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LMS TAX Pro Software Manual for use with

1. Enter 10000 in the number field on your screen and hit the lt ENTER gt key Completing the above steps will help prevent your electronically filed returns from rejecting because of duplicate DCNs 31 3 9 Bank Setup River City Republic Santa Barbara ir you area River City Republic Santa Barbara Refund Advantage or other bank user you will need to input your bank information into LMS TAX Pro From the LMS TAX Pro Main Menu select Configuration then Electronic Filing Bank Setup and then choose RAL Bank Setup Menu Next choose Bank Used for RALs Select River City Republic Santa Barbara or Refund Advantage In some cases LMS TAX Pro will ask you on what drive your bank software is installed Enter in that drive letter and press the lt Enter gt key That s all you have to do to configure the bank software with LMS TAX Pro If you have specific problems or questions about your bank software you will need to contact your bank technical support for further assistance 3 10 Prin ter Copies Setup By choosing the Printer Copies Setup menu item from the Configuration Main Menu you will access all of the options associated with printing forms and schedules We will discuss these options in the sections below 3 11 Printer Setup Menu Select your printer and configure the correct printing port if not already selected To make sure that the printer you wish to use has been correctly set up select the Printer Setup opt
2. Corrupt tax return to LMS TAX Pro Technical Support for clarification or discussion Transmitting a Corrupt file tax return is simply a means of allowing a LMS TAX Pro Technical Representative to copy a questionable tax return onto his or her computer so that you may discuss the return over the phone You may be having a problem with the calculation of a certain line on the Federal 1040 or the State Return or you may have a specific question concerning a particular client s return Corrupt does not mean that your file is infected with a virus or harmed in any way Designating the return as a Corrupt return protects the return from being inadvertently transmitted to the IRS by LMS TAX Pro personnel 139 The LMS TAX Pro Program has an option in the Utilities Menu to transmit a corrupt return to the LMS TAX Pro Support Team To send a corrupt return complete the following steps 1 Select the option for Send Corrupt Return to LMS TAX Pro from the Utilities Menu 2 Enter the Social Security Number of the primary taxpayer on the questionable return 3 The following question will appear on the screen answer YES 4 Click the Connectl button to send the return to LMS TAX Pro 1 0 9 Repairing Da tabase Files During a busy Tax Season you may have need of recalling clients from your LMS TAX Pro backup files In doing so you may encounter error messages indicating that the backup data has become corrupt T
3. 131 9 2 Voiding a Client s Check While Printing Checks For the sake of this example we will assume that our check DID NOT print correctly so we will answer NO to the question from the above screen print on the next pages we will discuss voiding a check that is not correct choosing NO brings up the screen shown below all checks that were printed in the batch will automatically show up in the list on your computer s screen this screen in the program will allow you to place a check in the box for any check that DID NOT PRINT CORRECTLY DO NOT PLACE A CHECK IN THE VOID BOX IF THE CHECK PRINTED CORRECTLY Again for purposes of our example we will continue to void the check shown 132 If you have checks to void clicking the OK button brings up specific instructions on your screen when you click the OK button to leave this screen you will have the opportunity to reprint any checks that you had to void the process will begin with the question on the screen Are You Ready to Print Checks follow the on screen and the Manual instructions under Printing a Client s Check 9 3 Tr a nsmi ttin g Your Ch eck R ecor ds to LM S TAX P FO Once you are satisfied that all of your checks have printed correctly you will need to IMMEDIATELY transmit your Check Records to LMS TAX Pro This will guarantee that you will receive your client fees from the bank First return to
4. 2 Credit For The Elderly or the Disabled Schedule R A tax credit is available to certain low income individuals if they are at least age 65 or older before the close of the tax year and to individuals under age 65 if they are retired with a permanent and total disability and have taxable disability income from a public or private employer 82 Education Credits Form 8863 Hope Credit If your client his or her spouse or a dependent for whom your client can claim an exemption was enrolled at least half time in the first or second year of college in 2008 your client may benefit from the Hope Scholarship credit Lifetime Learning Credit Unlike the Hope Credit students are not required to be enrolled at least half time in one of the first two years of postsecondary education 4 Foreign Tax Credit Form 1116 Generally speaking a client s Foreign Tax Credit will not exceed 300 so in most cases you will use option 1 from the Foreign Tax Credit Menu to calculate this credit This amount will be entered in as a plug in figure in the program Your client can claim a credit for foreign income taxes or taxes imposed by possessions of the U S that were paid or accrued during the tax year For example your client might have become liable for foreign taxes on profits from overseas operations or investments Your client can elect to deduct these taxes instead of taking the credit if he or she prefers although claiming the credit will gener
5. 8824 If you sell or dispose of property used in a trade or business it must be reported on IRS Form 4797 Sales of Business Property This form is divided into several sections which are used for different types of property Other Gains Loss Menu Form 8824 Like Kind Exchanges requires a description of the relinquished and replacement properties purchase date of the relinquished property and the date it was transferred the date the replacement property was identified and the date it was acquired by the taxpayer The form also requires the fair market value of the exchange properties and sales expenses Taxable gain is then reported on Form 4797 or on Schedule D depending on the character of the property given up Income Menu IRA Pension Distributions Forms 1099 R 1099RRB 8915 This Income Menu option allows you to enter the amounts from your client s 1099 R forms Generally distributions from pensions annuities profit sharing and retirement plans IRAs insurance contracts etc are reported to recipients on Form 1099 R Rollovers For a distribution that has been rolled over into another retirement plan you will need to enter 0 in box number 2a Taxable Amount on the Form 1099 R screen Be sure to enter the amount that was rolled over in box e The LMS TAX Pro software will automatically calculate the 10 penalty if the 1099 R from the Income Menu is marked with a Distribution Code of 1 71 How
6. If your client is married he or she must file a joint return with the spouse to claim either the adoption tax credit or the exclusion for employer reimbursed adoption expenses unless 1 they are legally separated or 2 they have lived apart from for the last six months of the year and the home is the child s home for more than half the year and your client paid more than half the cost of keeping up the home for the year Child s identification number If the adoptive child can not obtain a Social Security number or an ITIN for a resident or nonresident alien your client must obtain an adoption taxpayer identification number by completing IRS Form W 7A which can be obtained by calling 1 800 TAX FORM DC First Time Homebuyer Credit Form 8859 Who May Claim the Credit If your client purchased a main home during the tax year in the District of Columbia and your client and spouse if married did not own any other main home in the District of Columbia during the 1 year period ending on the date of purchase 84 Other Taxes Menu 1 Self Employment Tax Schedule SE If your client s total business income from all Schedule Cs combined and from any partnership or S corporation income that is treated as self employment income is 400 or more the LMS TAX Pro software will generate a Federal Schedule SE If your client is filing jointly and the spouse also files one or more Schedule Cs each spouse must count his or her own income separately Cer
7. Install LMS TAX Pro After the installation is complete RIGHT CLICK on the 2008 LMS TAX Pro icon LEFT CLICK on Properties Select the Compatibility tab Locate the Privilege Level section and check the box Run this program as an Administrator Click OK DOUBLE CLICK the LMS TAX Pro icon on the Windows Desktop and continue with the Configuration of the program 4 a LMS TAX PRO TAX PROGRAM REFERENCE MANUAL Ta b I e of Contents Chapter 1 How to Get Around in the Program Topic Page Number The Opening SCEE rected SIME aot nei dead 10 Program Features cccececeeeeeeeeeeeeeeeeeeeeeeneneaeees 14 Chapter 2 Installing Your LMS TAX Pro Software Topic Page Number Hardware Requirements 16 Installing the Federal 1040 Software sii Sivek eevee 16 Removing the Software cc ceceeeeeeeeeeeeenee entree eeaes 18 Prior Year Tax Programs ccceeeeeeeeeeeneeeeeeeeeeeeees 18 Chapter 3 Setting up Your Configuration Topic Page Number First Time Configuration ccceeeeeeeeeeeeeeee ener es 20 Personalizing Configuration csceeeeeeeeeeeeeeee eee 26 Company Setup ERO s Memnu ececeeeeeeeeeeeeeeeeeneneneees 27 Preparers Menu 2 2 20c0ceeeeeeeeeeeeeeeeeeees 28 Fee Menu 2 2 ccccccecec cece eeeeeeeeeeeeeeeeenees 28 Electronic Filing Bank Setup 30 Updating DCN Batch N mbers irn maa e Ea 30 Bank Setup River City R
8. Notice the menu option Military Foreign Address which allows for the entry of a Military Address APO FPO Stateside etc Once you are satisfied that all of the Personal Information is correct Pressing the lt Enter gt key entering 0 or clicking Exit Menu will take you to the next screen prompt Notice the option to mark the client as a Dependent on Another Return if necessary 60 Important f the Client 5 Social Security Number entered at the very beginning of data entry does not match the number from the Name and Address Menu you will be asked at this point in the program to correct the Social Security Number You will then be asked to enter dependents in the Dependent Information Main Screen Entering Dependent Information Below is the Dependent Information Input and Edit Screen O Ifyou prefer using your mouse you may left click once on the New button to begin the process of entering information for the Taxpayer s dependents O Ifyou prefer using the keyboard you may press lt Alt N gt or simply press the Insert key on your keyboard as illustrated on the screen print below 61 Below is an example of a filled in Dependent Information Entry Screen Important In order to have the tax return accepted for electronic filing you must o spell the last name correctly o have the correct Year of Birth o and enter the correct Social Security Number of each dependent If these ite
9. Print Print Copies of Returns The Print Menu option allows you to print a client s return schedules or any other portion of a client s tax return To begin the print procedure From the LMS TAX Pro Main Screen click once with your left mouse button on the large Print icon Or you may press number three 3 on the keyboard and lt Enter gt Either action will access the LMS TAX Pro Print Menu To print an individual client s return select item number 1 Select Individual Returns to Print from the Print Menu You should now see a screen that lists all of your clients by Social Security Number and name To select the return you wish to print there is no need to enter the Social Security Number simply left click once in the small box in the Selected column for the client whose return you wish to print or left click once on the client s name Your print options will then appear on the screen One Copy Federal and State Two Copies Federal and State etc Click once with your left mouse button on a print option to highlight it and then click the OK button Once a print option has been selected a check will appear in the Selected check box You may then print the selected return uncheck the client s name from printing or choose another client s return to print 13 Support Technical Support Options LMS TAX Pro has developed a number of support options that can help you resolve most problems without
10. The first way and the most common way is through the Print Menu To print a return through the Print Menu you may select the Print icon or select Print from the LMS TAX Pro Main Menu Choose _Individual Returns to Print Click on the check box next to the SSN of the client you would like to print do a Search by Last Name or Enter the Taxpayer s SSN The _Select Print Option box will appear Choose how many copies you would prefer After making the selection click the OK button If this is the only return you will be printing at this time click the _Print Selected button at the bottom of the client list The return will be sent to your printer 122 8 2 Using the View Results Menu The second way to print a return in LMS TAX Pro is through the View Results menu inside the clients return From the client s 1040 Menu select the View Results menu The box that appears lists every form that is associated with this return You can view and print forms from this menu To view a form select the form you wish to view and click OK To get to the next page of the form press the page down key on your keyboard To print the form click File in the top left hand corner and select Print Choose _ Yes when asked if you would like to Print this Form To close the form select File and then Exit or click the X in the top right hand corner of the screen You can also print the return in its entirety from the View Res
11. USB drives or hard drives To backup returns to your CD ROM use your CD burning software that is installed on your computer and copy the LMS TAX folder found on your computer hard drive The Print Path should be left the same as your Backup Path or if you are running a Network the Print Path will show up as your Network Backup Path We recommend that you do not change your Print Path unless you first contact LMS TAX Pro Technical Support The Prior Path is the directory or the path that LMS TAX will look for in order to pull in the data from last year s clients This path should not change unless you are converting from another company s tax software OR unless your previous year s client data is on another hard drive 3 1 8 Con f j g ura ti on U til i ti S The Configuration Utilities Menu offers several options including Copying your LMS TAX Pro System Configuration to a USB drive also called a flash or jump drive so that you may recall your configuration at a later time in the event of computer failure Or you may also use this backup to recall your Configuration to another stand alone computer running your LMS TAX Pro software Another useful Configuration Utility Menu option is a display of your program update status Periodically during the Tax Year LMS TAX Pro will produce updates to the Federal and State Packages These updates will correct minor problems in your software that may be discovered during
