt you 3 IT dki not ihe with or separation Gee page 18 Abigail Brown Deperde rt or 6c vote ne red aboue Add numbers or Ihes above Figure 7 Enhanced Mode These five components are described in the following sections NOTE Toolbar Tax Year 2010 Basic mode the View and Print screens used prior to 2008 is avail able for those who prefer it see Table 6 1 The Enhanced mode toolbar consists of the buttons described in Table 6 1 Table 6 1 Enhanced mode Toolbar Button Description jis Leave View mode and return to data entry Data Entry Send selected forms to printer send selected forms to Drake PDF printer includes option to password protect PDF file e mail selected forms print the Print EF message page only D Set up form properties color and order Access other setup options available in Le bd the program Setup Access archiving features including the Drake Document Manager DDM E 7 aw Archive 177 Viewing and Printing a Return Drake Software User s Manual Table 6 1 Enhanced mode Toolbar Description E
192. 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 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 Drake10 CF LOGO BMP C indicates the drive letter to which the 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 20 37 Software Setup Naming a Template Press CTRL N to quickly access the
193. Time Homebuyer Credit Taxpayers who took the First Time Home buyer Credit for home purchased in 2008 must begin repaying the interest free loan in 2010 e Changes in Estate Tax Returns Title V of the Economic Growth and Tax Relief Reconciliation Act of 2001 EGTRRA repeals the following taxes Estate tax for decedents dying after Dec 31 2009 and before Jan 1 2011 Generation skipping transfer GST tax on direct skips taxable terminations or taxable distributions that occur after Dec 31 2009 and before Jan 1 2011 For more information on estate returns in Drake for 2010 see Chapter 14 New Features in Other Packages Contacting Drake Support In addition to the manual on screen Help and online resources Drake Software offers unparalleled telephone and e mail support Use one of the methods shown below to consult a member of the Drake Support team NOTE The 1040 filing deadline for 2010 is Monday April 18 Note that Drake s tax season support hours are effective through April 20 e E mail Support Support DrakeSoftware com Recommended for simpler Drake Software questions e Telephone Support 828 524 8020 Recommended for more complicated Drake Software questions e Fax Support 828 349 5718 We reply to faxes with faxes not phone calls Drake Support Hours 2010 2011 December 1 2010 April 20 2011 April 21 November 30 2011 Monday Friday 8 a m
194. To apply an adjustment to all future years or cases right click the cell with the adjust ment and select Carry Adjustment Across To access reports click Reports from the Tax Planner toolbar and select to print a Detailed or Summary Report Standard charts and graphics are also available To print Tax Planner data 1 Click Print Planner 2 In the Print Selector select your printing options e Sheet Selection Sheets pertain to specific tabs in the Tax Planner e Report Selection Select Summary Report Detailed Report or both e Copies Select the number of copies to print Tip To save your printing options as the default click Save Selection 3 optional Click Print Preview to preview your selection Use the scroll bar to view additional pages and then click Print To back up or restore Tax Planner files 1 Click Backup Restore from the Tax Planner toolbar Select the Backup tab or the Restore tab Choose a backup or restore location or browse to the location Choose the client files to back up or restore Select All Clients to select all Tax Planner client files To choose specific clients click Select Clients and enter a cli ent s Tax Planner filename Browse to a location as needed 5 Click OK oN Client Write Up 318 Client Write Up CWU is free to Drake clients 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 su
195. 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 To reset columns to the default view click Reset 2 Click OK to save your changes Other ways to customize the display click a column header to sort in Tip ascending or descending order adjust column widths by dragging the edge of a column to the desired width and double click a column header s right border to quickly size to fit 234 Tax Year 2010 Drake Software User s Manual Searching Updating and Filtering and Viewing Searching Updating and Filtering and Viewing Searching the CSM To find a return in the CSM click Search or press CTRL F to open the Find Client A Record text box As you type the client name or ID the CSM searches for and high oe lights the matching record Click Close to exit Updating the CSM C To incorporate the latest return updates when the CSM is open either click the lt 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 Filters allow you to control which records are shown in the CSM To select filters Fiters 1 From the Home window click
196. User s Manual 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 Copying EF Data Firms with multiple computers but no network might have to copy data from com puter to computer using a disk 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 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 3 Select the output drive from the Select Drive drop list 4 Click Copy Files Figure 7 13 Select Drive D CD ROM Drive Drake1 OSE xport x Commo ts Figure 7 13 Copying files to CD 5 Click OK after files are copied Copying From a Storage Device To copy EF information from a data storage device to a computer 1 From the Home window 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 208 Tax Year 2010 Drake Software User s Manual About State E filing About State
197. User s Manual gt iD rake D gt moro ENARE Drake Software User s Manual Tax Year 2010 Support DrakeSoftware com 828 524 8020 Drake Software User s Manual Copyright The 2010 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 2010 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 2010 Drake Software User s Manual Table of Contents Table of Contents trod UCHO essaia 1 A
198. W 2 or Form 1099 R 104 Form 4868 Application for Automatic Extension 149 161 Form 4952 Investment Interest Expense Deduction 124 125 Form 4970 Tax on Accumulation Distribution of Trusts 133 Form 4972 Tax on Lump Sum Distributions 133 Form 5405 First Time Homebuyer Credit 6 102 103 142 Form 5695 Residential Energy Credits 127 Form 5884 Work Opportunity Credit 130 Form 5884 A Credits for Affected Midwestern Disaster Area Employers 130 Form 6198 At Risk Limitations 98 107 Form 6251 Alternative Minimum Tax Individual 24 125 Form 6252 Installment Sale Income 100 155 Form 6478 Credit for Alcohol Used as Fuel 130 Form 6765 Credit for Increasing Research Activities 130 Form 6781 Gains and Losses From Section 1256 Con tracts and Straddles 98 Form 706 United State Estate and Generation Skipping Transfer Tax Return 322 Form 8082 Notice of Inconsistent Treatment or Adminis trative Adjustment Request 123 Form 8275 Disclosure Statement 163 Form 8275 R Regulation Disclosure Statement 163 Form 8283 Noncash Charitable Contributions 124 125 Form 8332 Release of Claim to Exemption for Child of Divorced or Separated Parents 163 Form 8379 Injured Spouse Allocation 163 Form 8396 Mortgage Interest Credit 130 Form 8453 U S Individual Income Tax Transmittal for an IRS e file Return 201 Form 8582 Passive Activity Loss Limitations 98 107 109 Form 8582 CR Passive Activity Cre
199. WN ARROW on your keyboard to move from term to term Search The Search tab Figure 10 10 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 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 Two types of help are available in data entry field help and screen help Field Level Field help provides information about a selected field To access field help click Help inside a field and press F1 or select View Help from the right click menu The help for the selected field is displayed as shown in the example in Figure 10 11 Drake Software Data Entry Help 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 ee Se T aA Figure 10 11 Example of field help Tax Year 2010 251 Software Support Drake Software User s Manual 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 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 Fi
200. 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 Schedule aS fe P gt Click Apply and then click Save to save the schedule See Scheduler on page 74 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 Click Print The Report Viewer displays the current preparer listing aa Click Print and then click Print again PYN Click Exit to close the Report Viewer Click Exit again to close the Preparer Setup dialog box See Report Viewer on page 297 for more on using the Drake Report Viewer To search for preparers entered into the program 1 From the Drake Home window go to Setup gt Preparer s 2 Click Search Pa Search 3 Enter preparer information in the Find 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 5 Manual Supplement Pay Per Return PPR available on your Drake CD and on the Drake Support site at http Support DrakeSoftware com Training Tools gt Manuals Directories and Paths Setup Directory and path settings which mana
201. a substitute for obtaining help from Drake Support 248 Tax Year 2010 Drake Software User s Manual Online Support Other Resources Drake Software Downloads Prior Year State Programs Release Notes Conversions Publications Marketing Kits Partner Programs Tax Year 2010 The Drake Support site offers a wealth of additional resources such as information about webinars trade shows live training sessions update schools Drake s Tax Plan ner the DDM and CWU You can also view helpful publications and download prior year Drake programs prior year release notes and software for converting data files from other tax software programs into Drake 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 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 Tools gt Download Center on the Drake Support site and then install the updates within Drake Software Tools gt Install Up
202. able to the return Once these calculations are complete e The product flows to the Allowed Losses and Deductions in Current Year col umn of the adjusted basis worksheet generated when the return is calculated e The difference between the total losses and deductions and the allowed losses and deductions flows to the Disallowed Losses and Deductions in Current Year col umn of the adjusted basis worksheet generated when the return is calculated Enter prior year unallowed losses in the Prior year carryover losses and deductions column which spans the Basis Worksheet screen see Figure 5 32 and Basis Work sheet continued screens The program automatically updates prior year unallowed losses entered in the 2009 program 113 Farm Income Drake Software User s Manual 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 OF DUSINESS eels b Netlosses from rental real estate activities eee c Netlosses from other rental activities eee d Net short term capital losses eee d Netlong term capital losses P e Other portfolio losses T Netlosses under Section 1231 g Netlosses under Section 1256 ecccecsecseeseeseeseesnesneeneeneeneene g Net short term capital losses not portfolio eee g Netlong term capital losses not portfoliO eee eeeeeeeeeeee
203. address and display name and suppress notification messages To view the Setup menu go to the Home window in Drake and select Help gt E mail 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 Address 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 an e mail mes sage that contains an attachment select the Hide Attachment Open Warn ing check box NOTE Setup options are not available if you access the e mail program from within data entry Once you have selected Help gt E mail from the Home window you have three ways to check yo
204. aff software security levels 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 cords and connections to be used during tax season Check scanner Review Drake recommended scanners If necessary purchase a scanner to use with the Drake Document Manager Purchase office supplies These include folders envelopes paper and toner Tax Year 2010 Drake Software User s Manual Appendix A Preseason Checklist Install and Set Up Software LJ Review system requirements for installation See System Requirements on page 7 L Install the 2010 Drake Software CD Refer to your shipment letter or see Installation on page 8 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 L 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 10 L Perform configuration updates Update configurations for firm information macros etc from the p
205. age window Figure 10 18 You can double click a key word to add it to the body of the e mail In the Figure 10 18 example the preparer has begun the letter with the greeting Dear lt TAXPAYER NAME gt l Se OOOO O D H OIF To Attach Help Exit l To Report Generated Recipient List New Clients s of 10 15 2010 Edit Send E Subject Attachments Add Dear lt TAXPAYER NAME gt Keyword Selector TAXPAYER NAME RETURN TYPE PREPARER NAME FIRM NAME FIRM NUMBER just wanted to take a moment to let you know that if you have a question about the status of your lt RETURN TYPE gt you should feel to contact me at any time Thank you for letting us be a part of your tax team Sincerely lt PREPARER NAME gt lt FIRM NAME gt lt FIRM NUMBER gt hagas nt ncn nantes o N E nem ation a a y T T onan 4 Figure 10 18 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 write or 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 the other e mail addresses in the recip ient list In other words they will be unaware that others are receiving the same e mail NOTES To delete th
206. al Click Include Test Returns if you want to include Drake test returns in the export 5 Click Continue 6 Click Exit when the export is complete 272 Tax Year 2010 Drake Software User s Manual File Maintenance 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 9 enter the SSN or EIN of the client file to password protect Drake 2010 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 a Enter password Confirm password Continue Figure 11 9 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 N oO oF Ifan SSN or
207. ales 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 26 108 Tax Year 2010 Drake Software User s Manual Supplemental Income 7 Cleaning and mamtenance aaa a 8 Commissions e eee 9 Insurance G PMI 10 Legal and other professional fees 11 Management fees ae lis Se Oe eee ee Figure 5 26 If the PMI box on line 9 of screen E is marked the program displays a PMI indicator on the Schedule E Rental of Enter income from rental on personal property on screen 3 Enter expenses if any on Personal screen 4 in the Expenses from casual rental of personal property field under line Property 36 Do not use screen E Schedule K 1 Screen codes K1 Screens for Schedule K 1 are accessible from the Income tab The program contains TE AIS 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 NEW FOR For K 1 forms with a 2D barcode you can now scan the
208. all tax return preparers must register for a PTIN and pay a 64 25 annual fee See Contact the IRS on page 1 of Appendix A for details Obtain Circular 230 Beginning January 1 2011 all tax preparers must com ply with the standards of conduct set by Treasury Department Circular 230 See Contact the IRS on page of Appendix A for details Know the applicable banking requirements In addition to consulting your bank s handbooks and brochures see Chapter 8 Banking NOTE A detailed flow chart showing the e filing process as it occurs for most Tax Year 2010 tax preparers is included in Appendix B 189 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 and have an Electronic Filing Identification Number EFIN 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 Be aware that processing can take up to 45 days If you are a new ERO this year you must submit the following items to the IRS e Form 8633 Application to Participate in IRS e file Program online e A set of IRS authorized federal fingerprint cards for each principal and responsi ble official of the company not required for attorneys CPAs EAs officers of publicly held corporations or banking
209. 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 Any 7 Client New is True Additional Report Options Sort Summarize Report by this field lt None gt JI Summarize the Report Data Use Data from 2009 L Report output file name New Clie aian aa aai ne EON Ap sent ns mame aire E nn nate ln ste nn E e teeta Figure 12 3 Report Editor Step 2 window top half 2 Select a pre defined or custom filter from the Select a Report Filter drop list Note that a Filter Description is displayed when a filter is selected Figure 12 4 Filter Selection Select a Report Filter Clients with Schedule C X Edit Filters Filter Description Return Type is 1040 Schedule C is present Figure 12 4 Filter that includes all 1040 returns with a Schedule C 3 Click Save Tax Year 2010 291 Setting Up a Report Drake Software User s Manual Customized Use a pre defined filter as a template for creating a customized filter Be aware that Filters 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
210. amount directly into the Foreign Tax Credit field on screen 5 See Figure 5 37 Ope eel mt ten ad TET tet an y UT mn ee TE mei pe oat ating gee GD at os my Other Taxes ST RRT Oona upaa ERECTA Gp OE 65 Excess Golden Parade payimieniis aae aaa a aS the P p O T T E E e a a N aani n Aaaama leh a r in Figure 5 37 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 Tax Year 2010 125 Child and Dependent Care Expenses Credit Drake Software User s Manual 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 94 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 the return receives reject code 0973 on Form 1116 a statement must be entered as statement number 98 99 or 100 indicating the line of the form and stating how the foreign currency was converted into U S dollars For information on adding unfor
211. an appointment from the Scheduler Appointment Delete 1 Double click the appointment time slot in the Appointment Scheduler Click Delete in the Appointment Detail toolbar Click Yes to confirm the deletion Click OK to return to the Appointment Scheduler PYN Searching Appointments Find Find scheduled appointments by searching keywords from the Appointment Details Scheduled information for all clients To search for a client s appointment in the Scheduler Appointment 1 Open the Scheduler and click Search Appts to open the Scheduler Search 2 Enter one or more keywords in the Enter Search Terms field The program will search all Appointment Detail information for these keywords 82 Tax Year 2010 Drake Software User s Manual Scheduler 3 Select a date from the Start at this Date drop list The program searches for all appointments scheduled for that date and after 4 Click Search Results are displayed in the Scheduler Search window as shown in the example in Figure 4 18 E Drake 2010 Schedule Sou Enter Search Terms 400006665 Start at this Date 12 3 2011 ID Num Prep Name Time 01 05 2011 William amp Amelia Carter 400006 Dood 1 00 PM 03 28 2011 William amp Amelia Carter 400006 Dood 1 00 PM Open Search Cancel Figure 4 18 Scheduler search results Double click an appointment row to view appointment details Creating Appointment Reports The Schedu
212. and for the accuracy of returns filed with the IRS and state tax authorities Drake Software Manual Tax Year 2010 Your Drake Software User s Manual Tax Year 2010 is an electronic document with a comprehensive index for quickly finding the information you want You can save the manual to your desktop or print your own copy It is available from three locations e Drake Home window From the Home window select Help gt Drake Soft ware Online Manual to access the online version of the manual e Software CD The latest version of the manual is shipped with each CD e Support website Select 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 MPORTANT 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 239 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 of Drake s online
213. and interest amounts Prog ram that would otherwise be calculated by the program Calculations e Failure to file penalty Enter a 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 preparers compare and review information more effectively include all required details on a return and track a return s progress Comparing Data 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 Tax Year 2010 167 Other Special Features in Data Entry Drake Software User s Manual Cross checking Drake Calculations Screen code CHK Comparing Tax Returns Screen code COMP 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 66 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 previously prepared return regarding income taxes credits deductions banking etc a Exit the CHK
214. and passwords students can log in to ETC on their own 242 Tax Year 2010 Drake Software User s Manual Online Support NOTE The CTEC fields in the Admin and student account sign up pages apply to CA preparers who want to receive CTEC approved credit Admin accounts are created using the Need to sign up section Figure 10 3 Need to sign up It s easy to get started with Drake ETC We ll begin by creating your admin account First are you a Drake customer Yes ONo Figure 10 3 Need to sign up section of ETC Home page To create an Admin account 1 Ifyou are a Drake customer select Yes and click Submit 2 Enter your EFIN and Drake password from your packing slip and click Submit 3 Inthe Welcome Office Administrator window complete all applicable fields To earn CPE credit for completing ETC tax courses select Yes from the drop list 4 Click Save Information When the system has saved your data click Next If you are not a Drake customer but are visiting the ETC home page go NOTE to the Need to sign up section select No and click Submit Next fol low the directions on the screen 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 click Save Information Logging In To log in to ETC 1 Go to the Drake Support site and select Training Tool
215. and pick up free marketing kits from the IRS From the Drake Support site click Partner Programs to access information on Drake s bank and other partners Dnet Internet Services NELCO Solutions forms and checks and Crown Money Map financial software 249 Software Support Drake Software User s Manual Drake Drake clients have exclusive use of the Drake Advisory Group DAG DAG consists Advisory of retirement specialists advanced underwriters and attorneys who can help your firm Group assist your clients in minimizing tax on Social Security benefits estate tax planning and reduction retirement planning and business continuation and restructuring When you work with DAG 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 launch the process of working with DAG 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 DAG for review Based on that information DAG 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 DAG s professionals can pa
216. anual release of claim to exemption Form 8332 163 state related data 88 tuition and fees deductions for 122 depreciation see also depreciation schedules see also section 179 expensing elections 155 in data entry 150 155 of farm assets 115 of home 153 157 of sold assets 154 of traded assets 101 reports and lists 297 300 stopping depreciation on an asset 154 depreciation schedules for 2009 24 generated in Drake 150 layout portrait or landscape 23 detail Ctrl W worksheets 58 59 direct debit consent Form 8879 149 from multiple accounts 146 of balance due 145 146 of estimates 146 direct deposit of bank products 202 216 of refunds 143 144 to multiple accounts 143 direct expenses on Schedule E 108 directories and paths 20 21 disabling grid data entry 58 disaster payments farm 114 special tax treatment due to 45 disposal of property 107 distributions charitable 103 distributions HSA funding 103 dividends and interest 93 95 document control numbers see DCNs Document Manager installing 8 printer setup 43 using 301 313 dollar rounding 26 domestic production activities deduction 123 DOT hours of service rules meals subject to 97 downloading ABC Voice Files 206 automatic updates 264 conversion software 249 Drake tax software 249 e mail messages 253 fonts 266 prior year state programs 249 Tax Year 2010 Drake Software User s Manual program updates 263 publi
217. ar 2010 Drake Software User s Manual Software Support 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 NOTE F Drake10 Help FixHelp exe on each workstation Replace F with your server drive letter Access Help System items by using the Contents Index and Search tabs Contents Index Type in the keyword to find Gere index Search Contents Cladex Search Type in the keyword to find ferganizer List Topics Select Topic to display Blank Forms Figure 10 10 Contents Index and Search tabs Contents Arranged in a Table of Contents style the Contents tab Figure 10 10 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 Index The Index tab Figure 10 10 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 DO
218. ard The purpose of the Step 2 Demographic Information 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 tax payer and spouse if applicable If you select SMS text messaging you ll also need to select the cell phone carrier from the second drop list The program uses the e mail address and cell phone number provided 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 The Security Information section of this screen contains questions intended for the preparer s clients to answer The taxpayer and spouse will have to able to answer these same questions if they want to log in to the EPS Financial website espfinancial net and set up an online account As Step 3 of the process enter the 12 digit PRN Payment Reference Number as shown in the window of the E1 Card envelope Re enter it for verification purposes As the final step in the E1 Card application process click the Apply for E1 Card but ton to retrieve the account information including the application results and card RTN account number necessary from the card processor The data retrieved allows Drake to know whether the card has been
219. are overrides If selections are made on both screens the program disregards the ES screen selection and uses screen 1 Tax Year 2010 135 Estimated Taxes Drake Software User s Manual Estimate ES codes are shown in Table 5 10 ES Codes Table 5 10 Estimate Codes in Drake ra Description blank Does not generate estimate vouchers P Generates estimate vouchers with no dollar amounts X Generates estimate vouchers with payments rounded to nearest 5 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 47 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 inf
220. aring to H File p eccessu Kida desbdagded doa gdibda anes a a E E noes 190 E filin oa Retie apeere bead his dra ies Grease Mena dead Das GG GEG ead EEA 191 EF Override Options in Data Entry 20 ent n nee eens 198 EE Data DAS Cassa eect atacecsene a aaah E tania Moe anan E A Sine Se teen Bees ata ALI ine E A 201 Online EF Database 203 0636 cher rerne n nie whoa cbse neh baa eed bebee deers 204 Copy mg EF Data x pc didn vate dion alee keene nme bale e del ed Bead ele eile Re ee enh 208 About State E filing ss sca cond peta eee es Vee Ee se OAS Ss VOT Ok Ces sed hee ed Rae 209 BT rieira ee 211 Tax Preparer Requirements 0 ccc eee n teen eens 211 Taxpayer Requirements 2 0 ccc eee nen en tenn eee eens 213 Franchise Network Requirements 1 0 0 0 00 c cece teen teen teen nee 214 Pypes Of Products sperrer tntu ans ben EE Ramee Miele Pee Teele oda ewe eee eens 215 Distribution Methods srein utida Gad deo hh a aad oe gad edd thi eh lw adit 216 Preparing to Offer Bank Products 0 00 ett teen eee nents 218 Using Bank Screens in Data Entry 2 etn nen e ene n eens 222 Bank Product Transmission 0 0 0 tent tet e nent nent eens 224 Processing the Check 230 005 c3aees beter bk eek eid hie wed beh eed oben 225 Troubleshooting Check Printing 0 cee een tenet nents 227 Cancellations Tracking and Post Season Procedures 0 0 0c ccc eee ene eee 229 Client Status Manager isis obscene es acc lt
221. asic taxpayer information along with 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 transmission record for the client file is displayed State acknowledgments Under State the middle 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 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 on page 202 The F2 Bank Direct Deposit tab contains detailed data about any bank products Bank information is located on the left side of the window Direct deposit information involving bank loans is located on the right side of the window This information includes amounts paid to the bank amounts paid to the preparer and the dates of the payments Information on direct deposits not involving bank loan fields can be found at the bottom of the window For the federal state and loan status an account type and number are displayed for each type of direct deposit The F3 Fees Miscellaneous Info tab contains general return information about the
222. ast year s clients encourage clients to use organizers Estimate payment reminder Remind current year clients that estimate payments are due provide instructions for sending payments Appointment reminder Set up current year appointments with prior year clients EF status letter Provide acknowledgment status of e filed return Engagement letter Enter into contract with clients to prepare their tax return Tax Year 2010 277 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 34 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 13 Select letter to print for clients Post season for 2010 Clients Pre season for 2009 Clients Individual Estimate Payment Reminder for 2011 Scheduled Appointment Reminder fo
223. ate City Description Acquired Sold Sales Price Cost Basis AMT Cost Basis S L Misc r F F A O E T E Y E OOOO NE AE E EOE T T E Figure 5 17 Screen D fields as columns in an Excel worksheet 99 Sales of Assets Importing Saved Data Drake Software User s Manual To import the information Open the client s file to the Data Entry Menu and click Import gt Schedule D Import from the toolbar The Schedule D Import instructions are displayed Click Next to open the Schedule D Import dialog box Click the button to the right of the 1 Import File Name field Locate and select the file to be imported IRUN Click Open The data path and file name should be displayed in the 1 Import File Name field Figure 5 18 and the transactions displayed in the Schedule D Transaction Information grid below it 1 Import File Name C Drakel ONFT FILENAME XLS al Figure 5 18 File name includes data path file name and file extension 6 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 item 2 7 Click Next 8 After verifying that the information is correct click Finish Screen D is opened listing all imported transactions If more than one screen D is required an Existing Forms List is shown Double click a row to view the screen Sales of Assets 1099 S Transact
224. ate the report again using current data click Yes to do so sd Set the report s date range by typing start and end dates in the Value fields 6 Click Continue The report is displayed in the Report Viewer See Report Viewer on page 12 for more information on the Report Viewer 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 7 E filing 84 Tax Year 2010 5 Return Preparation This chapter focuses on how to prepare Form 1040 U S Individual Income Tax Return using Drake Software It describes procedures for entering data for and pro ducing Form 1040 and the supplemental forms schedules and other documents that might be part of a tax return This chapter assumes a basic understanding of data entry in Drake If you are not familiar with Drake data entry please read Chapter 3 Basics before attempting to prepare a tax return in Drake The amounts that appear on a Form 1040 return consist of directly entered data and program calculated data based on the numbers entered by the preparer Screens 1 through 5 of the program provide fields for dir
225. ated 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 5 5 State Information AR LA NY EIC NY 272 PA Months Date of Oee inde nam DON Tht ANA ieil Figure 3 5 Example of a State Information section for federal to state links In the past returns with multiple instances of the same form such as partnership returns that had numerous partners required extra steps to organize the forms Screen tabs eliminate the intermediate steps previously required In Drake s 1040 package the K1P K1S and K1F screens contain tabs to associate the K 1 screens Schedule K 1 now requires two screens in Drake and to associate the two sections of the basis worksheet with a particular K 1 issued to the taxpayer Drake 2010 Data Entry NNN Carter William amp GArmelia ANNIES Ei Schedule K 1 for 1065 1065 K1 1 12 1065 K1 13 20 Basis Worksheet Basis Worksheet continued ts s v le st W zc Passive Activity No Partnership ID number Figure 3 6 Tabs on the K1P screen for an individual 1040 return Creating and Opening Returns 54 When you enter an ID number SSN or EIN the software searches both current and prior year files If it finds a client record
226. ates 38 print order settings 43 statuses in the CSM 232 Tax Planner data 318 RET Refund Electronic Transfer 215 retirement income 103 106 return options 46 returns amending 160 archiving 187 188 calculating 173 176 191 comparing data between 167 creating 55 e filing process 189 209 e mailing to Drake 254 entity packages 990 1120 1120S 1065 319 322 estate 706 275 321 extensions 161 fiduciary 1041 50 115 filing late 165 gift 709 162 indicators on 45 late filed 165 non resident 161 NOTES pages 175 opening 55 233 Pay Per Return PPR 20 practice 65 246 preparation of 85 172 pre prepared entry 284 Tax Year 2010 Drake Software User s Manual printing 176 requesting copies from IRS 163 splitting 62 state 64 199 200 statuses of 231 storing information in DDM 301 313 tracking information on 171 updating from prior year 67 70 viewing and printing 176 182 RIA Checkpoint 252 River City Bank 215 rollover of pensions annuities 104 Roth IRAs 5 105 rounding amounts 26 royalties 106 RT Refund Transfer 215 S S corporations changing from C corps 274 sale of residence 102 sales tax 172 saving previously prepared returns 187 scanners 8 306 310 311 scanning 2D barcode 2 89 109 DDM files 310 Schedule A Itemized Deductions and application for tentative refund 159 depreciation schedules for 150 entering data for 124 printing 24 44 Schedule B Interest and Ordinary Dividends en
227. atus bar Provides system and update information item 6 in Figure 3 2 e Personal Client Manager PCM item 7 in Figure 3 2 personalized version of the Client Status Manager see Personal Client Manager following for more information e Enable Privacy Hides the recent return list the PCM and the preparer notes Click Disable Privacy to view the list again e 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 i B Drake 2010 Tax Software File EF Tools Reports Last Year Data Setup BS DO Open New Calculate Print View Recent Returns Key Ted s Tax Exempt 3 1 See Corp 2 ee fatsa Help Z sg Research CSM Scheduler Print Vie Enable Privacy Personal Client Manager Client Name Type Status Started ABCD ALPHABETIC SIGNS LLC 1120 Updated From 2009 ALABAMA UNDERPAYMENT CALCU 1120 In Progress ALL SEASONS SUPPLIES AND T 1120 Updated From 2009 BANK OF ENGLAND 1120 Updated From 2009 BUSINESS TAX PAY AGREEMENT 1120 In Progress CORP 2 NEW ASSETS lt 250K 1120 Updated From 2009 CORP 6 PERSONAL HOLDING CO 1120 Updated From 2009 CORP 8 PER SERVICE CORP 1120 Updated From 2009 CORP TAX RATES F
228. ayment of tax penalty and interest on late filed 1040 returns You can manually enter interest rates as needed and override certain compo nents such as interest owed that affect system calculations of penalty and interest Penalty and Interest Calculation Global Option Tax Year 2010 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 To have the program calculate penalties and interest for all late filing clients based on 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 63 Interest and Penalty Calculation Formats must be entered as For example 1 5 would be entered as 01 50 415 6 3011 jooo 7 1 9 3012 ooo 10 1 12 31 13 ono 741 930711 ooo 10A 12 31 12 0000 1 1 3 3114 ooo 10M 12 31 11 ogo 1 71 331 713 ooo 1 630714 foo W1 3 3112 0000 4 1 6 30 13 foo oo 7 7 9 3014 ooo 4 1 6 3012 o 71 9303 fogog 10 1 12 31 14 0000 Figure 5 63 Interest and Penalty Calculation section Setup gt Options gt Optional Items on Return 165 Features for Late Filed Returns On the Fly Option Other LATE 166 Screen Features Interest Rates Manually Entering Rates 3 Drake Software User s Manual Click OK The program
229. be used to determine whether or not the tax preparer is subject to the e filing requirement If a tax preparer files 50 or more returns in 2011 then 90 of the returns must be e filed Tax return preparers who file more than 10 individual income tax returns will be required to file their clients returns electronically The mandate will first apply to 2010 individual income tax returns due on April 15 2011 and follows a federal return mandate enacted by Congress in 2009 The e filing mandate requires tax preparers filing more than 100 individual income tax returns to do so electronically beginning January 1 2008 as authorized by Louisi ana Revised Statute 47 1520 The e filing requirement will be phased in as follows e For returns due on or after January 1 2008 30 percent of the authorized individ ual income tax returns must be e filed e For returns due on or after January 1 2010 60 percent must be e filed e For returns due on or after January 1 2012 90 percent must be filed e filed Maine Rule 104 states that for returns filed in calendar year 2010 or any subsequent year if the tax return preparer filed more than 50 individual tax returns eligible for e file in the previous year the preparer is required to e file all original Maine tax returns For employers with 50 or more employees with Maine withholding after 2008 they must e file all tax returns for quarterly and annual reconciliation for Maine income tax withholding
230. bout Your Drake Software User s Manual 000 c ccc nee e eee eens 1 What s New in Drake for 2010 0 nent tenn een teen eens 1 IRS Changes and Requirements 0 0 0 ccc eee en tenn teen ene nes 4 Contacting Drake Support sas siteu aca add daa he denen eee dw Erb edd E aioe wate band a 6 lnstallation amp Setup srren anar arara ERARETO EEEE 7 System Requirements nonunion nnne 7 Installation sess iors cou cea BA ees SEN A ee a a heed Roe E AN ele E amp 8 Running Drake on a Network 2 0 0 eee eee eet E EE 10 Software Setup lt 2 3 nied e e Phe nek de neta hee bee a Rae Rha Ria thee eek weds 13 Making Changes on the Fly 0 ccc cece nett nent e teen ene e ee eeeennes 43 BUSS ceia Ea e pe 51 Logging mand Outs i srcsrie 5 ogres RAE ina EEEE EEEE EEE EE OE EEEE ERE EE EEE E 51 The Home Window scree beetere ba cere Erin beh ES E EO a wren E a S 51 General NavigatlOMs esineen er che eae dain goad Saree d Aare eRe a ww Oe ben a whee Re Waele ae 53 Creating and Opening Returns 1 6 ene e teen e eee n eee 54 D ta AMI ys ones e eaa a tease a ae ied eh We E E end Gre nnenh ed ba A G8 Ra eld E O We antes E R Boe ional 56 State RemMimMs a ies anaa aa aang ihe pede tk ale a te wees ang A GE sade keg tee heats 64 Practice Returns and Test Returns eosin erni eea e AERE eee t E A 65 Preseason PRO DALAM OI isis viccctccntastvsssunccdiecnencmetssanstnnstinacanestbintasecedecennnanns 67 Prior Year Updates ia n2 cowed ne
231. 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 NEW FOR You can now print organizers and proformas from the Scheduler From the Appointment Detail toolbar in the Scheduler click Proforma or 200 Organizer and follow Step 3 through Step 5 in the procedure below For more on the Scheduler see Scheduler on page 74 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 ofthe following tasks e Enter the client s SSN or EIN and press Add Client Repeat for additional cli ents and then click Next and wait for the program to scan the client files See Filter e Click Next and select filtering and sorting options as desired Click Next phere BE MoE 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 Options dialog box is opened Figure 4 8 select the desired options 72 Tax Year 2010 Drake Software User s Manual Organizers and Pro
232. cal culations If the state K 1 amounts differ from the federal you can manually enter the state amounts in the State column of a K1 screen Figure 5 28 Amounts from K Federal 1 Ordinary income loSS 0 0 eee ssid az 2 Rental real estate income loss 3 Other rental income loss A Interest income ccecneeenereeneeeneree 5a Ordinary dividends E ate E T EN paama TP T Figure 5 28 Some of the Federal and State K 1 columns from screen K1S In some cases an entity will issue Schedule K 1 forms for multiple states requiring 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 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 110 Tax Year 2010 Drake Software User s Manual Supplemental Income K 1 Exports 0 0 0 K1 Export Tax Year 2010 6 7 From the first page of the screen press PAGE DOWN to start a new screen 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 29 Select a state from the ST drop list In Figure 5 29 below North Carolina has been selected See Figure 5 29 Schedule K 1 for 1120S 1120S K1 1 11 1120SK1
233. cations 249 W 2 information 91 drag drop ordering 186 Drake Document Manager see Document Manager Drake PDF password protection 180 printing to 177 Drake Software CD installation process 8 contact information 260 online forums 248 partner programs 249 shipment letters 6 Drake Support 239 261 Drake Tax Planner see Tax Planner due date to print on letter and instructions 45 due diligence screens for EIC 140 for First Time Homebuyer Credit 142 E EA see enrolled agents Earned Income Credit EIC advance payments 132 blocking EIC calculations 141 due diligence 140 in data entry 139 141 interview questions 28 preparer checklist 139 editing see also adding and deleting firms 15 letter templates 37 printer settings 40 43 education expenses 122 student loan interest deduction 122 educator expenses 118 EF see also e filing database 201 203 messages 175 online database 204 status letter 277 status page 27 e filing acknowledgments 195 196 checking e mail while 27 combining steps for 27 delaying 169 eliminating EF messages 192 extensions 161 199 Tax Year 2010 Index identification numbers see EFINs imperfect returns 197 installment agreement requests 163 mandates 4 see also state mandates marking Ready for EF 198 messages 175 online database 204 override options 198 overview Appendix B PIN signature for 148 process 189 209 requirements for first year e filers 16 Schedules C and C EZ
234. cel 282 Tax Year 2010 Drake Software User s Manual Install State Programs 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 If the States Available panel stays empty select another location Select the location of the state installation files Install State s from this Drive FADRAKE1 0 gt Install State s from the Internet Figure 11 14 Install state programs from computer CD or Internet ae Choose the states to be installed 4 Click Install The progress bar identifies the states being retrieved and installed Tip Check for updates after installing state programs to ensure that you have the most up to date information Repairing State Program Files Scheduler 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 replac
235. cel xls files To create a new text Word or Excel file 1 From the DDM toolbar click File 2 Inthe menu that is displayed select New lt Text gt File New lt Word gt File or New lt Excel gt File The applicable program is opened when you click a selection Save files to F DrakeDDM Cabinet Drawer Folder Subfolder replacing F with your drive letter For instance you might save client correspondence at C DrakeDDM Clients Bob s Business 2010 Tax Year 2010 Drake Software User s Manual Document Manager File Security When DDM files are password protected a password must be entered before the files Other Tasks Tax Year 2010 can be accessed DDM passwords have an eight character limit and are case sensitive To assign a password to a file right click a file and select Password Protection Enter the password twice and click Continue To open a password protected file double click the file or select the file and click Open Enter the password and click Continue To remove or change a password right click the file to open the Password Protection dialog box Enter the password and click Continue When prompted to enter and re enter a new password do one of the following e Enter a new password twice to change the password e Leave the password fields blank to remove password protection Click Continue and then click Yes if removing password protection NOTE To require a password for opening
236. cel 2007 a Preparer Web Site Page Not Found 5 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 3 Bank Products for OLF 5 09 07 10 Broadcast OLF We re Improving Preparer We 4 1040 com Preparer Revenue Checks Sent Twice a Year a Cannot Open Saved Tax Planner in Excel 2007 u Preparer Web Site Page Not Found a Dependents Not on 1040X Top 10 Frequently Asked Questions 5 CWU Why do I get a malicious script error when trying to update 4 How do I send paper documents with an e filed 1040 return toon moti What dagen Authemicationdailed mean when trying to TANER Rinman nanannttink maant mnan wnae a Te Figure 10 1 KB tabs item 1 search fields item 2 and suggested articles item 3 Begin your queries by viewing the Latest Articles those most recently published or changed Hot Topics those most viewed in the past month and Top 10 Frequently Asked Questions See item 3 in Figure 10 1 Next search for specific articles ques tions or terms using the five tabs listed in Table 10 1 240 Tax Year 2010 Drake Software User s Manual Online Support 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 see also Searching the KB following Browse Open folders containing all arti
237. cess 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 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 preparer 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 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 access 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 Combine the proforma codes and heads down mode to move efficiently to the proper areas of a screen for data entry To work in heads down mode 71 Organizers and Proformas Drake Software User s Manual 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 H 52525 525 3 SocSecwages 4 SocSecwh E 525235 3257 5 Medicarewages 6 Medicare taxw h 2 e TAAL FONET Figure 4 7 Numbered fields in heads down mode 3 Inthe Heads Down box at the top of the screen enter a field number in the first text
238. ch forms as W 2 1099 940 941 943 944 941SS and 944SS A num ber of reports including multi column profit and loss reports pre posted reports com parative or single column balance 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 A manual is also available on the Drake Support site at Training Tools gt Manuals gt CWU Tax Year 2010 1 4 New Features in Other Packages Chapter 5 Return Preparation focuses primarily on the 1040 package in Drake Instructions for using the software s other packages are provided in manual supple ments for each package to be published in spring 2011 This chapter lists some of the new features you ll see in Drake s other packages It also includes information on the estate 706 package which will be used for state returns only in filing season 2011 Entity Packages 1120 1120S 1065 990 Entity packages consist of the corporation 1120 S corporation 1120S partnership 1065 and tax exempt organization 990 packages As with the 1040 package these packages for 2010 feature more EF trapping improved EF messages and NOTES pages and a new EF message to help prevent filing a return that has already been e filed The following sections list descriptions of some additional changes to the
239. ck file was not posted to your EF database Run Repair Index in Drake D Drake Software User s Manual Appendix C Keywords Appendix C Keywords Keywords are used in the Reports and Letters programs in Drake Report Keywords Report keywords appear as columns in reports Figure 1 1 Reports are generated from the Report Manager New Clients As Of 0 ht axpayer D A Best Call Time enneth amp Jean Watson 513566120 1040 6169322411 nage had T a a T ee aa Figure 1 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 1 2 shows the keywords 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 Balance Due Taxpayer Best Call Time Child Care Credit lt lt Unselect All Child Tax Credit Child T ax Credit Additional Dividends Ordinary Total Education Credits Figure 1 2 Keywords are listed under available columns To view a keyword description hold the mouse pointer over a selected keyword F
240. cknowledgments 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 Setup gt Options EF tab and select Check for email during EF transmit receive Tip To have the system check for Drake e mail during transmission go to 194 Tax Year 2010 Drake Software User s Manual E filing a Return 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 Once the acknowledgments are received click Exit See Step 4 Process Acknowl edgments following for more information on acknowledgments Step 4 Process Acknowledgments When Drake receives your transmission it immediately sends you a one letter acknowledgment or ack When the IRS Submission Processing Center receives the return it sends an ack to Drake which you can pick up along with any bank and state city acknowledgments by logging in to Drake Ack To process acks go to the Home window and select EF g
241. cks 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 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 2 3 4 Ensure that paper for printing has been loaded into the printer Drake recom mends using a blank sheet of paper 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 Click Print in the Print dialog box Printing Checks for Bank Products Tax Year 2010 Before you print checks Be aware that the appropriate IRS and bank acknowledgments must be received before you can print checks Make sure the computer for EF transmissions has the correct date Make sure the check number on the computer matches the check number on the next available physical check D
242. cles 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 Glossary View a list of relevant tax and Drake Software terms How to Search View detailed instructions on how to use the KB search features to quickly the KB find relevant articles Searching To search for a topic or article in the KB the KB Browsing the KB Tax Year 2010 1 Under the Search tab Figure 10 1 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 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 Natural Language Allows you to enter a sentence in the Search field The KB pulls out matches to any words in the sentence 3 Click Click to Search Related articles appear in order of relevance with the most relevant first Click a title to
243. click Print again oe a 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 access the online e filing database and access RIA online tax research Fields needed for e filing 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 2 Enter General Information for the ERO Fields needed for e filing are marked by red text 3 Under Connection Settings choose a connection setting The default is Always use my existing Internet connection this setting works for most computers Contact Drake Support if you have trouble connecting to Drake 4 Ifapplicable select Advanced Options Transfer my files using Default is HTTPS Most computers transmit using this protocol My machine uses a firewall FTP users only Most machines using trans fer protocols of Regular FTP or WinSock FTP require that this box be selected This option uses a defined port range to transfer files 5 If your firm is a franchise or network complete the Franchise Network Infor mation fields See Franchise Network Requirements on page 214 15 Software Setup Preparer Setup Adding a Preparer 4 dd To apply for a PTIN complete Form W7 P and send to the IRS 16 6 7
244. click the applicable link provided in the 7216 Signature section at the top of the ECOL screen e El Visa Card fields A notification method and PRN must be entered if using the El Card For more information on these fields see The E1 Screen on page 217 If using e Collect you do not need to complete the E1 screen all required fields are provided on the ECOL screen Bank Product Transmission 224 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 this information to the bank e The bank sends an acknowledgment back to Drake e Ifthe bank approves a RAL it sends a Check Print Authorization or Debit Card Authorization acknowledgment This acknowledgment allows you to print the check It is normally posted on the Thursday of the following week if the return is sent by noon Thursday e Ifthe bank declines a RAL it flips the RAL to a non loan product If the non loan product is approved the bank sends an acceptance ack 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 Tax Year 2010 Drake Software User s Manual Processing the Check Your system pi
245. ct this option to print the RAL application fees withheld from the RAL amount on the bill 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 percent 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 multiplied 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 whatever option is selected here unless the Bill Summary option is cleared at Setup gt Options Optional Documents 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 s
246. culated in Drake Screen Form and Credit 8909 Form 8909 Energy Efficient Appliance Credit 8910 Form 8910 Alternative Motor Vehicle Credit 8911 Form 8911 Alternative Fuel Vehicle Refueling Property Credit 8912 Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds 8930 Form 8930 Qualified Disaster Recovery Assistance Retirement Plan Distribu tions and Repayments 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 2010 New in 2010 the program 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 Education Accounts section of screen 5329 Figure 5 41 131 Advance EIC Payments Drake S
247. d 134 Tax Year 2010 Drake Software User s Manual Estimated Taxes Estimated Taxes Paid in 2010 Federal Overpayment 2009 OP from 2009 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Ability to enter varying amounts for quarterly Date fielders are payments override fields Figure 5 44 Entering estimated taxes paid in 2010 Estimated Payments for 2011 Estimated payments for 2011 are shown on the payment vouchers in View mode All Forms Sets EF Federal Miscellaneous Figure 5 45 ES vouchers as they appear in the View Print directory Make estimated tax payments by debit card or credit card using the N TES ae e Payment r at www 1040paytax com MasterCard Visa or Discover E mail reminders can also be set up for the taxpayer on this website Printing Drake calculates the balance due and generates payment vouchers Form 1040 V but Estimate it does not generate estimate vouchers by default To have the program print estimate Vouchers vouchers you must indicate this manually You can do this in one of two ways ree e Select an estimate ES code on the ES screen shown at left oe zl e Select an ES code at the bottom of screen 1 Figure 5 46 Fed ST Estimated Tax zl z Overpayment code Invoice Number EA E AE S R E Figure 5 46 Estimated Tax ES code overrides on screen 1 Note in Figure 5 46 that the screen 1 fields
248. d Common Many screens in Drake have fields labeled TS F ST and City These fields shown Screen in Figure 3 19 are used to apply the data on the screen to the taxpayer or the spouse Fields or both on federal state or city returns Schedule C TS ls z rb zl st ar z city pT zl Figure 3 19 Screen code examples for Schedule C e 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 Tax Year 2010 61 Data Entry Associating One Screen with Another Splitting a Joint Return 62 aja Split Drake Software User s Manual 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
249. d click Next Drake 2010 QuickBooks Import Step 3 Business Type Select the type of business from the list below 1 Import File Name C Per1 0406 txt 2 Client ID Number 400000000 3 Business Type hd Corporation 1120 S Corporation 11205 Partnership 1065 Tax Exempt 990 Sole Proprietor 1040 e nll mea dines ia dheth chen E aa a agin adh ee h Figure 11 12 Step 3 Choose one of the business types listed 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 OTE prompted to convert the QuickBooks file while importing for example if there is an S corp 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 l
250. d item in the list below to fix the problem Package Code Description right click for full description Federal 5443 The asset s with the bad date has been ignored for the Federal 123 Form W 2 The following fields must be significant Name of Reporting Federal 5350 PIN signature is required for all returns to be e filed A PIN has Oe all Recital 40 paffe aiant a ae TE T Figure 6 3 Return in this example is ineligible for e file The EF Messages section lists e filing 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 191 The Return Notes section see Figure 6 2 displays informational notes about the return Thes
251. d pay the fee Attorneys CPAs and EAs are not exempt Drake has provided a short tutorial on the PTIN application process Go to Support DrakeSoftware com select Resources gt Preparer Regulation and click Tutorial under section under the Register heading Standards of Conduct Beginning January 1 2011 all tax preparers must comply with the standards of con duct set by Treasury Department Circular 230 revised October 2010 These regula tions extend current regulations which already apply to attorneys CPAs EAs and other specified tax professionals to all tax return preparers including currently unen rolled tax return preparers This circular is available on the Drake CD and at www irs gov pub irs pdf pcir230 pdf e File Mandates New mandates to e file are in effect for the tax year 2010 These mandates will be phased in over two years in the following schedule e January 1 2011 For preparers who anticipate preparing 100 or more federal individual or trust tax returns during the year e January 1 2012 For preparers who anticipate preparing 11 or more federal individual or trust tax returns during the year 4 Tax Year 2010 Drake Software User s Manual IRS Changes and Requirements 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 IRS Ending
252. dates 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 Resources gt 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 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 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
253. de Click the K1 Export button in the View mode toolbar The Export K1s screen lists all taxpayer SSNs for exporting All rows are selected by default optional Click a row to clear it if you do not wish to export K 1 data to all indi viduals listed 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 complete any state K 1 amounts if different IMPORTANT from the federal must be entered manually See State K 1 Amounts If Different on page 110 111 Supplemental Income Tracking Adjusted Basis Drake Software User s Manual 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 KIS 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 t
254. ding 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 Tax Year 2010 Drake Software User s Manual Quick Estimator 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 ae 7 Quick Estimator 2 Enter or select an SSN If an existing return 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 inc
255. displayed in the Filter Manager Figure 12 8 Basic Search Conditions for the Selected Filter Return Type is 1040 Edt r Additonal Search Conditions for the Selected Filter Add Condition Edit Condition Delete Match All Conditions C Match Any Condition Figure 12 8 New condition AGI is at least 50000 is displayed 6 optional Repeat the previous steps to add more conditions as needed Tax Year 2010 295 Filter Manager 7 8 Drake Software User s Manual 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 5 on page 292 can be modified as needed Create new filters edit existing ones or rename filters Creating a Filter Modifying a Filter Renaming a Filter To create a new filter in the Filter Manager PP ey S Click New Filter Enter a unique filter name Click OK Modify the search conditions as needed See Search Conditions on page 294 Click OK The new filter is added to the Available Filters and can be edited To create a filter in the Filter Manager using an existing filter as a template
256. displays the Scheduler Batch Created Appointments report which dis plays the following information Summary of appointments that could not be generated explanations provided e Number of appointments that had conflicts 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 To undo batch generated appointments go to the Appointment Sched NOTE uler select Batch Appts gt Undo Batch generated Appointments 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 l i 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 Tax Year 2010 81 Scheduler Drake Software User s Manual 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 Choose a preparer from the Preparer drop list or select Any Preparer oa y hee 3 Selec
257. dit Limitations 129 Form 8586 Low Income Housing Credit 130 Form 8594 Asset Acquisition Statement Under Section 1060 164 Form 8609 Low Income Housing Credit Allocation and Certification 130 Form 8611 Recapture of Low Income Housing Credit 133 Form 8615 Kiddie Tax 92 133 Form 8633 IRS e file Application 190 Form 8801 Credit for Prior Year Minimum Tax Individ uals Estates and Trusts 43 130 142 Form 8812 Additional Child Tax Credit 141 xiii Index Form 8814 Parents Election to Report Child s Income 133 Form 8815 Exclusion of Interest from Series EE and I U S Savings Bonds Issued After 1989 164 Form 8820 Orphan Drug Credit 130 Form 8822 Change of Address 164 Form 8826 Disabled Access Credit 130 Form 8828 Recapture of Federal Mortgage Subsidy 164 Form 8829 Expenses for Business Use of Your Home 156 Form 8834 Qualified Electric Vehicle Credit 130 Form 8835 Renewable Electricity Refined Coal and In dian Coal Production Credit 130 Form 8839 Qualified Adoption Expenses 5 130 Form 8844 Empowerment Zone and Renewal Community Employment Credit 130 Form 8845 Indian Employment Credit 130 Form 8846 Credit for Employer Social Security and Medi care Taxes Paid on Certain Employee Tips 130 Form 8857 Request for Innocent Spouse Relief 163 Form 8859 D C First Time Homebuyer Credit 130 Form 8862 Information to Claim Earned Income Credit After Disallowance 164 F
258. duler has four main sections see Figure 4 10 Scheduler 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 74 Tax Year 2010 Drake Software User s Manual Scheduler Figure 4 10 shows the Appointment Scheduler window in preparer mode Drake 2010 Appointment Scheduler T f ew Appt Search Appts Print Reports Export Setup Batch Appts Help Calendar for 01 10 2011 Weekly Calendar Preparer Calendars Name Comments Sun Mon Tue Wed Thu Fri Sat 28 29 30 1 2 3 4 5 6 7 8 12 13 14 15 16 19 20 21 22 23 26 27 28 29 30 January 2011 Sun Mon Tue Wed Thu Fri 23 4 5 6 7 9 eW 11 12 13 14 16 17 18 19 20 21 23 24 25 26 27 28 3031 01 2 3 4 5 SD Today 10 13 2010 li i S 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 16 Setting Up Scheduler Options Tax Year 2010 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 change
259. e Drake CD and open either the PDF or Word version of the form Enter your firm s name at the top before printing the form Clients must sign and date this form manually Forms are also available at Tools gt Blank Forms Screen code USE 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 8 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 2010 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 02 20 2011 Name of joint taxpayer must be entered by the taxpayer Date Amelia Carter 02 20 2011 Figure 8 1 Names and the date as entered by clients on the USE screen Once the required fields on the applicable screen are completed the Consent to Use of Tax Return Information will be generated with the return NOTE See E1 Visa Prepaid Card Program on page 216 for information on consent form requirements for the E1 Card Consent to Disclosure of Tax Return Information The Consent to Disclosure of Tax Return Information contains banking option infor mation and explains the IRS Regulation 7216 requirement to the taxpayer
260. e DDM the DDM 1 Open the DDM See Figure 13 6 on page 308 2 Choose Setup gt Options Options are listed in Table 13 1 and shown in Figure 13 4 on page 307 Table 13 1 DDM Setup Options Option Description Document Manager Data To store data in a location other than the DDM enter the Path data path here or click Browse to map to a new location Use this scan device By default the DDM chooses a scanner To choose a differ ent scanner select it from the list 306 Tax Year 2010 Drake Software User s Manual Document Manager Table 13 1 DDM Setup Options Option Description Turn off scanner interface Activate or disable the DDM s default scanner interface You might have to view the scanner interface window when mak ing ascan especially if options not available in the DDM such as scanner resolution or color are required Build index when DDM starts The DDM index used for searching the DDM occasionally must be rebuilt to ensure proper functionality Mark this box to have the system rebuild the index when the DDM starts Edit Reset list of Common Edit or reset names assigned to commonly scanned docu Documents ment types See Setting Up Common Documents follow ing Rebuilding the index each time the DDM starts does not interfere with NOTE DDM operation If you choose not to rebuild the index automatically you can rebuild the index by going to File gt Rebuild Search Index
261. e E filing Mandates Drake Software User s Manual E 2 Indiana Kansas Kentucky Louisiana Maine Paid preparers who file 100 or more Indiana individual income tax returns must file those returns electronically To help tax practitioners more easily comply with the e filing mandate the Department accepted part year full year nonresident and recipro cal state nonresident income tax returns via 2D barcode or paper format for the 2009 filing season Beginning with the 2010 filing season all IT 40PNR and IT 40RNR returns must be e filed Also 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 completed Form IN OPT must be signed by the client and the paid preparer must keep this form on file for five years A penalty of 50 for each return not filed in an electronic format with a maximum penalty of 25 000 per calendar year will be imposed on a professional preparer beginning with the 2011 filing season The requirement applies to any paid preparer who prepares 50 or more Kansas indi vidual income tax returns during any calendar year The requirement is based on the number of individual income tax returns including resident nonresident and part year returns filed by the tax preparer in a calendar year The combined total of the returns prepared by all employees at all of the tax preparer s locations will
262. e Manager Regular updates to the program are critical to ensure that your software is performing efficiently Use the Update Manager to obtain and install files to update the federal and state packages of the program Updates include modifications in both the federal and state packages to reflect the most recent changes in the tax law Updates can be downloaded manually or you can set the program up to download them automati cally Program updates do not include updates to the Drake Document Man NOTE ager DDM DDM updates are handled through the DDM Update Man ager see Updating the DDM on page 303 NEW FOR If the system finds five or more needed updates you will be alerted to 2 Di 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 Updates are shown in tabbed format with tabs representing the program packages and one representing all state updates Click column headers to sort data in ascending or descending order Tax Year 2010 263 Update Manager Drake Software User s Manual l 210k Sr Ve PLEO Drake Update Manager Manual Updates 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 Automatic Updates Auto Updates is currently t
263. e applicable check box 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 NOTE If a 1099 R was not received 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 91 Rollover of Ifa 1099 R distribution should be excluded 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 20 Rollover Information Exclude from income rolled over into another qualified plan Partial rollover amount Figure 5 20 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 automaticall
264. e 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 Enter the requested information if necessary and then click Next 5 If the Filter Selection dialog box is opened Set filters as desired and then click Next See Filter Manager on page 293 for information on filtering Select any Basic Search Options and then click Continue For more information on search conditions see Search Conditions on page 294 Recommended 6 Position the mailing labels as needed Options are described below labels are three across and ten down Avery 5160 or 8160 Number of Copies of this Label Number of labels to be printed For example if you enter a 5 five labels will be printed This option is avail able only when printing a single label Position of the first available label Position of the first label on the avail able sheet If the first label on the sheet is missing you can enter 2 to have printing begin in the position of the second label Vertical
265. e consent select the second box in the Paper Con IMPORTANT sent section of the CONS screen See Figure 8 2 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 15 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 Tax Year 2010 213 Franchise Network Requirements Drake Software User s Manual jointly 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 If a 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 To print a blank form without going through the return go to the Home window and select Tools gt Blank Forms select Federal and choose the application for your bank Note that applications are multiple pages as shown in Table 8 2 Table 8 2 Application Forms for Banking Options Available in Drake Bank Application Form Advent AD_APPL PG through AD_APPL PG2 2 pages EPS EPS_APP PG through EPS_APP PG
266. e 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 2 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 ta Form 1116 Foreign Tax Credit 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 required and you don t want one generated select 1116 NOT required See Figure 5 13 to view the check box as it appears on the DIV screen For more on Form 1116 in Drake see Passive Activity Credits on page 127 Taxable Refunds Screen code 99G Screen code 3 Alimony Tax Year 2010 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
267. e e eens 127 Home Energy Credits cei nace eda eden Oi oat lait cela N Bh dee we band dada ee E didi AEA A 127 Passive Activity Credits ccsa goresan ers detin eee ete t AA 127 Child Tax Creditu iiisiea taumai ee dens E Shh oe aa aa ble ald ad woe dee wed R 129 Retirement Savings Contributions Credit 0 0 0 e nnn eee ences 129 Other Credits bar Geena daa dvdrued eine heh dd OOS laa haat adirbadd ad bata Meta ws 129 Unreported Social Security and Medicare Tax 0 eee cece teens 131 Additional Tax on Qualified Plans etc 0 0 ccc etn ene n ences 131 Advance EIC Payments si i cscscvaswaehidawss Chia soe ob E EOE sd Ode Meee aca E 132 Household Employment Taxes 20 0 eee een n tnt n eee eens 132 Other Taxes panin Ee TE EE E EE beeen Late eae a ean ane tea eee ed 133 Estimated Taxes cic pecnes onini seaweeds Reawnks tone nei ehaweed pene NE EERE EEES 134 Making Work Pay Schedule M 00 eee ent nnn eee eens 138 Earned Income Credit EIC 0 0 ce nee nen tence nen n eens 139 Additional Child Tax Credit and Combat Pay 0 0 ccc cece teen eens 141 Other Payments 25 ois oGhacadedeicwe dhe cind a dea E Meee hedaianadidied negueaoamegiaaoneas 142 First Time Homebuyer Credit 0 ccc ccc nee tenn n nee eee ne teen enna 142 Direct Deposits eiga kerni ate sande danace sed clades haw Segawa gee Go tw del a Sida rae ean 143 Electronic Payment Options 0 0 0 eee een tenet teen nee 145 Third Party Desig
268. e logged in preparer each preparer can set his or her own display To customize the CSM display Shortcut Press 1 Click Customize In the Column Layout tab of the Customize Display dialog CTRL D to open r the Customize box Available Columns are listed in the left pane and Columns in Current Display dialog View are listed in the right box Drake 2010 Customize Display me Column Layout The Column Layout tab allows the user to define the columns that appear 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 Client Name Select gt Type Bill Adjustment Description 1 Preparer Bill Adjustment Amount 1 Select All gt gt Status Bill Adjustment Description 2 Started Bill Adjustment Amount 2 R Completed Bill Adjustment Description 3 g nenave Last Change Bill Adjustment Amount 3 Changed By Bill Payment Description 1 lt lt Remove All Refund Bill Payment Date 1 l BalDue Bill Payment Amount 1 Reset Total Bill Bill Payment Description 2 Eos Bank Deposits Bill Payment Date 2 m Client Payments 7 Figure 9 3 Column Layout tab 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
269. e normally Click OK to close the message and return to the Update Manager dialog box When you log in to the program you can immediately see in the Notifications sec tion 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 following conditions are met The program detects that the machine is connected to the Internet You have security rights to install patches You have permission to see the message regarding the updates ready for down load 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 3 265 Download Fonts Drake Software User s Manual Notifications i Notifications peaa Update Status Up to Date Update Status Updates Needed Get Updates OADM N E O P TA DI no n A Att anne a RE Figure 11 3 L System is up to date R updates are needed 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
270. e 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 4 When the archive has been created click OK Deleting an Return from the Archive Manager 188 Delete To delete an archive of a return from the Archive Manager 1 From View mode of the return select Archive gt Archive Manager Click the row of the archive to delete 3 Click Delete You are prompted to confirm the deletion 4 Click Yes to delete the file from the archive Once deleted the previously archived file cannot be recovered Tax Year 2010 r E filing 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 and online EF databases 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 require that
271. e provide details about the return but they do not require that changes be made and they do not prevent e filing They appear as NOTES in View mode The Fee Type and Amount columns see Figure 6 2 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 option must be selected from Setup gt Options Cal culation amp View Print Fee breakdowns appear on the RAL_INFO page in View mode when bank products are present Calculation Details Tax Year 2010 The Details tab displays return amounts in an easy to read format Figure 6 4 175 Viewing and Printing a Return Drake Software User s Manual Summary Details j Federal MMP Cee ce eee UU eeEe ceuteeeeae 77777 PEE EEE E EE ee ee 77777 k csp a a cages arp EE 6929 O E IAA T EATE ET SEIT E T TT is et Gi Sone eree tense en eee skeen th a eee en SS 1097 NCD400 Minta Grogs Inoutta 22 2 2 00cseccsccee 77777 Income Allocable to the State 61777 PMB iacent S05 S sass Sass eee Shee Shes nnana 3912 Batamne Ban 22 2 nnn n non an een cienen sane caseain 3135 Ne a N nad Pe Y ent R E ites tae saj 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
272. e 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 The e mail message is saved along with the generated report list and keywords 259 Interactive Support Drake Software User s Manual Alternative The e mail program uses your 1040 com e mail address your EFIN 1040 com for Reply example 777777 1040 com This address is used for both your sender and reply Address address 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 Select Use Alternative Reply To Address 4 Enter an Alternate Address This address replaces your 1040 com address appearing as the sender and reply addresses on e mail messages you send 5 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 6 Click Save Phone 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 Additional phone numbers and contact information are provided in Table 10 4 Table 10 4 Contacting Drake Supp
273. e return STATMENT A title is required for each unformatted statement to be attached to the return 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 Tax Year 2010 Drake Software User s Manual Other Special Features in Data Entry The program numbers required statements in the order in which you create them and provides a reference where applicable on the printed return Figure 5 68 Va Fee el ER a et rn OF Samp d Ue ov 3 ee ee ee ee Yes No Figure 5 68 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 68 the Statement 1 label is triggered by marking Other for item c 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 code Changes to the Return Tracking TRAC screen make it even easier to track the TRAG work done on each return At a glance you can see who did the work who reviewed it and how much time was spent on the return You can also review e filing and bank product information NEW FOR Reports can now be generated from the TRAC screen For more infor 200 mation see
274. e 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 Attaching When contacting Drake Support with an issue you might be asked to send via e mail Files a client s data file a return DDM file Drake Software program file or other kind of file Entire folders cannot be attached 254 Tax Year 2010 Drake Software User s Manual Interactive Support From Data To e mail a client data file directly from data entry Entry 1 In Drake open the return you want to transmit r 2 Click Email The Compose Message window shows the client s data file attached z to the message Figure 10 14 mail Drake 2010 Email SE PS 7 E xd To Attach Hep Exit Attachment s Data File 400006665 1040 support drakesoftware com Eea Send Cc Bec Subject Question abouttheKIP Attachments Add Regarding our phone conversation about data entry on the K1P screen have attached the requested data file Sincerely Danny Dood The Ta
275. ear 2010 Drake Software User s Manual Document Manager Estimated Backup Size amp Free Space Restoring Contents Z6 Backup NOTE If you want to back up the entire DDM select Entire DDM in the Backup Restore Manager dialog box before clicking Start Because the backup process 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 should click Close to return to the DDM As shown in Figure 13 1 the application provides Estimated Backup Size and Free Space information for the selected location If there is not enough free space you will be prompted to select another location The Free Space information is not available if you are backing up to a CD DVD drive This is because the data is stored within the Windows OS temp files to wait to be copied to the disk at the user s convenience however you can check the available space on the disk before backing up to make the Free Space determination To restore backed up contents of the DDM 1 Click a specific drawer cabinet or folder to back up 2 Click the Backup button on the DDM toolbar The Backup Restore Manager dialog box is displayed See Figure 13 1 Click Restore located in the bottom half of the dialog box 4 From the Backup to Restore drop list click a location from which to restore files 5 Click Start to begin the restore process If you see a No Backups we
276. ections the Drake tax program will be updated to reflect these changes to the law as forms and procedures are finalized 321 Estate Package 706 Drake Software User s Manual Form 706 Form 706 United State Estate and Generation Skipping Transfer Tax Return will be available in the Drake tax program for those who opt to file this form The federal 706 program in Drake will be updated when the 2010 Form 706 is finalized until then this federal form should not be filed with and will not be accepted by the IRS If you are using Drake to file state estate tax forms federal forms will be generated but with reminders that the forms are not to be filed with the IRS Only the state related information will be included on any letters and filing instructions produced If you want to exclude the federal forms and worksheets from the client s bill you must indicate this on the BILL screen For an estate return if you are amending the return or filing an exten NOTES sion you must manually indicate the type of letter amended or exten sion to be generated To do so go to the LTR screen and select the desired letter type from the Letter drop list at the top of the screen Form 8939 Form 8939 Allocation of Increase in Basis for Property Acquired From a Decedent is under development by the IRS Data entry in the Drake tax program will be made available when Form 8939 is finalized 322 Tax Year 2010 Drake Software User s
277. ections to start the update process 5 Click Exit when the status for each item is displayed as Completed Organizers and Proformas 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 AA Sepcuniystax WIRDE Ia ti eons Load Figure 4 4 Sample of W 2 page from an organizer 70 Tax Year 2010 Drake Software User s Manual Organizers and Proformas Available for individual and business packages proformas have numbered fields cor responding to the fields on Drake data entry screens Figure 4 5 Proformas are designed to be internal documents and can be used during the interview process William Carter 2010 Form W 2 Wage and Tax Statement Amelia fr ayne s Widgets and Weiners 5 6 4321 East Main Street pece E 8 9 39 ranklin NC 28734 W2 Employee s name address if different 10 1 ers ret nen ann a ers ae eee ee ee pope b P ka POY 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 72 for informa tion on printing for selected clients Entering Information from Proformas Heads down Data Entry Tax Year 2010 Use proformas during the interview pro
278. ectly entering data onto the 1040 how ever because many lines on Form 1040 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 Demographics accessible from the General tab to complete the Label and Filing Status sections of Form 1040 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 Click in the Filing Status box and press F1 to view explanations for the available codes Entering Taxpayer Information Enter the full name date of birth occupation and contact information phone num bers and e mail address for the taxpayer and spouse if applicable 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 2010 85 Taxpayer Demographics Drake Software User s Manual For e filing purposes the combined length of the taxpayer and spouse s names must not exceed 35 characters Press F1 ina Name field to see alternatives for names longer than 35 characters The full date of birth for the taxpayer and spouse if applicable is NEW FOR required I
279. ed Figure 3 15 Screen C under the Income tab has a flagged field To flag one or more fields in all returns 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 16 i 1120 Corporate 11205 Sub S 1065 Partnership 1041 Fiduciary 990 Tax Exempt 706 Estate Exit Figure 3 16 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 5 Select a screen to open it 6 Choose one of the 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 17 N a B Business code D Employer ID Figure 3 17 Field has been flagged for all new returns Tax Year 2010 Drake Software User s Manual Data Entry 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