12. and your gains from sales of draft breeding dairy or sporting livestock Wages you receive as a farm employee or from a farm corporation are not gross income from farming Income Menu Unemployment Compensation Form 1099 G Your client must include in income all unemployment compensation received Your client should furnish you with a Form 1099 G Certain Government Payments showing the amount paid Unemployment compensation generally includes any amount received under an unemployment compensation law of the United States or of a state 73 Income Menu Social Security Benefits Form 1099 SSA Enter your client s Social Security Benefits in this option of the Income Menu and the program will automatically determine the taxable amount if any The program will display a Social Security Benefits Worksheet which can also be printed Income Menu Other Income including W 2G Gambling Winnings and Form 2555 Foreign Earned Income The Other Income option of the Income Menu allows for descriptions of other earned and unearned income that may not have a category described by the previous menu options Also you will find the entry points for NOL Carryover from Prior Years Gambling Winnings and Foreign Earned Income Exclusion Form 2555 Note also the menu options for 1099 Q Education Program Payments and 1099 C Cancellation of Debt 74 Once you have entered your client s total income from all sources you will exit the Income Menu
13. be sure to click the Unblock button to allow your LMS TAX Pro Updates to download to your computer Click the Connect button on the next screen to connect to LMS TAX Pro Click the option to Download Install Updates 46 Once you click the Exit button you will see the screen illustrated below updates that you need to download will be colored RED updates that are ready to install will be colored BLUE Left click to place a check in the white box beside the Federal State or Miscellaneous Update that you need then click the red Download button once the update has successfully downloaded the update will turn BLUE place a check in the white box once again and click the blue Install button Follow the instructions on your screen to install the update To download and install updates to the LMS TAX Pro Business Package left click once on the BUSINESS tab to bring it forward again place a check in the white box beside the program or update you need click the Download button the update will turn BLUE re check the box and click the Install button Follow the installation instructions that appear on the screen Left click the Business tab to bring it forward this will allow you to download and install the Federal and State Business Packages and the Business Package Updates 47 Troubleshooting Tip If you have difficulty connecting to LMS TAX Pro to download your updates please try the following befor
14. button and the Print Option for TWO COPIES OF W2 has been created When you select the Print command from the LMS TAX Pro main screen and choose an individual s return to be printed you will now have the option to print 2 copies of the client s W 2s Scroll down to locate Form W 2 and left click to highlight it this will bring up the Number of Copies Needed question for our example we will enter 2 36 3 13 Prin ting Mailing Labels By choosing the option to Print Mailing Labels from the Print Copies Setup Menu you may print mailing labels for all of your clients or you may select individual clients for correspondence The program is configured to print on Avery 5160 mailing label sheets 3 labels across by 10 down per sheet 37 3 14 Edit the Client Letter Edit the Client Letter this option in the Print Copies Setup Menu allows you to edit the Client Letter that you attach to the printed copy of the tax return given to your clients This Client Letter summarizes the information from the tax return that you prepared for your client The letter also lists filing instructions estimated payment instructions and your own company information From the Client Letter Menu you can select the option to Edit Detailed Client Letter Your screen will look something like this When you have finished editing the Client Letter click File in the top left corner of the screen and then Save The changes th
15. small business or self employment information Generally if your client has a 1099 MISC the IRS requires that the income from the 1099 MISC be reported on Schedule C You 1 also report your client s deductible business expenses on the Schedule C Examples of deductible business expenses include advertising insurance legal and professional services office expenses and rent or lease expenses You ll subtract your client s expenses from the gross receipts and the net profit or net loss will be shown on the 1040 If your client had net earnings of 400 or more that amount will also be shown on the Schedule SE The Schedule SE is automatically generated by the program and figures the amount of self employment tax that your client may owe on the business income A Brief Discussion of Schedule C Expenses The LMS TAX Pro Schedule C Expenses Menu allows you to enter the dollar amounts for any expense that your client may have incurred in relation to his or her business Choosing the option for Depreciation will bring up the menu that allows you a few choices when entering your client s depreciable assets The Depreciation Module This is the Depreciation Menu use the Depreciation Module in most cases Generally you will choose the option for the Depreciation Module to enter your client s assets and also to choose the correct depreciation method such as MACRS Straight Line etc Car and Truck Expenses The two most common choic
16. the home office deduction The Form 8829 is found in the LMS TAX Pro Schedule C Edit Menu Your client must complete Form 8829 and the program will transfer the total to the Schedule C when the tax return is filed Unfortunately Schedule C EZ which is a much simpler form can t be used if your client is claiming the home office deduction The business portion of your client s home mortgage interest and real estate taxes is claimed on Form 8829 and cannot be claimed again as an itemized deduction on Schedule A of the return Form 8829 Business Use of Home menu option To determine how much your client can deduct you must enter the number of square feet used for the home business and divide that by the total square feet of living space in your client s home The result is the percentage of your client s home that is used for business It determines how much of the rent depreciation insurance utilities and other related expenses your client can deduct The amount of the home office deduction cannot be greater than the profit generated by the home based business On Form 8829 you must separate all of the home business expenses into two categories direct and indirect expenses The home office area is a direct expense Other costs utility bills insurance etc are indirect expenses Another example of a direct expense would be if your client had to paint or install carpet for that office space An indirect expense would be mortg
17. 1 2 In addition to paying regular income tax on that money it s taxed along with the rest of the income your client will have to pay a penalty for the early distribution Distributions from the following types of retirement plans are subject to this 10 penalty A qualified retirement plan like a 401 k or a Keogh plan a A traditional IRA a A Roth IRA An annuity tax deferred a A modified endowment contract The LMS TAX Pro software will automatically calculate the 10 penalty if the 1099 R from the Income Menu is marked with a Distribution Code of 1 unless an exception to the penalty is indicated See Page 71 for instructions on How to Mark Exceptions to the 10 Penalty in the LMS TAX Program 86 Advance Earned Income Credit Payment from the W 2 If your client receives an advanced Earned Income Credit Payment and you input this amount on the W 2 entry screen LMS TAX will automatically pull this amount forward and include the amount in the Other Taxes Menu 7 Household Employment Taxes Schedule H If your client is required to pay employment taxes on domestic help LMS TAX will calculate them along with the regular income tax on Form 1040 However you will need to complete Schedule H Household Employment Taxes and include it with the tax return 8 Other Taxes To Be Selected Tax on Accumulation Distribution of Trusts Enter the amount from Form 4970 and identify as ADT Golden Parachute Payments If
18. 2 s as well as change or delete W 2 s that have previously been entered Interest or Dividends Schedule B amp Form 8815 This option is used for entering interest and dividend income if the total is more than 1 500 00 Entering figures here will carry the amounts to Federal Schedule B Also included in this option is the access to Form 8815 Exclusion of Interest from Series EE and I U S Savings Bonds Issued After 1989 Please visit the IRS website at http www irs ustreas gov forms _pubs forms html for instructions regarding this form Form 1099 DIV is used to report dividend and capital gain income from stocks and mutual funds The following information shown on Form 1099 DIV is needed or may be used when preparing your client s return Ordinary dividends this amount is entered directly on Form 1040 or on Schedule B if required and is completely taxable Capital gain distributions this amount is entered directly on Form 1040 or Schedule D if required and may be eligible for a lower tax rate There are several classes of capital gains that are eligible for different rates Foreign tax paid this amount is taxes paid to a foreign government on international investments Your client may claim a credit or itemized deduction for this amount whichever is most advantageous Form 1099 INT is used to report interest income received The following information shown on Form 1099 INT is needed when preparing your client s ta
19. Business Returns 16 4 157 1 6 1 Comple ting a Business Return To access the Business Program select Business from the LMS TAX Pro Main Menu If you have downloaded and installed the Federal Business Installation from the Updates Menu as well as any current Federal Business Updates you will be at the Business Main Menu To begin a Business return select the type of return you wish to complete either 1120 1120S 1065 1041 990 706 or 5500 Enter the Employer s ID Number EIN and begin filling in the company s basic information After filling in the company s Basic Information the program will take you to the Heading Information Menu You can adjust any information entered from this menu Upon exiting the Heading Information Menu you will be at the Business Return Main Menu Notice that the layout of each menu corresponds to the layout of each business form Choose the appropriate menus to enter the company s information E Filing You can e file forms 1120 1120S 1065 and 990 Before doing so please read the chapter entitled Business E File Overview to make sure you are setup to e file business returns If you will be e filing the return there are several entries that must be complete before the return can be e filed You must enter a company officer as well as the officer s title These are located in the Heading Information menu under Name and Address You must also enter a Business Code The Business Code is located in the Schedule K me
20. Selecting Firm ERO Preparer Setup allows you to update or verify your Firm Information from within the Company Setup Menu Your Firm Information includes your company s name and address company phone number Employer Identification Number and EFIN The LMS TAX Group Code is for Rhodes Computer Services local offices no information needs to be entered in this field 27 3 4 Company Setup Changing the ERO s Menu choosing the ERO Menu from within the Company Setup Menu enables you to change your Electronic Return Originator information You may enter additional Electronic Filer Identification Numbers as well as update information for EFIN s that have already been entered during the initial Configuration setup Changing ERO Information From the LMS TAX Opening Screen select Configuration and then Firm ERO Preparer Setup Clicking Option 2 ERO s Menu in the Company Setup Menu brings up the following window in the LMS TAX Pro Program Click your EFIN to highlight it and then click the Edit button to change the ERO information The following screen will appear after clicking the Edit button Selecting any of the above menu options allows you to change the information for that option 28 3 5 Company Setup Changing the Preparer s Menu The Preparer s Menu in the Company Setup Menu has similar functions as the ERO s Menu In the Preparer s Menu you may add additional tax preparers or change the informatio
21. The program will then take you to the Form 1040 screen shown below There are 3 choices for entering additional information on the tax return from this screen 1 Use your keyboard to enter the number of a menu option such as 1 Personal Information 2 Income Menu 3 Adjustments and so on 2 Use the Form Finder section to search for or to click on a particular form 3 Double click a line item on the 1040 Form in the large white area of the screen Adjustments While entering a client s return you may have to access the Adjustments Menu Below is a brief discussion of the menu options found in the Adjustments Menu 1 Educator Expenses Teachers and other educators can deduct as much as 250 that they spent to purchase classroom supplies 2 Business Expenses of Reservists National Guard and reserve members may qualify for special consideration Those who travel over 100 miles from home to perform services as an armed forces reservist get to claim related business expenses on Line 24 of Form 1040 after completing Form 2106 3 Health Savings Account Form 8889 If contributions other than employer contributions were made to your client s health savings account your client may be able to take this deduction To enter additional tax return data you can use this screen in a number of ways Enter a Menu Option number from your keyboard use FORM FINDER to search for or double click on a particular form in the