280. ed This default can be overridden from the 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 ERO SSN Indicator 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 PREP gle return Enter the designee s name phone and PIN in the fields provided Third Party Designee Allow another person to discuss this return with IRS eee cececeeeeeeeeeeseeeeee z FERETE 2 Phone PIN Last name Figure 5 55 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 47 Tax Year 2010 147 Signing the Return Drake Software User s Manual 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
281. ed 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 74 Tax Rates for Ohio and Pennsylvania Cities Tax Year 2010 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 to Tools gt City Tax Rates and select a state The City Tax Rate Editor for the selected state is displayed 283 Forms Based Data Entry Drake Software User s Manual 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 About PA The PA editor is designed for local city forms not including Philadelphia and Pitts Cities burgh 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 If penny rounding is required for a specific mu
282. ed at the top of the PIN screen If no date is entered an Date FEF message is generated and the return cannot be e filed Obtaining Ideally the client signs Form 8879 in your office If the client is not available to sign Client PIN you can e mail Form 8879 as a PDF file to the client and have the client sign the form Signatures 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 148 Tax Year 2010 Drake Software User s Manual Signing the Return 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 Direct Debit If there will be a direct debit from the client s bank account to make a tax payment Consent selecting Direct Debit Consent indicates that the taxpayer authorizes 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 scree
283. efore 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 9 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 Setting Up This feature establishes security settings for an individual To assign the same security Preparer level to many preparers the Group Security feature may be a better option See Set Security ting Up Group Security on page 18 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 aN 2 Select a preparer and click Edit Preparer 3 Select Security gt Custom Security A In the Preparer Security Setup window select a menu and then select the items
284. eld 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 2010 119 Self Employment Adjustments Drake Software User s Manual Form 3903 Qualification If the mileage is under 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 within a single year use a separate 3903 screen for each move Press PAGE DOWN for additional screens Self Employment Adjustments Screen codes SE SEHI Table 5 5 lists screens in Drake for entering adjustments to self employment income Table 5 5 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 The SE and SEHI screens are located under the Adjustments tab Screen 4 is located under the General tab Self Employment Tax
285. elect 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 26 Tax Year 2010 Drake Software User s Manual Software Setup 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 Description Auto generate taxpayer s PIN Have the software can 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 data 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 Suppress federal EF Prints Form 9325 Acknowledgment and General Information for Taxpayers Who File Returns Electronically for every eligible return 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 do
286. em to which the preparer should be allowed access Items left blank will be inaccessi scot ble to the preparer gt File EF Tools Reports Last be V Open Retum Preparer can open I Cale and view returns but I Print cannot calculate or V View print them JV Pre Prepared Entry Quick Estimator a aat Figure 2 5 Security setup 5 Click Save When prompted click OK Click Exit to close Preparer Setup Tax Year 2010 17 Software Setup 18 Le RemoveRights Setting Up Group Security a Group Security gt Add Group NOTE Drake Software User s Manual Other options available under the Security button are shown in Table 2 4 Table 2 4 Preparer Security Options Security Option Set Security to Allow No Options Description 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 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 To remove securi
287. eneral federal and state sup 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 Ifa client s e mail address is entered on screen 1 of the return 1040 package only it can 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 267 Next return to the e mail program click New click To and then select Drake Software Client Address Book Choose an address from the left pane and click Add to add it to the recipient list on the right To finish click Done The Local Address Book can be filled with e mail addresses of your choice This option is not available when accessing the e mail program from data entry To add an address 1 From the Email Inbox window click the Address Book button to open the Edit 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 You can also import addresses from a spreadsheet into your Local Address Book The importing procedure is similar to that of the Schedule D import in that your spread sheet 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
288. enhancement streamlines data entry and increases 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 39 accessible from the first Credits tab PACR Tax Year 2010 127 Passive Activity Credits Drake Software User s Manual Passive Activity Credit Carryover tss zl st z For z mcf Form Amount Form Amount E rl sl sl O y O a O oo a a a a oo a sl al sl Figure 5 39 PACR screen 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 62 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 lines 5 and or lines 29a 29g of Form 3800 and the corresponding worksheets NOTE Amounts on lines 3a and 4a credits 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
289. ent Ctrl D All Forms Email Selected Form s Ctrl M Quick Print ETD_MSG Ctrl Q h DOM aa Oe Figure 6 6 Click the arrow next to the Print icon to see print options Select Forms Tax Year 2010 181 E mailing from View Print Drake Software User s Manual 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 Use E mail Setup in View Print to indicate the e mail method you want to use and specify default settings IMPORTANT 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 gt 2 Click the arrow on the Email button and select E Mail Setup 3 In the 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 the arrow next to it Email 4 To include a default Ce or Bee address one to which all e mailed returns will be sent type the
290. ent 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 default is Paid Preparer 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 22 Return Options PIM Eea z EP Preparer 5 zl Ov Data Entry zl In ERO Tadas zl reg Figure 2 22 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 46 Tax Year 2010 Drake Software User s Manual Making Changes on the Fly 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
291. ent letters see Introduction to Letters in Drake on page 34 Improved EF Messages and Notes EF messages and notes throughout the program have been revised for clarity Other Program Enhancements Tax Year 2010 Other improvements to the program include the following Enhancements to Printing Improvements to the printing feature in Drake are listed below For more on printing see Printing Setup on page 40 Availability of Drake PDF for all print jobs including for letters forms and reports Auto launch feature that opens Adobe Acrobat automatically if Drake PDF is the selected printer Ability to add a custom watermark on the fly Ability to make global print setup changes on the fly Enhancements to the DDM The Drake Document Manager DDM now includes the ability to add edit or rename custom folders See Document Man ager on page 301 Update Alerts Regular updates to the program are critical to ensure your soft ware is performing efficiently If the system finds five or more needed updates you will be alerted to update your software For more on updating your software see Update Manager starting on page 263 Enhancements to the Scheduler The following improvements have been made to the Scheduler For more on the Scheduler see Scheduler on page 74 Its now easier to apply the same schedule for multiple days Proformas and organizers can now be p
292. ents Birthdays this Month Dependents Birthdays this Month Spouse Fithdays this Month Taxpayer a Match All Conditions C Match Any Condition Figure 12 5 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 294 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 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 291 Sort Under Additional Report Options choose a keyword by which to sort reports If for Summary example you re building a report on Clients and you want to sort the results by the Order clients last names you would select Taxpayer Last Name from the list which includes all the keywords in the report plus taxpayer ID taxpayer last name ZIP code preparer number firm number DCN date return was e filed and federal acknowledgment code 292 Tax Year 2010 Drake Software User s Manual Filter Manager Data Calculations Prior Year Data Output Fi
293. eparer and ZIP code plus a sum mary of all returns bank products and preparer fees Tools 94x reports for Client Write Up users ABC Voice Files client contact information lists see 94x Reports on page 206 Options Configure and manage reports summary counts and check suppression Multi Office Manager MOM Multiple office reports see Multi Office Manager MOM on page 207 To select a report category click one of the report buttons shown in Figure 7 11 204 Tax Year 2010 Drake Software User s Manual Online EF Database Drake Online EF Database SSN Lastname Lookup Go Returns Bank Products Checks Fees Summary Tools Options MOM i E E xit 2009 j eran or reamed Ie TD i Figure 7 11 Online EF database report categories Viewing a To view a report Report Click a category button to select a report category Figure 7 11 2 Enter a Start Date and End Date The report pulls information from only those returns with records that fall within the date range selected 3 optional for multiple EFIN offices only Select Restrict to Multisite and choose an EFIN to restrict reporting to returns for a particular EFIN 4 Enter any other report criteria desired Criteria differ for each report type 5 Click Run Report Click the Print and Export icons respectively to print a report or export it in spread sheet format suitable
294. er directly Use Settings to configure Drake specific options Printer Drake PDF Printer Tray Main paper source Settings Number of copies 1 I Print a custom watermark Duplex a I Staple J Print Client Set watermark Print Preparer Set watermark Password Protect can06665 Figure 6 3 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 To print the PDF document without having to enter the password clear the check mark from the Password Protect box 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 D Select any other options as desired from the Print Selection dialog box N Click Print to open the Save As dialog box 8 Ifnecessary assign a filename and select a location for the document default is the current year folder in the DDM 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
295. er form 31 setup 31 printer setup 40 43 printing see also viewing bill summary 24 calculation details 176 carryover worksheets 24 checks 225 data entry screens 64 date of signature 25 depreciation schedules 24 documents only when required 27 due diligence info for homebuyer credit 28 EF status page 27 EIC due diligence documents 28 estimate vouchers 135 filing instructions 25 forms in a certain order 185 forms in a return 179 forms only when required 24 labels 280 letters batches 278 list of EINs 282 list of firms 15 list of preparers in a firm 20 on the fly 43 options 184 186 organizers and proformas 72 preparer fees withheld 26 printer sets 180 referral coupons 25 return summary 24 sets 42 SSN on bill 26 Tax Planner 318 tax returns 176 taxpayer phone number 25 third party designee 25 using the PRNT screen 43 privacy letter 25 private appointments setting up 79 mortgage insurance PMI 108 processing acknowledgments 195 loan checks for bank products 225 proformas 71 73 property disposal of 107 listed 151 on Schedule E 106 xvii Index personal use of 107 qualified Indian reservation 154 rental of personal 109 sale of 108 section 179 expensing 152 type and usage 107 PTIN 4 13 16 189 1 public safety officers 103 publications IRS Drake etc 249 purchasing W 2 downloads 91 Q qualified charitable distributions 103 qualified real property sectio
296. er 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 36 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 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 Tax Year 2010 Drake Software User s Manual Software Setup Viewing The preview feature allows you to open View mode and view a sample letter for one Letters for of four return categories Sample Return Letter for e filed return with balance due e Letter for paper filed return with balance due e Letter for e filed return with refund e Letter for paper filed return with refund To access the preview feature click the Preview button in the toolbar of the Client Communications Editor Bringing To replace a current year template with a prior year one Forward a Template 1 From the Client Communications Editor click Open and select the template to replace Go to S
297. er 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 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 separately 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 7 8 Form 8453 Paper Document Indicators l AppendixA Form 8283 Select all paper document indicators that apply For I Form 1098 C l Form 8332 more information on the paper document indicators I Form 3115 I Form 8858 click the Screen Help button at the top of the screen l Form 3468 l Form 8864 Form 4136 l Form 8885 Form 5713 Schedule D 1 Figure 7 8 Form 8453 section of EF screen W
298. eria for Preparers to e File NYC Business Tax Forms Tax preparers who pre pared more than 100 documents in or prior to calendar year 2010 and used tax soft ware to prepare corporate and partnership tax documents must e file The 100 returns or more should consist of all returns completed by the members or employees of a company including all locations The count should include extensions amended and prior year returns and estimated tax payments Any documents relating to the return which cannot be e filed should be counted Tax Year 2010 Drake Software User s Manual Appendix E State E filing Mandates Ohio Oklahoma Pennsyl vania Rhode Island South Carolina Tax Year 2010 Opt Out Provisions for NYC e Filing 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 Paid tax preparers who filed more than 75 tax returns in either the 2008 calendar year or during any subsequent year must beginning on Jan 1 2010 e file state income tax returns Acceptable methods of e filing include the IRS federal and state e file pro gram Ohio I File or Ohio eForms This requirement does not apply to paid tax pre parers who during the previous calendar year prepared 25 or fewer tax returns For tax year 2010 The department will bill such ta
299. erview of the e filing process for most Drake preparers Included are definitions of acknowledgment codes acks Tax Year 2010 B 1 PROCESS E FILING FEDERAL RETURNS come Address the Test eee identified issue transmission eum l successful 2 D Review return to If NOT accepted l a ensure that it is B R D or X ack T ack ab ready to e file l Soe A x Drake Transmitting P T or B ack gt Beep Specs _ P ack er va acknowledgments ACCEPTED Wait for IRS ack Mark ready for EF P Transmit return A ack or E ack Drake Acknowledgement l Codes nae eceive Transmit Transmit return transmitted gt If P ack Receive ack 2 P Processing Wait for IRS ack retum acknowledgment Zd to IRS T Test transmission successful QOQ Ready to e file B Bad transmission rejected by Drake Install updates and try again 4 IRS Acknowledgement Codes A Accepted by IRS l N R Rejected by IRS see reject codes l o Fecave Transmit AF D Duplicate return is a duplicate of a previously filed return or DCN Rejected by IRS transmitted acknowledgment l E flingiprocess oe return complete X Problem with the transmission E Imperfect return A
300. es 304 e mail 255 Form 709 162 unformatted schedules 170 audit log DDM 312 auto expenses 156 automated backup of files 270 automatic updates 264 B backup and restore DDM files 302 Drake files 268 bank name database 61 bank products see also banking see also checks applying for 214 check register 227 denial of 218 direct deposit of 202 distribution of 216 Drake banking partners 211 eligibility for 213 in data entry 222 loan cancellations 229 non loan 215 opting out of 223 processing checks 225 service bureau 214 settings 27 tracking prior year information 229 transmission of data 224 types of 215 216 withholding fees from 223 banking 211 229 bankruptcy 99 barcode scanning 2 basis in calculating K 1 amounts 112 batch appointment generator 80 batch calculations 173 billing overriding setup options 45 blank forms 266 blindness 86 bonds purchased with refund 3 143 Briggs court case 124 business see also business use cancellation of debt 117 codes 97 depreciating home used for 153 viii Drake Software User s Manual expenses 118 mileage 97 use of home for 156 business use converting home to 103 percentage 151 156 C C corporations changing from S corps 274 calculating tax returns 173 176 191 calculations batch 173 global options for 23 pause option for 23 calculator 64 calendars in Scheduler 77 cancellation of debt 117 of loans bank products 229 capital gains and losses see a
301. es not include a bank product To override see Overriding Bank Product Alert on page 201 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 E mail 9325 Notice to Taxpayer automatic from Drake Processing Center Default ERO Allows program to notify you before it transmits the Check Print Records 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 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 email 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 acknowledg
302. es of documents that can be priced 3 Select a form in the grid and press ENTER or double click the form 4 optional Edit the Form Description This description is printed on the client bill if Include on Bill is selected Do not edit the form name 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 15 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 47 The program now includes options to add a custom fee and a financial product assis tance 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 description 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 31 Software
303. escribed in Table 5 19 Table 5 19 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 B Produces Form 2350 Taxpayer s name and address are printed at the bottom of the form P 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 click the Screen Help button in the title bar of the screen E filing an If e filing an extension application complete the EXT screen and then select the Extension 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 198 Non Resident 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 Subject NOTE to Withholding should be entered on either the 2555 screen the NR screen or in the Other income field on screen 3 Tax Year 2010 161 Requests Claims and Other Forms Drake Software User s Manual Gift Tax
304. escription Drake 2010 Status Description Edit Reset Under Review Signed Delivered lt Custom Status 6 gt Enter the Status description in the sy continue lt Custom Status 7 gt lt Custom Status 8 gt 9 lt Custom Status 9 gt 10 lt Custom Status 10 gt Da 3 4 5 6 Ea 8 Select status to customize 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 232 Tax Year 2010 Drake Software User s Manual Setting Statuses 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 Tip the Drake Home window go to Setup gt Options Under the Calculation amp View Print tab select Auto calculate tax return when exiting data entry 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 a9 CSM The status is updated in the Status column Setting a Status from Data Entry To se
305. est Computation Under Look Back Method 1120 package Form 8866 Interest Computation Under the Look Back Method for Property Depreci ated Under the Income Forecast Method has been added Section 179 Expense Limited on M 2 1120 package The limited section 179 expense and not the elected section 179 expense is now carried to the Schedule M 2 M2 Worksheets for 1120S and 1065 1120 and 1065 packages Worksheet WK_M2 is now produced if a Schedule M 3 is present in the return All Copies of Form 8805 Available 1065 package Copies A B C and D for Form 8805 Foreign Partner s Information Statement of Section 1446 With Tax Year 2010 Drake Software User s Manual Fiduciary Package 1041 holding Tax are now available in the program as blank forms Tools gt Blank Forms e Change of Ownership Percentage Calculation 1065 package Ownership change percentage calculation is now done for profit loss and capital based on data entry e Schedule N Added 1120S package Schedule N Foreign Operations of U S Corporations has been added to the 1120S package e New Schedule A Worksheet 990 package The software now produces a Schedule A worksheet for Part II line 5 Fiduciary Package 1041 This year more screens in the 1041 package have the same format and similar func tionality as the equivalent screens in the 1040 package Most changes to this package were made to allow more complete entry of pas
306. ete sign and submit to Drake a cancellation request CANCEL PG in Tools gt Blank Forms If the check has already been printed send the voided original with this form If no check has been printed indicate this on the form with the ERO s initials If required to submit this document send the completed form and cancelled check as applicable to Drake Software Loan Cancellations 235 East Palmer Street Franklin NC 28734 Note that Drake does not accept faxed copies of checks A loan cannot be cancelled if a debit card is used A cancellation IMPORTANT is not processed if the direct deposit from the IRS or state has already occurred Tracking Prior Year Information The TRAC screen in data entry displays prior year bank product information for fed eral returns including RAL and federal refund deposits and preparer fees Information must be entered manually the first year these fields are used Post Season Procedures Tax Year 2010 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 229 Cancellations Tracking and Post Season Procedures Drake Software User s Manual This page i
307. etup Drake Software User s Manual 4 Once all color selections are made click OK 5 To restore the original color settings in Setup gt Colors click Restore and then click OK Printing Setup Use the Printer Setup to e Establish the printer to be used with Drake e Integrate the Drake Document Manager DDM with your client files in Drake e Install a Print to PDF option that allows you to create PDF files Even if your office uses the same printer for tax returns and the DDM the DDM is a stand alone tool and requires separate setup from the Drake tax program Your Windows default printer is designated as the Drake default printer NOTES when Drake is installed You do not have to add or set up a printer in Drake if the printer is already set up in Windows Printer settings are carried forward automatically each year NEW FOR Watermarks can be added on the fly via the Print Selection dialog box the box that is displayed whenever you click Print in Drake You can 200 opt to print a custom watermark that you specify a Client Set water mark or a Preparer Set watermark Editing To edit settings for the printer used for printing tax returns Printer Settings 1 From the Drake Home window go to Setup gt Printing gt Printer Setup 2 Enter setup changes as needed Details on each tab are provided in Table 2 15 3 Click Save Table 2 15 Printing Setup Tab Field Description F5 General
308. etup 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 prompted click Yes oe UOUN Be sure to read through the replacement letter to ensure that the information is current Color Setup Use the Color Setup feature to tailor Drake screens to meet your firm s preferences If you used Drake last year consider customizing colors to make your Tip 2010 program look different from your 2009 program If you must open the 2009 program during tax season customized colors will help you avoid entering data into the old program by mistake Program To customize program colors Colors 1 From the Drake Home window go to Setup gt Colors 2 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 Use Define e Use Custom Created Colors The Program text color and Program Custom Colors to creole a new Color background color boxes to the right become available Click a box to view the Windows color palette and choose a color 3 Click OK Data Entry To change the color of a specific area in data entry Colors 1 From the Drake Home window go to Setup gt Colors 2 Click a color box in the Data Entry Colors box to open a Windows color palette 3 Select a color and click OK Tax Year 2010 39 Software S
309. eturns 27 197 importing see also exporting files into the DDM 310 Kiddie Tax data 133 QuickBooks data 276 Schedule D data 99 income exempt notary 97 index file repair 267 indirect expenses on Schedule E 108 inheritance 99 installing DDM 301 Drake tax software 7 12 updates 263 Integrated File and Pay 2 145 interest and dividends 93 95 and penalty for late filed returns 165 rates manually entering 166 IRA adjustments 122 contributions 105 converting to Roth 105 income not reported on 1099 R 103 penalty computations 105 IRS Regulation 7216 Consent to Use and Disclosure of Tax Return Information 16 211 213 itemized deductions 124 K K 1 see Schedule K 1 KB Knowledge Base 240 key combinations 53 57 keyboard 53 keywords Appendix C Kiddie Tax 133 134 Knowledge Base KB 240 L labels 278 Tax Year 2010 Index language Spanish 23 late filed returns 165 167 letterhead for bills and letters 37 letters about 34 36 available templates 36 batch 277 280 bringing forward from last year 39 Client Communications Editor 34 customized supplemental 25 default templates 25 due date to print on 45 editing a template 37 engagement 25 envelopes 280 estimate payment reminders 277 K 1 11208 1065 1041 only 25 36 44 keywords Appendix C letterhead 37 mailing labels 278 margins adjusting 37 overrides LTR screen 48 overriding due date shown on 45 printing 278 privacy 25 restoring 38 setup 36 vi
310. etwork setup E 3b This is a workstation V Indicate server drive letter for sharing client files F w To access all other shared files on a server EF Firm Pricing Letters etc select appropriate shared drive letter in Admin Override section below Figure 2 7 Example of selected shared drive 3 optional but recommended To share all other Drake files Setup EF configura tions letters and acknowledgments a In the Paths section at the bottom of the Directories and Paths Setup win dow select Admin Override See Figure 2 8 b Choose a Shared drive letter for all other shared files In Figure 2 8 the user has chosen to share all the files on the F drive Paths determined by configuration selected above Admin Override IW Path for 2010 Data F ADRAKE10SDT Path for 2009 Data F DRAKEOS DT Path for Print File FADRAKETO PFS F Shared drive letter for all other shared files EF Firm Pricing Letters etc optional Figure 2 8 Sharing all files c Click OK Once a shared drive letter is set do not change it during tax season CAUTION unless Drake Support instructs you to do so Changing a drive letter during tax season can cause problems in file storage and e file pro cessing Options Setup Options Setup is The tax software is shipped with the most common preferences set as the defaults Use not required for Options Setup accessible by clicking Setup gt Options from the Home w
311. ewing 39 lifetime learning credit 122 like kind exchanges 101 listed property types 151 live payroll see Client Write Up loans see bank products logging in as ADMIN 9 to Drake 9 51 to ETC 243 to online EF database 204 logging out of Drake 51 long term care insurance 117 losses capital gains and 98 net operating NOLs 158 159 non recaptured 100 of assets screens for entering 98 on Schedule C 98 passive activity 109 using the LOSS screen 158 lost checks 227 lottery winnings 117 macros XV Index see also shortcut keys in the Fixed Asset Manager 300 setup 32 symbols used in 33 viewing from data entry 32 mailing labels 278 mandates 4 See also state mandates mandates e filing 4 margin adjustments letters 37 marketing kits 249 married filing separately see MFS filing status maximizing screens 22 maximum minimum fees 32 meals and entertainment 118 meals subject to DOT rules 97 medical savings accounts MSAs 117 message pages EF messages 192 MFS filing status claiming dependents 88 ineligibility for child care credit 127 splitting a joint return 62 using Quick Estimator 285 mileage and moving expenses 120 prior year 156 rates 97 military 86 addresses 86 and EIC 141 data required for bank products 224 processing codes 86 related tax forgiveness 164 Military Spouses Residency Relief Act 97 ministerial income allocation see clergy MOM see Multi Office Manager months in home dependents 88 mouse 53 m
312. ext 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 34 Tax Year 2010 Drake Software User s Manual Software Setup Paragraph Nesting Client Communica tions Editor Tax Year 2010 The enclosed conditional text is printed only if a particular situation applies in that let ter For example the conditional paragraph below is generated only if the taxpayer who has a balance due is paper filing and has selected not to pay by direct debit Text is generated only if this condition applies 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 Figure 2 17 Conditional paragraph Many conditional paragraphs are nested within larger ones Different nesting levels are indicated by different colors In Figure 2 18 the Federal No Dir Debit Paper Paragraph
313. ey tax provisions will expire after December 31 2009 and will not be available in 2010 if not extended Additional standard deduction for state and local real property taxes Deduction for educator expenses up to 250 Deduction for qualified tuition and related expenses up to 4 000 Itemized deduction of state and local sales tax Individual AMT exemption levels are scheduled to drop unless Congress extends the relief that was available in 2009 IRA Donations to Charity Individuals can no longer have their IRA trustee make tax free IRA distributions to charitable organizations Standard Mileage Rate The standard mileage rate has decreased from 55 cents to 50 cents per mile New Roth Provisions Starting in 2010 individuals with any amount of modi fied adjusted gross income may switch a traditional IRA to a Roth IRA Conver sions are fully taxable at their regular tax rate For conversions in 2010 taxpayers Contacting Drake Support Drake Software User s Manual can spread the tax due over two years Half the tax will be due in 2011 with the remaining half payable in 2012 e Education Credit The American Opportunity Tax Credit formerly Hope Credit provides up to 2 500 per student per year for four years of college e Child Tax Credit If a taxpayer wants to claim the refundable child tax credit but the credit is more than the tax due the taxpayer must meet an income thresh old of 3 000 e First
314. f a date of birth is missing or incomplete an EF message will 7010 be produced when the return is generated 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 Below the E mail text msg field select any applicable boxes to indicate if a taxpayer is a dependent of another a full time student wants to donate to the Presidential Cam paign Fund is blind or has a stateside military address If the taxpayer is active mili tary and requires a special processing code use the Special processing code drop list Pit ee rere At at yet I ve Ae Pe Best time to call aatas B Print on return Da E mailitext msg F Dependent J Full time l Presidential M Blind Stateside of another student campaign military address Special processing code for active military Street address 3 E MAIN ST a n aT T anai a ee afal Figure 5 1 Select applicable boxes and military code if applicable Entering Residency Information Enter the taxpayer s address and state residency information in the bottom half of screen 1 If a taxpayer is a part year PY resident of the state in the address select PY from the Resident state drop list To search codes The Resident city field is activated if a city return is required Press F1 in this field to CTRLESHIFTES access city codes To suppress a state return altogether select 0 from the Res
315. f the issues and identification of fields that must be verified N DTE Error codes above 5000 are Drake error codes All other codes are fed 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 1 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 message page to view e EF message pages 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 174 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 Step 2 Prepare the Transmission File Tip To bypass this step select the return directly from the Calculation Results screen See Figure 7 3 on page 193 To prepare the transmission file 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 7 2 192 Tax Year 2010 Drake Software User s Manual E filing a
316. 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 62 Use field flags to set certain fields apart for review Flagged fields are shaded default is green 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 14 2210 Options PND CODE ccccsnenee gt 2008 Fed ta 2008 State tax Figure 3 14 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 globall
317. filing a Return Trouble shooting Acks Staggering 196 DCNs Drake Software User s Manual Table 7 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 Described below are some troubleshooting steps for commonly received acks B A B ack can 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 R An R ack indicates that the return has been rejected A reject code show ing the reason for the rejection is provided Look up reject codes in the EF data base see Reject Code Lookup on page 202 address the issue and re transmit Be sure to download and install the latest updates see Update Manager on page 263 and check your Drake e mail for new tax developments 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
318. for the program to transmit it Overriding Program Defaults for State Returns State returns are e filed using one of three methods e Direct The return goes directly to the state Tax Year 2010 199 EF Override Options in Data Entry Drake Software User s Manual Assigning a Return for Piggyback Suppressing Returns from Being E filed 200 e Piggyback The return is attached to or filed in conjunction with the federal return and the IRS sends the state return to the proper state e State only The return is sent to the IRS but not attached to the full federal return and the IRS passes it on to the state This method is used when transmit ting more than one state return or when re transmitting a state return that was rejected and the federal return has already been accepted The direct method is used only by California Illinois Maine Massachu NOTE setts and Minnesota The piggyback and state only methods are used by all other states and Illinois California Maine Massachusetts and Minnesota do not use the piggyback or state only methods By default resident state returns are transmitted piggyback unless the resident state is one of the five direct states mentioned in the previous note and all other eligible state returns are sent via the direct or state only method whichever applies To transmit a state return other than the resident state piggyback go to the EF screen and select a state fr
319. formas f Drake 2010 Individual 1040 Organizer Options 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 C Print Organizer even if printed before C Just those returns that were calculated in 2009 C Print Sch A always CO Print INT always O Print DIV always O Include Sch D Blank Form O Include Form 4684 Blank Form O Include HOME Worksheet Blank Form LT Do Not orint MISC Preparer Override X Help Select All Unselect All Process 1040 Cancel Figure 4 8 Options dialog box includes Process button circled To have a certain preparer s name appear on the preseason engage NOTE ment and privacy policy letters select a name from the Preparer Over ride drop list 4 Click Process Figure 4 8 to open the Batch Printing dialog box Figure 4 9 Proformas Organizers Forms may be toggled on off for printing purposes Simply choose the appropriate tab scroll through the list of forms and check uncheck the appropriate forms Click Detail to enable disable specific proformas organizers and to review their contents 1040 Organizer 1040 Proforma 1120 Proforma 1120S Proforma 1065 Proforma 1041 Proforma Description COVER Envelope Slip Sheet LETTER Pre
320. forms e Extensions Forms 4858 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 7 6 select the forms to e file FEDERAL E FILE OVERRIDE Choose one from the options below Tip If you want to send a federal form and NO state forms select the Do NOT send any states box on the right M 1040 4868 M 2350 M 9465 only vV 56 Do NOT send Federal Figure 7 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 for 4868 2350 or 56 you are indicating that the program should transmit only 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 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
321. from Figure 2 17 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 Figure 2 18 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 19 Click to expand a category or click to contract it Hover your pointer over a keyword to view its description Keywords
322. from one computer to another Tip in regular file program maintenance or to store data off site as part of a disaster recovery plan Backing Up To back up DDM contents Contents 1 Select a specific drawer cabinet or folder to back up T 2 Click the Backup button on the DDM toolbar The Backup Restore Manager e dialog box is displayed Figure 13 1 Backup C g Drake Document Manager Backup C hn Backup Restore Manager Select the Backup or Restore location and options needed This may take a few minutes You may minimize this window and continue working When the backup restore process is complete you will be notified a Backup Restore Location C DDMBackup Free Space 40 3GB Backup Backup Name CLIENTS 09092010 Selected Folder CLIENTS C Entire DDM Estimated Backup Size 6 4MB C Restore No Backups were found at C DDMBackup I Help Figure 13 1 DDM Backup Restore Manager 3 optional If you don t want to use the default Backup Restore Location click the Backup Restore Location button and specify a new location 4 optional If you don t 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 5 Click Start to begin the backup process 302 Tax Y
323. g 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 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 Tax Year 2010 23 Software Setup Drake Software User s Manual Form amp Options under the Form amp Schedule Options tab are described in Table 2 7 Schedule Table 2 7 Options Setup Form amp Schedule Option Print Schedule A only when required Description Produce Schedule A only when taxpayer qualifies to itemize Print Schedule B o
324. gage Interest Credit 8586 Form 8586 Low Income Housing Credit 8609 Form 8609 Low Income Housing Credit Allocation and Certification 8801 Form 8801 Credit for Prior Year Minimum Tax Individuals Estates and Trusts 8820 Form 8820 Orphan Drug Credit 8826 Form 8826 Disabled Access Credit 8834 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 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 8880 Form 8880 Retirement Savings 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 130 Tax Year 2010 Drake Software User s Manual Unreported Social Security and Medicare Tax Table 5 7 Other Credits Cal
325. ge the locations for data access and storage must be configured before you begin using the program To enter your settings select Setup gt Directories Paths from the Home window Information on screens is pro vided in the following sections Directory and path settings should not be changed during tax season CAUTI DN For details on setting network configurations see Running Drake on a Network on page 10 For assistance contact your office IT profes sional or Drake Support Sharing Files You can share just the Drake client files among your network s computers or you can on a Network share the client files plus all of the other Drake files recommended To share files 20 Tax Year 2010 Drake Software User s Manual Software Setup 1 From a workstation not the server go to the Drake Home window and select Setup gt Directories Paths 2 To share just the client files a For item 3b mark the This is a workstation box and then choose a drive for sharing client files In Figure 2 7 the user has selected the F drive b Click OK Configuration Choose the appropriate configuration below Important If necessary consult with your technician or contact Drake Support for assistance These settings should not be changed during the season unless instructed to do so by Drake Support r Network Options r NW Client link installed on workstations 3 Software installed on server and workstations secondary n