22. are also a few other items worth mentioning while discussing the Personal Information Menu Personal Information Menu Other Categories of Personal Information The final option to be discussed in the Personal Information Menu is the Other Categories option Allow Another Person to Discuss Return With IRS If the Taxpayer wishes to authorize someone other than the preparer to discuss the return with the IRS then you would enter in the Authorized persons name telephone and PIN Disaster Designation allows you to indicate if your client is a victim of a recent hurricane Katrina Rita Wilma or other qualified natural disaster Military Processing enables you to indicate if your client served or is serving in a Combat Zone Print Date will override your computer s date when printing the tax form The date that you enter will print on the bottom of the 1040 Force System to Itemize Deductions will use the temized Deduction calculation even though this result may be a lower deduction than the Standard Deduction This sometimes can result in a tax savings on the state return or in the case of a Married Filing Separate return choosing this option is necessary when the other spouse has itemized on his or her tax return Are you a Non Paid Preparer Enables you to indicate whether or not you are a non paid preparer and if you are a non paid tax preparer you may choose the non paid category TCE VITA etc from the pick list of choices Once you have exited
23. be displayed Make certain your Internet browser is up and running if you have a dial up Internet Connection Broadband users do not have to have the Internet browser open Click on the Connect button In the white box you will see a description of each action taken through the transmission process When prompted click on the Exit button Step 4 You will see a message that reads You Have Reports to Print From the Electronic Filing Main Menu select item 3 Print Reports Each report you need to print will be marked with an arrow next to the report As a minimum you will have a Transmission Confirmation report This report will list the returns you just transmitted Keep this report until you receive an acknowledgment for the return IMPORTANT If you DO NOT receive a Transmission Confirmation Report your returns WERE NOT TRANSMITTED to LMS TAX Pro You will need to re send your transmission The returns will be processed by the IRS and acknowledged usually in 24 hours The IRS does however reserve the right to wait 48 hours before giving an acknowledgment for the return 160 16 4 Receiving Acknowledgments for Business R e tur NS If returns are transmitted first thing in the morning it is possible to have acknowledgments for those returns the same day However it generally will take 24 hours for an acknowledgment or even up to 48 hours in certain circumstances To receive acknowledgments follow the steps below Step 1 On the T
24. correct the first Reject Code this will take care of the others as well However this is not always the case Remember if you correct a rejected tax return and you are ready to submit the return again DO NOT use the Retransmit option in the LMS TAX Pro electronic filing menus You will need to start with option 1 Transmit Electronic Return s from the Indirect Main Menu or the Direct Electronic Filing Menu and ADD the corrected return to the Transmission Table 116 7 14 Checking Client Status To check the return status of a client or to follow up on a Bank check select Client Status from the LMS TAX Pro Main Menu or you can simply RIGHT CLICK on most any screen while in the program Type in the Client s social security number and press the lt Enter gt key At the top of the Client Status menu you will notice the taxpayer s personal information along with pertinent information regarding the return Below the personal information is a list of nine 6 tabs The Summary tab contains most of the information you will need to know about your client After the Transmission Summary the next item listed on the Summary Tab is the IRS Code The IRS Code will display either Accepted or Rejected after the return has been acknowledged by the IRS Next to the IRS code is the Debt Code If the taxpayer owes the government or any other financial institution money the Debt code will appear with FMS debt or IRS debt If the Debt Indicator show
25. have strange characters and lines Solution From the LMS TAX Pro Main Menu select the Print Menu Choose Download Computer Fonts A series of yellow bars will appear on your screen After the fonts have finished downloading re start your computer Once the computer is re started the strange characters and lines will disappear 124 Printer Troubleshooting Continued Problem 2 When printing a tax return the forms do not have any lines Solution Same as above Download Computer Fonts and then re start your computer Problem 3 The printer will not print tax returns Solution Make sure the printer is turned on Check that you have selected your printer inside the printer setup menu From the LMS TAX Pro Main Menu select Configuration Choose Printer Copies Setup and then select Printer Setup Make sure your desired printer is displayed for Type of Tax Printer If the printer is selected you may need to re select the printer again Click on Type of Tax Printer and then re highlight your printer Select OK once you are finished Problem 4 When printing a tax return I receive an error message stating Printer Spooler Error Solution The printer needs to be selected or re selected Follow the steps above to re select the printer 125 CHAPTER 9 Check Printing and Bank Products Printing a Client s Check 9 1 Voiding a Client s Check While Printing Checks 9 2 Transmitting Your Check Records to LMS TAX Pro 9 3 What to Do if You Need a Check
26. having to make a call to the Technical Support Center Click the Support Life Saver icon in the center of the LMS TAX Pro Opening Screen The LMS TAX Pro Support Options screen offers you a variety of methods to resolve issues not only with the LMS TAX Pro program but with your client s returns as well Online Help Center Clicking this icon takes you directly to a page of the most frequently asked questions Support Site This is a direct link to the Support Page of our Web Site You can access our Video Tutorials Questions and Answers section links to helpful web sites and Ask an Expert which allows you to complete a form and request assistance from a Technical Support Technician Community Message Board The message board is available only to LMS TAX Pro Users Before you can gain access you must register Click on the Community Message Board icon and then click Register at the top of the page Members of the message board are able to post questions and interact with other LMS TAX Pro Users You may post questions concerning technical or tax issues and even exchange ideas on how to improve and expand your practice User Manual Within the software User Manual you will find the answers to many of your questions using a Key Word search or by using the Index Email Support This option gives you a pre addressed e mail template for you to use when requesting e mail support from LMS TAX Pro Most e mails are answ
27. if you use more than one computer in your office for your LMS TAX Pro program and the computers are NOT connected by a network you will need to designate one computer as your Transmitting Computer This machine will be used to transmit your returns to the IRS and to LMS TAX Pro by using your internet connection Your other computers will become Workstations In order to transfer client data from your Workstations to your Transmitting Computer so that you can electronically transmit your clients returns you will need to Backup your Electronic Receipt Data from your Workstations and Restore the Electronic Data to your Transmitting Computer To do this select Utilities from the LMS TAX Pro opening screen Select Advanced Utilities Select option 3 Backup Electronic Receipt Files You will be prompted to insert a disk into your computer s backup drive and the electronic files will be copied Then remove the disk take the disk to your Transmitting Computer select Utilities Advanced Utilities and then choose option 5 Restore Electronic Receipt Files If this is the first time that these particular returns are being transmitted they will automatically show up in your LMS TAX Pro Transmission Table If they do not automatically show up you may add them to the Transmission Table as described in Chapter 7 4 1 0 5 x J R emovin g a CI fen t S R e tur N Another important option found in the Utilities Menu Advanced Util
28. list or double click a line on the 1040 Form to take you to its Menu 75 4 Moving Expenses Form 3903 This option in the Adjustments Menu allows you to enter any Moving Expenses that your client may have Form 3903 is used to calculate your client s moving expenses to a new principal place of work within the United States or outside of the United States There are two tests that need to be met The first test is the 50 mile test The distance between your client s new job location and your client s former home must be at least 50 miles more than the distance between your client s former home and your client s former job location The second test is that your client must be a full time employee for 39 weeks during the 12 month period immediately following your client s arrival 5 One Half of Self Employment Tax LMS TAX Pro software will automatically calculate this figure as an adjustment to income 6 Self Employed SEP SIMPLE and Qualified Plans To qualify for this adjustment your client must have self employment income Self employment income consists of net profits from a Schedule C or Schedule F or guaranteed payments from a partnership Additionally your client must set up and fund a qualified retirement plan such as a SEP IRA SIMPLE IRA or Keogh type pension plan SEP SIMPLE and qualified plans offer you and your employees a tax favored way to save for retirement You can deduct contributions you make to th
29. option to _Print the Network Setup Instructions You will need these instructions to complete the network setup Workstation Computer Setup step 4 set the System Network Configuration Menu on the Workstations to reflect the use of a network The Workstation Computer should resemble the following Are You Using a Network YES a Transmitting Computer No Electronic Drive This is the drive letter used to map to the C drive of the Transmitting Computer for example N This Computer s Network Name This is the Network Name of the Workstation Computer This Computer s Workgroup Name The correct Windows Workgroup for your network a Backup Recall Returns from the Electronic Drive YES 148 Workstation Computer Configuration Step 5 On the Workstation Computer select Electronic Drive A box will appear asking you to Please Select a Drive On the instructions that printed from your Transmitting Computer look for a box in the middle with a name and a drive letter Does that name and drive letter match anything listed in the box If yes then highlight it and click OK If No select Transmitting Computer Not Found Above Step 6 The Network Utility Box will appear Look at the instructions again and focus towards the bottom of the page The box on the instructions resembles the box on your computer screen Put the same information in your computer that is listed
30. report will be automatically sent to your printer and the indicators will clear 115 7 1 2 Ac C epted R etur NS You will receive various reports from LMS TAX and the IRS When you receive reports a screen prompt advises you that there are reports to print Select Print Reports from the Indirect Main Menu or the Direct Electronic Filing Menu The reports to print are marked on the Print Menu One such report will be a listing of your accepted electronically filed tax returns Mail Form 8453 If you and your client chose NOT to use the Self Select PIN option for electronic filing you will need to mail the Form 8453 When the return is accepted and the DCN has been entered on the Form 8453 mail it to the IRS You have 24 hours after the return is accepted to mail the Form 8453 7 13 R ej ec ted R e tu FNS From time to time you will file electronic returns that will be rejected by the IRS This may be due to anything from incorrect Social Security numbers to incorrect birth dates for dependents to incorrect spelling of last names If your return rejects your first task is to interpret the IRS Reject Code and then correct the return After the information on the return has been corrected you may electronically resubmit the return up to five more times before you must mail a paper copy to the IRS More often than not you will see more than one Reject Code on a report for a rejected tax return A good portion of the time if you are able to
31. that it must be 5 digits and that it cannot begin with a zero You will then be asked to enter additional Preparers or to Exit the preparer input and continue 23 Step 4 The next series of screen prompts are for the bank setup Left click the name of your bank to highlight it and click OK If you are using Bank Products you have the option to print checks in your office if you wish In the RAL Bank Setup Menu make sure that the option for Check Printing Handled By is set to Tax Office If you are located in New York City answer YES to the question so that your Bank Applications will be correct for an office located in New York Preparers located in New York City will not be able to use the Chase Bank application that can be printed by LMS TAX Pro You will have to use the manual applications provided by Chase Step 5 The next step for configuration is the Fees Table The program will calculate the tax return preparation fee from the information you enter in this table To enter the fees for a particular form left click the row that corresponds to the form and when the screen prompt appears enter your fee For example to enter the fee for the 1040 left click row 16 for Form 1040 and enter the fee when prompted If you are charging the same fee for a consecutive range of forms click the Set Range button Enter the beginning and ending number of the range and the fee to be charged on the screen prompts If you wish to increase or
32. the Check Print Menu here you will see an alert that you need to Send Check Records 133 you will see a screen similar to the one below click Transmit to send your check records to LMS TAX Pro you will receive a confirmation report stating that Check Records were received again it is vital to send your Check Records to LMS TAX Pro as soon as possible so that your preparer fees can be deposited into your account 134 9 4 What to Do if You Need a Check Re Issued There may come a time when you inadvertently answer YES that your client s check printed correctly when in fact it did not To have your checks re issued or re hung so that you may print them correctly follow these steps 1 Access the Check Printing Menu from the Indirect Main Menu 2 Select option 3 Void Checks 3 Enter the check number to void as given by the RED number on the check 4 Answer YES to the on screen question for each voided check 5 Once you have finished entering the check numbers you wish to void press the lt Esc gt key 6 Send your Check Records as described in Section 9 3 7 Write VOID across the face of each voided check using a felt tip marker or dark ink pen 8 Print the Check Rehang Cover Page from the Check Print Menu fill out the requested information on the Check Rehang Cover Page and fax the completed Check Rehang Cover Page and the voided checks to 706 868 0263 attent