326. gence First Time Homebuyer Credit Form 5405 due diligence information is entered on Documents screen HBDD The PRNT screen includes options to print EIC and 5405 due dili gence documents with a selected return These options are set globally from the Administrative Options tab in Setup gt Options Dates onthe Use the PRNT screen to override the date shown on the return and the due date shown Return onthe letter and filing instructions These changes cannot be set globally from Setup NEW FOR A default due date for filing is printed on all letters and filing instructions generated with a return You can now override the default by entering Z t an alternate due date in the Due date to print on letter and filing instructions field on 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 NOTE 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 and can be Format 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 Cho
327. gory 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 sets selected in Printer Setup EF All forms for e filing in addition to any EF message pages Federal All forms for filing the federal tax return Worksheets All worksheets produced with the return Miscellaneous Various items such as W 2 forms letters overflow statements depreci ation 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 Tree View A tree view directory of all forms worksheets and other documents in a return allows Directory you to view at a glance the components of a return Expand or collapse the tree as necessary for your viewing needs Viewing The preview panel provides a preview of a selected document within the return To Panel preview a document click the document name in the tree view Printing a Return 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 NEW FOR 2UI0 Printing To print tax return forms and other documents Forms ina Return 1 Open Enhanced mode for a return The All Forms tab i
328. gram use prior year data Assign a report output file name Report Editor Step 2 Filtering of Reports 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 Tax Year 2010 289 Setting Up a Report 4 Drake Software User s Manual G gt te zmo eoon conors i 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 be dragged to create the desired order of columns Below this list is a sample of the the report and the print format Select Title and Description Report Title New Clients Report Description List of new clients Select Report Columns Categories Available Columns Selected Report Columns All Categories 4562 ST Bonus Depreciation a Taxpayer Name 4562 ST Depreciation Select gt Taxpayer ID 4562 ST Life Return Type Taxpayer Daytime Phone Taxpayer Best Call Time 4562 ST Method 4562 ST Prior Bonus 4562 ST Prior Depr 4562 ST Prior 179
329. gure 10 12 press CTRL ALT or select Screen Help from the right click menu i SSS 4 SaeenHelp 5 s 2 RE x A Wages tips 2 Federal tax wh State Information 2 57550 1550 N NJ PA a Soc Sec wages 4 SocSecwih 57550 3568 Medicare wages s cFineghledicare tah sanana BAD Figure 10 12 Screen Help button for W2 screen In most cases a window similar to the field help window Figure 10 11 displays the screen help Some screen helps include links to form instructions and RIA Check point s Form Line Finder See RIA Checkpoint following RIA RIA Checkpoint is an independent tax research tool for advanced research by tax pro Checkpoint fessionals To access Checkpoint from the Home window click the Research button or select Help gt RIA Tax Research The RIA page provides access to the following e Extensive Federal Tax Handbook with answers to hundreds of tax questions e Public domain materials including federal tax case law and IRS rulings and mem oranda some of which date back to 1860 e A Weekly Alert Newsletter for staying on top of fast breaking developments e RIA Tax Return Guides containing the latest data available for individual corpo rate partnership and estate returns Guides are linked to the Form Line Finder e The Form Line Finder for quick convenient searching of the Tax Return Guides current and archival years by form and line e Calculators to help you a
330. gure 10 15 Clicking Browse opens the Attach File dialog box displaying the vari ous DT folders listed 0 through 9 Returns are stored in these DT folders by the last digit of their SSN EIN for instance return 400006665 Tip is stored in the 5 folder To find and attach a return double click a folder to open it select the proper data file and click Open at the bot tom of the dialog box That data file now appears in the Attachment s pane of the Email Attachments dialog box See item 2 in Figure 10 15 Follow Step 6 below 6 Click Done You are returned to the Compose Message window with the file attached See Figure 10 14 on page 255 7 Complete the To and Subject fields and compose your message 8 Click Send The message and attachment are sent to the recipient Attaching Other file types can be attached to an e mail message from the Attachments dialog Other ee box in the Drake e mail program See Step 3 of prior procedure and Figure 10 15 of Files e To attach a file from the DDM use the Document Manager File s section of the Attachments dialog box Enter the SSN or EIN in the SSN EIN text box and click Browse to open the Add Attachment window Select the file to attach and then click Open The file is shown in the Attachment s pane of the Attachments dialog box Click Done e To attach a Drake program file click the Browse button for Drake Software Program File s See Figure 10 15 Locate
331. gure Report Security POND Enter an e mail address and password and click Add Update Security Password From the Tab Security section click Secured or Unsecured for a whole report category e From the Report Security section click Secured or Unsecured as desired for a specific saved report To exit the report security screen choose another tab in the EF database Tools Three functions are available from the Tools tab Run 94x Report Download ABC Voice Files and Generate Contact List 94x Reports Ifyou 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 From the online EF database toolbar click Tools Click Run 94x Report and choose the Tax Period End Date Enter the EIN or leave the text box blank to include all 94x returns in the report optional Remove a check mark to exclude 940s 941s or 944s idle gc a Daa From the Status drop list choose one of the following status options e Include all returns in report 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 6 Click Submit ABC Voice Also on the Tools tab the option to Download ABC Voice Files applies only to pre Files parers using the ABC Voice File tool For more infor
332. he Basis Worksheet screens These are accessed from either the K1P or K1S screen as shown in the Figure 5 30 example Schedule K 1 for 1065 1065 K1 1 12 1065K113 20 Basis Worksheet Basis Worksheet continued Ts Arf s tent z Passive Activity No Partnership ID number 41 4141414 ai erorian ostii ARET hN GRRR na gj sg daa Figure 5 30 Tabs for basis worksheets on the K1P screen If you calculate a return with K 1 information but you have not entered NOTE anything on the Basis Worksheet screens the program generates a How the Calculation is Applied Adjusted Basis 112 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 return 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 114 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 Figure 5 31 shows t
333. he adjusted basis fields for a partnership Tax Year 2010 Drake Software User s Manual Supplemental Income Calculating Loss Allocation Prior Year Unallowed Losses Tax Year 2010 Partner Basis 2a Gain recognized on conkibulion of Proponga b Additional capital contribution and other current year increases c Adjusted basis of property contributed eects Partnership interest acquired other than by cash or property 3j Increase for excess depletion adjustment e E o 17S ce OE CSS na E E A Debt Basis 4 amp 7 A Partner s share of partnership liabilities B Partners share of partnership liabilities from prior year 6 lenient ts La ph fee ARS ES RAS A a E Figure 5 31 Partner Basis fields on Basis Worksheet screen 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 32 Data entry for this column begins on the first Basis Worksheet screen and continues to the Basis Worksheet continued screen Loss allocation percentage is calculated by a Taking the total losses and deductions allowed b Dividing them by the total losses and deductions to figure the loss allocation percentage c Multiplying the loss allocation percentage by each category of loss applic
334. he home was owned during the past five years Enter this information under the Reduced Maxi mum Exclusion heading on 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 assuming 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 etc 1099 R Items Not Reported on 1099 R Tax Year 2010 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
335. he 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 24 2 years 24 months Payments 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 281 EIN Database Drake Software User s Manual 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 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 information Adding or Editing Employer Information To add or edit an employer s EI
336. he 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 CSM Reports Seven predefined status and financial reports are available in the CSM Reports are displayed in the Report Viewer Data can be exported from the Report Viewer Report Title CSM Data Table 9 2 CSM reports Description 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 Bank Deposits Report lists cash amounts received from bank deposits only The data in this report is pulled from the EF database Cash Receipts Client Payments Report lists amounts entered on the BILL screen in data entry Completed Returns Report lists SSN EINs and client names of returns with a Complete status The program pulls the date completed from the TRAC screen which is automatically set when you select a status of Complete An administrative user can manually set the completion date by complet ing the Date complete field on the TRAC screen Problem Returns Old Returns Report lists returns that have taken longer than a specified number of days to complete Problem Returns Missing Files For this report the CSM scans client fi
337. he selected file to the new location 313 Tax Planner Drake Software User s Manual Table 13 2 Other DDM File Tasks Task Description Access Help e Exit the DDM Tax Planner Tax Planner The Drake Tax Planner helps you assist your clients with planning for financial deci sions Clients can see how events such as the birth of a child a marriage or a new job will affect their short and long term finances and tax liability The Tax Planner is installed when you install Drake Because each worksheet in the Tax Planner contains typical Excel worksheet functions your computer must have Microsoft Excel 2000 or later installed Opening the Tax Planner To open the Tax Planner from the desktop double click the Tax Planner icon Begin entering data in the blank planner or click Open Planner to open an existing planner To open the Tax Planner from data entry 1 Click the Tax Planner icon 2 When the program asks if you want to calculate the return answer Yes or No and the Tax Planner is opened 3 When the program asks how many cases or years you want covered in your Tax Planner select a number from the drop list and click OK The client s current year information is imported You can edit this information once it is in the Tax Planner Clicking New Planner opens a blank planner NOTES See Working in the Tax Planner on page 316 for instructions on steps to take once you ve ope
338. hen the return is generated Form 8453 shows which forms are to be mailed NOTE Click Screen Help at the upper right corner of the EF screen for more information on Form 8453 EF Database Tax Year 2010 The EF database is a searchable database that displays information about all returns your office 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 7 9 To browse all records leave this field blank 201 EF Database afol Drake Software User s Manual SSN EIN To Search For SSN Name 400001001 Taxpayer 400001001 JOHN amp JANE lt DOE Spouse 400002001 F1 General Information F2 Bank Direct Deposit Info F3 Fees Miscellaneous Info F4 Reject Code Lookup Figure 7 9 Search EF Database window 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 General Information Bank Direct Deposit Info Fees Misc Info Reject Code 202 Lookup 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 7 9 The F1 General Information tab displays b
339. hich 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 Debt Indicator A field on an acknowledgment that indicates whether a debt offset of a taxpayer s refund will occur Drake Document Manager File extension for Microsoft Word files Appendix D Acronyms amp Abbreviations DTP EA E ack EF EFIN EFT EFTPS EFW EIC EITC EIN ERC ERD ERO ETA ETC ETD ETIN FMS HOH IRC D 2 Drake Software User s Manual File extension for Drake Tax Planner files 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 or savings accounts Also known as direct debit Earned Income Credit Earned Income Tax Credit A refundable individual income tax credit for certain persons who
340. hine is rebooted Disabling There are two ways to turn off automatic backup Automated Backup Goto Tools gt File Maintenance gt Backup click the Automatic button and clear the Activate Automatic Backups check box e Click the icon in the system tray see Figure 11 7 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 From the Home window go to Tools gt File Maintenance gt Change SSNs on File 2 Inthe Incorrect SSN EIN box enter the ID number that is currently in the sys tem Do not use without spaces dashes or additional characters 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 267 ae ALITION PPR cients It you change an SSN or EIN you will be charged for another return Tax Year 2010 271 File Maintenance Drake Software User s Manual 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 From the Home window select Tools gt File Maintenance gt Clear BBS Files 2 Click OK 3 When the deletion process is complete c
341. his 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 Proforma organizer Prevents proforma organizer for next year from being generated See Organizers and Proformas on page 70 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 1120S 1065 and 1041 packages If the option to print K 1 letters is selected in Options Setup you can go to the PRNT screen to suppress the printing of K 1 letters Forcing Table 2 17 lists PRNT screen items that can be forced even if the program calcula Generated tions and established defaults would otherwise not generate them Table 2 17 Items That Can Be Forced from the PRNT Screen Item Schedule A Description Schedule A Itemized Deductions Schedule B Form 4562 Form 6198 Schedule B Interest and Dividend Income Form 4562 Depreciation and Amortization Form 6198 At Risk Limitations Form 6251 Form 6251 Alternative Minimum Tax for Individuals Form 8582 Form 858
342. hrough Setup gt Pricing use item 350 NOTE For more on setting up pricing in Drake see Pricing Setup on page 31 To suppress the charge for an individual return use the BILL screen See Overriding the Bill Amount on page 47 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 Save 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 enable you to enter frequently used data entry items with minimal keystrokes This feature is described in detail in the Macros Setup section of Chapter 2 Installation amp Setup Heads Down Data Entry Heads down data entry pro
343. ices 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 47 NOTE Write the custom paragraph for the bill in the Custom Paragraph field at Setup gt Options Billing Tax Year 2010 45 Making Changes on the Fly Drake Software User s Manual 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 and Calculations can be changed from within a return 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 Use the override fields on the LATE screen in data entry to override established defaults 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 165 Listing a Differ
344. ident state drop list By default the program completes the City and State fields once the NOTES ZIP code is entered If the taxpayer has a foreign address or telephone number enter that information on the MISC screen Indicating a Deceased Taxpayer If the primary taxpayer is deceased 1 Enter the date of death in the taxpayer s Date of death field on screen 1 2 Type the surviving spouse s name in the In care of field on screen 1 If tax infor mation should go to someone else enter that person s name instead 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 86 Tax Year 2010 Drake Software User s Manual Exemptions Exemptions Screen code 2 Use screen 2 Dependents accessible from the General tab to complete the Exemptions section of Form 1040 Enter the dependent s required data name SSN etc at the top of screen 2 In Figure 5 2 note that the dependent s age is displayed once the birth date is entered i State Information Dependent Information Use lt F3 gt to switch to grid mode AR LA NY EIC NY 272 PA Dependent Last name Months Date of first name MA if different Suffix SSN Relationship in home birth Scott 400 00 5008 SON X X 10 07 2007 Childcare Expense Information Form 2441 Age determined by Qualifying childcare expenses incurred and paid in 2010 date of birth Portion of
345. igure 1 3 Select Report Columns Categories Return Results Alimony Received Alt Min Tax Applied Child Care Credit Child T ax Credit Child T ax Credit Additional Dividends Ordinary Total Education Credits Figure 1 3 Place mouse pointer over a selected keyword to see the description For instructions on creating and editing reports see Chapter 12 Reports Tax Year 2010 C 1 Appendix C Keywords Drake Software User s Manual Letter Keywords Letter keywords appear as bracketed phrases within the letter templates of the Client Communications Editor Figure 1 4 p ASE awed aie tivo Tays betut oura patient aate you Tetato re Please bring all tax related materials including W 2s 1099s charitable con year s tax return and two forms of identification We look forward to preparing your return this year If you have any questions please contact us at lt Paid Preparer Phone gt i Sincerely F on ie tee P andi fi an ee on Figure 1 4 Keywords from letter template 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 1 5 the Preparer Firm and Revenue category has been expanded Client Information Miscellaneous Prep
346. ile all individual income tax fidu ciary and partnership returns including Form IT 204 LL and individual income tax and partnership extensions if the preparer meets either of the following criteria e The preparers was subject to the mandate in a prior year e The preparer meets both of the following conditions The preparer prepared more than 100 combined original individual fiduciary and partnership returns for tax year 2009 in calendar year 2010 The preparer used tax software to prepare one or more New York state indi vidual fiduciary or partnership returns for tax year 2010 in calendar year 2011 Also beginning January 1 2011 e Clients can no longer opt out of e file e Form TR 800 Taxpayer Opt Out and Reasonable Cause Record for Tax Return Preparers has been eliminated e Ifa preparer has reasonable cause to not e file he or she must maintain adequate documentation The preparer must provide that documentation to Department of Taxation and Finance if he or she receives a penalty bill for failing to e file e A preparer cannot charge a separate fee for e file but can charge a separate fee for paper filing NYC Mandates e Filing for Certain 2010 GCT and UBT Business Taxes Begin ning January 1 2011 e filing is required for tax preparers The following business tax forms must be filed and paid electronically NYC 3L NYC 4S NYC 4SEZ NYC 204 NYC 204EZ and NYC EXT for corporations and partnerships Crit
347. indow to completing or e y filing tax returns view or change the defaults for the various options available Options are categorized Tax Year 2010 21 Software Setup Drake Software User s Manual into tabs as shown in Figure 2 9 Only administrative users have the Administrative Options tab Data Entry Billing Select to Turn ON TM p Drake 2010 Setup Options Customize data entry functionality by indicating your preferences below Data Entry Calculation amp View Print Size data entry screens to show most fields without scrolling x 5 States EF Form amp Schedule Options Optional Documents Optional Items on Return Administrative Options Language for menus and data entry screens English foe gl naan ptt ngasa ARAA for Fld spgaiic help in data erty an Figure 2 9 Tabs in Options Setup Table 2 5 through Table 2 12 describe the options available on each tab in Options Setup Data Entry Options Options under the Data Entry tab are described in Table 2 5 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 Effec tive on
348. ing a Schedule K 1 that has been amended S corp partnership and fiduciary packages only Grantor Trust Statement 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 36 Tax Year 2010 Drake Software User s Manual 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 set up letterhead for bills Changing Letter Margins Tax Year 2010 Software Setup 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
349. innesota Individual OtherTax1 Property Tax Credit 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 Tax Year 2010 C 5 Appendix C Keywords Drake Software User s Manual Table 1 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description New York Individual OtherTax1 IT 204 LL OtherTax2 MTA 6 MCTMT Corporation OtherTax1 CT3M 4M Partnership OtherTax1 IT 204 LL New York City Individual OtherTax1 NYC 1127 NYC Employment 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
350. 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 8911 0863 tion are located on the same screen The 8863 8917 screen should be used to enter information for the taxpayer or spouse To enter a dependent 5 information use the Education Expense Information section of screen 2 NOTE If a dependent does not qualify for an education credit the software does not apply this information when calculating the federal return Multiple If education credits are to be filed with one state and tuition and fees deductions with States another select the applicable states from the drop lists in each section of the screen Selecting a When entering education expenses complete either the American Opportunity Credit Type Credit or the Lifetime Learning Credit field as applicable Form 1098 T Enter amounts from Form 1098 T Tuition Payments Statement on the 8863 8917 screen Use screen 3 to enter the amount received from any taxable scholarship that was not reported on a W 2 or 1098 T 122 Tax Year 2010 Drake Software User s Manual Domestic Production Activities Deduction Domestic Production Activities Deduction Screen code 8903 Use the 8903 screen accessible from the Adjustments tab for Form 8903 Domestic Production Activities Deduction Entering Data from Multiple 8903 Forms Only one Form 8903 can be attached t
351. ion V EF Paper EF f Paper EF J Paper EF Jf Paper EF J Paper J EF J Paper Customized Supplemental Letter Engagement Letter il ud ud Privacy Policy EF J Paper EF J Paper JALIL J Figure 2 25 Select EF to force a letter to be printed as ifthe return is eligible for e file From Setup gt Options Optional Documents you can select to have the customized supplemental letter engagement letter and privacy policy letter printed with all 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 25 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 50 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 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 198 Tax Year 2010 3 Basics To open the 2010 program double click the Drake 2010 icon on your desktop The Login window displays the Preparer Login box Figure 3 1
352. ion 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 NEW FOR Under the provision of the Small Business Jobs Act of 2010 taxpayers may now elect to expense under section 179 up to 250 000 of the UNO cost of qualifying real property placed in service during the taxable year See Indicating Sec 179 Expensing on page 152 for more infor mation on how to make this election in Drake 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 and Forms 2106 4835 and 8829 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 156 To associate a dep
353. ion booklet 1310 Form 1310 Statement 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 2010 163 Requests Claims and Other Forms Drake Software User s Manual Table 5 21 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 NOTE terrorist or military action go to the MISC screen and select the applica ble code under Combat Zone Press F1 for more information Other Forms Table 5 22 lists screens for other forms available under the Other Forms tab Table 5 22 Other For
354. ions To enter non recaptured losses use the Part IV Decline in Business Use section of screen 4797 For sold property listed on Form 4797 depreciation sometimes must be recaptured as ordinary income For more on depreciating sold assets in Drake see Depreciating Sold Assets on page 154 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 the 4797 Installment Sales Screen code 4562 Screen code 4797 100 The steps for entering an installment sale vary depending on whether the assets are entered on the 4562 screen If the 4562 screen is not used complete the 4797 screen for the sold asset and indicate with a Y that the sale is also reported on Form 6252 Next take the steps in the following procedure beginning with Step 3 To enter an installment sale using the 4562 screen 1 For the sold asset open screen 4562 and complete the Date sold field This causes the program to stop calculating depreciation 2 Select Property type IN for 1245 or IS for 1250 3 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 Tax Year 2010 Drake Software User s Manual Sales of Assets Screen code 6252 4 5 TIP Enter the line 31 amount on screen 6252 line 12 Depreciation to recapture Comp
355. iscom ABC voice files 206 videos 247 viewing see also printing bank decline reasons 203 218 blank forms 266 CSM filters 235 deleted records 237 earned revenue from add on fees 14 EF reports 205 letter keywords Appendix C loan status codes 203 218 processed acknowledgments 191 report keywords Appendix C reports 296 sample letters 39 scheduled appointments 81 tax returns 176 W W 2 import 91 watermarks 40 41 Windows operating system default printers 40 enabling standard keystrokes 22 using system colors 39 Windows operating system requirements 7 worksheets AUTO 156 carryover 24 detail Ctrl W 58 59 for Schedule D import 99 next year depreciation listing 44 sale of home HOME screen 102 sales tax 172 Z ZIP code auto fill 22 database 61 Tax Year 2010 Drake Software User s Manual xxii Tax Year 2010
356. ist of available tutorials in ETC click Tutorials The Tutorials and Quizzes page displays a connection speed options box and lists Drake tutorials Figure 10 6 Tax Year 2010 245 Online Support 246 Practice Returns Drake Software User s Manual Please choose your connection speed Low recommended for dial up users no audio Med recommended for dial up users with audio High recommended for cable dsl with audio larger screen Subject General x Subject Tutorials 2p 7216 Launch Tutorial Vv gt i 8615 Export Launch Tutorial 2 ip Appointment Scheduler Launch Tutorial wv gt Archiving Launch Tutorial xX a Oe a T a T N E T Figure 10 6 Connection speed options and tutorial list Before opening a tutorial select a connection speed Next 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 View drop list and click Launch Quiz for the desired quiz Tutorials are added throughout the season so check for new tutorials N ITE often To view tutorials for Drake CWU select Client Write Up from the Subject drop list shown in Figure 10 6 Practice returns have been designed as hands on tools to help your firm become famil iar w
357. it can change its status Application statuses are listed below A Accepted B Accepted post acceptance changes rejected C Accepted post acceptance changes pending D Declined available for correction and resubmission E Accepted awaiting bank account information N Not completed P Pending R Rejected Call the selected bank to resolve any issues 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 Once you have chosen your banking solution activate your selection in Drake data entry so the correct screens are accessible from the General tab 220 Setting Up Banking Options 1 From the Home window select Setup gt Firm s 2 Double click the firm or select a row and click Edit Firm Under Banking Information select your chosen banking option and enter addi tional information as necessary Options are described in Table 8 4 on page 221 Click Save Tax Year 2010 Drake Software User s Manual Preparing to Offer Bank Products Table 8 4 Options under Banking Information in Setup gt Firm s Item in Setup Retrieve banking information Description Import banking information from your complete bank application in the EOM into Firm Setup Additional fees Add on These fees are deducted from the taxpayer
358. ith each software release thereafter Your serial number and Drake customer account number are M p RT NT 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 Tax Year 2010 To run Drake Software your computer operating system must be Windows 2000 or later and must meet or exceed the following system requirements e Windows 2000 NT XP ME Vista 7 Windows NT users must have Service Pack 4 0 or higher available from www microsoft com e Windows 2000 amp XP 300 MHz processor or higher 128 MB of RAM Installation Drake Software User s Manual 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 Internet access HP compatible laser printer strongly recommended TWAIN compliant scan ner 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 or a 56K modem A backup
359. ith the basics of data entry and e filing in Drake Software To access practice returns in ETC click Practice Returns The Practice Returns page displays instruc tions and a list of available practice returns Figure 10 7 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 View Solution Ee ee Me re ie Figure 10 7 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 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 Tax Year 2010 Drake Software User s Manual Online Support Videos Report Card Admin Logging Out Tax Year 2010 Tutorials and practice returns are also available outside of ETC To see the tutorials or to work on the practice returns without sig
360. izing 28 fonts for printing tax forms 41 266 foreign account reporting 164 earned income 118 employers 90 interest and dividends 94 mailing address for tax firm 14 mailing address for taxpayer 86 tax credit 125 126 Form 56 Notice Concerning Fiduciary Relationship 149 164 199 Form 706 U S Estate and Generation Skipping Transfer Tax Return 275 Form 706 A U S Additional Estate Tax Return 275 Form 709 U S Gift and Generation Skipping Transfer Tax Return 162 Form 90 22 1 Report of Foreign Bank and Financial Ac Tax Year 2010 Drake Software User s Manual counts 164 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 163 Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 164 Form 1040 U S Individual Income Tax Return 85 172 Form 1040NR U S Nonresident Alien Income Tax Re turn 161 Form 1040X Amended U S Individual Income Tax Re turn 160 Form 1045 Application for Tentative Refund 159 163 Form 1098 Mortgage Interest Statement 124 Form 1098 C Contribution of Motor Vehicles Boats amp Airplanes 124 Form 1098 E Student Loan Interest Statement 122 Form 1098 T Tuition Payments Statement 122 Form 1099 C Cancellation of Debt 117 Form 1099 DIV Dividends and Distributions 92 95 Form 1099 H Health Coverage Tax Credit 119 Form 1099 INT Interest Income 93 9
361. k Reset in the View Mode Color Selection dialog box Basic Mode Because Basic mode uses the multi color 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 mode e View Mode View mode only e Print Mode Print mode only e EF message page e Notes page 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 10 Tax Year 2010 185 Setting Up View Print Options Drake Software User s Manual Drake 2010 Sort Form Order 1040 Series v Federal bd Save Normal Default C EF Signature Set C Estimate Extension Set 209 Messages Page
362. ke Test returns can be used to test e filing The SSNs for the test returns run from 500 00 1001 through 500 00 1008 For more information on how practice returns can help you see Practice Returns on page 246 65 Practice Returns and Test Returns Drake Software User s Manual This page intentionally left blank 66 Tax Year 2010 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 preseason 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 2009 data path points to your firm s 2009 data files To check the prior year data path 1 Log in to the program as a user with administrative rights 2 From the Home window select Setup gt Directories Paths 3 Look at the Path for 2009 Data field Figure 4 1 gt ree s o ee pos P F aemm A fm peo om ee at Mites _ Se T at x ene cet OM Le wy in L Paths determined by configuration selected above Admin Override V Path for 2010 Data DRAKETOSDT VA Path for 2009 Data DRAKEOS DT Path for Print File SDRAKETOS
363. ke Document Manager DDM apply a DDM password and customize the default folder layout Access Options Document Manager Location C DrakeDDM Search Add Password for DDM Startup ADMIN ONLY Confirm Password Folder Structure Allow Drake to set up Document Manager client folders Recommended TEST JOHN 123456789 Add Tax BS 20 Edit Remove To customize the DDM structure created by Drake select an existing folder and click Add This will insert a new default folder one level below the selected folder m Apply this layout to existing DDM client folders now lf this boxis unchecked layout changes will only apply to new client folders Help Save Cancel Figure 13 3 Adding a password to DDM 4 Click Save With a password in place users must enter the password in order to open the DDM To change a password repeat the steps described previously In the Add and Confirm text boxes see Figure 13 3 enter the new password and click Save To remove a password go to Setup gt Printing gt Document Manager as described previously Delete the passwords from the Add and Confirm text boxes see Figure 13 3 and click Save To delete select a password and press DELETE NOTE For information on password protecting individual files in the DDM see File Security on page 313 Configuring To set configurations for th
364. kstations 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 Network Options You can select one of two available network options a Server Only Install Drake on a server and link workstations to the server using a network link NWClient b All Workstations Install Drake on all workstations and designate one sta tion as the server All other workstations use the designated server to share files 10 Tax Year 2010 Drake Software User s Manual Running Drake on a Network Table 2 2 shows a comparison of these options Table 2 2 Comparison of Network Options Server Only Preferred Setup All Workstations For firms with a robust network setup For firms without resources to use a single server Simplified setup and updates Updates must be installed to each computer No need to stagger DCN counter Could be necessary to stagger DCN counter Server Only Using the instructions in Installation on page 8 install Drake onto the server NOTE Drake can be installed to the server from a workstation if necessary Be sure to select the correct server drive Once Drake is installed on a server complete the following steps at each workstation 1 Click Start gt Run Windows 7 u
365. l save 200 Click Print or Press the P key to Print this screen Click Save or Press the S key to Save the MFS returns HINT Select Retum s First then Click Save and View Help MFJ MFS Repo Print Save Selecta Unselect all Exit Figure 3 21 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 21 MFJ MFS The report is displayed with the MFS_COMP and OH_COMP 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 176 NOTE Currently the state report feature is available for Ohio returns only 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 Tax Year 2010 63 State Returns Screen Captures Calculator Macros Drake Software User s Manual Billing for this report is done t
366. lance Sheet and Schedule A information transfers 4706 7064 return can be created from a 1040 as well as a 1040 from either a 706 or 7064 return Enter SSN EIN to convert 400001001 Convert this file to CE individual 1040 C Fiduciary 1041 C Estate 706 Corporate 1120 Partnership 1065 Heir 7064 C Sub S Corp 1120S C Tax Exempt 990 400001001 File Type is Individual 1040 Select the type of return to convert to Figure 11 10 Available return types are displayed Click an option to select it and then click Continue When asked if you want to keep the original return in addition to the new return click Yes Click OK 275 File Maintenance Drake Software User s Manual 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 Preparing a QuickBooks File Importing QuickBooks Data 276 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 and the QuickBooks files before importing client files Before you can import QuickBooks files into Drake Software you must first place the
367. le Name 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 2009 box Enter a report output name in the Report output file name field This name must be fewer than nine characters You will use this name to locate the report in the Report Viewer See Report Viewer on page 297 Creating a New Report When planning reports for your office consider beginning with a pre defined report that already includes most of the information you require Whenever you modify a pre defined report the modified version is saved as a new report in My Reports See Setting Up a Report on page 289 for more information 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 Electronic Filing amp Banking For a report based on the EF database e Tax Return Data For a report based on data entry information Click OK to open the Report Editor Step 1 window 4 Using the instructions in Setting Up a Report on page 289 as a guideline enter the report formatting and filtering information 5
368. le refund amounts vary by bank and can range up to 9 999 99 The loan amount is paid in full when the IRS deposits the actual refund directly into the bank The bank could withhold preparer fees through this loan process A preparer can print the RAL check once the loan is approved Preparer fees are deposited into the pre parer s account within days after the check is printed Non Loan Products Non loan 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 unbanked taxpay ers an alternate way to receive their refund proceeds Tax Year 2010 215 Distribution Methods Drake Software User s Manual 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 non loan bank product is not a loan The disbursement reflects the actual deposited refund amount NOTES with the bank transmitter and preparer fees deducted Banks provide certain non loan products for state refunds Check with your bank for a list of eligible states Distribution Methods Bank products can be distributed by direct deposit cashier s check or debit card Fees are charged for each method Notify your client that the following fees can be sub t
369. lendar year for any taxable year beginning before January 1 2010 or both shall be e filed in the manner prescribed by Departmental instructions For exceptions definitions and other information see 40 Pa B 3745 Legislation signed into law on July 1 2008 indicates that Rhode Island requires pro fessional tax preparers who prepared more than 100 individual Rhode Island returns in the previous season to e file their clients individual both resident and non resident state income tax returns Preparers filing 100 or more returns of any package individual S corp 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 E 5 Appendix E State E filing Mandates Drake Software User s Manual Utah Virginia West Virginia Wisconsin returns unless the number of 1120 returns exceeds 99 All returns should be e filed if possible Tax preparers who file 101 or more income tax returns in a filing period are required to e file all such returns Ifa preparer or multiple preparers affiliated with the same establishment prepared 101 or more returns in the prior calendar year they must submit all Utah individual tax returns electronically A tax professional who prepares 100 or more individual income tax returns is required to e file Filing returns on substitute forms using 2 D barcodes no longer meet
370. ler works with the Reports feature in Drake to provide reports based on appointment data To generate a Scheduler report 1 Open the Scheduler and click Reports The Report Manager is opened 2 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 Reports 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 client name client SSN and client phone and e mail address Preparer Appointments Lists the appointments for all preparers Data types include appointment time client name client SSN dura tion of appointment client phone and new client indica tor and e mail address Preparer Call List Lists the appointments for a preparer select a preparer name from the drop list Data types include appointment time and date client name SSN and client phone and e mail address Tax Year 2010 83 E filing Preparation Drake Software User s Manual a Click on a report type to select it 4 Click View Report You will be asked if you want to cre
371. les for File Deleted and File 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 See Chapter 12 Reports for information on using reports in Drake Generating a CSM Report To generate a report from the CSM 236 Tax Year 2010 Drake Software User s Manual Exporting CSM Data 1 Select Reports 2 Select a report from the Select Reports drop list in the CSM Reports dialog box Depending on your selection you could be prompted to enter dates select prepar ers or provide other information to narrow the scope of the report Reports 3 Click Report The report data is displayed in the Report Viewer You can now print the report export it into another program or customize the display For information on using the Report Viewer see Report Viewer on page 297 Exporting CSM Data 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 Export opened automatically Admin only Features Users with administrative rights can delete records from the CSM display restore CSM data and remove duplicate entries Deleting 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 T
372. lete screen 6252 by entering all other installment sale information Listed below are specific instructions and explanations for completing the separate parts of screen 6252 e Part I lines 1 15 Complete Part I for the year of sale only Part I must also be completed in subsequent years in order to have the gross profit per centage 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 Part II line 19 and Receipt category section Complete the Part II 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 To generate Part II of Form 6252 enter payments received in current and prior years in the Receipt category section located on the right hand side of screen 6252 e Part III Related Party Sale Income Complete the Part III section 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 on screen 6252 just above the Part III heading The taxable amount is calculated on the WK_ 1250 worksheet and is carried to Schedule D line 19 based on these calculations 6 View the return See line
373. lick Exit Exporting Data from Drake The exporting tool allows you to transfer client data in Drake and the EF database files to either a text file or a CSV spreadsheet format file You can then import that infor mation 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 8 G Drake 2010 Export Client EF Data sl This will export all EF or Client data to a Text CSV 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 Export client data files C Export efile data files I Export to CSV Comma Separated Values I Include test returns Path File name for export data C DRAKE10 export CLIENT TXT Help Continue Exit Figure 11 8 Export Client EF Data dialog box 2 Select to either Export Client Data Files or Export EF Data Files e Ifyou choose Export Client Data Files the path for client export is dis played Change the default path as needed e Ifyou choose Export EF Data Files the file and path names are 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 option
374. ll 12 months If you select 0 months for a son or daughter the dependent is classified as one who did not live with the taxpayer due to divorce or separation If 0 is selected for another type of dependent parent grandchild etc the program applies the Other Dependent classification regardless of the relationship To override these classifica tions select the applicable boxes in the Additional Information section at the bottom of screen 2 See Additional Dependent Information Claiming a Dependent for Split Returns MFS Married Filing Separately T Taxpayer S Spouse J Joint If taxpayers are married and want plan to split the return to see if filing separately would be 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 sec tion A TSJ code should also be selected if the state has an MFS 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 information is necessary in some situations for example if the parents of the dependent are MFS and reside in different states TSJ sl State fad State codes
375. loyee select Statutory employee OR qualified joint venture rental real estate activity Screen code W2 3 On the W2 screen for the employee select the associated Schedule C from the Special tax treatment drop list at the top of the screen Figure 5 7 90 Tax Year 2010 Drake Software User s Manual Personal Service Income W 2 1099 MISC Drake 2010 Data Entry 400001002 WHITE MARY W2 Wage and Tax Statement 1 Wages tips 2 Federal tax wih TS ZI E E Special tax treatment z ES y MAS f l Statutory employee wages for Schedule C 1 2 Statutory employee wages for Schedule C 2 3 Statutory employee wages for Schedule C 3 Statutory employee wages for Schedule C 4 c s C 6 C 7 b Employer s Federal ID Number 5 Statutory employee wages for Schedule Statutory employee wages for Schedule Statutory employee wages for Schedule ih we dette 00 mnn tn die Mila s CHEN FEDMPT QPREK ROAD Figure 5 7 W 2 in this example is associated with the second 2 Schedule C entered The selected Schedule C will now indicate that the taxpayer was a statutory employee ITIN SSN _ If the client has an Individual Taxpayer Identification Number ITIN on screen 1 and Mismatch on the SSN on the W 2 does not match that ITIN enter the SSN from the W 2 in the W 2 ITIN SSN Override field at the bottom of the W2 screen Press F1 from this field for more on e filing returns with ITIN SSN mismatches Corrected or Near the botto
376. lso Schedule D Capital Gains and Losses carryovers from prior years 99 carryback of net operating losses 158 carryforward of net operating losses 158 159 carryover worksheets 24 cashier s checks 216 casualties and thefts 98 CD shipments 8 change of address 164 changing client SSN or EIN 271 return types C corp to S corp etc 274 charitable distributions 103 check register 227 checks 222 lost or stolen 227 resetting check numbers 227 test printing 225 Child Tax Credit 6 129 child care expenses 126 127 church income see clergy city codes 62 tax rates for Ohio and Pennsylvania 283 clearing flags 59 clergy expenses 119 income allocation 123 indicating on W 2 121 self employment tax 120 Client Communications Editor 34 client files see files Client Status Manager 52 231 237 Tax Year 2010 Drake Software User s Manual client statuses in CSM 231 Client Write Up 318 COBRA assistance 133 codes acknowledgment acks 195 196 activity type Schedule C 96 business 97 city 62 error in e filing 192 ES estimate 136 extension form 161 filing status 85 form 56 FTC foreign tax credit 126 investment credit 153 miscellaneous 168 multi form MFC 62 non paid preparer 14 OP overpayment 137 proforma 71 reject 202 searching 97 special processing 86 ST state 62 tax treatment 97 TS TSJ 61 underpayment 138 unformatted schedule 170 colors in data entry 39 in view print mode basic and enhanced 184 co
377. ly when monitor resolution is set to 1024x768 or smaller Disable sizing of data entry screens Keep preparer from resizing screens Effective usually for monitor resolu tion set to 800x600 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 Activate W 2 wage and federal with holding verification fields Enlarge the active field for easier reading To ensure accuracy of data entry require wage and withholding amounts be entered twice on the W2 screen Tax Year 2010 Drake Software User s Manual Software Setup Table
378. m 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 148 for more on electronic signatures Amended Returns 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 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 DDM if you archive the return See Archive Manager on page 187 To create an amended return in Drake 1 Open the return to be amended Screen code X 2 From the Other Forms tab click 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
379. m 8888 The following conditions must apply for the taxpayer to file Form 8888 Conditions 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 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 to the first account entered on the Accounts DD screen If depositing funds into multiple accounts complete the Federal selection Tax Year 2010 143 Direct Deposit Drake Software User s Manual field to indicate whether the first account entered should be used for the federal refund Figure 5 51 The default selection is Yes Account 1 4 Deposit selection Federal selection Zj Stat Name of financial institution Yes M R Smalltown Bank and Trust Repeat account information Figure 5 51 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 52 An amount entered here overrides the calculated refund amount ederal deposit amount
380. m of the Contact Information box and then click the arrow that appears 3 Select a planning preference and click Save Planner To save multiple planners for a client save each planner using a Tip slightly different name For example Click Save Planner gt Save As then save one planner as Smith1 another as Smith2 etc Planner The following options are available from the Tax Planner Options button Options Send to DDM e Send to DDM Select Options gt Send to DDM to save the open file as a PDF file to a selected DDM client folder See Document Manager on page 301 A WS Case Options Select Options gt Case Options to choose the number of cases or years to view and print Click Set selection as default to set a number as a default setting J Directories and Paths Directories and Paths Select Options gt Directories and Paths to select a path for the Tax Planner to use as its source for Drake data current path is dis played Enter a New path if necessary Files are saved to the specified location Case Options Working in the Tax Planner To begin working in the Tax Planner 1 Open the Planner using one of the methods described in Opening the Tax Plan ner on page 314 Tax data automatically fills the planner for the current year 2 Inthe Case Selector select the number of years or cases to use If you have already selected a default number the Case Selector does not appear Click OK
381. m of the W2 screen are check boxes to indicate that a W 2 was altered Altered W 2 handwritten non standard or corrected Select the applicable box to indicate that a W 2 has been changed 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 that uses W 2 eXpress that client s W 2 can be downloaded directly into Drake See the Drake Support site My Account gt W2 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 1 From the Data Entry Menu of the client s return click Import gt W2 Import 2 2 Inthe W2 Download dialog box select Taxpayer or Spouse as applicable The Le eerahs ts name and SSN of the selection is displayed below the Taxpayer Spouse drop list Schedule D Import Tax Year 2010 91 Passive and Investment Income 1099 DIV etc Drake Software User s Manual te gt Drake 2010 W2 Download cic e Taxpayer Spouse Taxpayer William Carter
382. m the Home window click Open New 2 Enter or select the dependent s SSN and click OK You are asked if you want to import the return data 3 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 applicable fields as shown in the Figure 5 43 example Drake 2010 Data Entry 400005008 Carter Form 8615 Tax Computation for Certain Children with Investment Income Parent s First Name Last Name Parent s SSN Estimate State Information Wi1iam O emer aooo Parenls ling E E E se j2 zl r Pants tabis hOM ooo a 74809 Parems E EAA EA T EA ct OST T E T OD I ONE 11069 I Parent s tax computed using either Schedule D or J Fear earns Rat Compal hema a aaa o aan ar r S E E E E E a a E ON pie Figure 5 43 Parent information has been imported into dependent s 8615 screen Estimated Taxes This section focuses on the following information in Drake e Estimated taxes paid in 2010 Estimated payments for 2011 e Estimated tax adjustments e Application of 2010 overpayments to 2011 e Underpayment of estimated tax Estimated Taxes Paid in 2010 Use the ES screen to enter by quarter the 2009 overpayment and the estimated taxes paid in 2010 The program applies the standard estimate payment dates If any of these dates are different enter the correct date in the applicable override fiel
383. mail the return to a selected recipient Refresh Update the viewed return to reflect any changes made by another preparer working in the open return Basic View Switch to the cascade view the exclusive Drake view before 2008 wv 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 133 K 1 K1 Export Open the K 1 Export tool This button is visible only for certain business returns Help fi Exit Access Drake online help Exit View mode Viewing Tool Use the arrows and zoom icon Figure 6 1 when viewing in Enhanced mode QOQ Figure 6 1 Click arrows to move through the return click zoom icon to zoom in or out Category Tabs Labeled tabs allow you to view sections of the return according to selected categories For example if you click the EF tab only the documents directly related to e filing are displayed in the tree view TED Federal Worksheets Miscellaneous MESSAGES EFSTATUS 9325 AllForms Sets de ER Figure 6 2 If the EF tab is selected only the EF specific documents are shown in tree view 178 Tax Year 2010 Drake Software User s Manual Viewing and Printing a Return Category tabs and descriptions are provided in Table 6 2 Table 6 2 Cate
384. 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 Residence Screen code HOME Related Worksheets Updating from the Prior Year Schedule D 102 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
385. mation call Versicom at 937 438 3700 Contact Lists 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 the Excel icon 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 PARNA 206 Tax Year 2010 Drake Software User s Manual Online EF Database Multi Office Manager MOM Transferring Data to MOM Running a MOM Report Tax Year 2010 The Multi Office Manager MOM is the online version of the Client Status Manager CSM For more on the CSM see Chapter 9 Client Status Manager Designed for the multi office environment MOM allows you to track workflow of multiple offices providing a snapshot of your entire business Reports and statistics on demographics return status return type bank payments fees and billing information are available For CSM data to be transferred to MOM the software must be configured to send 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 the Home window go
386. ments and process the acknowledgments in one step Transmit return data to Drake for multi office web reports Sends Client Status Manager CSM data sent automatically to the Multi Office Manager MOM during the EF process State EF Suppresses 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 Tax Year 2010 Software Setup Admin Options Drake Software User s Manual To access the Administrative Options tab a user must have administrative rights Options under the Administrative Options tab are described in Table 2 12 Table 2 12 Options Setup Administrative Options Option Use customized data entry selection menu Description Click Customize and then select the package and package type to cus tomize 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 Customize user defined data entry fields 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
387. mmunity property allocation 123 comparing current to prior year 24 network options 11 two versions of a return 167 configuring colors in basic mode 185 DDM 306 Consent to Use and Disclosure of Tax Return Information IRS Reg 7216 16 211 213 contact lists 206 conversions 249 copying DDM files 313 EF data 208 coversheets 24 CPE credits 245 creating see also opening amended returns 160 appointment reports 83 archived returns 187 CSM reports 236 Tax Year 2010 Index EF reports 204 ETC accounts 242 filters 296 key combinations 32 macros 32 miscellaneous codes 28 29 preparer schedules 76 reports 289 returns 55 credit card as electronic payment option 2 145 Credit for Small Employer Health Insurance Premiums 5 credits see also individual credit and form names adoption 2010 changes to 5 child and dependent care 126 child tax 6 129 education 6 122 elderly disabled 127 foreign tax 125 home energy 127 homebuyer 6 45 102 103 142 retirement savings contributions 129 crop income for Form 1041 115 insurance 125 CSM see Client Status Manager Ctrl W detail worksheets 58 59 custom folders in DDM 305 custom paragraphs 26 49 customized supplemental letter 25 customizing colors 39 184 CSM display 234 data entry menu 28 drop lists 29 fields on BILL screen 28 flagged fields 28 greetings in letters 49 letters 35 miscellaneous code fields 28 report filters 292 security setting
388. ms downloading prior year 249 setup options 26 state returns accessing 64 e filing 209 statutory employees 90 stolen checks 227 storing files in the DDM 309 311 print files 23 student full time 86 loan interest deduction 122 supplemental income 106 111 support see Drake Support Drake Software User s Manual suppressing documents on the fly 43 e filing of a return on the fly 198 e filing of returns globally 27 EIC calculations 141 Form 1116 Foreign Tax Credit 95 forms options for 24 system requirements 7 T tax courses ETC 244 Tax Planner 314 318 tax returns see returns taxable distributions 117 refunds 95 test returns 65 testing e file transmission 191 printing of checks 225 third party designee 147 148 tracking adjusted basis 112 tracking return data TRAC screen 171 troubleshooting acknowledgments in e filing 196 check printing 227 229 e file transmissions 194 return selection for e filing 194 TS TSJ field 61 tutorials 245 U unemployment COBRA 133 compensation 115 unemployment compensation 95 unformatted schedules SCH screen 170 unlocking client files 273 Update Manager 263 updates access to 28 automatic 264 installing 263 notification of available 52 updating CSM 235 DDM 303 from the prior year 67 70 NOTE screens from year to year 169 Tax Year 2010 Drake Software User s Manual V verification fields see flags verifying SSNs 22 W 2 amounts 22 89 Ver
389. ms 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 8828 Form 8828 Recapture of Federal Mortgage Subsidy 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 Form 90 22 1 consists of four sections Foreign Accounts Section 1 Filer Information Complete once for each filer reporting a foreign account Use a separate 9022 screen for each 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 e Section 2 For Parts II HI IV V Complete this section for each 9022 screen used Choose one of the boxes at the top of this section to indicate the nature of the account Options are shown in Figure 5 62 164 Tax Year 201
390. must be signed before the return is e filed e Paper Forms Access the form in PDF or Word format from the PDF 7216 folder on the Drake CD Enter the firm and franchise or network name in Word or PDF or print the documents and enter the names manually The taxpayer and spouse if applicable must sign and date the form prior to e filing Next go to screen CONS accessible from the Other Forms tab and select the first box in the Paper Consent section Figure 8 2 PT oT epee tee eee yt Mees ee ee namai E ete atti si fit miata pain MOL i fe as weet Paper Consent of Disclosure to Franchise Network WM Consent to Disclosure of Tax Return Information to franchise network has been signed by the taxpayer and joint taxpayer if applicable I Consentto Disclosure of Tax Return Information to franchise network has NOT been signed by the taxpayer and joint taxpayer if applicable Figure 8 2 Check boxes on CONS screen for disclosure to franchise networks Screen code Electronic Signatures To obtain electronic consent the taxpayer and spouse CONS if married filing jointly must enter their names and the date onto the CONS 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 giv
391. n e Form 4868 Application for Automatic Extension of Time to File U S Individual Income Tax Return with payment e Form 2350 Application 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 DTE Prior year AGI amounts are required to e file Forms 2350 9465 and 56 Enter this information on the PIN screen Special Conditions Power of Ifthe return is being signed by someone with Power of Attorney for the taxpayer indi Attorney cate this information on the MISC screen 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 MPORTANT Form 2848 itself is not printed automatically it must be completed on the 2848 screen in order to be generated with the return 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 170 Tax Year 2010 149 Depreciation Drake Software User s Manual Depreciation Form 4562 Depreciat
392. n accessible from the Credits tab to enter data for Parts I and II of Form 5405 First Time Homebuyer Credit Use the HOME screen to complete Parts III and IV see Basis of Primary Residence on page 102 Due Diligence for First Time Homebuyer Credit Screen code HBDD 142 Your office can require that a due diligence screen be completed for taxpayers who claim the First Time Homebuyer Credit To apply this requirement a user with admin istrative rights must go to the Administrative Options tab in Options Setup and select Require applicable due diligence screens to be completed located under the Due Diligence section If this requirement is set and the due diligence screen is not com pleted on an applicable return the program generates an EF message upon calculation and the return cannot be e filed until the screen is completed Also from Setup gt Options gt Administrative Options tab an adminis NOTE trator can set the global option to print all EIC and Form 5405 due dili gence documents To access due diligence questions for the First Time Homebuyer Credit go to screen HBDD You can access this screen from first Credits tab or by pressing PAGE DOWN from screen 5405 Tax Year 2010 Drake Software User s Manual Direct Deposit Direct Deposit Screen codes DD Use the DD screen accessible from the General tab to indicate that a refund is to be 8888 deposited directly into the taxpayer s account NEW FO
393. n 179 expensing for 152 Quick Estimator 285 QuickBooks imports 276 R railroad benefits 116 RAL Refund Anticipation Loan 215 Ready for EF indicator 27 real estate 106 110 real property section 179 expensing for 152 receiving acks only 195 recurring appointments setting up 79 referral coupons 25 refunds direct deposit of 143 144 Regulation 7216 Consent to Use and Disclosure of Tax Return Information 16 211 213 reject codes see also acknowledgments due to multiple 2106 forms 119 foreign tax credit 126 looking up 202 203 troubleshooting acks 196 release notes 249 rental real estate with active participation 110 rentals see also Schedule E Supplemental Income and Loss by clergy 123 converted from home use 103 farm 114 repairing index files 267 report cards ETC 247 reports appointment 83 creating 289 CSM 236 deleting 293 xviii Drake Software User s Manual depreciation list 297 filters 291 296 hash totals 300 in Drake 287 300 keywords Appendix C Multi Office Manager MOM 207 Tax Planner 318 reprinting checks 226 Republic Bank 215 requirements e filing see e filing EIC due diligence 139 for bank product eligibility 213 service bureau 214 system for running Drake software 7 resetting check stock 227 restoring see also backup and restore files archived returns 188 client files 268 269 color settings 40 CSM data 237 DDM files 303 default color palette basic view print 185 letter templ
394. n account other than the account indicated for federal complete the fields in the Account 2 section of the PMT screen To have a balance due from another state withdrawn from a third account complete Account 3 NOTE Neither the federal nor the state balance due can be paid from more than one account To indicate direct debit of estimates only select Estimates Only from the Federal selection drop list By default the estimate payment amounts and dates see Figure 5 54 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 override that data Tax Year 2010 Drake Software User s Manual Third Party Designee 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 15 along with descriptions of how the options affect the Third Party Designee section on page 2 of Form 1040 Table 5 15 Setup Options for Third Party Designee Selection Third Party Designee Section of Form 1040 None Blank No box is mark
395. n gta a geettimmatiN tin itm fem inanan o i antaii poy A N wClient link stalled on workstations i 3 Software installed on server and workstations secondary network setup E 2 1 3b This is a workstation V dicate server drive letter for sharing client fild el To access all other shared files on a server EF Firm Pricing Letters etc select appropriate shared drive letter in Admin Override section below Paths determined by configuration selected above 3 Admin Override V Path for 2010 Data H DRAKETO DT SES Path for 2009 Data H DRAKEOS DT VES Path for Print File H DRAKE10 PFY 4 Shared drive letter for all other shared files EF Firm Pricing Letters etc optional Help OK Cancel Figure 2 4 Installing Drake onto a workstation 5 Click OK The program is now set up to share client files and if indicated share other files EF Pricing Letters etc p AUTI DN Do not change the Directories Paths settings during tax season lf a change is necessary contact Drake Support 12 Tax Year 2010 Drake Software User s Manual Software Setup Perform setup procedures after installing the software and before attempting to pre pare or e file returns Some setup procedures are required others are optional Table 2 3 Setup Procedures Required and Optional Software Setup Required Setup Procedure Optional Setup Procedures Firm s See Firm Setup on page 14 Options See
396. n the INT or DIV screens is combined 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 on Schedule B and calculated 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 gains Dividends included in Box 1a that are NOT taxable on the state Dividends included in Box 1a that are U S Government dividends k xp DANT inaterta the ahah Goxernmentatnidends postion on t yaona sgh gna 2 ge Figure 5 10 Enter portions of ordinary line 1a dividends as amounts or as percentages of the total Schedule B Some taxpayers with bank or other financial accounts in foreign countries must file Part Ill 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 Schedule B Part Ill Foreign Account Questions Enter on the first 1099 INT only
397. ndi a4 ao ee hd lade Raw a awed 298 Client Status Manager CSM Reports 0 0c cc een tne n eee eens 300 Hash Totals 4 cid base kdtastetegidu tienda a a ine Meiaaodhhhdaddans 300 Suite Gal ee ey eee nM ee ev een EEEE Ea E 301 Document Manager ia seei onde shied ed ah ie ater hal AE die dale and E E ae dag seca aah lecien oat eect 301 Tax Planneficis lt c cdntae ertir nese na E E bear sel oder EE 314 Client Write Up lt lt o 6 oicc dnd hd oe ak poe we OH Sane Mad ho Ot alah bd bade ded ola Pw 318 New Features in Other Packages ssseeeeeeeeeeeeeeeeeeeeeeeeeneeeeneeeeees 319 Entity Packages 1120 1120S 1065 990 i u 04 sidnes whoo sneaks gaGhike gnGaa da aimkes dake eae 319 Fiduciary Package 1041 m nbsc 05 beesape epee aee i EEE deb EEE EEEE ETE EE ESEO E 321 Estate Package 706 00 ccc eee ee ene ee eee a ne nee ete nn teen eneeee 321 Appendix A Preseason CheckliSt ccccccceeeeeeeeeeeeeeeeeeeeeeeenaeeeeeeeeees A 1 Appendix B E filing OVervieW ccceceeeseeeeseeeeeeeeeeeneeeeseeaaeeeeeeeeees B 1 Appendix C GY WOKS sis sitccctsccatcrsasdacidcadanienccinnannvestsariaeaseridiciewcadicon C 1 Appendix D Acronyms amp Abbreviations ccccccesseeeeeseesseeeeeeeeeeeees D 1 Appendix E State E filing Mandates ccccceeeeseeeeeeeeeeeeeeeeeeeeeeees E 1 Appendix F Addenda Pages for 2010 cccecceeceeeseeeeeeseeeeeeeeeeeeeeees F 1 e E E E E E E E E T E vii vi
398. ned the Tax Planner Tax Planner Window 314 The Tax Planner contains a spreadsheet menu bar the Tax Planner toolbar taxpayer data and and tabs representing setup and specific portions of the 1040 return Tax Year 2010 Drake Software User s Manual Tax Planner GoTo Schedule C A pa lt lt Back Next gt gt afe Edt View Insert Format Tools Data Window Client Setup Drake Software Tax Planner TEST O MAPLE 400 00 1005 Contact Information Taxpayer SSN i 400 00 1005 Taxpayer name TEST O MAPLE Taxpayer date of birth 4 15 1988 Taxpayer blind Spouse name Spouse date of birth Spouse blind Street address 7842 WEEPING WILLOW LN City state zip AUDUBON NJ 08106 7842 Daytime phone 201 555 1111 Multi Year Next gt gt Notes 3 nd M 4 gt Q Client Setup Demographics Summary Income f Adjustments f Itemized Deductions Credits lt gt Figure 13 11 Menu bar item 1 toolbar item 2 data and tabs item 3 K Some cells are read only and cannot be changed others can be edited Unshaded white cells are active and can be edited The Client Setup Figure 13 11 tab has cells for taxpayer demographic data and planning preferences The other tabs correspond to sections of the 1040 The Sum mary tab displays a summary of the information in the other tabs NOTE Summary tab cells do not accept direct entry If you click a Summary tab cell the program
399. nee ss i ccd ered ed bahia te eae eet tee nok heen Meee eee ee emwen ected 147 Siening th Retin 2 s63 bode ek kbd eus r die bbe eee eis der EE bee eed s ERE 148 Depreciation ecseri iee or eie ae kbd fae Re Hee Ok dee A bd Pale ee aa Oe hae Ma a 150 Auto Expenses 20sc 034 ness eta dens cena Gems hee GAS eee Ges wens hoe ebe Go aa E 156 Office im HOM C235 4a eras 8 nE Ee E he Oae OR AMEN eee edn donee beeen 156 Net Operating Losses 1 eee ene net n enn nent eee nee 158 Election Options 2 4 56 404 0 6 oid ebb ete e ge a a aes a a a dd noth dade 159 Special REMUIMS easi Sap anra a dra vengeance Munsee a 4d die eed Guede GEG E Geka A 160 Requests Claims and Other Forms 00 cece ene eee n ene e eens 162 Features for Late Filed Returns 0 0 0 cece nee teen e eens 165 Other Special Features in Data Entry 20 eect e ence eens 167 iv Tax Year 2010 Drake Software User s Manual Table of Contents Ret rn RESUS nena rr ee Errore ete daaa EE aia ey mene 173 Calculating a Return 2 0 eee enn en ete n nes 173 Calculation Results 03 563 vis hee COG Be Oa Soe ees Hedging Goad e Sa EE eee eas 174 Viewing and Printing a Return 0 nett nnn e eee e eens 176 E mailing from View Print 0 0 een ete n ete e eee e ene 182 Setting Up View Print Options 0 0 ete ERE EAER EE EAEE A teens 184 Archive Manager ocre sirro eed es eke hs YES oh AS te eh en WE de he 2 oe es 187 BPO ecsccer cers E E E T 189 Prep
400. nia 10404 PG2 Colorado al 1040EZ PG Connecticut 1040EZ PG2 District of Columbia 1040NR PG Delaware 1040NR PG2 wilmington 1040NR PG3 Florida 1040NR PG5 Georgia 1040NREZ PG oo 1040NREZ PG2 lahe 1040NR PG4 Ilinois F Indiana oo Form names Kansas categories Kentucky CFO TTT Cr Louisiana 10405P PG Massachusetts 1040SP PG2 Maryland 1040SS PG Maine 10405S PG2 Michigan 10405S PG3 Detroit 104055 PG4 Hudson 1040V PG Port Huron d Help Find 2 3 A NOTE Description Individual Corporate Sub Partnership Fiduciary Tax Exempt Estate Tax packages U S Individual U S Individual U S Individual U S Individual ncome Tax for ncome Tax for U S Individual U S Individual Individual Individual Individual Individual Income Tax Return Income Tax Return Income Tax Return Income Tax Return r Single and Joint Filers r Single and Joint Filers Nonresident Income Tax Return Nonresident Income Tax Return Nonresident Income Tax Return Nonresident Income Tax Return Nonresident Income Tax Retum Nonresident Income Tax Retum U S Individual Planilla p Planilla d FO Planilla p U S Individual U S Individual U S Self Empl U S Self Empl U S Self Empl U S Self Empl Nonresident Income Tax Retum rm descriptions Income Tax Return Spanish Income Tax Return Spanish loyment Tax Return loyment Tax Return loyment Tax Return loyment Tax Retu
401. nicipality select Allow penny round ing in the PA City Tax Rate Editor This feature which allows penny rounded amounts to be printed on the form requires that amounts on the federal screens be entered with pennies in order to be accurate To allow penny rounding on a Pennsylvania return in data entry 1 Enter the desired amount in data entry 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 284 Formerly known as pre prepared data entry forms based data entry allows you to enter a previously prepared 1040 return into the tax software 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 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 correspon
402. ning on to NOTE 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 Drake ETC offers online videos covering such subjects as basic administration set ting up the software and entering ERO firm and preparer information e filing reports working with the CSM DDM and Drake Tax Planner and data entry com pleting various schedules and forms in the 1040 1120 1120S and 1065 packages New in 2010 there is a video on using Client Write Up To access videos in ETC e Click Videos from the ETC sidebar menu e Choose a tax year and course from the Tax Year and Course drop lists e Click Launch Video Drake also offers videos CDs and DVDs of our annual Update NOTE Schools To order from the Support website go to Training Tools gt Videos If you re logged in to ETC return to the main Support website by clicking Log in to Support in the upper right corner of the window Click Report Card from an ETC screen to view training progress test and quiz results and CPE credits earned for a selected year To re print 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 Administration Displayed are a list of students buttons for add ing and searching studen
403. nly 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 Print two W 2 1099 Rs per page 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 1040A EZ suppress Automatically suppress Form 1040A or 1040EZ Form 1045 page 2 NOL Automatically produce Form 1045 page 2 if the return has 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 Many of these settings can be adjusted on a per return basis See Making Changes on the Fly on page 43 Optional Options under the Optional Documents tab are described in Table 2 8
404. 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 in the Land cost field and 90 000 in the asset Cost Basis field at the top of the screen Depreciating Home Used for Business Tax Year 2010 If a 4562 screen is to be associated with a 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 153 Depreciation Drake Software User s Manual 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 State Asset Type ITC Code and State basis if different fields 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 and PA State specific fields for Florida and Pennsylvania returns are located on screen 4562 e Occurrence of Schedule field Choose the occurrence of the state form or sched ule t
405. not reprint the check If a check is lost or stolen go to Tools gt Blank Forms and print the lost check affida vit LOST_CK PG This document must be completed signed by both the taxpayer and the ERO and faxed according to your bank s instructions The bank s fax num bers are listed at the bottom of this form 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 Drake Support please review the following questions to ensure that the necessary conditions for printing checks have been met Tax Year 2010 227 Troubleshooting Check Printing Drake Software User s Manual e Is the correct printer selected Go to Setup gt Printing gt Printer Setup and look in the Checks section of the F5 General Setup tab e Are you using the same computer from which the return was transmitted e Have you received the bank acceptance acknowledgment for this taxpayer e Has the correct SSN been entered if reprinting e Have you entered the range of checks you received from your RAL bank 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 From the Home window go to Setup
406. not visible but can be accessed using the selector field 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 11 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 Codey eee M Arrows indicate lt drop lists User defined codes established in Setup gt Options Figure 2 11 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 11 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 12 Data Entry Customization Options V Use Customized data entry selection menu Customize Customize user defined data enty fields ei Customize N Figure 2 12 Click Customize to customize user defined data entry fields 3 Inthe Customizable 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 4 In the fields of the Add En
407. ns 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 IIT Tax preparers who prepare 200 or more personal income tax returns are required to e file all eligible forms that are supported by their software Software developers producing software for professional tax preparers must support e file for all Michigan income tax forms that are included in the tax preparation software package Beginning with the 2010 tax year Michigan will have an enforced Michigan Business Tax MBT e file mandate Developers producing MBT tax preparation software and computer generated forms must support e file for all eligible Michigan forms that are included in their software package All eligible MBT returns prepared using tax preparation software or com puter generated forms must be e filed Treasury will not process computer generated paper returns that are eligible to be e filed A notice will be mailed to the taxpayer indicating
408. nswer questions and provide advice to your clients RIA s 100 calculators are also great to use in conjunction with your Drake Tax Planner Broadcast E mails Broadcast e mails inform you of the latest IRS alerts or software issues They are sent during tax season to your 1040 com e mail address vour 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 mails through Drake at Help gt E Mail NEW FOR The Drake Support site now has a Broadcast Center Resources gt 72010 Broadcast Center Starting in 2010 all broadcasts are posted on this page for reference 252 Tax Year 2010 Drake Software User s Manual Interactive Support Interactive Support Drake provides interactive support via e mail phone and fax E mail Program E mail Setup Checking for E mail Tax Year 2010 The Drake e mail program allows you to send and receive messages using your 1040 com e mail address Use the e mail program to send questions directly to Drake Support or to e mail your clients You can also use your Drake e mail as your every day e mail program To access Drake e mail from the Home window select Help gt E Mail From data entry click the Email icon or press F11 on your keyboard NOTE E mail addresses for Drake Support are listed in Table 10 4 on page 260 Use the Setup menu to select a method of sending and receiving e mail change your reply to
409. nt up to the established current year limit for all properties expensed under the section 179 deduction If section 179 EXP 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 the asset The limitation occurs when the total of the expensed assets reaches the established limit for the current year again regardless of schedule Tax Year 2010 151 Depreciation Qualified Real Property Indicating Sec 179 Expensing 152 Drake Software User s Manual 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 Under the provision of the Small Business Jobs Act of 2010 taxpayers may elect under section 179 to expense up to 250 000 of the cost of qualifying real property QRP placed in service during the taxable year rather than recovering that cost through depreciation deductions This law is in effect for tax years 2010 and 2011 and applies to the following types property e Qualified leasehold improvement property e Qualified restaurant property e Qualified retail improvemen
410. ntentionally left blank 230 Tax Year 2010 9 Client Status Manager The Client Status Manager CSM is a tool for tracking workflow within an office It displays various types of data including client ID number and client name return type preparer name client status and the starting and completion dates for each return The CSM can be used for searching viewing organizing and printing data Accessing the CSM Choose one of the following methods to open the CSM 9 From the Drake Home window click the CSM icon in the toolbar aa e From the Drake Home window select Reports gt Client Status Manager e Press CTRL L on your keyboard e Use the Personal Client Manager See Personal Client Manager on page 52 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 toolbar and select a new status About Client Statuses 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 cally as the return progresses through the cycle see 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 i i i New Client In Progress EF Pending EF Accepted
411. ntinue a 2 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 1 From the Home window select Tools gt File Maintenance gt Delete Client Files 2 Enter the SSN or EIN of the client file to delete 3 Click Continue 4 Click Yes to continue 5 Click OK 6 Click Exit to return to the Home window 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 corporate return is converted to an S corp return the balance sheet and Sched ule 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 268 274 Tax Year 2010 Drake Software User s Manual File Maintenance Estate and Qualified Heir Returns Tax Year 2010 To change a return type 1 2 3 4 5 From the Home window select Tools gt File Maintenance gt Change File Type Enter the SSN
412. nto 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 Mise 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 Tax Year 2010 Drake Software User s Manual Other Special Features in Data Entry N DTE To create customized drop lists for miscellaneous code fields see Cus tomized Drop Lists on page 29 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 The screen includes fields for names dates and any screen or form to which the note refers Figure 5 67 Notes Date Date Screen Form Note taken by completed Completed by EF Note KO POOE S P E ampere apenas G Figure 5 67 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 NOTE In the Date Completed field enter the date that the note should be dis con
413. o 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 6 These screens are all available from the Adjustments tab Table 5 6 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 Ministerial Income Allocation 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 expenses 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 Rental Ifthe church provides a rental or parsonage allowance but no parsonage enter the Parsonage Parsonage or