33. up a Tax Program password that will require entry of a password before the LMS TAX Pro program can be opened Configuration Main Menu Advanced Configuration Require EIC Due Diligence The EIC Due Diligence checklist is set to YES If the taxpayer is eligible for Earned Income Credit EIC you will automatically be taken to the Due Diligence Checklist This question should always be answered YES Changing this answer to NO could cause you to be in violation of the IRS s EIC Due Diligence Requirements Backing Up the Configuration Select Configuration Utilities from the Configuration Main Menu Select Copy Configuration to Disk If you have multiple computers in your office and you are not networked use the Restore Configuration from Disk option in Configuration Utilities to install the configuration to your other computers The configuration back up will be configured for workstations in your office Delete All Tax Returns Off System This option in Configuration Utilities will allow you to use your computers to familiarize yourself and your preparers with LMS TAX Pro before you process live returns When your training is completed make this selection to delete the practice returns from your system 3 3 Company Se tup 7 Chan gin g F ir m I n fi orma ti ON From the LMS TAX Pro Opening Screen select the Configuration Menu The first item in the Configuration Menu is Option 1 Firm ERO Preparer Setup
34. used when he or she works at home provided the usual requirements for business deductions is met Subscriptions Your client can deduct the cost of professional trade or business publications and newspapers Telephones The installation and monthly charges for the first telephone line your client brings into his or her home is not deductible But if your client has a second line for business or you can determine the cost of specific long distance or local charges for business calls your client can deduct those amounts even if he or she does not qualify for the home office deduction Work clothes and uniforms These are deductible only if your client must wear certain items as a condition of employment and they are not suitable for normal wear for example firefighters delivery people waiters health care workers and others required to wear specific uniforms may claim the deduction but not those who are merely required to conform to a dress code or to dress in a certain style or color If your clothing qualifies so does the cost of upkeep and cleaning Your client can also deduct the cost of protective clothing or items like hard hats safety glasses work gloves steel toed boots etc Other deductions Here are a few more potentially deductible items that are often overlooked breakage fees business cards business liability or malpractice insurance for wrongful acts committed on the job damages for breach of employme
35. you have an Employer Identification Number EIN enter it on this screen Do not enter your Social Security Number SSN in this field Press the lt Enter gt key after filling in each field this will take you to the next line For example enter the Name of your Firm and then press the lt Enter gt key to get to the Name of Contact field after typing the Name of Contact press lt Enter gt to enter the Street Address and so on 21 IMPORTANT When entering the Name and Address of Your Firm please do not enter apostrophes pound signs dollar signs periods or any other punctuation characters Because of the IRS restrictions for electronic filing these characters are not accepted in a Company or Firm name If you attempt to place any punctuation characters in the Firm Name you will be reminded to remove them before you can continue After your company information has been entered click the Continuel button You will be at the Firm Information Setup Menu Review your entries for accuracy and click on a menu option to make any necessary changes or corrections The Group Code option is for our local Rhodes Computer Services Inc offices and can be left blank You may now EXIT the Firm Information Setup Menu When entering Firm Information please do not use punctuation characters this is due to IRS electronic filing restrictions 22 Step 3 The next screen asks you to enter your preparer information begin
36. 00 too much social security tax may have been withheld Your LMS TAX Pro software will automatically calculate the excess FICA tax for you and place the amount on the line for this menu option in the Payments Estimates amp 2210 Menu However you have the ability to change the amount on this line by clicking on this menu option and plugging in the desired figure 10 Shareholders LT Gains Form 2439 The tax paid on Undistributed Long Term Capital Gains by the client s Mutual Fund or REIT is shown in box 2 of Form 2439 11 Federal Tax Paid on Fuels Credit Form 4136 Gasoline tax credit Your client can claim a credit for any federal excise taxes paid on gasoline and special fuels like undyed diesel heating oil liquefied petroleum gas and compressed natural gas when your client uses the fuel for certain purposes for farming for nonhighway purposes of trade or business for intercity local or school buses or for export or foreign trade Your client can t claim this credit for any personal nonbusiness use so forget about claiming it for the snowmobile or pleasure boat The credit is claimed on Form 4136 Credit for Federal Tax Paid on Fuels It is refundable meaning that the IRS will pay it to your client even if there is no tax liability for the year 12 Health Insurance Credit Form 8885 There is a health coverage credit available to certain individuals who receive a pension benefit from the Pension Benefit Guaranty Corporation
37. 082 8271 8821 8275 Form 8082 Use Form 8082 to notify the IRS of any inconsistency between your tax treatment of an item and the way the pass through entity treated and reported the same item on its return Also use the form to notify the IRS if you did not receive Schedule K 1 by the due date for filing your return Form 8271 Form 8271 is used to report the tax shelter registration number the IRS assigns to certain tax shelters required to be registered under section 6111 and to report the name and identifying number of the tax shelter Form 8821 Tax Information Authorization form Form 8275 Disclosure Statement Form 8275 Disclosure Statement is used by taxpayers and income tax return preparers to disclose items or positions except those taken contrary to a regulation that are not otherwise adequately disclosed on a tax return to avoid certain penalties 13 Application for ITIN W 7 Application for IRS Individual Taxpayer Identification Number for use by individuals who are not U S Citizens or permanent residents 14 1040 Override The 1040 Override selection allows you to manually plug in figures on your client s return For example if a particular form is not supported by LMS TAX Pro software the figure may be entered from the keyboard and the tax return will still calculate correctly However if you must use the 1040 Override the tax return cannot be filed electronically This option should only be used as a last res
38. 44 4 2 Downloading Updates Through the Program Periodically during the Tax Year LMS TAX Pro will produce updates to the Federal and State Packages These updates will correct minor problems in your software that may be discovered during the course of the Tax Season You will have the option to download these updates or patch files through the Updates Menu in your program or from the LMS TAXpro com Support Site Because it s easier and more straightforward we strongly encourage you to utilize the Updates Menu within the program The update download and installation process is easy streamlined and very user friendly To download updates from the Internet make sure you have a valid Internet connection established and if you have a dial up Internet connection please have your web browser running in the background If you have a dial up Internet connection you will need to first dial your Internet provider and connect your computer to your Web browser If you have DSL or a cable modem your Internet connection is always on Click Updates from the LMS TAX Pro Main Screen and then click Download Install Updates Using C Click the Updates Icon at the top of the screen click 10 Updates from the menu or enter the number 10 in the Enter Option box 45 If this is your first time downloading updates you may see a Windows Firewall Screen If the Windows Firewall Screen or Windows Security Alert DOES appear
39. Computers click the START button and click Network or Network Places depending on your operating system 2 An icon for your Transmitting Computer should appear on the screen if not 3 Double click on the word Entire Network and then double click on Microsoft Windows Network 4 Double click on your Workgroup Name probably MS Home 5 An icon representing your Transmitting Computer should now appear Note For XP users you may have an option on the left hand side that reads View Workgroup Computers if so click on this option All of the computers on the network should appear 6 Double click on the icon for the transmitting computer to verify that you can access that computer from this Workstation If you can access that computer a list of folders and files should appear on your screen 7 If you do not see the Transmitting Computer or if you get an error message when you double click on the Transmitting Computer s icon move to another Workstation and repeat steps 1 through 6 8 If you are still unsuccessful you will need to check all of your network settings computer hardware and cables to make sure everything is in working order If you need assistance in doing so you will need to call your local computer or network company to get your network set back up Please note that if the computers on your network cannot see communicate with each other in your Windows en
40. IRS 7 If you wish to transmit returns directly to the IRS you will first need to set your LMS TAX Pro configuration for Direct Filing If you have a valid and current ETIN Electronic Transmitters Identification Number and RS password you are eligible to transmit directly to the IRS To set your LMS TAX Pro configuration for direct filing do the following E From the LMS TAX Pro opening screen select Configuration E From the Configuration Main Menu select Electronic Filing Bank Setup From the Electronic Filing RAL Bank Setup Menu select Direct Electronic Setup 110 First you will need to select option 2 Filing Direct to IRS and answer Yes to the question Are You Going to File Direct to the IRS Note that a Dial Up Modem is no longer supported by the IRS You must transmit all returns over a Secure Internet Connection You will be prompted to download and install a third party Secure Communications Program You MUST install this program on the Communications Computer in order to file direct to the IRS Next enter your ETIN User ID Password and Current IRS Processing Site example shown below Once your Secure Communications Program has been installed you have entered your ETIN ID and Password and you have selected the Current IRS Processing Site you may return to the opening screen From the LMS TAX Pro Main Screen select the option for Electronic Filing then select the option for Direct Electronic Filing to t
41. LMS TAX Pro Software Manual for use with the 2008 LMS TAX Pro Income Tax Preparation Program 2 Before You Call at Rhodes Computer Services LMS TAX Pro Software our wish is to provide you with all of the tools you should need to assist you in using your LMS TAX Pro income tax preparation software In addition to this Operating Manual we provide you with the following avenues of support Help Menus By pressing the lt F1 gt key from any LMS TAX Pro Menu you will bring up the LMS TAX Pro On Screen Help that can be viewed while the program is open Tutorial Videos Another addition to Support are the LMS TAX Pro Tutorial Videos These videos are step by step instructions on how to use LMS TAX Pro in your office These videos are great training tools for yourself and also for your employees You can find the videos on our website by clicking the Support tab and then Tutorial Videos LMS TAX Pro Community Message Board The Message Board is only for LMS TAX Pro Users which means you will need to register with the Message Board before you can gain access to it Go to www LMS TAXpro com support and click on the Message Board link When the Message Board displays click on Register in the top left corner You will be asked some basic information about you and your company this is so we can verify that you are a LMS TAX Pro User In less than 24 hours you will have access to the Message Board This new feature will be a big asset to you and
42. Master Report within LMS TAX Pro Select Reports from the LMS TAX Pro Main Menu Choose Master Report Inside the Master Report menu choose Specialized Reports Selecting Specialized Reports brings up the Specialized Master Report Menu You can customize the Master Report by clicking on Type of Client Return Client Payment Status Preparer Number Date from when the return was completed and the Type of Master Report Detailed Secure Summary or Mailing Labels for those selected clients Example To see a complete detailed list of all of your clients enter the Date from 01 01 2009 to 12 31 2009 This will capture all of your clients for the year Next choose Detail for the Type of Master Report When you are satisfied with the selections choose Print Master Report Using Above Info This will print the report with all of the information you have selected 154 CHAPTER 15 The Client Organizer The Client Organizer Pro Forma 15 1 155 15 1 The Client Organizer Pro Forma A Pro forma or Client Organizer prints pages of information that follow the IRS forms but in a format that is more readable for your clients Another major feature of a Pro forma Organizer is that it contains data from the previous year and a column to enter the current year s data These can be mailed or used internally for year end planning input sheets etc To begin the process of entering your client s data in the Client Organizer click Print from th
43. NO click the menu option again to return it to __YES if you wish Configuration Main Menu Advanced Configuration Database Management This option allows you to identify and create activities or special considerations that you want to track for your clients For example your client needs to file an extension Make Activity 1 EXTENSION When your client comes in you can enter the basic personal information in the program Right click on any screen in the program and select Database Management When the menu is displayed click on EXTENSION Later in the tax season when you are ready to file the extensions go back to the Database Management screen and print the extension report You will have a list of all of your clients that require an extension to be filed If you are selling insurance or investments or have other business activities list them as an activity If you generate a lead with the client right click and highlight the areas of interest This will remind you that you need to contact the client about the other services offered by your firm This function also allows you to print mailing labels for client mailers Configuration Main Menu Advanced Configuration Passwords You can enter a password for each of the ten 10 options in the LMS TAX Pro Opening Screen 1 Tax Returns 2 E File 3 Print 4 Business 5 Client Status 6 View Returns 7 Configuration 8 Utilities 9 Reports 10 Updates You can even set
44. Re Issued 9 4 126 9 1 Printing a Client s Check Ifyou have applied to use Bank Products with your LMS TAX Pro software RAL s Bonus Deposits etc and you have chosen to print checks in your office you will need to become familiar with the check printing process Important There may come a time during the Tax Season that your LMS TAX Pro acknowledgments will indicate you have checks to print however the menu item for Check Printing will not appear in the Indirect Main Menu If this is the case BEFORE CALLING TECHNICAL SUPPORT try the following From the Main Menu select Configuration Click Electronic Filing Bank Setup Click 2 RAL Bank Setup Menu Click 1 Bank Used for RALS RESELECT your correct bank from the available choices ii Make certain that the option in the RAL Bank Setup Menu for Check Printing Handled By reads Tax Office Return to the Check Printing Menu and you should now be able to print your checks Aligning Your Printer BEFORE PRINTING ANY CHECKS we recommend PRINTING A TEST CHECK This will make sure that your printer is properly aligned and that the numbers amounts and signature print correctly on your check stock To access the Check Printing Menu begin at the LMS TAX Pro Opening Screen and left click the option for E File make sure you are at the Indirect Main Menu next click the option for Check Printing The first opt
45. S TAX Pro Below is what the menu should look like if you are NOT using a network but you are on the computer used to transmit electronic returns the transmitting computer Below is what your Network Configuration Menu should look like if you are using a network AND if you are on the computer that you will be using to transmit your electronic returns Below is what your Network Configuration Menu should look like if you are using a network AND if you are on a workstation computer that does NOT transmit your electronic returns Notice the letter of the drive that is mapped to the Transmitting Computer 41 3 17 Path Menu In the Configuration Main Menu the option for the Path Menu lets you change the drives to which your tax returns will be backed up as well as making the choice whether or not to even back up your returns although we highly recommend that you do LMS TAX Pro backs up your tax returns to your selected Backup Path one at a time as you exit each tax return ONLY IF you have the question Do You Want to Backup Returns answered YES We strongly suggest you leave this question set to Yes You may change your Secondary Backup Path to a USB flash drive or any additional hard drive by clicking the option for Secondary Backup Path and selecting the proper drive letter At this time LMS TAX Pro WILL NOT automatically back up returns to a CD The automatic backup routine will work only with ZIP flash
46. X digit number If you have the numbers listed above you will need to transmit two batches of TEST Returns to the IRS before you are allowed to file LIVE returns The IRS Test Returns are already included in your LMS TAX Pro software To transmit the TEST returns do the following From the LMS TAX Pro Opening Screen select E File Choose the option for Direct Electronic Filing to the IRS Choose the Option for Direct Filing Test Returns Choose the Option to Send the First Three Test Returns to IRS Allow the transmission of the First Three Test Returns to complete and return to Direct Filing Test Returns Menu Immediately Choose the Option to send the second Transmission the transmissions MUST be sent BACK TO BACK within minutes of each other Twenty four hours from your two transmissions you will need to receive your acknowledgments from the IRS To receive acknowledgments from the IRS you will need to do the following From the LMS TAX Pro Opening Screen select E File Choose the option for Direct Electronic Filing to the IRS Choose the option to Receive IRS Acknowledgments Only If there are any acknowledgments from the IRS they will be picked up automatically If you should receive acknowledgments you will need to go to Print Reports and print out the IRS acknowledgments Once you have received your acknowledgments from the IRS you will need to call your IRS Service Center and let them know that t
47. age interest real estate taxes insurance repairs and maintenance and utilities For the tax savings on indirect expenses the program applies the percentage of the home used for the business to household utilities repairs taxes homeowner s insurance and the like Basic telephone service to your client s home is not deductible Business related long distance charges or a second phone line dedicated to the business are 70 The Income Menu Capital Gains and Losses Schedule D Use this option to report stock transactions and other sales of property Form 1099 B is used to report proceeds from stock transactions Schedule D Menu Other Schedule D Data In the Edit Capital Gain Loss Transaction Menu the button for Other Schedule D data will take you to the menu entries for Loss Carryovers from the previous tax year and the Sale of Main Home Worksheet Income Menu Installment Sale Form 6252 An installment sale is when your client sells an asset to someone who will pay in payments rather than all at once up front If the payments extend over more than one tax year your client may be able to report the gain using the installment method which would allow him or her to claim only a portion of the total gain each year based on the amount actually received that year Installment Sales are reported on Form 6252 and are frequently used when businesses or business assets are sold Income Menu Other Gains and Losses Forms 4797 amp
48. ally save your client more money The credit is claimed on Form 1116 Foreign Tax Credit 5 Child Tax Credit Your LMS TAX Pro software will automatically calculate the Child Tax Credit if it applies to the tax return Within the Child Tax Credit Menu you have the option to adjust the Taxable Earned Income for the Form 8812 Additional Child Tax Credit You also have a menu option to enter any additional amounts for Railroad Employees Tier tax which is withheld from pay 6 Retirement Savings Contribution Credit Form 8880 In an effort to encourage lower and moderate income workers to set money aside for retirement Congress created as part of the Tax Relief Act of 2001 a temporary new tax credit for contributions to IRAs 401 k s and other employer sponsored retirement plans 7 Other Credits General Business Credit Form 3800 In order to provide some uniform rules about dollar limitations carrybacks and carryforwards and other technical details many of the federal income tax credits available to businesses are lumped together and treated as components of the general business credit Residential Energy Credits Form 5695 Beginning in 2006 residential energy credits can be claimed on Form 5695 Nonbusiness energy property credit Maximum credit of 500 Must be new property and installed in or on main home Total of 1 10 of qualified energy efficiency improvements insulation exterior windows and skylights up to 2 000 exterior doo
49. and the IRS When you receive reports a screen prompt advises you that there are reports to print Select option 3 Print Reports from the Indirect E File Main Menu returns filed through LMS TAX Pro or option 4 Print Reports from the Direct E File Main Menu returns filed directly to the IRS A set of small arrows will indicate which reports need to be printed Figure 1 A small set of arrows in this area will indicate that you have Reports to Print select the Print Reports option to move to the Indirect Print Menu Figure 2 showing the Menu Options for which you might have reports to print select any of the menu options that show indicators or arrows in order to print your report for that particular item 114 The following is a brief description of some of the reports Transmission Confirmation This report is received after every transmission to the LMS TAX Pro Computer Center Compare this report to your list of returns transmitted to verify they have been received by LMS TAX Pro IRS Acknowledgments This is your list of acceptances and rejections from the IRS Reject codes are listed for the returns that rejected Use these codes to locate the error in the return and prepare it for retransmission State Acknowledgments This is your list of state acknowledgments for your electronic state returns Bank Authorizations This is a list of check print authorizations received from the bank A list of rejection codes will be pr
50. arison of last year s return with this year s return Clicking on a form in the View Results list and then clicking the OK button will allow the form to be viewed on your computer screen Take note of the options in the top left corner of the screen File View Window Help gt Clicking on File will bring up the menu to Print the entire form or to print only the page showing on the screen Current Page gt Clicking on View will allow you to Zoom In on the form to make it larger on your screen or Zoom Out to make the form smaller You may adjust this setting to your liking gt Clicking on Window allows you to view the next page of the form on the screen or if the form has more than 2 pages you may select the page you wish to view 5 2 Marking the Return for Electronic Filing This is the first step in the electronic filing process If the return is not marked electronic the program will consider this to be a non electronic return and it cannot be pulled into the electronic filing tables 95 You will then be taken to the Electronic Filing Information Screen When the Electronic Filing Information Screen is displayed you will be asked to select the type of return you wish to electronically file If you choose a Refund Anticipation Loan Bank Bonus Bank Pass Thru or RAL Direct you will be asked if the taxpayer is associated with the Armed Forces as shown below You will need to select one of the c
51. ash gifts over 500 for the year you must complete and attach to your client s tax return IRS Form 8283 If any single gift or group of similar gifts was valued at over 5 000 you must also get an appraisal of the item from a qualified appraiser 5 Casualty and Theft Loss Form 4684 This menu option in Itemized Deductions is the entry point for Casualty and Theft Losses If your client has suffered the results of a theft accident fire flood or some other casualty during the year he or she may be able to deduct some of the unreimbursed losses 6 Deductions and Job Expenses Subject to the 2 Limit Deductions Subject to the 2 Limit Tax preparation service fees and IRS audits a Union dues Safe deposit rentals Investment Fees and Expenses Employee Business Expense Form 2106 If your client has expenses that are not reimbursed by his or her employer you ll generally have to claim the nonreimbursed expenses on Form 2106 Then the total amount of the expenses from the 2106 is transferred to Form 1040 Schedule A Itemized Deductions The IRS gives employees the opportunity to claim some tax deductions if they spend money on the job e g on business meals and entertainment local transportation gifts travel education supplies tools uniforms and other customary business expenses so long as the expenses are considered reasonable and meet certain requirements Other expenses If your client has expenses that are not reimbursed
52. at any changes made to dependent information has been updated 143 CHAPTER 12 Pulling Prior Year Data How to Pull Prior Year Data 12 1 Prior Year Path Settings 12 2 144 12 1 How to Pull Prior Year Da ta When a client from last tax season comes into your office to have this year s tax return prepared your LMS TAX Pro Program gives you the option of pulling the client data forward from last year When you enter the Social Security Number of the Primary Taxpayer you will see the following question appear on the screen Answering Yes will pull forward all of the client information from last year s tax return This includes filing status dependent information W 2 and employer information itemized deduction information Schedule C information and so on LMS TAX Pro does not pull last year s data from all clients all at once The data is pulled only when you enter an individual primary taxpayer s Social Security Number from last year into the 1040 program You must also choose to answer YES to the question to use the information from last year 12 2 P rior Year P a th S e tti n g S Ifyou were a LMS TAX Pro user last year and if your Prior Path is set correctly within your Path Menu Configuration gt 7 Path Menu gt 6 Prior Path all of last year s data for the return you are working with will pull forward If you have trouble pulling information forward in your LMS TAX Pro software try the following befor
53. at you made to your Client Letter will now print for all of your Client Letters to follow We recommend that you edit the text only DO NOT change the information contained in lt brackets gt The information in brackets is computer code and tells your LMS TAX Pro software what specific client information to print on the Client Letter 38 3 15 Mailing Addresses Option 4 Edit Addresses in the Client Letter Menu allows you to work with the mailing addresses for Federal and State returns For example select Change Mailing Addresses Choosing this option brings up the State Mailing Addresses pre programmed into LMS TAX Pro Left click the state of your choice and then click the OK button 39 highlighting the state of your choice and clicking the OK button brings up the following menu Not only does this menu allow you to change and update mailing addresses but will give you the proper mailing addresses of any non resident or part year resident states that you may encounter This is especially useful if you prepare a tax return involving multiple states that need to be mailed 40 3 16 System Network Configuration In the Configuration Main Menu Option 6 System Network Configuration Menu lets you change your software settings to allow LMS TAX Pro to run in a network environment This menu option also allows you to indicate whether or not the computer you are working with is the computer that is used to Transmit to LM