414. o delete a record from the CSM display right click the record and select Delete Record To view a deleted record click Filters gt Display Deleted Records NOTE To delete a client file from Drake see Deleting Files from the Program on page 274 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 Tax Year 2010 237 Admin only Features Drake Software User s Manual This page intentionally left blank 238 Tax Year 2010 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 Si te gustaria hablar con alguien en espanol llame al 828 349 5500 y trataremos de conectarle con uno de nuestros agentes de apoyo que hablan espanol Drake s help resources are available to assist you in making the most of your tax prep aration software and using it successfully We not however provide tax law advice Support is provided as an aid to tax return completion only Preparers are responsible for knowing tax preparation
415. o not include the cost of the land Business Use Leave this field blank default is 100 Method Federal column Select SL Straight Line Tax Year 2010 157 Net Operating Losses Drake Software User s Manual Table 5 18 Screen 4562 Fields to Complete for First Year 8829 Screen 8829 Information or Text to be Entered Life Enter the number 39 Federal column 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 III 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 Screen code 3 Enter NOL carryback amounts from future years on screen 3 in the NOL field Figure 5 59 This field can also be used to amend the current year amount or to adjust carryback amounts calculated from the LOSS screen pnd tet tei Rate pon ee E gli ie Titan bt apelin tl ts LONI wet I wt 0 0h POR Ng a apa Net railroad Social Security equivalent Tier 1 benefits Teceived for 2010 Note Program will figure taxable portion of 2010 SS benefits 21 Other J Form 8615 Investment Income income J Form 8615 Investment Income I
416. o not transmit from more than one computer unless the program is CAUTI DN 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 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 225 Processing the Check Drake Software User s Manual 5 Click Continue The Check Print Options dialog box displays the client s name ID number check amount and check number 6 Choose from the available options listed in Table 8 5 Table 8 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 checks you must set up a check range IMPORTA
417. o 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 2010 Date sold is entered 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 e Donot use MACRS tables Options include Qualified Indian Reservation Property 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 57 Group Sales To enter group sales in Drake 154 Tax Year 2010 Drake Software User s Manual Depreciation 1 Open a 4562 screen for the first asset of the group sale 2 Complete
418. 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 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 Tax Year 2010 Drake Software User s Manual Making Changes on the Fly Document Manager DDM Setup 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 The DDM is a stand alone application that can be integrated with Drake Software For details see Chapter 13 Suite Products To implement the Drake file structure 1 From the Home window go to Setup gt Printing gt Document Manager 2 Enter the path of the DDM or click Search to find the DDM location If the DDM is found in more than one location you must choose one 3 Select Allow Drake to set up Document Manager client folders recom mended The Drake structure is established in the DDM directory and the DDM button is acti vated in data entry 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
419. office needs approximately ments 1GB of space for each year Most new computers have at least a 20GB hard drive if you own a new computer storage should not be an issue Be aware that while long file names can be used this naming convention might not function properly on older systems that limit file names to eight or fewer characters File The DDM stores files in a file structure You can build a file structure entirely from Structure scratch create an automatic file structure by integrating the DDM with the tax soft ware or implement a combination of both approaches Among the benefits of integrating the DDM with the tax software e The DDM s default file structure contains a Clients filing cabinet drawers labeled 0 9 and A Z folders in each drawer for each client labeled by last name or business name a Tax subfolder and a 2010 subfolder Figure 13 2 ef I eee pe Fd 4 Vaoo06665 g CLIENTS 1 4 o Gy Gy Go Go Ga CARTER WILLIAM 400 Figure 13 2 Each drawer contains a client folder Subfolders are titled Tax and 2010 e When you create a return for a new client in Drake you are required to enter the client s name Once a client s name is entered a client folder is automatically cre ated in the DDM g e The Doc Mgr button in data entry opens the DDM to the client s tax year folder
420. officials who have been bonded and finger printed within the last two years An established ERO must make changes to Form 8633 only if the information in its original application has changed Changes should be made online If you plan to e file business returns this year after filing only 1040 IMPORTANT returns in the past you must update your 8633 information or your e filed returns will be rejected by the IRS To complete or update Form 8633 1 Go to wwwirs gov 2 Click the Tax Professionals tab 3 Click e Services for Tax Pros from the menu on the left side of the page 4 Click Login if you ve registered before or click Registration Services if you haven t 5 Follow the directions on your screen 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 Obtaining an EFIN All tax preparers who plan to e file must have a valid EFIN Once your application is processed the IRS assigns the 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 test returns When you receive your EFIN forward a copy of the 8633 response letter from the IRS to accounting DrakeSoftware com so we can update your Drake customer account 190 Tax Year 201
421. oftware User s Manual ap ant Ustia nucwdibjedct to addiuonar Kae 4 Amount on line 1 that is taxed at 25 Part Il Education Accounts QTP ESA Taxable Distributions Adjusted qualified education expenses for 2010 8 Gross distribution from Qualified Tuition ee QTPW 1 Coverdell ESA 2010 COPIED ENB ONS ES ESA eect 5 Distributions included from Coverdell S22 and QTPs meant atin h sail Aeon peer A Figure 5 41 New Education Accounts 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 8 shows which fields are required in order to ensure correct calculations Table 5 8 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 2010 Distribution Adjusted qualified education expenses 2010 Gross distribution from Coverdell ESA Gross distribution from QTP Basis in Coverdell ESA as of 12 31 2009 Portion of QTP distribution that is earnings Education account type Education account type 2010 contributions for this ESA Value of Coverdell ESA on last day of 2010 entered at top of screen 5329 Along with the automatic calculation the program produces the worksheet QTP_ESA which shows how the taxable amount
422. oldings If the verification amounts do not match the amounts entered in the equivalent boxes at the top of the W2 screen an EF message will be generated Amounts must be cor rected before the return can be e filed Foreign To indicate a foreign employer on the W2 screen enter the city and country in the Employers city field of the employer address and then select Foreign from the State field a dot appears in the field Leave the ZIP code field blank See example in Figure 5 6 Oe OY OE moa i c Employer s name address city state ZIP code PEPE LEPEU i 2 RUE MOUFFETTE PARIS FRANCE SA Incare of address continuation Note Theemplover s complete inforshetionis a Figure 5 6 Entering foreign employer information on W2 screen Screen code FEC If no W 2 was issued by a foreign employer use the Foreign Employer Compensa tion screen accessible from the Income tab to enter employee employer and income information NOTE For information on the foreign income exclusion Form 2555 see Excluding Foreign Income on page 118 Statutory Because all statutory employees must file Schedule C for expenses related to W 2 Employees income both a W2 screen and a C screen must be created for a statutory employee To indicate a statutory employee on a tax return Screen code W2 1 On the W2 screen for the employee select Stat employee line 13 Screen code C 2 Onscreen C for the emp
423. ollowing Social Security or equivalent benefit amounts see Figure 5 33 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 swage Reporar walfioure taxable portion of 2010 SS benefits attach Figure 5 33 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 To enter data from the federal RRB 1099R form use the RRB screen This screen reflects the federal form Other Income 116 NEW FOR To report taxable income that is not reported elsewhere on the return you can use the Other income fields on screen 3 Amounts entered here are produced on line 21 of Form 1040 and descriptions are listed in a statement If a line 21 item is investment income that should be reported on Form 72010 8615 Kiddie Tax mark the Form 8615 Investment Income box to the right of the item description Several screens are available in Drake for entering other types of income as described in the following sections Tax Year 2010 Drake Software User s Manual Other Income Taxable Distributions 1099 Q Ifthe amount on Form 1099 Q Payments From Qualified Education Programs exceeds the amount of education expenses com
424. om the Select state for piggyback e file drop list All other eligible state returns will be sent via the direct or state only method whichever applies STATE E FILE OVERRIDE Choose the states cities you want to e file Note If you do not make a selection below all eligible states will be e filed Select state for piggyback e file GA i Select other states cities to e file us zl NC bd a v Ee z a wv S zl I Do NOT send any states Figure 7 7 State E file Override options 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 other states cities to e file drop lists In the example in Figure 7 7 the Georgia return is piggybacked with the federal return and the Mississippi and North Carolina returns are filed separately No other state returns will be e filed for this taxpayer even if they are eligible If nothing is selected in the Select state for piggyback e file drop list NOTE the program sends the resident state return piggyback If nothing is selected in the Select other states cities to e file drop lists the pro gram sends all other eligible returns state only or direct as applicable Tax Year 2010 Drake Software User s Manual EF Database Overriding Bank Product Alert Und
425. ome are entered in one field Int div other income the bank product and preparer fees might not be accu rately reflected on the bill The income could be overestimated or underestimated The Quick Estimator produces only one return if Married Filing Separately 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 The potential bank product amount can be calculated by selecting the RAL fields e An Override RAL amount entry overrides the selected loan amount on the BANK screen if this is allowed by the bank e A Prep fees w h entry overrides the Tax preparation fee field on the BANK screen Remember the Quick Estimator should be used only for estimating NOTE taxes A full return should be prepared later Data from the Quick Estimator flows to the full tax program and might need adjusting Tax Year 2010 285 Quick Estimator Drake Software User s Manual This page intentionally left blank 286 Tax Year 2010 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
426. on sections Overriding the Bill Amount Overriding the Total Adjusting Individual Amounts Tax Year 2010 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 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 e Balance due from prior years e Tax Planner fees e Percentage increases and discounts e Sales tax percentage e Prior Payments 47 Making Changes on the Fly Drake Software User s Manual Pricing for a Single Return NOTE To create user defined drop lists for the write in Adjustments and Pay ments screens see Customized Drop Lists on page 29 You can also indicate the following adjustments from the BILL screen e To include Form 8888 on the bill if the taxpayer is paper filing and depositing the refund into multiple accounts e To exclude a charge for the Filing Status Optimization Report See About the MFJ MFS Report on page 63 e To adjust the bill as needed for a self prepared or firm prepared e filed return The BILL screen also allows you to o
427. onic Payment Options Electronic Payment Options Electronic payments can be made by credit card debit card or electronic funds with drawal direct debit NEW FOR Integrated File and Pay IFP is now available for taxpayers who wish Ali to pay a balance due by credit card upon acceptance of the tax return 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 Visa 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 New in 2010 the EPAY screen accessible from the Miscellaneous tab is used to pay EPAY Screen a balance due with IFP This screen should be used after the return is completed but before it is e filed In order to use IFP the taxpayer s first and last name SSN full IMPORTANT address phone number including area code and e mail address must be entered on screen 1 Screen codes On the EPAY screen indicate the form being e filed 1040 or 4868 extension and EPAY ONIRE click the Authorize Credit Card button You will
428. onnection is working properly You can save time and mouse clicks by combining the previous seven steps 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 loan checks for bank products Step 1 Calculate the Return Calculate the return to determine if it is ready to be e filed See Calculating a Return on page 173 for instructions on calculating returns in Drake Drake generates an EF status document and if necessary EF message pages shown in the Figure 7 1 directory tree and described in the following list Tax Year 2010 191 E filing a Return Drake Software User s Manual All Forms Sets EF Figure 7 1 EF related documents include EF messages and an EF status page e EFSTATUS The FF status page shows transmission options piggyback state returns to be transmitted with the federal return and any additional state returns to be transmitted It also states whether any federal EF messages were generated 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 o
429. or 1 From the Appointment Scheduler click the Batch Appts icon and select Gener iii ate Batch Appointments The Batch Appointment dialog box is displayed cone Select a location from the Use last year s appointments found on drive drop list Select a Begin Date and an End Date Select the days that should be available for appointments for this year Under Dates Not Available for Appointments click Add to add any holidays or other days on which appointments should not be scheduled IRUN 80 Tax Year 2010 Drake Software User s Manual Scheduler Dates Not Available for Appointments Create a list of holiday and other dates in which your office will be closed Add Day of Week Holiday Other January 17 2011 Monday MLK Day Edit February 21 2011 Monday President s Day Delete 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
430. or EIN of the file to convert and click Continue Select the new file type Individual Corporate Sub S Corp Fiduciary Part nership Tax Exempt Estate or Heir See Figure 11 10 Click Continue 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 Form 706 U S Estate and Generation Skipping Transfer Tax Return Form 706 A U S Additional Estate Tax Return NOTE There is no federal Form 706 for the 2010 tax year see Estate Pack age 706 on page 321 for more information 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 2 From the Home window select Tools gt File Maintenance gt Change File Type In the Enter SSN EIN to convert dialog box enter the SSN to be assigned to a new return type Click Continue The available return types are displayed In Figure 11 10 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 d c Drake 2010 Convert Client Data File Ty This will allow you to convert a client data file from one type of return to another The following data will convert name address fiscal year all depreciation screens 6 7 8 9 and 10 In Corporation to Sub S Corporations conversions the Ba
431. or e filing 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 Minnesota New York and Oregon 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 returns that have not been e filed and on returns where the preparer and ERO are different for example if an override field on screen 1 is used To IMPORTANT have the alternative electronic signature printed on a return that has been e filed you must re enter this number in the PIN for preparer s alternative e signature field on the PRNT screen for that return Tax Year 2010 Drake Software User s Manual Software Setup 7 Ifapplicable enter the firm s Republic Bank Identification Number RBIN 8 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 b
432. orm 8863 Education Credits 122 Form 8864 Bio diesel and Renewable Diesel Fuels Credit 130 Form 8866 Interest Computation Under the Look Back Method 164 Form 8867 EIC Preparer Checklist 139 Form 8873 Extraterritorial Income Exclusion 123 Form 8874 New Markets Credit 130 Form 8879 IRS e file Signature Authorization 148 149 Form 8880 Credit for Qualified Retirement Savings Con tributions 129 130 Form 8881 Credit for Small Employer Pension Plan Star tup Costs 130 Form 8882 Credit for Employer Provided Childcare Facil ities and Services 130 Form 8885 Health Coverage Tax Credit 130 142 Form 8888 Direct Deposit of Refund to More Than One Account 143 Form 8889 Health Savings Accounts 119 Form 8896 Low Sulfur Diesel Fuel Production Credit 130 Form 8903 Domestic Production Activities Deduction 123 Form 8907 Nonconventional Source Fuel Credit 130 Form 8908 Energy Efficient Home Credit 130 Form 8909 Energy Efficient Appliance Credit 131 Form 8910 Alternative Motor Vehicle Credit 131 Form 8911 Alternative Fuel Vehicle Refueling Property Credit 131 Form 8912 Credit for Clean Renewable Energy and Gulf Tax Credit Bonds 131 xiv Drake Software User s Manual Form 8917 Tuition and Fees Deduction 122 Form 8919 Uncollected Social Security and Medicare Tax on Wages 131 Form 8930 Qualified Disaster Recovery Assistance Re tirement Plan Distributions and Repayments 131 Form
433. ormation Applying 2010 Overpayment to 2011 To apply part of a 2010 overpayment to the 2011 estimate enter the total overpayment to apply to all estimates item 1 in Figure 5 47 on the ES screen The program applies the overpayment according to the overpayment OP code selected item 2 see OP Codes following To override the OP code selection enter amounts to be applied into the Overpayment fields for each voucher item 3 Estimated Taxes DUE in 2011 3 Federal ES Code z OP Code B Estimate amt Overpayment Voucher 1 Voucher 2 Voucher 3 Doo T Voucher 4 Figure 5 47 Entering overpayment amounts 136 Tax Year 2010 Drake Software User s Manual Estimated Taxes OP Codes _I fapplying an overpayment to the 2011 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 46 NOTE If a code is selected on both the ES screen and screen 1 the program uses the override code from screen 1 z Overpayment codes are described in Table 5 11 Code descriptions can also be viewed Li alte clicking in an overpayment code field and pressing F1 Table 5 11 Overpayment Codes in Drake OP Description Code P blank Does not apply overpayment to 2011 refund entirely A Applies the overpayment to the vouchers in order until it is completely applied
434. orner of an article window takes you to a list Articles of other articles related to the one you queried Attachments An Attachments link 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 Feedback 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 Electronic Training Center ETC Drake ETC is a convenient resource for training your office staff using tutorials prac tice returns videos 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 ETC is free for Drake clients People who are not Drake customers can NOTE also use ETC but certain fees apply before non customers can receive CPE credits for completing ETC courses Creating an Before you can log in to ETC your office must have an ETC administrator Admin ETC Admin account Once the account is established you can create student accounts and begin Account tracking student progress With their own user names
435. ort Department Contact Accounting Accounting DrakeSoftware com Education Education DrakeSoftware com E filing EF DrakeSoftware com Support General Support DrakeSoftware com 828 524 8020 Support State specific XXstate DrakeSoftware com Replace XX with state abbrevi ation Examples nystate DrakeSoftware com for New York dcstate DrakeSoftware com for Washington DC Conversions Support DrakeSoftware com 828 349 5546 Client Write Up Client wu DrakeSoftware com 828 349 5547 Fax Get answers to software questions using the fax cover letter provided on the following page Drake replies to faxes with faxes not phone calls 260 Tax Year 2010 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 U Windows 2000 OU Windows Vista UL Windows NT U Windows ME U Windows XP U Windows 7 Are you working on a network Ul Yes CJ No If this fax is concerning a prior year Drake Program Year program what year Give us a brief description of the situation Tax Year 2010 261 Fax Cover Letter for Support Drake Software User s Manual This page intentionally left blank 262 Tax Year 2010 1 1 Tools This chapter covers the various tools and file maintenance capabilities available on the Tools menu and includes details on other Drake tools and accessories Updat
436. ose to stag ger 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 filing rejections Changing a 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 q 2 Click View to go to View mode where you can check Form 8879 to verify that the DCN has been changed henal Revere senie gt Keep this form for your records See instructions Declaration Control Number DCN 00 777777 066658 Tapaers rame WILLIAM CARTER Spouse s rame AMELIA CARTER 2 Total tax Form 1040 line 63 Form 10404 line 37 Form 1040EZ line 10 ss e eee ee eee S aa ai a AhC et cinch a eee Figure 7 5 DCN on Form 8879 in View mode Once the DCN has been changed the return can be re transmitted Imperfect Two common error codes listed below for IRS rejection of 1040 returns relate to Returns name and SS
437. oss amount is available enter the loss amount and leave Sales Price blank e AMT Cost Basis Enter the AMT cost or basis of the item here but only if it is different from the regular tax cost or basis e S L From the dates entered Drake determines if an item is long term or short term If no specific dates select S or L to force short term or long term e Mise Select a code from the drop list Check with your state for codes that are required for state purposes only 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 2010 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 Schedule D Import you must have a worksheet containing the transaction data This worksheet should be saved as a Microsoft Excel TAB or CSV file Columns must match those on screen D as shown in Figure 5 17 A B c I D E G H J K E TSJ F St
438. ount 1 From the Drake Home window select Setup gt Preparer s 2 Click the Administrator ADM row and then click Edit Preparer PTIN before saving and exiting A PTIN is required for e filing 3 optional 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 13 Software Setup Firm Setup 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 NEW FOR 2UI0 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 s bank application into the Drake program Adding a_ To add a firm in Firm Setup Firm 14 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
439. oving expenses 119 MSG state EF message pages 194 multi form code MFC fields 62 Multi Office Manager MOM 27 204 207 208 multiple EFINs 205 multi screen forms 58 N net operating losses NOLs 158 159 network installing Drake ona 11 options 10 peer to peer 196 server only option 11 sharing files on a 20 xvi Drake Software User s Manual new features this year 1040 package 1 4 new features this year other packages 319 322 non loan products 215 non paid preparers 14 non passive activities 109 non profit contributions 104 notary income exempt 97 NOTE screen 169 notepad PAD screen 170 notes pages generated with return 175 release 249 NWClient 10 11 O office in home 156 Ohio city tax rates 283 online EF database 204 206 opening see also accessing see also activating see also creating Drake tax software 9 51 password protected files in the DDM 313 returns from the CSM 233 returns in Drake 55 screens for additional dependents 87 test returns 65 the DDM 304 the EF return selector 192 the Scheduler 74 the Tax Planner 314 optional documents with return 24 items on return 25 options setup 21 30 order of forms 185 organizers 70 73 overflow statements 23 overlapping appointments in Scheduler 81 overpayments 136 override fields 23 61 overriding bill amounts 47 EF options 198 letters setup 48 setup options 45 50 P PAD screen preparer notepad 170 paper boy 9
440. owing fields can be completed 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 you select T or S at the top of the screen You do not need to type anything into these fields unless the informa tion differs 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 a W 2 has incorrect Social Security or Medicare withholdings a RAL is not allowed until the W 2 is verified with the employer NOTES If after contacting or attempting to contact the employer you suspect fraud immediately contact Drake the RAL bank if appropriate and the nearest IRS Criminal Investigation office Call the tax fraud hotline at 800 829 0433 For W 2 forms with a 2D barcodes you can now scan W 2 and K 1 information directly into Drake 1040 package only To do so open the program to the client s Data Entry Menu not the W2 or K1 screen and scan the barcode The scanned infor mation 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 If you plan to use this new feature be aware of the following information e When scanning the information the
441. ox is marked all three returns will be marked eligible for e file See EF Override Options in Data Entry on page 198 To split a joint return 1 Open the return 2 Choose one of the following options e To compare returns for two individuals who lived together for the entire year click the Split button or press CTRL S Tax Year 2010 Drake Software User s Manual Data Entry e To compare returns for two individuals who did not live together for the entire year click 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 best treatment of the Schedule A deductions Results are displayed in the Return Selector Figure 3 21 The MFJ MFS Report button allows you to view a Filing Status Optimization Report for a selected return See About the MFJ MFS Report on page 63 SSN EIN Date Time Name FedRefund State Refund _Type Status fm 400004505 _ 10 07 14 12 04 SPLITT TOM SPUIT RETURN __ 2a7 oH 1501 PER Mso C 400004546 10 07 14 12 04 SPLITT LOLA SPLIT RETURN 284 OH 665 PER Msg C 400004505 10 07 14 12 05 SPLITT TOM amp LOLA 29 OH 2576 PER Msg Filing JOINTLY wil
442. oyer Health Insurance Premiums has been added Use screen 8941 to complete infor mation for this credit Multiple Forms 8027 Available Returns can now include multiple Forms 8027 Employer s Annual Information Return of Tip Income amp Allocated Tips Section 179 Expensing for Qualified Real Property In accordance with the Small Business Jobs Act of 2010 a taxpayer may elect under section 179 to expense up to 250 000 of the cost of qualifying real property placed in service during the taxable year As in the 1040 package this election is made on the 4562 screen 990 package not included Individual Entity Packages 320 The following items have been added to one or more of the entity packages Schedule UTP Added 1120 package Schedule UTP Uncertain Tax Position Statement has been added to the 1120 package Screen UTP is accessible from the Other Forms tab Foreign Ownership Capabilities Expanded 1120 package Screens G and K have been expanded to allow input of foreign owners without an EIN Returns with foreign ownership data on schedules G and K are now eligible for e file Form 1120 C Cooperative Associations 1120 package The 20C screen now allows entry of non patronage NOL carryforwards from prior years Prior Year Tax Return Comparison 1120 package You can use the new CCOM screen to compare data from the current return with data from the two previous years returns for Form 1120 C Inter
443. payer 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 and WK_CLGY2 when the return is generated See Ministerial Income Allocation on page 123 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 on page 62 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 fi
444. pg 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 2010 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 211 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 in the following sections Consent to Use of Tax Information 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 go to the PDF 7216 folder on th
445. plication to your selected bank for review New in 2010 bank information for single offices and multi site offices 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 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 In the procedure that follows note that completing bank applications for single office 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 s
446. pling 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 not related to DE a specific printer Classic print For preparers who prefer Basic View See Viewing a Return mode Enhanced Mode on page 176 Drake s Classic Print mode will be displayed when in Print mode F8 Edit Printer Settings used to edit print settings for a selected printer Tax Year 2010 Select printer 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
447. pointment reminders to groups of clients See Report Generated Recipient List on page 258 Scheduler Modes The Scheduler offers two levels of access preparer mode and front office mode Preparer Using preparer mode a preparer have full access to his or her calendars Preparers can Mode make appointments manage schedules and share calendars with other preparers Pre parer mode is the default setting for Scheduler users and has three calendar types Cal endar for current date Weekly Calendar and Preparer Calendars Front Office Designed for the receptionist and others who manage appointments but do not prepare Mode tax returns front office mode allows the user to set up viewing options and manage appointments In front office mode a user can access only the Preparer Calendars 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 Security PON IMPORTANT Preparer logins and front office mode assignments must be estab lished in Drake before the Scheduler can be used effectively Accessing the Scheduler From the Home window select Tools gt Scheduler or click the Scheduler icon The Appointment Sche
448. pre parer s appointment Customer name autofill Establish how client names are displayed in the cal endar view Preparers in View Select which preparer schedules are visible by default 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 Calendars in my view Select which calendars will be in your default view This choice not available to users with administra tive rights Colors Select screen colors for the calendar The Scheduler allows you to view at a glance the planned daily schedules of selected preparers including the times they are scheduled to be in the office To establish a preparer s daily schedule in the Scheduler Scheduler Tab General Calendars Establishing Daily Schedules 1 Click Setup The Scheduler Setup dialog box is displayed sd 2 Select a preparer from the Open Setup Schedule for drop list The Setup Sched Setup 76 ule dialog box Figure 4 11 is opened for the selected preparer Tax Year 2010 Drake Software User s Manual Scheduler Drake 2010 Setup Schedule Natalie 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 sched
449. 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 generated by selecting the Suppress Schedule C EZ box on screen C Sales of Assets 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 Table 5 1 Screens for Entering Gains and Losses Screen or Form Name Schedule D Capital Gains 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 Form 4684 Casualties and Thefts 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
450. 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 screen will be correctly populated in Drake If not you will need to visually verify the data that was scanned 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 Any barcode scanner can be used but Drake recommends the Honeywell Metro logic MS1690 Focus A good less expensive alternative is the IDAutomation USB Barcode Scanner 89 Personal Service Income W 2 1099 MISC Drake Software User s Manual W 2 Verification fields activated from Setup gt Options gt Data Entry help ensure that Verification wage and withholding amounts are correct They require that federal and state wages and withholding amounts be re entered 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 417 STtax 16 ST wage 47 ST tax Figure 5 5 Verification fields for federal and state wages and withh
451. ptions see Table 8 4 on page 221 For more on indi vidual bank selections see Chapter 8 Banking 4 Click Save The program assigns a number for each firm entered in Firm Setup NOTE 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 Account Tax Year 2010 Drake Software User s Manual Software Setup Editing Firm Information Shortcut Double click a firm s row to edit firm data Deleting a Firm Delete Printing a List of Firms am Print ERO Setup Tax Year 2010 To edit a firm s information 1 From the Drake Home window go to Setup gt Firm s 2 Select the firm to edit and click Edit Firm to activate the bottom half of the Firm Setup window 3 Edit the firm information See Adding a Firm on page 14 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
452. pute the taxable amount of the distri butions and enter it on screen 5329 Part II line 5 and on screen 3 line 21 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 tronic Games of Skill Not all states tax the gambling winnings from lotteries or 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 on 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 bu
453. r 2010 Clients EF Status for 2010 Clients Engagement Letter AAA Figure 11 13 Letter choices in Client Letters dialog box 9 Click Next to open the Client Selection dialog box 4 Complete one of the following e Printa letter for specific clients Enter a client s SSN EIN and click Add Client Repeat for additional clients Click Next e Printa 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 293 Click Next for Basic Search Conditions Click Continue to Scan Client Files Click Print Click Next 6 If printing a batch of letters Click Continue to scan the client files 7 Click Print a Mailing Labels 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 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 278 Tax Year 2010 Drake Software User s Manual Letters 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 labels for clients whos
454. r C as applicable only if the activity is a qualified joint venture and is a rental real estate business Select option B if the activity is a passive activity Rental real estate income is not generally included in net earnings from self employ ment subject to self employment tax and is generally subject to the passive loss limita tion rules Options A and C refer only to rental real estate income from a qualified joint venture If you select option B and the income is rental real estate income from a joint qualified venture you must mark the Statutory employee OR qualified joint venture rental real estate activity box on screen C to ensure that the program calculates the limits as required by tax law You can select this box after choosing option A or C but it is not Tax Year 2010 Drake Software User s Manual Self Employment Income Schedule C necessary the program automatically calculates the applicable limits for those selec tions Business Codes Press To locate a specific business code place the cursor in the Business Code box field B la a a 0 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 Please input search data publishing Go Results 516110 Internet publishing broadcasting ee ee ee ee ee NTN seek we Figure 5 15 Example of a business code search on screen C Select the desired code and click OK
455. r example to add an item enter a description and an amount and click Add Once all items are entered click Exit The total is shown on a blue background Figure 13 13 Income Items Wages Nontaxable combat pay axable interest Nontaxable interest Dividends Qualified dividends axable refunds Alimony Business income Schedule C Capital gain loss Schedule D Figure 13 13 Worksheet totals are highlighted in blue e Tax Planner Worksheets To access an additional tab or worksheet for a form or line double click the shaded cell Making Each numerical column in the Tax Planner has an Adjustment column to the right of Adjustments it Use this column to enter dollar amounts or percentages by which to adjust the amounts Default is dollar amount to use a percentage enter the number with a per cent symbol See Figure 13 14 To decrease an amount enter a negative number or percentage by entering a minus sign in front of the amount for example 5 or 5 in the Adjustment column Tax Year 2010 317 Client Write Up Running Reports Printing a Tax Planner Backing Up amp Restoring Files a Drake Software User s Manual 2009 Adjustment 2010 Adjustment 2011 Adjustment 2012 Fa C 1200 gt 58 750 50 gt 29 375 Income Items Wages Nontaxable combat pay axable interest Noptarabiasinte ast simiman an Figure 13 14 Adjustments
456. r more on the NOL screen 4506 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 21 lists additional screens for statement and claim forms Table 5 21 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 instruct
457. racted from the refund amount e Tax preparation fees e Additional fees formerly Add on transmission fees e Fee Withholding Charge Advent only e Bank fees e Software fee e Franchise network fee 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 See Direct Deposit on page 143 for instructions on how to enter direct deposit information Cashier s Check The most frequently used method of bank product delivery is a cashier s check printed in the tax preparer s office See Printing Checks for Bank Products on page 225 Debit Card Some banks provide the option of delivering bank products via debit card The E1 Visa Prepaid Card E1 Card described in the following section is offered by EPS Financial but can be used for banks other than EPS If you use a bank other than EPS check with your bank for other debit card options E1 Visa The El Card can be used with most bank products within the limitations of the spe Prepaid Card cific bank the product is coming from If you re offering the E1 Card you provide Program your client with the card at the time of tax preparation Once funds have been released generally within hours of bank approval your client can receive notification by e mail or text me
458. ram 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 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 96 Rental Real Estate Income on Schedule C Screen C offers four options for activity type item G and shows where on Form 8582 Passive Activity Loss Limitations the calculation flows if applicable e Option A Qualified Joint Venture Active rental real estate Form 8582 line 1 Rental Real Estate Activities With Active Participation e Option B Other passive activity Form 8582 line 3 All Other Passive Activities e Option C Qualified Joint Venture Rental activity by Real Estate Professional does not flow to Form 8582 e Option D Not a passive activity 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 A o
459. rams and setup options are also available in both Basic and Enhanced modes e Pricing setup See Pricing Setup on page 31 e Printing setup See Printing Setup on page 40 e Printing sets setup See Printing Setup on page 40 186 Tax Year 2010 Drake Software User s Manual Archive Manager Archive Manager The Archive Manager is a tool that allows you to archive returns and to review a La restore or delete the archived returns This means you can save various versions of a aoe return such as the amended return and the original return prior to amending The Archive Manager is accessible from both Basic and Enhanced modes NOTE Archives are saved as PDF documents and can be accessed and viewed from the DDM Creating an Archive To create an archive of an open return E 1 From View mode select Archive gt Archive Client Return or select Archive gt Archive Manager and click the Archive icon in the Archive Manager toolbar r acai 2 Inthe Archive Client Return dialog box enter a description of the archived file Figure 6 11 and click OK Drake 2010 Archive Client Return 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
460. re 7 e A tree view showing all documents in a return can be expanded or collapsed See item 4 in Figure 7 e A viewing panel displays the selected document See item 5 in Figure 7 Tax Year 2010 Drake Software User s Manual EFSTATUS 1040 2106 8283 8879 9325 iscellaneous uo WK_8812 w FED DEPR J WK_CARRY FOLDR FILEINST ENGAGE LETTER PREPPROOF LETTER2 PRIVACY BILL SUMMARY COMPARE LELLLLO o Setup Archive Form 1040 Label mee lnstructions onpage 14 Use fe RS tel Otherwke pkase prit or pe Presidential Filing Status Check ony one bow Exemptions Itmore than ber pekt cee page 17 ard check bere B Cr Email P f Basic View 8615 Export Refresh Help Viewing and Printing a Return Deparmertortie Treaty ne nal Revente Seme U S Individual Income Tax Return For the year Jan 1 Dec 31 2010 of other tryear beg balig Your Mrstaame ard lnttal Jeff Hajohtretur sposse s irstiame ard Initial Wanda Single Married filing jointly even if only one had income Married nihg separate y Ever spouse s SON above and full wane bere ec Dependents d Firstaame Lastiame Matthew Mark Brown 2010 eidg OMB No 1545 0074 Your social secerty nimbe r 400 00 1003 Sporse s social secerty sumber 400 00 1009 Make sure the SSN s above A and on line 6c are correct Checking a box below will not change your tax or refund