54. ategories before you can proceed In the case of a balance due return you will be asked the following question If the return is for a mailed check or a bank product all of the bank information will be pulled in automatically If the return is a direct deposit you will be prompted to enter the Routing Transit Number RTN the account number the type of account and the bank name To reduce the possibility of an error you will be prompted to enter the RTN and the account number twice Important Make sure you get the RTN from a check and not a deposit slip Some banks use an internal routing number on their deposit slips rather than their RTN Your client s refund will be delayed for several weeks if the proper RTN is not transmitted to the IRS 96 When you exit the Electronic Filing Information Screen the E File Menu will be displayed Use this screen to make changes to the electronic filing information or to remove the clients return from electronic filing Menu option 11 Other E File Information allows you to enter or change certain E File information as shown below If the return is self prepared be sure you change from PREPARER to SELF Important Marking the Federal return electronic does not make the State return electronic You must mark the state portion of the return electronic from the appropriate state program menu Practitioner PIN The IRS has implemented a completely paperless tax return for clients throug
55. ation where to put this dollar amount from the K 1 onto the Form 1040 In other words according to the IRS instructions for the K 1 there is more than one correct choice on the Form 1040 for the dollar amount on that particular line of the K 1 The LMS TAX Pro software cannot make the determination If you have questions regarding K 1 input please visit the IRS website at http www irs ustreas gov for specific line instructions for the K 1 Income Menu Farm Income Schedule F Farmers must report their income from farming in a variety of different ways If your client is in the trade or business of farming your client must complete and file Schedule F along with IRS Form 1040 This Schedule F is very similar to Schedule C and most of the expense deductions tax credits and gains and losses are computed using the same rules Gross income from farming is income from cultivating the soil or raising agricultural commodities It includes the following income from operating a stock dairy poultry bee fruit or truck farmii income from a plantation ranch nursery range orchard or oyster bed ti crop shares for the use of your land gains from the sales of draft breeding dairy or sporting livestock Gross income from farming includes farm rental income and expenses reported to the IRS your share of a partnership s or S corporation s gross income from farming your share of distributable net income from farming of an estate or trust
56. batch for Bank Products and a second batch for Direct Deposits and E mails Simply transmit all your files in one batch to LMS TAX Pro LMS TAX Pro will maintain copies of all your electronic returns here on file In the event of a computer crash or any similar unforeseen circumstance we can send you a complete copy of all of your electronic returns you ll be back up and running in no time Transmitting your returns to LMS TAX Pro will enable us to discuss with you over the phone any questions you may have concerning a particular file By having the transmission file in house we can help you correct any reject codes or other errors that may arise Ifnecessary we can re hang your acknowledgments quicker and easier than the IRS often within just a few minutes Steps to E Filing Your Returns From the LMS TAX Pro Main Screen select E File unless you have set your configuration to include Direct Filing you will be at the Indirect Main Menu From the Indirect Main Menu the first option is to Transmit Electronic Return s 105 7 2 Cr ea ting the F ilin g Tabl Select Option 1 Transmit Electronic Return s you will see the following Transmission Table Your table may have a tax return or returns ready to transmit as in the example above or your table may be empty In this section of the manual we will go over transmission of returns that are already showing up in the LMS TAX Pro Transmission Table The next step in
57. by the employer or if the employer does not use an accountable plan you ll generally have to claim the nonreimbursed expenses for your client on Form 2106 Employee Business Expenses Then the total amount of expenses is transferred to Line 21 of Form 1040 Schedule A Itemized Deductions 79 Along with the expenses we ve already mentioned your client can deduct almost any other ordinary and necessary business expense he or she had as an employee Some of the more common ones are discussed below Computers Your client can claim a first year expensing election on a home computer if used more than 50 percent for business otherwise or for later years your client may depreciate the business percentage of the cost Dues Your client can deduct membership fees and dues to professional societies the chamber of commerce boards of trade business leagues civic or public service organizations real estate boards or trade associations if membership helps your client in his or her job however your client can t deduct any portion of the dues that is used for lobbying or political activities Your client s organization should tell the percentage of dues if any that are used for this purpose Dues to airline clubs social clubs or country clubs are not deductible Office furniture used at home Even if your client can t claim the home office deduction he or she can expense or depreciate the cost of a desk chair file cabinets lighting etc that is
58. can be changed if necessary You will need to enter the state tax withheld and the Locality if desired Your cursor should now be blinking at the bottom of your screen At this point you can make changes and corrections to the W 2 input To change or add data to any field on the W 2 screen you can 1 left click with your mouse in the field you wish to change or 2 type in the number that corresponds to that field and press the lt Enter gt key For example to change the state abbreviation code click the drop down beside the state abbreviation or enter 15 from your keyboard in the Enter Option box To change the Federal Tax Withheld left click field number 2 or type the number 2 and hit the lt Enter gt key and so on While the cursor is blinking at the bottom of the W 2 Input Screen you may press the lt Enter gt key to exit to the Form W 2 entry window Here you will have the opportunity to enter a new W 2 or make corrections to any W 2 s that have been previously entered Clicking the Exit button takes you to the Income Menu 67 The Income Menu this mem allows you to enter income information in addition to W 2 income Here you may also make changes and corrections to any previously entered income information by selecting the appropriate menu option Below is a discussion of some of the options found in the Income Menu Wages Salaries Tips W 2 As mentioned before you may use this option to enter additional W
59. ccess the Other States Credit menu 102 You will be asked if you wish to pull forward the Nonresident State income and tax information answer YES to calculate the credit Our client will now receive a tax credit on his Georgia resident state tax return for income taxes that were paid to South Carolina the Nonrefundable Credits Menu leads to the Other States Credit menu 103 CHAPTER 7 Electronic Filing Indirect Filing Through LMS TAX Pro 7 1 Creating the Filing Table 7 2 Transmitting Returns 7 3 Adding Returns to the Table 7 4 Deleting Returns from the Table 7 5 Direct Filing to the IRS 7 6 Direct Filing Test Returns 7 7 Changing from Test to Production Mode 7 8 Retransmitting Returns 7 9 Receiving Acknowledgments 7 10 Reports Printing 7 11 Accepted Returns 7 12 Rejected Returns 7 13 Checking Client Status 7 14 Federal Reject Codes 7 15 State Electronic Filing 7 16 E Filing State Only Returns 7 17 104 7 1 Indirect Filing Through LMS TAX Pro Important All Chase Bank products RAL s Bonus Directs Bonus Deposits Pass Thrus and RAL Directs MUST be electronically filed through LMS TAX Pro What are the benefits to you in filing through LMS TAX Pro rather than filing directly to the IRS Eliminate the hassles of filing early season test returns with the IRS No more worries about obtaining E TINs and Live Transmission Passwords from the IRS No need to break your electronic transmissions into one
60. ceipt will be printed when you Mark a Return as Completed upon exiting the Receipt Menu The LMS TAX Pro program prints a four part receipt on 8120 11 qaper Fees Billing Questions Menu Increment the receipt numbers automatically If you select No you will be prompted to enter a receipt number each time Fees Billing Questions Menu Last receipt number written On a single machine this will be the number of the last receipt written on that particular machine If you are using several non networked machines in your office you may enter a different receipt range on each machine Set this to one digit before the number you wish to have printed on the next receipt If you are on a network you only have to set this number on the Communications Server The workstations will pull their receipt numbers from the Communications Server Fees Billing Questions Menu Recalculate Fees as per Default Fees If you answer this question Yes the fees for each return will be recalculated according to the fees entered in the Fee Table every time you exit the tax return If you answer No the fees will remain the same as they were when you exited the return the first time Fees Billing Questions Menu Bank Transmission Fees This is the fee charged by LMS TAX Pro to transmit your Bank One Chase products Advanced Fee Setup Menu Require Electronic returns to be paid up front This refers to Electronic Mailed Checks and Direct Deposits If you an
61. clock This is called the System Tray and it holds the icons for software that is running in the background If you are not sure which is the correct icon you can hold your mouse cursor over each icon for a few seconds A yellow dialog box will pop up telling you what each icon represents Pass your cursor over each icon until you find the icon for your anti virus software You can then RIGHT CLICK on the icon this will bring up a small dialog box with the option to temporarily Disable or Exit the anti virus software When you are finished with the LMS TAX Pro installation you may then RIGHT CLICK on the icon once again and Enable your anti virus software Insert the CD into your CD ROM drive After several seconds the program should start to load automatically If it does not click on your Windows Start button and then click Computer Find the icon for your CD ROM drive and double click the icon By choosing the EXPRESS installation the default destination drive for the program will be your computer s C drive If you want to install the program to a drive partition other than your C drive choose CUSTOM A list of available drives on your computer will be listed and you may check the box for the desired drive The installation will automatically create a shortcut to LMS TAX Pro on your desktop Once the installation is complete you will be prompted to Restart your c
62. d The check number that will print in this area must match the pre printed number on the check This top portion of the check is the Disclosure area 128 You should only have to align your printer once for the entire Tax Season However if you purchase a new printer during Tax Season we recommend that you print another Test Check with your new printer to make sure that your checks print properly Printing The Actual Client s Check Once you have picked up your acknowledgments and printed your reports from LMS TAX Pro you will need to return to the Indirect Main Menu of the program You will now see that you have a set of indicating arrows pointing to the Check Printing option if the arrows appear select the Check Printing option to open the Check Print Menu if there are no arrows then you have no checks to print the Check Print Menu will allow you to Print a Test Check Void misprinted checks Print your Check Register and most importantly Print Checks for your clients 129 Click option 2 Print Checks and you will see the following questions Click YES to both questions if the information is correct If you are ready to print your checks you will see the following screen We recommend that you enter the number 1 and print ONE CHECK AT A TIME until you are thoroughly familiar with the check printing process This will avoid the delay that you will experience if you have to call LMS TAX Pro Technical Sup
63. d Gross Income AGI deductions and exemptions taxable income Taxes are then calculated based on the amount of taxable income From this initial tax bill allowable credits are subtracted and any additional taxes like AMT Alternative Minimum Tax self employment taxes and payroll taxes on household help are added to arrive at the amount of taxes your client actually owes for the year 2 Income Averaging for Farmers and Fishermen Sch J Beginning in 1998 a special rule was passed to permit farmers and fishermen to average their income over three years This will allow a client who is a farmer or fisherman to pay less in taxes in an unusually good year If your client elects to average farm or fishing income you must complete Schedule J and file it with the Form 1040 The program will figure the current year s tax by entering the amounts requested by the program 3 Tax For Children Under Age 18 Form 8615 If you are filing a return for a child under age 18 who had more than 1 700 in investment income you must compute the child s tax using Form 8615 Tax for Children Under Age 18 With Investment Income of More than 1 700 4 Child s Interest and Dividends Form 8814 If you have a client whose child s income was in the form of interest dividends and capital gain distributions e g from mutual funds and the amount is more than 850 but less than 8 500 you can elect to report the income on your client s own return rather t
64. decrease your fees by a certain percentage for instance to increase all fees by 10 click the Increase Decrease button at the bottom of the Fee Menu Click the Continuel button when you are finished entering your fees in order to move to the next configuration step 24 Step 6 The next prompt asks if you are using a network If you answer No You will be asked if this is the computer you will be using to communicate with RCS You can only transmit from one computer to RCS and the IRS If you answer Yes A warning message will advise you to consult your network administrator before making any entries on the following screens LMS TAX Pro will automatically search your computer network and you will be asked what drive will be used to store all of your electronic information for processing Select the drive of your choice from the list that appears on the screen You will then be asked if this is the Communication Computer answer Yes or No again bear in mind that only ONE computer in your office may be used to transmit and receive data from LMS TAX Pro Below is an example of the System Network Configuration Menu as it would appear for the Transmitting Computer in a typical office network setup Important Before proceeding your computers should already be networked in Windows and should be properly communicating with each other across your network Please note that if your office network is not set up or is not working properly