461. re 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 Initial Login To open and log in to Drake for the first time APON Preparer Login 1 Double click the Drake Software 2010 icon on your desktop In the Preparer ID field of the Login window type ADMIN not case sensitive In the Password field type your serial number printed on your packing slip Click Login Preparer ID lt Type Admin Password lt Enter serial number for initial login Click Login Figure 2 1 Logging in as ADMIN The Setup Assistant opens automatically the first time you log in to Drake Setup Assistant 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 indicates that a setup item is complete Tax Year 2010 Running Drake on a Network Drake Software User s Manual Welcome to the Drake Software Setup Assistant Use the Required for E filing Setup section to enter setup information for firms preparers and e iling 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
462. re found at message you may have NOTE selected an incorrect location to fill the 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 Close to return to the DDM Updating the DDM Tax Year 2010 The DDM Update Manager allows you to check for download and install DDM updates in a few simple steps The DDM must be open in order to access the DDM Update Manager To get and install DDM updates 1 From the DDM menu bar select Setup gt Options to open the Setup Options dia log box 2 Enter your EFIN and Drake Password and click OK 3 From the DDM menu bar select File gt Update Manager The DDM Update Manager dialog box is displayed 4 Click Update to initiate the connection to Drake and check for needed updates 5 Once the program has located any available updates click Get Updates 303 Document Manager Drake Software User s Manual The DDM 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 Setting up the DDM Review the following information before beginning work in the DDM Technical The DDM takes up very little disk space but you may require more space to store Require your office files The storage drive for an average sized
463. reciable asset with another screen in Drake see Associ ating One Screen with Another on page 62 Click the Form 4562 link or press CTRL W inside the Depreciation Tip field of a supporting schedule s screen such as Schedule E to access the associated 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 To ensure the accuracy of future calculations it is important to complete each 4562 screen correctly the first year an asset is entered 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 57 150 Tax Year 2010 Drake Software User s Manual Depreciation Required Required fields on the 4562 screen are described in Table 5 16 Fields Table 5 16 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 62 Description Description of asset This field supports 42 characters Per IRS regula 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
464. reciation Book Depreciation Tax Schedule Code Date Disposed Section 179 Assets Asset list of items expensed during the cur rent year Asset Number Department Number Asset Description and Date Placed in Ser vice Cost Section 179 Expense Amount Prior Year Carryover and the Current Year Sec 179 deduction Dispositions Asset list of items disposed of within the cur rent year Asset Number Department Number Asset Descriptions Date Acquired Date Sold Gross Sales Price Depreciation Amount Cost or Other Basis Loss Gain Department Summary Asset summary report sorted by department or schedule Produces an asset summary report sorted by department or schedule 298 Tax Year 2010 Drake Software User s Manual Report Type Year Summary Fixed Asset Manager Table 12 4 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 Depre ciation Current Federal Depreciation Total Federal Depreciation State Prior Depreciation State Current Depreciation and Total State Depreciation Preference Report List of assets placed in service after 1986 Asset Number Department Number Asset Description Date Placed
465. rect 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 the TRAC screen can be incorporated into Report Manager and Client Status Manager CSM reports TRAC Two reports can now be generated directly from the TRAC screen Screen Reports Return Preparation Data Consists of information entered by preparers in the Return Preparation Data section of the TRAC screen e ADMIN ONLY Return Data Consists of information generated by the soft ware and displayed in the ADMIN ONLY side of the TRAC screen The ADMIN ONLY fields can be viewed only by users with administrative rights To generate a report go to the TRAC 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 TRAC screen e The Generate ADMIN ONLY Return Data Report box in the ADMIN ONLY section of the TRAC screen TRAC 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 SIAX Worksheet 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 override
466. rental allowance and the Actual expenses for parsonage If a separate Allowance Utility allowance is provided enter the amount with the amount of Actual expenses for utilities Finally enter the Fair Rental Value of the housing used Parsonage Ifa parsonage is provided enter its Fair Rental Value If a separate Utility allowance is provided enter the amount with the amount of Actual expenses for utilities Tax Year 2010 123 Standard and Itemized Deductions Drake Software User s Manual Standard and Itemized Deductions Screen codes A 4952 8283 Schedule A Screen code A Generating Schedule A Mortgage Interest Paid Form 1098 C 124 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 the 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
467. 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 Drake Software Sup port or Client Write Up When you open a KB the Search tab for that KB is dis played Figure 10 1 Search Browse Glossary How to Search the KB Search for articles Search Click to Search Advanced Search Search using All Words X Search within All Knowledgebase s gt Latest Articles Hot Topics 4 09 21 10 Broadcast Drake artners Announced a Preparer Regulation and e File Mandate for 2011 Tax Se a Preparer Regulation and e File Mandate 5 09 21 10 Broadcast Drake Bank Partners Announced 4 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 8815 au 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 Ex
468. returns using this technology conform to format prescribed by the Department There is no opt out provision California law requires tax preparers who prepare more than 100 individual state income tax returns annually and who prepare one or more using tax preparation soft ware 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 Connecticut agency regulations Section 12 690 1 require tax preparers who prepared 50 or more 2009 Connecticut income tax returns to e file all 2010 Connecticut per sonal income tax returns using the Federal State Electronic Filing Program e file 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 and Emergency Excise Tax Return Form F 1120 and file through the IRS s 1120 Fed eral State Electronic Filing Program using approved software S corporations partnerships and trusts must make Illinois income tax payments on behalf of nonresident shareholders partners and beneficiaries Electronic payment is required for most corporate taxpayers that have an annual tax liability of 20 000 or more Individual taxpayers with an annual tax liability of 200 000 must make electronic payments E 1 Appendix E Stat
469. rial Income Allocation on page 123 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 e SEHI screen line 1 An entry here overrides system calculations from screen C or F an entry might be required on line 4 to effect correct system calculations 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 Deduction To have the program calculate the maximum SEP contribution enter the plan contri bution rate as a decimal on the SEP screen Adju
470. rinted from the Appointment Detail dialog box Improvements to Help Resources Drake Software continually strives to improve its help resources Listed below are some of the more significant improvements for this year IRS Changes and Requirements Drake Software User s Manual A supplement to the manual is now available for Drake s Pay Per Return PPR preparers It is located on the CD and the Drake Support site The online help now includes more detailed help in using letters The online help also includes report descriptions so you can see what the basic reports are and their expected output 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 In early 2011 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 at Support DrakeSoftware com IRS Changes and Requirements The following pages cover just a few of the IRS changes and requirements for tax year 2010 For a complete list of what s new and different in IRS regulations for the 2010 tax year see the IRS website www irs gov New Preparer Regulations Beginning this year all tax return preparers must register for a PTIN and pay a 64 25 annual fee Preparers who already have a PTIN must also sign up an
471. rior 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 letters and coupons to send with organizers L Begin preseason scheduling Get a jump start on tax season Schedule clients who are eager to file early L 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 new Update Manager features See Update Manager on page 263 L Update and back up settings Run the update routine see Prior Year Updates on page 67 and make a backup copy of the software setup see Backing Up and Restoring Files on page 268 Take Advantage of Drake Resources L Electronic Training Center ETC For tax courses tutorials videos and testing go to Drake Software com ETC Tax Year 2010 A 3 Appendix A Preseason Checklist Drake Software User s Manual m Ooooovoo vo Tutorials The 2010 tutorials can be accessed through the Help menu or from the Drake Support site Training Tools gt Tutorials 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
472. rity dialog box Tax Year 2010 Drake Software User s Manual Software Setup PA wee of Rnet inte hin nf sin nnn etl ees ee ee Group1D__ 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 in the main office Security Settings Assign Preparers File EF Tools Reports LastYearData Setup Help Custom Preparer Security z A Retum Click the menu items to apply AE security checkmark indicates a Pes access is allowed Remove the iew checkmark to disallow access I Forms Based Data Entry Quick Estimator ay eer ne oe am Ge E E aw eee ee ere one a Figure 2 6 Security Group General Information section of Group Security dialog box 4 Under Security Settings click the menu category and mark the boxes represent ing the features to which the group should have access Accessible features can not be edited for the Full or Admin groups Click Check All to mark all boxes shown in all menu categories 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
473. rn Individual Payment Voucher ion Federal Sobre el ion Federal Sobre el ion Federal Sobre el Planilla para Ta Declaracion de Ta Contribucion Federal Sobre el Figure 11 4 Blank Forms window Select a form category default is Federal and a tax package default is Individ ual Scroll through the form list to locate a form Select a form and click View or Print IRS Revenue Procedure 96 48 requires that a copy of the Paperwork Reduction Act Notice be distributed with federal tax forms When pro viding a blank copy of a federal form to a client you must include a copy of the notice To access it go to Tools gt Blank Forms and select Federal Under the Individual tab select PAPERWRK PG Repair Index Files Tax Year 2010 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 Situation ie 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 EIN Index The Client Sta
474. ro Due Paragraph tate Uther Tax Estimate Paragraphs State Other Tax Results FL phataeihtlenr Teas Fabs 1Steet ai anatoa aiai di Figure 1 7 Examples of OtherTax paragraph keywords Table 1 1 lists the Other Tax types indicated by specific letter keywords for state and city returns in the Drake tax packages Table 1 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 S Corporation OtherTax1 NR Composite OtherTax2 Franchise Partnership OtherTax1 NR Composite OtherTax2 Franchise Fiduciary OtherTax1 NR Composite OtherTax2 Franchise Tax Year 2010 C 3 Appendix C Keywords C 4 Drake Software User s Manual Table 1 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Colorado Individual OtherTax1 Severance Tax Corporate OtherTax1 Severance Tax S Corporation OtherTax1 Severance Tax Partnership OtherTax1 Severance Ta
475. rs or subfolders 1 Highlight the drawer or folder that will contain the new folder or subfolder 2 Click New Folder 3 Enter a folder name in the Input dialog box 4 Click OK The new folder appears in the left pane New Folder Repeat these steps as needed to create more folders Working With Files in the DDM Once the cabinets drawers and folders are established in the DDM you can begin adding files The DDM supports many file types and allows you to import or scan files into the DDM or link to a file outside of the DDM Once added to a folder files are listed in the right pane of the DDM window NOTE Files can be added to the DDM from the toolbar or through the DDM s Documents gt Add Document menu Importing a To import a file into the DDM File 1 Select the folder where the document will be stored Browse to and select the desired document Import 4x 2 From the toolbar click Import 3 4 Click Save The DDM copies the document into the selected folder Scanning a Scan documents into the DDM using a flat bed or document feeder scanner A flat File bed scanner scans one page at a time creating a separate PDF for each page A docu ment feeder scanner scans multiple pages and makes one document of many pages N OTE See Compatible Scanners following for scanners that have been reviewed and found to be compatible with the 2010 DDM release When you scan a document using the DDM the program au
476. rs to and restore them from a specified location e DDM Updates Ability to update DDM files from within the DDM e Ability to copy files to CD Ability to copy DDM files directly to a CD e Password protection Ability to password protect the entire DDM e Custom folders Ability to add custom folders in addition to the default Tax and 2010 folders to all new clients added to the DDM Use the DDM to create an organizational file structure for storing electronic docu ments such as PDF copies of tax returns scanned Forms 8879 and scanned copies of driver s licenses Before storing items in the DDM determine the type of file structure Tip you want to use The structure can be difficult to rearrange once it is in place and contains files Tax Year 2010 301 Document Manager Drake Software User s Manual Think of the DDM file structure as a virtual filing cabinet with drawers and folders with Level 1 as a cabinet Level 2 as a drawer and Level 3 as a folder Folders can also have subfolders The documents themselves reside in the folders and subfolders Backing Up Restoring DDM Contents The backup restore feature allows you to copy files to a local networked CD DVD or USB drive You can back up and restore the entire DDM structure or a specific cab inet drawer or folder To back up individual files use the Copy To options See Table 13 2 on page 313 Use this tool to back up and restore files
477. rticipate in the presentation but this is not required e Implement the plan Although you and your client are responsible for imple menting the plan DAG is available throughout implementation and will continue to be available for follow up In addition to helping you guide your clients DAG can be a significant revenue source for your business because you can charge consulting fees for both your work and the time DAG spends on each case generally four to ten times the number of hours as an accounting firm For more information on how DAG works and how you can work with its experts to benefit your clients call 828 488 1950 extension 203 go to DrakeSoftware com or go to DrakeAdvisory com Software Support 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 Each package in Drake has an FAQ screen accessible 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 N 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 250 Tax Ye
478. rts 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 Client Reports EF Bank Reports Scheduler Reports Client Contact Call List for all Preparers New Client Appointments Preparer Appointments Preparer Call List My Reports Other Report Options Sample Report List of preparer to call Portrait Call List for all Preparers Preparer Start Time Appointment Date Taxpayer Name Taxpayer ID Duration Phone Da lt gt Help New Report Edit Report View Report Exit Figure 12 1 Tree view of Report Manager Only those reports in My Report can be deleted To delete a report select it and click Delete Report or choose Delete Report from the right click menu NEW FOR Drake 2010 Help includes descriptions of all standard reports in the 20i Report Manager Click the Help icon in the Drake Home window tool bar or by selecting Help gt Drake Software Help 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
479. ry 400006665 Carter William amp 6Amelia 40000666 g a ams amp E E amp fe 5 c i J ww i Calculate View Print Split Tax Planner Import CSM Email Help Exit General Income Adjustments Credits Credits Taxes Other Forms Miscellaneous States 1 Name andAddress A Itemized Deductions Schedule 2 Dependents 3 Income 2106 Employee Business Expense 4 Adjustments Earned Income Credit 5 Payments 8867 EIC Paid Preparers Checklist ES Estimated Taxes EIC1 EIC Due Diligence Qualifying Child 2441 Child Care Credit EIC2 EIC Due Diligence Income M Making Work Pay Credit EIC3 EIC Due Diligence Head of Household EIC4 EIC Due Diligence Additional Notes w2 Wages F W2G Gambling Income Electronic Filing and Banking 4 1099 1099 R Retirement Santa Barbara RT DIV 1099 DIV Dividend Income Consent to Use of Tax Return Info INT 1099 INT Interest Income Consent to Disclosure of Tax Return Info 99G 1099 G Government Payments Direct DepositForm 8888 99M 1099 MISC Miscellaneous Income Electronic Funds Withdrawal RRB RRB 1099 R Railroad Retirement 8879 8878 e file Signature SSA 1099 SSA Social Security EF Options Override BILL Client Bill Adjustments Notes about the return FAQ Frequently Asked Questions Preparer Notepad Enter Screen State or City Code Return Status In Progress Return Type Individual Tax Return Current Package Federal Figure 3 8 Data Entry Menu Working in a Tax Return Toolbar
480. s Click the Setup icon in the Scheduler toolbar The Scheduler Setup consists of two tabs a General tab for default settings and a Calendars tab for setting viewing options for calendars Options are described in Table 4 1 75 Drake Software User s Manual Table 4 1 Scheduler Setup Options Setup Option Appointment duration Description Set the default appointment time displayed in the Appointment Detail dialog box see Scheduling Appointments on page 13 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 75 Appointment reminders Activate 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
481. s Screen code SCH Types of Attachments Title Statement Number 170 NEW FOR UNO number and title drop list on the SCH screen Statements are listed in The SCH screen is a tool for adding statements and explanations not supported else where in the return Some not all unformatted schedules can be e filed SCH screen amounts do not flow to any other form or schedule If a statement is required select the required attachment information title and statement number from the Type of attachment statement order by numeric code For optional attachments use the Title and Statement number fields below the explanation pane The SCH screen is accessible from the Miscellaneous tab or via links from other screens where an attached statement is required If the Type of attachment field of any SCH screen is blank the text is attached to the return as a statement Type of attachment options are shown in Table 5 23 Table 5 23 Attachment Types and How They Appear in View mode er View Type Description 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 th
482. s gt Drake ETC or go to DrakeETC com 2 Inthe Returning Users section enter a Username and Password Figure 10 4 Returning Users Username MaxsTaxes Password eoccee Figure 10 4 Logging in as a returning user Tax Year 2010 243 Online Support Drake Software User s Manual 3 Click Sign In Once you re logged in the ETC Welcome page is opened On the left side of this page is a sidebar listing the available resources described in Table 10 3 Table 10 3 Drake ETC Resources Resource Description Tax Courses 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 Tutorials Step by step instructional slide shows teach the basics of Drake Soft ware There are currently 60 Drake Software tutorials and 16 CWU tutorials available Practice Returns Hands on data entry and e file training Videos Online videos covering such subjects as administration data entry e filing CSM DDM Drake Tax Planner Forms 4562 and 1116 Sched ules C F and E and new for 2010 Client Write Up Report Card Track students progress in the tutorials and in the tax courses includ ing 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
483. s 17 D data entry bank screens in 222 basics of 56 65 colors 40 customizing 28 EF override options in 198 forms based 284 grid 57 87 150 heads down 71 Index help resources within 251 maximizing screens 22 menu 56 practice returns 246 printing client labels from 280 screen captures 64 setting CSM statuses from 233 setup options 22 Spanish 23 special features in 167 172 upper mixed case 23 date shown on return 25 45 DCNs Document Control Numbers assignment of 14 changing 197 staggering 196 DDM see Document Manager debit card as electronic payment option 145 debt cancellation 117 deceased taxpayer 86 deductions claiming for depreciation 150 domestic production activities 123 itemizing 124 125 section 179 expensing 151 self employed health insurance 121 tuition and fees 122 deleted files in the CSM 236 deleting see also editing appointments 82 archived returns 188 checks 226 CSM records 237 duplicate entries from the CSM 237 e mail messages 254 employer data 282 files from Drake 274 firm information 15 flags 59 records from CSM display 237 reports from My Reports 293 reports from online EF database 205 rows in grid data entry 57 screens in Drake 57 text from letter templates 37 update files 272 dependent of another 86 dependents child care expenses 126 claiming if married filing separately 88 education credits for 122 EIC information for 139 kiddie tax 133 134 Drake Software User s M
484. s 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 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 2009 to 2010 and select Preparer Schedules Foran To schedule an appointment for a preparer Individual 78 Tax Year 2010 Drake Software User s Manual Scheduler 1 Inthe Scheduler 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 schedule grid it is opened to that date and time Figure 4 14 Drake 2010 Appointment Detail z O S amp S aZ gof Find Next Appt Save Delete Lookup Data Entry Organizer Proforma Help Exit Date 1 10 2011 Time 01 45 PM Duration ris 15 min s SSN EIN 400001003 Client type New 7 Appointmenttype Individual z Name roy amp Rebecca Rivers Street 1215 Coleridge St City DENVER sT CO ZIP 80221 Preparer s Phone day 655 555 5555 Evening Cell Ext Ext Email Comments
485. s as necessary As applicable lines 2 3 and 7 should be completed in order to calculate the maximum deduction More information the STAX screen is available by clicking F1 in the individual fields 172 Tax Year 2010 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 335 played in the Calculation Results window See Figure 6 2 on page 174 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 up to the last nine returns calculated Each return is indicated by a function F key 4 7 oo ot iio E Batch Calculation Enter SSN EIN and press the ENTER key to add it to the list of returns to calculate or press F1 F9 to add returns that are listed on this screen Click OK to start the batch calculation A To delete an item from the list highlight and press the Delete key F1 400500600 EssBeeEss F2 400400400 See Corp F3 400006665 Carter William amp G mel F4 702000006 EXTENSION FILING RETURN F5 401111111 MY SBS TEST F6 403111111 TEST PARTNERSHIP F 412000691 powerofattorney TEST amp F8 200001001 179 S CORP TEST
486. s 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 To print all forms in a set select all of the boxes in the tree view under All Forms NOTE As explained in the procedure that follows you can opt to have Adobe launched when the PDF is created If the main box of a set is selected all sub boxes are automatically selected Tax Year 2010 179 Viewing and Printing a Return Drake Software User s Manual Shortcut Press CTRL P for the Print Selection option Printing to Drake PDF Print Printing Printer Sets 180 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 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 The Print Selection dialog box is displayed with the Drake PDF Printer selected Drake 2010 Print Selection Print Dialog Select desired printer Use Properties to further configure print
487. s the e filing mandate Income tax preparers who filed more than 100 personal income tax returns last year and will be using tax preparation software to complete one or more of these returns must e file them for the current tax year Paid preparers who have prepared 100 or more Wisconsin individual returns in prior years will be required to e file all eligible individual returns this year Tax Year 2010 Drake Software User s Manual Appendix F Addenda Pages for 2010 Appendix F Addenda Pages for 2010 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 Drake Software Online Manual e From the Drake Support site select Training Tools gt Manuals and click the link for the 2010 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 User s Manual Tax Year 2010 during
488. s you to enter the form description pricing 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 Properties Setting Form Colors Colors can be customized in both Basic and Enhanced modes Enhanced The Form Color Background Color and Text Data Color can each be changed in Mode Enhanced mode Drake default colors for these three items as shown in Figure 6 9 are black white and red respectively 184 Tax Year 2010 Drake Software User s Manual Setting Up View Print Options Fom Department of the Treasury Internal Revenue Service 4 Form Color 1040A U S Individual Income Tax Return lt Black Label Your first name and initial Last name Background See page 15 Color White TEST O MAPL Use the If a joint return spouse s first name and initia Last name IRS label Otherwise Home address number and street If you have a P O box se Pi Text Data please print 842 WEEPING WILLOW IN Color Rad or type City town or post office state and ZIP code If you have a F N afte me T at b ti ee ew aa ra Figure 6 9 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 clic
489. 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 40 shows an example from Worksheet 3 for lines 3a and 3b 128 Tax Year 2010 Drake Software User s Manual Child Tax Credit For Form 8582 CR Lines 3a and 3b keep for your records WORKSHEET 3 Sockal Secarty No 400 00 1001 Total Credits Name ELLA T SAMPLE Prior Year Unallowed Credits b Credit line 3b Current Year Credits From Form Name of Activity a Credit line 3a c Add cols a and b E amp S PARTNERSHIP 8586 I 1 500 617 2 317 o Anna a mn als eT aa a ee NAY P Tne an nama de Ao Figure 5 40 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
490. screen and calculate the return 4 In View mode view the EF message page Figure 5 66 which shows where dis crepancies occurred ELECTRONIC FILING MESSAGES MUST be corrected before electronic filing is allowed Name s Your social security number 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 As ce gett tte E E E ER E E T tats AE nt nt Figure 5 66 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 The Tax Return Comparison screen is used for comparing a current year tax return 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 Ifa return was updated from the prior year the COMP screen already contains data If 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 168 The Miscellaneous Codes fields on screen 1 are for use in tracking returns and creat 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 i
491. se or re play 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 Click Tax Law Updates to view any changes in the tax laws since the NOTE tax courses were published Click Tax Form Updates to see copies of 1040 tax forms with the latest changes highlighted Click Tax Desk Ref erence to view Drake s 2010 Desk Reference CPE Credits 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 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 re print a CPE certificate click Report Card in the Drake ETC side bar Scroll to the bottom of the Report Card window to the CPE Credits NOTES 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 Tutorials teach the basics of Drake Software through text sound and animation For a l
492. se 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 Ifa bank offers multiple products the screen for that bank includes 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 Identification Each screen has one or more sections for entering and verifying the taxpayer s identi fication Some information fields such as telephone number and address fields are overrides if the data is entered on screen 1 it does not need to be entered on the bank screen Some fields require the taxpayer to produce one or more forms of ID driver s license passport etc and the preparer to enter information from these IDs onto the screen Identification information is required must be entered before the return can be transmitted and bank product accepted 222 Tax Year 2010 Drake Software User s Manual Using Bank Screens in Data Entry 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 310 Prep Fee Override Field
493. sed on screen 2 Fields for Parts I II and IV are located on the EIC screen The EIC 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 To complete Form 8867 for a return go to the EIC screen accessible from the Gen eral tab and mark all required boxes EIC Due Diligence Screens Screen codes EIC1 ElC2 EIC3 EIC4 Because a thorough interview is necessary to ensure that all information is gathered 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 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 requirements Described in Table 5 13 these screens contain interview questions and fields that must be com pleted if required by selections made in Setup regarding EIC Table 5 13 EIC Due Diligence Screens Screen 7 Screen Name Description Code EIC1 EIC Due Diligence Qualifying Child Screen contains questions pertaining
494. sers Click the Office button The Windows Start and Office buttons are located at the lower left corner of your screen 2 Type F DRAKE10 NWCLIENT NWCLIENT EXE substituting your server drive letter for F 3 Click OK Windows 7 users Press ENTER 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 Next set up directories and paths This can be done on either the server or a worksta tion and needs to be done only once To set up directories and paths 1 From the Drake Home window select Setup gt Directories Paths 2 Select 2 Software installed only on Server Setup Directories and Paths Select the appropriate configuration for your office setup below It is not recommended that these settings are changed during the season Configuration Choose the appropriate Configuration below Important If necessary consult with your technician or contact Drake Support for assistance These settings should not be changed during the season unless instructed to do so by Drake Support Network Options Software installed only on Server preferred network setup V N WClient link installed on workstations 3 Software installed on server and workstations secondary network setup r Indicate server drive letter for sharing client files N ell Jo access all other gied ies ASNE im
495. siness 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 4 Table 5 4 Cancellation of Debt Scan Where Flows on Tax Return 1040 Form 1040 Other income line C Schedule C Other income line E Schedule E Rents received line F Schedule F Other income line 4835 Form 4835 Other income line 982 Form 982 Total amount of discharged indebtedness excluded from gross income line Tax Year 2010 117 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 90 Foreign earned income is calculated into the total income line of 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 b
496. sive activity data and improved capa bility in calculating and printing related information Some of these changes include e Ability to enter passive activities for Schedule E Schedule K 1 Form 4797 Form 6198 and MAGI e Addition of Activity Type drop lists to screens E K1F K1P and K1S and the ability to indicate real estate professional and nonpassive activities on these screens Listed below are a few other changes that have been made to the 1041 package this year e Data entry fields for statements are now present on more screens for easier attach ment of statements e Form 1116 is now generated automatically when the DIV screen is used e A tax exempt statement is now generated automatically if tax exempt is indi cated on the K1F K1S K1P or INT screen Estate Package 706 Tax Year 2010 Title V of the Economic Growth and Tax Relief Reconciliation Act of 2001 EGTRRA repealed the following taxes e Estate tax for decedents dying after December 31 2009 and before January 1 2011 e Generation skipping transfer GST tax on direct skips taxable terminations or taxable distributions that occur after December 31 2009 and before January 1 2011 In December 2010 the 2010 Tax Relief Act effectively repealed this provision but it also gave estates of decedents dying after December 31 2009 and before January 1 2011 the option not to come under the revived estate tax As described in the follow ing s
497. ssage The refund amount must be larger than the sum of the preparer 216 Tax Year 2010 Drake Software User s Manual Distribution Methods 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 government 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 E1 Screen following To set up pricing for the E1 Card access Setup gt Pricing from the NOTE Home window and enter the desired price 10 max for Form 189 E1 Card Product Information See Pricing Setup on page 31 for more information on setting up pricing 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 RT ANT 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
498. stments 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 fields on screen 4 Penalties This section covers penalties on withdrawals Penalties on estimated taxes are covered in Estimated Tax Penalty on page 138 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 Tax Year 2010 121 Alimony Paid Drake Software User s Manual 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 105 Alimony Paid Enter details about alimony paid in the Alimony fields on screen 4 IRA Adjustments To enter IRA adjustments see Retirement Income 1099 R etc on page 103 Student Loan Interest Deduction Enter student loan interest deduction amounts Form 1098 E Student Loan Interest Statement
499. t 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 201 Ifno 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 7 1 Re send any return that receives a B ack Table 7 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 IRS acknowledgment codes are shown in Table 7 2 IRS acknowledgments are usu ally processed within 24 hours Table 7 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 197 Bank acknowledgments listed in Table 7 3 are usually processed within hours of IRS acknowledgments depending on volume Tax Year 2010 195 E
500. t 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 DDM Audit Log select a file from the DDM 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 You can choose a status for any document in your filing system The status will be listed in the Status column in the DDM window See Figure 13 6 To change the status of a document 1 Select a document from the DDM 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 10 Audit Log of Activities on Document Consent to Use 2010 This screen shows the activities that have been performed on this document along with the date time and the person logged into the machine at the time AuditLog For Consentto Use 2010 Status Path C DrakeDDM CLIENTS C CARTER WILLIAM 400006665 Tax 201 0 Archive 201009091 20624 Description Consentto Use Steet OF ae E ET T N a mA antan i a nn fp nemeetn NAP nent tens Figure 13 10 Choosing a document status 3 Click OK Your computer must have Word and Excel installed in order to use the DDM to create new text txt Word doc and Ex
501. t property To expense QRP under section 179 1 Open screen 4562 and complete the For Description Date Acquired Cost Basis Method and Life fields for the property See Table 5 16 Required Fields on 4562 screen 2 Inthe 179 expense elected this year field enter the amount being elected maxi mum allowed is 250 000 3 From the Type drop list of the Qualified Real Property section located in the lower right corner of the 4562 screen select the property type When the return is calculated the program expenses the amount entered under section 179 and depreciates any remaining cost using the method selected from the Method drop list on screen 4562 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 56 An amount in this field overrides system calculations Tax Year 2010 Drake Software User s Manual Depreciation 179 expense
502. t records and a drop list for displaying Active Students Inactive Students or All Students Figure 10 8 Active Students v Search P LastName FirstName UserName Password Admin Report Card ibms abe ep tonnes erra ethene No Edit Report Card i ru Karrere are Yes Edit Report Card Sig ete o buge poera No Edit RprateCardee Bishan Denise anap ReRiAR a ENDR a gaah MAp Elit Figure 10 8 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 Log Out You are returned to the ETC login page 247 Online Support Drake Software User s Manual Federal State Facts The Federal State facts pages have federal data on IRS drain times and reject codes lists of forms eligible for e file Drake message pages transmission times and state data on e filing tax forms payments and deposits due dates penalties and exten sions You can also access state shipment letters form instructions and update notes As EF packages are approved that information is added to the state pages There are also links to the Drake Forums see Drake Forums following and state taxing authority websites The Professional Tax Solution Drake Software Support D elect a link on this site Year State California State of California Franchise Tax Board 2009 gt E
503. t start and end dates The program searches all times within your date range ind Next App 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 5 Click Find The next available appointment time for the preparer is displayed NOTE Preparers with no set schedules are excluded from the search To view the details of a selected appointment time click Select To find a scheduled appointment see Find Scheduled Appointment on page 82 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 To locate a client record 1 From the Appointment Detail dialog box click Lookup 2 Select the location from which to search Lookup 3 Select a client name from the displayed list Clients are listed in alphabetical order by last name or entity name 4 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 Changing To change the details of an appointment that has already been entered into the Sched Appointment uler double click the time slot of the appointment in the Appointment Scheduler Details When the Appointment Detail dialog box for the selected appointment is opened make any changes necessary Click Save Deleting an To delete
504. t the root of the selected drive or subdirectory In the 2010 Drake program the folder name always starts with DS2010 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 2010 would be titled DS201001282010 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 2010 To restore Drake files 1 2 A 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 Click Exit when restoration is complete 269 File Maintenance Drake Software User s Manual 6 If you do not have Windows XP Vista or 7 and want to back up MPORTANT 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 feature to have the program au
505. t the status of a return from within data entry click the CSM button from the aS 5 Data Entry Menu toolbar to display a status list and then select a return status from Ea 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 From the Home window click Last Year Data gt Update 2009 to 2010 and update the return The client s record goes into the 2010 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 les re a Open The return is opened to the General tab in data entry When you exit the return entry 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 A the Open Client 2 Enter the SSN or EIN for the return in the Open Client File dialog box cup didiog box 3 Press Open and then click Yes Tax Year 2010 233 Customizing the Display Drake Software User s Manual When prompted you can begin entering data for the new return Customizing the Display Because custom views are saved and displayed according to th
506. 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 25 Direct Indirect Expenses Expenses AMGTUSON oe sre oe Auto amp travel AUTO Cleaning amp maintenance Commissions onor 22ers ere WE hineeinclide giia Sea A A o hnn man datatita oon ann Figure 5 25 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 S