65. dent state s before filling out the return for the resident state There are generally two pieces of information from the nonresident states that are needed for the resident state tax credit 1 The total income taxed by the nonresident state 2 The taxes usually from the Tax Tables that were actually paid to the nonresident state For example assume we have a client who is a resident of Georgia and a nonresident of South Carolina He has earned a total of 40 000 in wages from all sources 35 000 was earned in South Carolina and 5 000 was earned in his home state of Georgia We first need to calculate the South Carolina tax return because it is the nonresident state On his South Carolina nonresident tax return the income taxed by South Carolina will be 35 000 and the state tax calculated by the program after all adjustments are made will be 443 from the South Carolina Tax Tables Total Income figure taxed by South Carolina 101 In the Georgia resident tax return menu we will select the option for Total Nonrefundable Credits to access the Other States Credit menu The credit for taxes paid to another state is generally a nonrefundable credit Keep in mind that each resident state program may have different menu options to get to the other states credit but the procedure for each state is basically the same Tax from the South Carolina Tax Tables In the Georgia state program select Total Nonrefundable Credits to a
66. does not match the IRS database the tax return will reject if electronically filed You will next have the opportunity to enter Child Care Provider information for the dependent if you wish If you select Yes you will be taken to the Child Care Provider entry screen As with the Dependent Information Entry screen click the New button to enter Child Care Provider information 63 Example of a completed Child Care Provider Information Screen Next the Child Care Provider Edit Menu allows you to make corrections as well as add the Provider s phone number Entering the Child Care Provider s phone number is necessary for California state tax returns 64 Preparer Code Number Once you have completed the dependent information if any you will be asked for your Preparer Code Number This number will identify you or a member of your staff as the preparer for this tax return and will also pull in your Company Information to the 1040 Form Entering a Preparer Code allows the program to print the Company Name and Address on the bottom of the Federal 1040 and other tax forms that require your company name and address If the Preparer Code is left at 0 your company information will NOT print on the tax forms At this point the program will return you to the Personal Information Menu As with the Name and Address Menu you will now have the opportunity to correct any mistakes that you might have made during the previous data entries There
67. e calling technical support From the LMS TAX Pro Opening Screen select Configuration and then Path Menu In the Prior Path option of the Path Menu first make sure that the correct drive letter is present This will be the hard drive of the computer that contains last year s data for example CALMS TAX 2007 07RCSD1 where C is the drive letter on which last year s LMS TAX Pro program is loaded Next if you used LMS TAX Pro last year the directory listed after the letter of the hard drive should be LMS TAX 2007 07RCSD1 Ifyou are converting from another tax software the path directory should be 0O7RCSCNV and NOT the Data Path of the other software package Ifyou are on a network the path directory should be C LMS TAX 2008 07RCSNET 145 CHAPTER 13 Using LMS TAX Pro on a Network Network Overview 13 1 Networking Setup 13 2 Network Troubleshooting 13 3 146 13 1 Network Overview LMS TAX Pro Network Setting up the LMS TAX Pro Network takes only a few moments if your office network is already working properly Please note that if your office network is not properly setup in Windows our LMS TAX Pro technicians will NOT be able to assist you in setting up the LMS TAX Pro Network You will need to contact your network administrator local computer company or network company for assistance if your computers are not communicating with each other through your Windows environment Also not
68. e plan for your employees If you are a sole proprietor you can deduct contributions you make to the plan for yourself You can also deduct trustees fees if contributions to the plan do not cover them Earnings on the contributions are generally tax free until you or your employees receive distributions from the plan from IRS Publication 560 7 Self Employed Health Insurance Deduction Selecting this menu option allows you to enter your client s information for the Self Employed Health Insurance Deduction Worksheet 8 Penalty on Early Withdrawal of Savings This is the penalty your client pays for withdrawing money from a savings plan such as a certificate of deposit CD before its maturity date For instance if your client has a 2 year CD but he or she withdraws the money after only one year the bank may charge a penalty You report the interest income in full but you are allowed to take an adjustment to your client s gross income for the penalty 9 Alimony Paid This is money paid to a spouse or former spouse as a result of a written separation agreement or a court order in a separate maintenance agreement or divorce decree Alimony and separate maintenance payments are taxable income to the receiver and deductible before adjusted gross income for the payer 10 IRA Deduction Your client may furnish you with Form 5498 IRA Contribution Information Form 5498 Box 1 IRA Contributions is for reporting contributions deductible and n
69. e that LMS TAX Pro operates in a peer to peer environment which means that the program must be installed on each computer from the CD Do not install the program on a file server and then distribute the program to each workstation LMS TAX Pro Network Terminology Transmitting Computer the transmitting computer is the computer that you will use to prepare and transmit returns to the IRS The transmitting computer will store all of the tax returns completed on this computer and returns completed on the workstations in a folder called O8NETBCK You may hear LMS TAX Pro technicians refer to this computer as the Communications Server Workstation Computer the workstation computer is a computer used only to prepare returns This computer does not transmit returns to the IRS Once a return has been started on a workstation and then backed up to the network this is done automatically the transmitting computer and all of the other workstations will be able to view and work on this return The workstation computers will map to the transmitting computer Layout the Network Before setting up the Network it helps to draw a diagram of your LMS TAX Pro Network Identify the Transmitting Computer and Workstation s Note that all of your workstations computers will be mapped to the transmitting computer Determine what network drive letter you will be using We recommend using N if it is available Note The Transmitting Computer does not have to be the Office Fi
70. e LMS TAX Pro Main Menu You will now be at the LMS TAX Pro Print Menu Selecting Print Organizer takes you to the Organizer Menu The Client Organizer Main Menu When you select Print Blank Organizer a 17 page Client Organizer is sent to your printer A blank Organizer is designed to be given to taxpayers who have no prior year data produced by LMS TAX Pro software If you have clients entered into a previous year s version of LMS TAX Pro the Client Organizer is designed to pull client data into this year s Pro forma You may then mail the Pro forma to your clients before their visit to your office This will save time for you and your client and help your client with some preliminary planning before the preparation of the tax return To print an Organizer for your client select Print Organizer for Selected Clients Select the client for whom you want to print the Organizer and click OK The Organizer will be sent to your printer If you encounter any problems pulling in last year s client data do the following Return to the LMS TAX Pro Main Menu Select Configuration From the Configuration Main Menu click on the Path Menu Make sure the option for Prior Path is pointing to the hard drive on your computer that contains last year s program data for example C LMS TAX 2007 07RCSDI 156 CHAPTER 16 Business Returns Completing a Business Return 16 1 Business E File Overview 16 2 E Filing Business Returns 16 3 Receiving Acknowledgments For
71. e Number Printing a Client s Chek RE tients ie ies cee N 126 Voiding a Client s Check While Printing CHECKS i vicbieeitii el meta nels 131 Transmitting Your Check Records to LMS TAX PIO ele Salary ae Terni eae lke 132 What to Do if You Need a Check Re Chapter 10 LMS TAX Pro Utilities Topic Page Number Reindexing Your PIGS a EIR E 136 Backing Up and Recalling Client DEN gt EEA T AE E A EET 136 Conversions from Other Software 2 eseeee es 137 Backing Up and Recalling Electronic Receipt Data ceeeeeeee ees 137 Removing a Client s Ret sis cig pehs n AETA 137 Married Filing Separate vs Married Filing Joint Comparison 0008 138 Quick CalCulation cccc ccc ce cece eee ee eee eaeeeeeeeaeenes 138 Sending a Corrupt or Questionable Return to LMS TAX Pro 138 Repairing Database FileSend Man enaa 139 Chapter 11 Amended Tax Returns Topic Page Number Steps for the Federal 1040X cceceeeeeeeeeeeeeeeeenees 141 Chapter 12 Pulling Prior Year Data Topic Page Number How to Pull Prior Year Data 144 Prior Year Path Settings ereenn 144 Chapter 13 Using LMS TAX Pro on a Network Topic Page Number Network OVEIVIOW vii ese itd auen TEAN Araka R 146 Networking Setup cc ceceeeeeee cece eens seen este eeeeeenes 147 Network Troubleshooting 2 ceeeeeeeeeeeeeeeeees 149 Chapter 14 The Reports Menu Topic Page Number Client Reports cccec
72. e and click OK If the drive letter is not present select Transmitting Computer not found above For more information on this process check out the Workstation Computer Setup instructions that are located in the Network Setup Instructions 151 CHAPTER 14 The Reports Menu Client Reports 14 1 Master Reports 14 2 152 14 1 CI fen t R epor ts s To print a Client Report within LMS TAX Pro select 9 Reports from the LMS TAX Pro Main Menu Now select Client Reports This will bring you to a list of over 50 different reports that can be tailored to suit your specific needs To run a report place a check mark in the box next to the report you would like to see For example to see a report on clients who have an upcoming Birthday place a check mark next to Personal Birthday Type in a month and day or the reporting period you would like to start with Press the lt ENTER gt key and type in the ending month and day of the report Now look down at the bottom of the page where it reads Generate Report Type Click on the drop down arrow and select View Print Report Next click the View Report button A message will appear telling you how many clients were found in the selected reporting period Click OK The report will display on the screen To print the report click on File in the top left hand corner and then Print To close the report click the X in the top right hand corner 153 14 2 M as ter R epor ts s To print the
73. e calling Technical Support o Disable your anti virus software Norton and McAfee are the most common types most often this can be done by right clicking the icon for your anti virus program found in your System Tray beside your clock then you will have the option to Closel the anti virus program or to temporarily Disable it Right click your computer s anti virus software icon normally found in the System Tray and then eft click on Disable or Closel o After disabling your anti virus software and you still have difficulty connecting select the option in the Updates Menu for HTTP simply left click in the small circle beside HTTP to place a dot in the circle and attempt to download the requested Updates O If you continue to have difficulty downloading updates place a check in the box for Connect Using Alternate Host and attempt to download once again 48 If you have had no success at downloading updates after trying the previously mentioned changes you may Download a Specific File by returning to the Internet Update Utility Main Menu and selecting the option to Download Specific File Choosing the Download Specific File option will allow you to select a particular update file to download to your computer The file will then automatically install to the LMS TAX Pro software Click the Select button to bring up the list of Updates click the Update of your choice and click OK then clic
74. e tax return to file separately as a married couple after your clients have filed a joint income tax return The usual reason is that your clients discover that they would have received a larger refund if they had done so Unfortunately once the due date of the return has passed they can t change a joint tax return to married filing separate returns That s the law They CAN change the returns before the due date but not after 1 0 7 Qu i Cc k Ca I cu la ti On The Quick Calc option in the Utilities Menu allows you to quickly input basic information for a client in order to closely estimate an amount of refund or balance due The Quick Cale option is recommended for simple returns only and should be used only to get a feel for what your client will expect when the actual tax return is prepared Most preparers use the Quick Cale during a preliminary client interview to determine whether or not the client actually wants to have the tax return prepared at that time One point to keep in mind is that the Quick Calc is a separate module from the LMS TAX Pro 1040 Program The 1040 program will not pull any basic client information or income information that has been entered in the Quick Calc module You will need to enter this information into the 1040 program for calculation of the actual tax return 1 0 8 Sending a Corrupt or Questionable Return to LMS TAX Pro at some point during the Tax Season you may have the need to send a