507. te 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 C 1099 Alpha Information 1099 R 1099 M and 1099 RRB C 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 and Firm Number Information Update the Custom Paragraph of the LTR Screen Update Employee s Info w2 W2G 1099 99M RAB Update 8283 s Donee s Information Update Child s Information on Form 8814 Update Taxpayer s and Spouse s PIN Update Bill Screen Information Update Return Password Help Select All Unselect All Update 1040 Cancel Figure 4 2 Individual Update Options box jOOOOOLRARRAeS 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 68 Tax Year 2010 Drake Software User s Manual Prior Year Updates Update To update all returns in a package not recommended Returns Globally 1 From the Home window select Last Year Data gt Update 2009 to 2010 2 Click Next 3 Select filters optional and then click
508. ted by your office 1 From the Home window select EF gt Check Register 2 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 297 for more on using these features in the Report Viewer 5 Click Exit to close the Report Viewer Available from Tools gt Blank Forms a printed check register REGISTER PG allows accurate record keeping of all RAL checks both voided and issued in the office Complete the check register as each check is written and ensure that this infor mation is available at all times and is not available from any other source Drake rec ommends that your office keep this check register in a three ring binder along with the computer generated check registers described previously Resetting Check Numbers Occasionally you might have to reset the check range Follow the process outlined in Printing Checks for Bank Products on page 225 When you get to the Check Print Options dialog box click Setup Checks to access the feature for resetting check range Lost 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
509. ted with the return e Enter a personalized letter greeting e Add a custom paragraph Tax Year 2010 Drake Software User s Manual Making Changes on the Fly 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 Default The result letter is the standard letter that is printed with a return It tells the client that Result Letter 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 24 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 P li Jl Individual Result Letter 01 Default ersonallzd gt Individual Result Template Individual Result
510. tep 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 appears 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 219 Preparing to Offer Bank Products Checking Status Drake Software User s Manual If offering e Collect or the E1 Card program go to epsfinancial net to access and download additional information Program participants must NOTES complete compliance training through the EPS website Republic Bank also requires compliance training through its website republicrefund com NEW FOR You can import your banking information directly from your Drake bank 200 application in your Firm Setup See Firm Setup on page 14 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 the page CAUTION Making changes to an application and resubmitting
511. ter Explains that an application for extension has been filed Amended Letter Similar to the result letter but for an amended return Estimate Payment Provides details for making a 2011 estimate payment individual 1040 package Reminder only Scheduled Appointment Informs prior year clients of this year s appointment date and gives instructions for Reminder preparing for the appointment individual 1040 package only Referral Coupon Preseason Letter Post season Letter Offers client a discount for referring another client individual 1040 package only Reminder to 2009 clients that tax season is coming up all applicable packages Letter thanking 2010 clients for their business available for all applicable packages Customized Supplemental Letter Fully customizable template that can be used to create a customer survey package or product offering sheet generic letter client coupon etc Engagement Letter Standard engagement letter for tax services E file Status Letter Provides 2010 clients with an acknowledgment summary of their e filed returns available for all applicable packages Privacy Policy Generic privacy policy for clients K 1 Cover Letter Cover letter for a shareholder partner or fiduciary receiving a Schedule K 1 S corp partnership and fiduciary packages only K 1 Amended Letter Cover letter for a shareholder partner or fiduciary receiv
512. ter April 18 the requested payment date cannot be later than the current date A Withdrawal selection item 1 in Figure 5 54 is required if the program is to direct tax authorities to electronically withdraw funds from the taxpayer s account Account 1 Type of account I Checking Savings I Checking I Savings Federal Federal payment amount Requested payment date Daytime phone number 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 Payment amount Resennih tere eee State State payment amount Requested payment date Daytime phone number Figure 5 54 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 54 Finally the PMT screen must indicate the return to which the payment data applies item 3 in Figure 5 54 Mark the box of the applicable return type All states require that only one account be designated for direct debit of funds To have a state balance due electronically withdrawn from a
513. tering data for 93 94 order of items listed on 23 printing 24 44 Schedule C Profit or Loss From Business applying expenses to 156 depreciation schedules for 150 e filing 98 entering data for 96 98 for clergy 123 for statutory employees 90 foreign income on 118 Schedule C EZ Net Profit From Business 98 Schedule D Capital Gains and Losses entering AMT cost basis on 99 entering data for 99 importing data from spreadsheet 99 sale of home 102 Schedule E Supplemental Income and Loss activity types 107 109 applying expenses to 156 depreciation schedules for 150 Tax Year 2010 Index entering data for 106 109 using for farm income amp expenses Form 1041 115 Schedule F Profit or Loss From Farming applying expenses to 156 depreciation schedules for 150 entering data for 114 115 Schedule H Household Employment Taxes 132 Schedule J Income Averaging for Farmers and Fishermen 114 Schedule K 1 Share of Income Deductions Credits etc accessing screens 109 applying expenses to 156 basis worksheets for 112 entering data for 109 111 exporting data from another return 111 letters 25 36 44 50 printing page 2 24 state amounts if different from federal 110 Schedule R Credit for the Elderly or the Disabled 127 Schedule SE Self Employment Tax 120 Scheduler 74 84 establishing daily schedules 76 new features this year 74 reports 83 287 searching 82 screen captures 64 search conditions in Filter Manager
514. 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 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 Return to first field on a screen If Home is inserted into a macro the cursor moves to the first field on the screen Move to last field on a screen If End is inserted into a macro the cursor moves to the last field on the screen Cursor jumps ahead a prescribed number 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 Cursor jumps back a prescribed number of fields For instance FB 5 would jump the cursor back five fields 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
515. 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 F 1 Supplemental Income Links for Schedule E and K 1 screens are located in the Schedules E and K1 section of the Income tab Schedules E and K 1 te Rent and Royalty Income K1P Partnership K 1 Parts of KIF Fiduciary K 1 ya Schedule E D K 2 Partnerships S Corps Tana one mare E3 Estates and Trusts income ta 4 REMICs Figure 5 23 Screens for entering Schedule E data Schedule E Screen code E Use screen E to complete Page 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 Use screens E2 E3 and E4 only if transcribing the information IMPORTANT from a Schedule E that has already been calculated and com pleted by hand General Enter the kind of property such as brick duplex and address at the top of screen E Property List each dwelling for the Schedule E on a separate screen To access a separate Information screen press PAGE DOWN 1
516. the EF tab in Setup gt Options e Data entered on the Preparer Information Overrides PREP screen overrides the default and the corresponding Return Options selections on screen 1 ERO information 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 22 is for tracking purposes only e A firm 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 147 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 NEW FOR You can now enter state preparer registration information for California Maryland Minnesota New York and Oregon on the PREP screen Ali You can also enter a firm s foreign address information in both the fed eral and state preparer informati
517. 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 20 Form 4562 For gt A C E F 2106 4835 AUTO 8829 zy Multi form code 2 1 999 1 is assumed if left blank amp Date Description Acquired Cost Basis wo ee eee eS ae ae ae i _ fh Figure 3 20 In this example the 4562 screen is to be associated with the 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 20 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 Also check to make sure Ready for EF is not marked on the EF screen If this b
518. the applicable fields for the asset including Date sold and Property type fields and all fields under Group Sale Information Figure 5 57 sold ssf A cf stl pn Group Sale Information Group sal MIMD Group sales price Group expense of sale Figure 5 57 Screen 4562 fields to complete for the first asset of a group sale a 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 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 Installment Unlike Form 4797 Form
519. the program go to Last Year Data gt Update Settings 2009 to 2010 The Update Settings dialog box is displayed Tax Year 2010 69 Organizers and Proformas Drake Software User s Manual Drake 2010 Update Settings rs Update Settings The application has detected Drake 2009 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 v _ Preparer Information _ Firm Information _ Preparer Schedules Macros Colors ERO Screen Document Manager Letterhead Reports Client Status Manager Setup gt Options Pricing Federal Pricing State City Letters _ Form Print Order Federal Help Continue Exit te Figure 4 3 Update Settings dialog box 2 Select the drive that stores the 2009 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 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 sel
520. 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 CAUTION installed on a dedicated server Transmitting and receiving from more than one computer can lead to duplicate DCN rejections and can affect your ability to print checks 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 192 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 CTRL T to open click Review The Transmit File Editor lists individual returns To remove a the Transmit A 2 Receive dialog return from the queue select it and click Remove Ror 4 Click Send Receive The Report Viewer displays the EF Transmission Record 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 5 Click Exit 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 a
521. tically 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 141 Tax Year 2010 141 Other Payments Drake Software User s Manual Other Payments Use the following screens to enter other payments from credits Table 5 14 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 These amounts flow to the Payments from line of Form 1040 Use the Other payments field on screen 5 to force an amount to flow to NOTE the Payments from line of Form 1040 Be aware that no documenta tion justifying the forced amount is included with the return by default First Time Homebuyer Credit Screen code 5405 The Housing and Economic Recovery Act of 2008 gave certain first time homebuyers a temporary refundable tax credit This credit was extended for homebuyers who entered into a binding contract before May 1 2010 to purchase the home before July 1 2010 and who closed on their home by September 30 2010 Use the 5405 scree
522. tinued 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 67 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 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 Notes to be Notes in the top section of the NOTE screen apply for the current year only To have Updated notes included in subsequent updates use the Miscellaneous Notes box at the bottom of the screen Tax Year 2010 169 Other Special Features in Data Entry Drake Software User s Manual 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 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 Schedule
523. tments 3 5 Payments ee ere y Figure 3 11 Multiple instances of a screen are shown in status bar and Data Entry Menu Record 2 of 2 Press Page Down for New Screen 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 2 Double click the field or press CTRL W to open a Detail Worksheet Detail Worksheet Sort Options F1 Description Ascending F2 Description Descending F3 Amount Ascending F4 Amount Descending Title SCHEDULE C LINE 8 ADVERTISING Description Amount RADIO 400 TELEVISION 600 Eusa 150 Figure 3 12 Detail worksheet with data entered 3 Enter or edit the worksheet Title 4 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 12 58 Tax Year 2010 Drake Software User s Manual Data Entry Field Flags Global Flags Tax Year 2010 5 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 is red Part Il Expenses Biv Advenlishng EE 9 Car and truck expenses z 10 Commissions and fees mel 411 Contract labor eee Figure 3 13 Shaded worksheet field Detail worksheets are produced as overflow statements but are not e
524. to enter Schedule M data for both the taxpayer and spouse For further guidance see the field level help in Drake or refer to the IRS instructions 138 Tax Year 2010 Drake Software User s Manual Earned Income Credit EIC Earned Income Credit EIC 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 In addition the EIC Due Diligence screens provide supplemental questions to help ensure a comprehensive interview with each taxpayer While the IRS does not require answers to these supplemental questions these screens provide a means for collecting valuable supporting documentation in case of a due diligence audit EIC Information for Dependent If the taxpayer has EIC with qualifying dependents the EIC Information section of screen 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 49 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
525. 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 To run a MOM report 1 Inthe online EF database toolbar click MOM to view report criteria filters Figure 7 12 Return Status All x Return Type All 5 Preparer G amp p EFIN saga Run Report Figure 7 12 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 To print the report click the printer icon Only the data on the screen 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 click the Excel icon 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 207 Copying EF Data Drake Software
526. tomatically 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 5 The Automatic Backup Settings dialog box is displayed Figure 11 6 ia Drake 2010 Automatic Backup Settings W l Automatic Backup Settings These settings affect the automatic backup program Please select a time and location to backup your files as well as which file types you would like to back up l Activate Automatic Backups Backup Operation Select Files to Back Up Select time to perform qz Client Files 1040 1120 automatic backup 11205 1165 etc 1 00 AM v Select backup type Setup Files Pricing Setup All files X Information Files Select a backup location System Files CSM EF amp l C ABACKUPS M Database IRS Bank and Scheduler Files This will not change the location of manually backed up files Last Backup was 18MB Free space on disk is 40 3GB Help Save Cancel Figure 11 6 Automatic Backup Settings dialog box o Place a check mark in the Activate Automatic Backups box 4 Inthe Backup Operation box choose a time type and location for
527. tomatically locates and uses your system s default scanner A Scanner Cannot be Located message implies that the scanner is not TWAIN compliant or has been improperly installed To scan a document into the DDM 1 Select the folder where the file will be stored 310 Tax Year 2010 Drake Software User s Manual lig on pri w Compatible Scanners Linking a File gt Link File Tax Year 2010 TIP Document Manager 2 From the toolbar click Scan and select Use Scanner Bed or Use Document Feeder 3 From the Input dialog box select a file type see Figure 13 8 e gt g Input S Enter a name for this document Or select a Common Name William Carter PDF ra E Common 7 C BMP C TIF Documents C GIF C PNG Enable Duplex Scanning if available OK Cancel Figure 13 8 In this example PDF is the selected file type 4 Entera filename If a default name has been assigned for a commonly scanned document select it from the Common Documents drop list In the Figure 13 8 example Social Security Card is being selected 5 Click OK To facilitate search and retrieval of DDM files establish a naming convention and use it consistently The Common Documents feature can help you achieve consistency in naming See Setting Up Common Documents on page 307 for more information Drake has reviewed the following scanners and found them compatible with the DDM
528. try section Figure 2 13 enter a Code eight or fewer characters and a Description 25 or fewer characters 29 Software Setup Drake Software User s Manual Selected Entry m m se See Add Entry Code BUSREF Description Business Referral Figure 2 13 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 14 FBUSREF Business Referral WOMREF Word of Mouth Referral Remove Move __Moveup Entry List Edit DAR tan thant atest saute dealt N T ofl Figure 2 14 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 14 e Removing a listed item Select an item and click Remove See Figure 2 14 e Editing a listed item Double click an item The Selected Entry box see Figure 2 13 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 B
529. tus Manager CSM index was updated CSM Index 267 File Maintenance Shortcut Press CTRL R to open the Repair Index Files window Drake Software User s Manual To repair index files 1 From the Home window go to Tools gt Repair Index Files 2 Inthe Repair Index Files window select the index files to repair To repair all types of index files click Repair All 3 Click Continue 4 Click OK If Name Index was selected you must select a Name Index Option before clicking OK 5 When the file repair is completed click Exit to return to the Home window 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 NOTE Back up your files often and store them at an off site location Backup To back up your files from the hard drive 268
530. ty 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 added to the new one To apply group security You cannot assign a preparer to more than one security group If you try to do this the preparer is removed from his or her current group and 1 From the Drake Home window go to Setup gt Preparers 2 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 appropriate group e Admin Users with administrative rights group cannot be deleted e Front Office Front Office rights Scheduler access only e Full Users with full access to everything except administrative features 3 Choose one of the following options e To adda group click Add Group Under Security Group General Informa tion 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 Secu
531. u can now access Scheduler data to send appointment reminders to All l 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 e Click To in the New Message window and click the Create Report Gener ated Recipient List link e Click the arrow next to the To icon and select Report Generated List The Report Manager window is displayed 258 Tax Year 2010 Drake Software User s Manual Interactive Support E mail Keywords Tax Year 2010 4 Select a report that includes only those clients who fit the criteria for the e mail list For example if you want to include only those clients who have filed an extension application you would create an Extensions report For details on creating reports see Chapter 12 Reports 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 18 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 Mess
532. uble click a keyword or single click it and choose Select The keyword column name moves to the Selected Report Col umns field Note that the new information appears in the Sample Report box Tax Year 2010 Drake Software User s Manual Setting Up a Report To remove a keyword from the Selected Report Columns field click it then click Unselect Click Unselect All to clear the field 3 Click Save or proceed to Assigning Filters following if you want to assign fil ters to the report The program stores the modified report under My Reports New reports overwrite existing reports of identical output names in the NOTE Report View Print Utility To have multiple versions of one report you must rename the newer output file Assigning Filters Filtering allows you to limit what information is included in the report by screening out unwanted data With the many filters available and the ability to create your own filters and add conditions to each filter you have a variety 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 1 From the Report Editor Step 1 window see Figure 12 2 on page 290 click Next The Report Editor Step 2 window is opened Figure 12 3 Se ES Filtering of Reports Select a Filter to use for this report The Filter
533. ule A fields are override fields Entries override system cal N TES 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 To indicate that the taxpayer elects to carry a NOL forward and not back go to the NOL screen and select Election to carry forward ONLY When the return is gener ated it includes an EF NOTE stating that the taxpayer is electing under Section 172 b 3 to relinquish the entire carryback period Use the NOL screen to enter data for figuring Alternative Minimum Tax NOL When the return is generated the AMT_NOL worksheet shows the current year AMT NOL Election Options Tax Year 2010 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 statement detailing an election go to the SCH screen and select E Election Explanation for the type of schedule Both the list of elections and any designated election explanations are visible as ELECTION pages in the View mode directory tree For more on unformatted schedules see Unformatted Sched ules on page 170 159 Special Returns Drake Software User s Manual Special Returns This section explains how to complete the following return types in Drake Form 1040X Amended U S Individual Income Tax Return e Extension Applications For
534. ule grid below Continue to set schedule day and time combinations Click Save to save Natalie s schedule and exit the screen Set up Times Select day s T Mon Tues Wed Thus J Fri I Sat I Sun a ow gt ow gt ow Current Schedule Day In M onday Tuesday Wednesday Thursday Friday Saturday Sunday Help Clear All Save Cancel Figure 4 11 Setup Scheduler dialog box for a preparer 3 Mark one or more boxes to select days This activates the In and Out drop lists in the top half of the dialog box 4 Select the in and out times for the selected days 5 Click Save In the Appointment Scheduler window the rows indicating a preparer s out times Ja 6 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 Calendar Settings Calendar view start time Current Time lt I Default calendar tab displayed at login Selected Date v Calendars in my view V Se Date WM Weekly M Preparer Figure 4 12 Calendar Settings section under Calendars tab These features are described with the Scheduler Setup features in Table 4 1 on page 76 For more information click the Help icon in the Scheduler Calendar To change the default colors displayed in the Sched
535. uler calendar Colors 1 Inthe Scheduler Setup dialog box select the Calendars tab Default colors are displayed under Colors Tax Year 2010 77 Scheduler Drake Software User s Manual Colors Use application default colors C Use custom created colors Scheduler grid background color Preparer scheduled start time color Single appointment color Multiple appointment color a Figure 4 13 Colors section under Calendar tab in Scheduler Setup 2 Click a color to open the Color dialog box for that color a Select a new color 4 Click OK When you change a color note that the Use custom 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 NOTE To print or export a schedule for a specified preparer see Creating Appointment Reports on page 83 Printing The Print feature prints the appointments for the selected date shown under the Cur rent Calendar Date In the Appointment Scheduler click the Print icon 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 Calendar tab is selected the Report Viewer display
536. update information system and drive information 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 52 Preparer Login Preparer ID Password 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 has the following features e Menu bar and toolbar items 1 and 2 in Figure 3 2 These tools allow you to accomplish tasks in the program Tax Year 2010 51 The Home Window Drake Software User s Manual e Recent Returns item 3 in Figure 3 2 Lists the last nine returns opened in the program for easy access e Appointments item 4 in Figure 3 2 Shows the preparer s schedule and pro vides a link to turn appointment reminders on and off e Notifications item 5 in Figure 3 2 Lists e mail messages that must be down loaded updates that must be installed and acknowledgments that must be pro cessed lets you know if your program is up to date e St
537. ur Drake e mail select File gt Check Mail from the menu bar click Send Receive or press CTRL M 253 Interactive Support Drake Software User s Manual To check only the status of your mailbox click File gt Check Mailbox Status or press CTRL S NOTES E mail messages are downloaded only once per EFIN If multiple com puters are using the same EFIN consider designating one person to download Drake e mail and forward it accordingly Message Downloaded messages appear in your Inbox double click a message to open it In Storage addition to the Inbox your mailbox includes a Sent Item box a Drafts box and a Trash box Figure 10 13 r Drake 2010 Email Inbox p File Message Folder Setup nm Send Receive Figure 10 13 Sent Items Drafts and Trash boxes Click a box to open it Boxes are described below e 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 Basic E mail To compose a new message click New Enter an address in the To field a subject in Tasks the Subject field required and a message in th
538. urned off Get Updates Auto Update Settings Click on an item below for information about updates currently installed 1040 amp Program 1120 1120 5 1065 1041 990 706 Git States TaxPlanner State Description Update No Released AR Arkansas 1 08 02 2010 Figure 11 1 Update Manager dialog box 2 Click Get Updates and wait while the program checks for updates e Ifno updates are found click Exit to return 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 Viewing When updates are installed manually the program creates an installation log showing Release the file name release date and number of the update To view a release note double Notes click the desired row in the Update Manager dialog box Figure 11 1 Notes are dis played 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 297 Automatic Updates Updates to the program can be performed automatically based on the update options you ve selected If you choose to have automatic updates you can indicate what time of day
539. ve digits of the client s ID The Default password drop list includes other format options 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 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 make the screen locked visible or hidden Default is visible Examples are shown in Figure 2 10 and described below the figure 28 Tax Year 2010 Drake Software User s Manual Software Setup Customized Drop Lists Tax Year 2010 Locked 7 BILL Adjust Client Bill Visible gt V CHK Return Checking Information Hidden gt COMP Tax Year Comparison M ELEC Election Options M EXT Extensions 4868 amp 2350 ERA aaan a Violet TT Figure 2 10 Locked Visible and Hidden screens Locked Menu items with a shaded check mark are not visible or accessible e Visible Menu items with a black check mark are both visible and accessible Hidden Menu items with no check mark are
540. verride the date printed on the bill and add a short note separate from the custom paragraph to the bottom of the bill To override Pricing Setup and establish prices for a 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 23 Senet ty a _ eee E o S test em ee yt Preparer fi a pry to this return Apply to all returns Fatah Po Form Price 50 00 State jo Item Price 100 Not available K1 fo JV Include on the Bill Figure 2 23 Pricing on the fly section of the Properties dialog box 3 Edit the description of the form 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 Overriding Letters Setup 48 Letters options and defaults can be set from both Setup gt Options Optional Docu ments 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 e Have a result letter other than the default prin
541. vides 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 64 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 resident state and on the state codes indicated on other forms W 2 Schedule C 1099 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 Tax Year 2010 Drake Software User s Manual Practice Returns and Test Returns 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 Tax Year 2010 Practice returns and 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 The SSNs for these returns begin with 400 00 and consist of various forms and schedules to show how different tax scenarios are prepared in Dra
542. vigation 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 and select the Enable logged in preparer s Per sonal Client Manager box located under Main Dialog Options General Navigation Both the mouse and the keyboard can be used for navigating within the software e 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 undo cut copy paste delete or view help for that field 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 to open the Open Create a New Return dialog box 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
543. was calculated NOTE from a Coverdell ESA or QTP The program calculates the penalty line 8 of Form 5329 just as it has in the past The new calculation includes any amount that is income Advance EIC Payments Enter advance EIC payments from Form W 2 in Box 9 of the W2 screen This amount flows to the Advance EIC payments line of Form 1040 Household Employment Taxes Screen code H Use screen H under the Taxes tab for Schedule H Household Employment Taxes 132 Tax Year 2010 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 9 Other Tax Forms That Can Be Calculated in Drake phil 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 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 2010 NOTE go to screen 5 and enter the amount in the COBRA premium assis tance received in 2010 line of item 60 Exporting Data for Kiddie Tax The 8615 Export feature allows exporting of parent data to a child s Form 861
544. 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 E1 Screen 7216 Signature Tax Year 2010 Use the E1 screen to apply for the E1 Visa Prepaid Card This screen is accessible only via a link from certain bank screens The link is visible once you have indicated in Firm Setup that your firm has been approved by EPS Financial to participate in the El Card program Signatures for consent and disclosure of tax return information are required only if the El Card is being used with a bank other than EPS Financial All 7216 forms must be signed by the taxpayer and spouse if applicable before applying for the E1 Card If the paper option has been used to obtain the taxpayer signatures mark the box pro vided on the E1 screen To have the required forms signed electronically click the links provided on the screen If using the E1 Card in conjunction with Republic or Tax Products Group two sets of consents must be completed one set for the IMPORTANT bank and one set for the E1 Card If using the E1 Card with EPS Financial only the consent forms for the bank must be completed For electronic signatures the USE and DISC screens are the bank consent screens 217 Preparing to Offer Bank Products Drake Software User s Manual Demo graphic Info E1 PRN Apply for E1 C
545. will now calculate penalties and interest on all late returns calculated The per return option can be used if the global option shown in Figure 5 63 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 64 Complete the Date return was filed text box Figure 5 64 If this field is blank the program uses the Date balance paid entry from the 2210 screen by default Late Filing Interest and Penalty I Suppress calculation of penalties and interest on this return M Calculate penalties and interest on this return I Do not carry P amp 1to 1040V filing instructions or letter Failure to file penalty Failure to pay penalty eee Lf gn bans Been E aettrasssnies ibaa tate Date return was filed Due date of return Date balance paid if different r A ATT S O E E E S thts tants Figure 5 64 The LATE screen accessible from the Taxes tab You can also use the LATE screen to override these additional default settings Including calculated amounts elsewhere By default the calculated amounts are incorporated into the payment voucher filing instructions and result letter for the return To override this default go to the LATE screen and mark the Do not carry P amp I box Figure
546. x 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 eet Individual OtherTax1 Franchise Fiduciary OtherTax1 Franchise 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 Tax Year 2010 Drake Software User s Manual Appendix C Keywords Table 1 1 Letter Keywords Other Tax Types for State Packages State or City Package Tax Type Description Massachusetts Corporation OtherTax1 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 M
547. x 3 Other UO income amount should be reported as income on Form 8615 Kiddie Tax 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 106 To enter foreign earned income see Foreign Earned Income on page 118 92 Tax Year 2010 Drake Software User s Manual Passive and Investment Income 1099 DIV etc Interest and Dividends 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 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 directly on screen 3 Income Figure 5 9 Pte ae a a Re ee a el a 7 Taxabl Scholarships not reported on W277 Ge L 7 Otherincome reported on line 7 NOT W 2 wages l Foreignincome Householdincome Prisonerincome 8a Interest income NO Schedule B required 8b Tax baited interest NO Schedule B required er APADI TONOS me o raant Anainn tania ag EAT nm cgaptannticnten gpa n Figure 5 9 Interest and dividend fields on screen 3 The Income screen amounts are calculated directly into Form 1040 Any interest or dividend income entered o
548. x Dood Inc Nepean PO COON ae T T R T A Figure 10 14 E mail Compose Message window with data file attached 3 Complete the To and Subject fields as needed 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 Attaching Other Types of Files on page 256 From the To e mail a client data file from the Home window Home Window 1 Select Help gt E Mail The Inbox window is displayed 2 Click New to open a blank Compose Message window zae 3 Click Add to open the Attachments dialog box Figure 10 15 4 Inthe SSN EIN Search text box enter the SSN or EIN of the file to send item 1 in Figure 10 15 Tax Year 2010 255 Interactive Support Drake Software User s Manual Drake 2010 Email Attachments ko a k Client Data File s SSN EIN Search Browse 400006665 Search Document Manager File s Attachment s Data File 400006665 1040 SSN EIN Browse Drake Software Program File s Browse All other File s Browse Remove Done Figure 10 15 In the Attachments dialog box enter a SSN or EIN and click Search item 1 the file is attached item 2 5 Click Search or press ENTER The file appears in the Attachment s pane to the right item 2 in Fi
549. x return preparers for a reduced penalty amount the tax commissioner has not yet ascertained what that amount will be for tax returns which the tax return preparer is required to file but fails to file by electronic technology For tax year 2011 The department will bill the preparer the full penalty of 50 for each Ohio income tax return which the tax return preparer is required to file but fails to file by electronic technology 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 All tax preparers are mandated to e file returns The rule previously applied only to those preparers who filed more than 50 returns annually The provision that allowed a taxpayer to opt out has been deleted Effective January 1 2011 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 preparer who submitted at least 50 PA 40 2009 Pennsylvania Personal Income Tax returns required to be filed in the 2010 calendar year or amended PA 40 Pennsylvania Personal Income Tax returns filed in the 2010 ca
550. xes for Options electing certain optional ways of treating some income and exclusion amounts Extension Ifa six month extension is being requested for a 1040 and a 709 return no separate Request for extension request is required Form 4868 covers extension requests for both returns Form 709 For more information see Extensions on page 161 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 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 162 Tax Year 2010 Drake Software User s Manual Applications and Requests Requests Claims and Other Forms Table 5 20 lists additional screens for application and request forms Table 5 20 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 158 fo
551. y Weekly or Monthly and the end date of the recurring appointment The dialog box will expand to offer options Tax Year 2010 79 Scheduler Drake Software User s Manual 6 Click Save The appointment will now be displayed on the schedule grid NOTES For a recurring appointment you can edit a single occurrence or the series You can also make a group meeting recurring For a Group To schedule multiple preparers to meet with a client follow the instructions provided of Preparers in For an Individual previously Instead of selecting only one preparer in Step 4 however you can select up to 50 There is no need to double click a name or to press SHIFT or CTRL while selecting Preparer s Figure 4 15 Multiple preparers selected for a group meeting 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 are excluded from the batch process To set up appointments using the batch appointment generat
552. y 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 DOT meals subject to 80 limit field Figure 5 34 Fee AE NEN PAN on anny pei e es A Travel away from home Other business expense gas Meals entertainment DOT meals subject to 80 limi tanane a are ve 5 Ty ere eee ee ee Figure 5 34 On the 2106 screen use both the Meals entertainment and DOT meals subject to 80 limit fields as appropriate 118 Tax Year 2010 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 tax
553. y 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 page 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 ver ified If there is no Schedule C no verification is required 59 Data Entry Drake Software User s Manual Flagging Fields Globally 60 e New Returns When a field is flagged for all new returns an unverified flag produces an EF message page whether or not the screen has been opened for the return In the above example an EF message would be created even if no Sched ule 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 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 15 default is green Once the field has been verified the highlighted tab and screen names go back to their original colors General Cncome adjustments Credits Credit Self Employed Income F Farm Co Op Income J Farmer s Income Averaging 4835 Farm Rental Income 6198 Amount Not at Risk en O T ttn aa O see Ne ti ton
554. y from the W2 screen to Form 1040 104 Tax Year 2010 Drake Software User s Manual Retirement Income 1099 R etc 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 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 with the amount from the 8606 screen If the 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 21 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 your traditional IRA converted to a Roth IRA Recharacterizations 417 IRAbasis before conversion ta adn Ratesheet Se gaoa E e aa ts oop Ya AN So eto dP whe Figure 5 21
555. you want the updates to occur You also have the option of not having auto matic updates NOTE Automatic updates are not set by default To view or change your automatic update settings 264 Tax Year 2010 Drake Software User s Manual Update Manager Notification of Updates Tax Year 2010 From the Home window select Tools gt Update Manager The Update Man ager dialog box is displayed Figure 11 1 on page 264 Click Auto Update Settings The Automatic Update Manager dialog box is dis played Figure 11 2 a Drake 2010 Update Manager Updating 2010 Drake Software on Drive C po Drake Software Automatic Update Manager Options Automatic Updates Auto Update mode is active The update On Cof Next Check 4 50 00 AM will run at the next scheduled time Status Last check Last Updates Figure 11 2 Drake Software Automatic Update Manager 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 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 operat

Drake Software User`s Manual: Tax Year 2010

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