75. ectory If you are not on a network you will not see this message All of the clients on your system will now appear in a pick list You can select certain clients for backup or you can backup every client by choosing Check All at the bottom of the screen Click OK The selected returns will now be backed up to your disk Recalling the returns after backing them up is basically the same procedure To Recall your returns place the backup disk into the correct drive and select the Utilities Menu Select Recall Returns Select the drive letter of your backup disk and click OK All of the clients on the disk will now appear in a pick list You can select certain clients to recall or you can recall every client by choosing Check All at the bottom of the screen Click OK The returns will now be recalled onto your system 137 1 0 3 Conversions from Other Software z In order to convert your client data from other software companies we request that you backup your client data to a CD or Jump USB drive through your old program and mail the disk to LMS TAX Pro for conversion We will return the data along with instructions on how to access last year s client data through LMS TAX Pro Please be sure that we have advanced notice that you are sending your data for conversion and mail the disk s to RCS 610 Ronald Reagan Dr Evans GA 30809 Attn Data Conversion 1 0 4 Backing Up and Recalling Electronic Receipt Data
76. ederal and state refund amount that information is located in the Fee Summary and Refund Summary section One other tab on the Client Status Screen that will be of importance to you is the State tab All of the information regarding State returns can be accessed by selecting this tab State that was E filed date of acknowledgment and Acceptance or Rejection Also note that if you are preparing a tax return and a client calls to check the status of his or her refund you can click the Client Status icon the top of the 1040 or simply right click on most any screen in the program Type in the client s SSN to view You do not have to exit the current return to look at the status of another return 7 15 F eder al R ejec t Cod eS Clicking the IRS Reject icon found at the top of your computer screen from any LMS TAX Pro menu will open the Federal Reject Code Finder From your Acknowledgment Report enter the Reject Code number Click the _Submit button and the description for the Reject Code will appear 118 7 16 State Electronic Filing To electronically file most state returns in LMS TAX Pro it is simply a matter of marking the state return for electronic filing and then allowing the state return to piggyback along with the federal e file transmission Within the Main Menu of each state program will be an Electronic Information Menu Access this option to mark the state return for e filing Click Send Sta
77. eeeceeeceeeeeeeeeeeeeeeeeeeees 152 Master PREPOMS A EA N a E E AE AN 153 Chapter 16 Business Returns Topic Page Number Completing a Business Return eceeeeeeeeeeeeees 157 Business E File Overview cceceeeeeeeeeeeeeeeeenees 158 E Filing Business Returns i Apttha ra a iE 159 Receiving Acknowledgments for Business Returns 160 9 CHAPTER 1 How to Get Around in the Program The Opening Screen 1 1 Program Features 1 2 10 1 1 The Opening Screen z At the top of the LMS TAX Pro Opening Screen you will find the Menu Bar containing seven 7 Menu Options and their related functions One single left click on a menu option reveals its pull down menu The 7 Menu Options are 1 File Open Individual Return Open Business Return Run Puerto Rico Program Print Exit 2 Electronic Filing Indirectly thru LMS TAX Pro Direct to the IRS if your configuration is set up to do so 3 View Client Status Client Return 4 Tools Configuration Utilities Reports Client Retention 5 Hot Keys Communications Setup Macro Setup Printer Setup 6 Updates 7 Help User Manual Online Help Center Support Tutorial Videos Where s My Refund Mailing Addresses IRS Reject Codes State Reject Codes Enhancements Problem Fax Report About 11 Figure 1 The LMS TAX Pro Opening Screen With LMS TAX Pro you have the choice of using your MOUSE or your KEYBOARD In addition to the Windows pull down menus and the icons at the top of the screen you
78. ent has large amounts of any items on this list and your client s adjusted gross income exceeds the exemption amounts discussed below the software will compute AMT liability on IRS Form 6251 Alternative Minimum Tax Individuals to determine whether your client must actually pay any AMT 3 Social Security and Medicare Tax on Tips Form 4137 Form 4137 is used to calculate the social security and Medicare tax owed on tips your client did not report to his or her employer including any allocated tips shown on Form W 2 box 8 of Form W 2 that your client must report as income Your client must file Form 4137 if he or she received cash and charge tips of 20 or more in a calendar month and did not report all of those tips to the employer 4 Uncollected SS and Medicare Tax Form 8919 This form is to be used by a taxpayer who has been designated as an employee by the IRS even though they did not receive a Form W 2 from their employer or did not have Social Security or Medicare taxes withheld from their pay 5 Tax on Early Distribution Form 5329 Any payment that your client receives from an IRA or qualified retirement plan before reaching age 59 2 is normally called an early or premature distribution If your client includes amounts from a Form 1099 R IRA and Pension Distributions on the tax return he or she may be subject to a 10 penalty if the funds have been withdrawn from the retirement plan before the taxpayer has reached age 59
79. enu option 5 Other State Withholdings Include on this line of the program any additional state withholdings that your client may have paid and that have not yet been accounted for anywhere else within the program 6 Earned Income Credit If the Taxpayer qualifies for the Earned Income Credit the LMS TAX Pro software will automatically bring up the Form 8867 EIC Checklist Menu as the return is being prepared A brief discussion of the EIC Checklist Menu follows on the next page 87 EIC Checklist Menu As you begin to answer the EIC Checklist questions beginning with Menu Option number 1 read and answer each question carefully Once you have answered the Due Diligence Questions correctly the menu options will change to Qualifies and the Earned Income Credit will automatically calculate Note that the EIC Checklist questions must be answered for EIC to calculate correctly If the software does not calculate the Earned Income Credit for a client that you feel is entitled please check the following before calling Technical Support EIC Checklist Questions have been answered correctly this client will receive Earned Income Credit From the Client s 1040 Screen select 11 View Results and the screen below will appear select WHY NO EIC CALCULATED and click OK 88 The reason why the Earned Income Credit did not calculate will be explained as in the example below If you should need to re calculate the Earned Income Credi
80. epublic Santa Barbara 31 Printer Copies Setup Printer Setup Menu eeeeeeee ees 31 Editing and Creating the Print Options 32 Printing Mailing Labels cceeeeeeeee ees 36 Edit the Client Letter 37 Mailing Addresses noa eae ckitiedadaed ae 38 5 Chapter 3 Setting up Your Configuration continued Topic Page Number System Network Configuration ceeeeeeeeeeeeeees 40 Path M n so tans eer ernie passable eta eed 41 Configuration Utilities 0 i ee ee eee eee ee eee es 41 Chapter 4 Downloading and Installing Updates Topic Page Number Downloading the States and Business Package s c eccceeeeeeeeeeeeeeeeeeeeeaees 43 Downloading Updates Through the Program 44 Downloading Updates from the Support Site annann 49 Chapter 5 Preparing a Tax Return Topic Page Number Steps in Preparing a Return Entering Tax Return Information 0 008 56 Marking the Return for E Filing 20 01c1ese 94 Diagnostics and WarNiNGS cccereeeenenenees 96 Marking the Return Ready to TFANSMIC ax deste tare sg tgeae dieters 97 Chapter 6 Preparing the State Returns Topic Page Number Entering State Return Data ccc ceeeeeeeeeeeeeee teen es 99 State Resident Programs c cececeeeeeeeeeeeeeeeeeeees 99 State Part Year Residents cceeeeeeeeeeeeeeeeeeees 99 State Nonresidents rnea aaa sera 99 Acce
81. ered in four hours or less Depending on the volume of e mails reaching our Support Center and the complexity of your issue some responses can take up to 24 hours 14 706 868 0985 This is the phone number to LMS TAX Pro s Technical Support Center Use this number to speak directly to a technician 706 868 0263 is our Fax Number If you are having a problem with a form for example print out the form showing the error and fax it to LMS TAX Pro Www irs gov Clicking this icon will take you directly to the IRS web site home page The Support Page will also have an icon for your RAL Bank if you are offering Bank Products to your clients This option will take you to the home web page for your bank 1 2 Program Features The LMS TAX Pro tax preparation program is an extremely user friendly program that has been designed with more than 35 years of tax preparation and electronic filing experience The LMS TAX Pro program is MENU DRIVEN as opposed to being forms driven this increases the speed of data entry and allows you to do more returns quicker The LMS TAX Pro menus guide the user through the input of a tax return in an orderly sequence following the logical flow of the 1040 form The LMS TAX Pro macros reduce the time required to enter a return and also help eliminate input errors Prior year information is carried forward from year to year based on entering the Social Security Number for the client
82. erly basis 16 Payment Voucher Form 1040 V Form 1040 V is a statement that your client may send with a check or money order when paying a balance due tax return Using 1040 V allows processing of the payment more accurately and efficiently The IRS strongly encourages the use of Form 1040 V but there is no penalty if not filled out The LMS TAX Pro software will automatically fill out a Form 1040 V on a balance due tax return 17 Underpayment of Estimated Tax Form 2210 Your LMS TAX Pro software will prompt you on a balance due tax return that a Form 2210 may be needed Most clients will be eligible for the Short Method enter the amount of last year s tax in menu option 1 and the LMS TAX Pro Software will calculate the penalty amount The following option is new for the 2008 LMS TAX Pro program in the Payments Estimates EIC Menu 20 First time Homebuyer Credit If you are a first time home buyer defined by the IRS you have an income of less than 75 000 150 000 if married filing joint and you bought a new home between April 9 2008 and July 1 2009 you are eligible for the Federal Housing Tax Credit for First time Home buyers The tax credit is for 10 percent of the purchase price but not to exceed 7 500 So if you purchased a home that cost 65 000 65000x 10 you credit would be 6 500 but if you purchase a home that costs 200 000 your tax credit would be 7 500 as it is the maximum credit The credit is technically a 15 year
83. es for Car amp Truck Expenses are 1 the Standard Mileage Rate and 2 Actual Expenses To enter car and truck expenses in the LMS TAX Pro Program you will need the following information the date the car was placed in service the total mileage and the total number of business miles Once you have this information from your client you can choose the option for Car amp Truck in the Schedule C Expenses Menu Selecting this option will bring up the following menu on your screen Car and Truck Expenses Menu For the Standard Mileage Rate select option 1 from the menu If your client has more than one vehicle to be entered for the Standard Mileage Rate enter the information for each vehicle in 69 the Standard Mileage Expense entry box For Actual Expenses including depreciation select option 3 from the Car amp Truck menu Also choose option 3 Actual Expenses if your client has a leased vehicle Remember there is no depreciation on a leased vehicle so you will enter 0 zero for the Cost of the vehicle Although there will be no depreciation the program will still ask you to select a depreciation method for the leased car Once you are past that point you will be given the screen to enter the Actual Expenses Again be sure to enter figures for the Business Commuting and Personal mileage Schedule C Edit Menu Form 8829 Business Use of Home Self employed people must fill out a special form to claim
84. essages Bank Acknowledgments and IRS Acknowledgments that you may have 107 Important If you do not receive a LMS TAX Pro Confirmation Report your transmission to LMS TAX Pro was not successful If you were disconnected in the middle of your transmission retransmit the table The transmission table remains on your system until a new one is created If you left the communication program prior to completing your transmission select 5 Indirect Utilities from the Indirect Main Menu Then click 1 Send Previous Transmission Transmitting by Modem The following will apply only if you have set your Communications Configuration to transmit returns by modem If you are using the Alternate Communications Package in your Communications Configuration your LMS TAX Pro Terminal Screen will have a START CALL button at the top of the screen You will need to click the START CALL button to initiate the dialing process If you are NOT using the Alternate Communications Package your modem will dial out automatically If you are using the Alternate Communications Package in your LMS TAX Pro Configuration you may see the box below when you transmit your tax returns if you see this box click YES after clicking YES you will see the LMS TAX Pro Terminal screen as shown on the next page you will need to click the START CALL button to dial out and send your returns 108 above is a view of the LMS TAX Pro Terminal when the Alternate Co
85. fice purchase a printer with the highest output PPM or printing speed that your budget can afford If you are printing checks for bank products in your office we recommend using a laser printer rather than an ink jet printer If a check printed on an ink jet printer becomes damp the ink could possibly smear or run This could force a delay in printing your client a new replacement check 2 2 Installing the Federal 1040 S oftwar When you receive your LMS TAX Pro 1040 CD in December keep in mind that you are receiving the Federal 1040 Program only Tn January you will need to use the Updates Menu to download your state and business programs Downloading and installing your State Business and Update programs is discussed in detail in Chapter 4 To install the Federal 1040 from the CD follow these steps Close any software applications that are running before beginning the installation Errors may occur if other applications are running while you are attempting to install your LMS TAX Pro software 17 Ifyou have anti virus software running in the background you will want to temporarily disable it before installing your LMS TAX Pro software Anti virus software such as Norton or McAfee will often interfere with the proper installation of other programs You can temporarily disable your anti virus software by first finding the icon for the software in the bottom right corner of your computer screen next to your computer s
86. from within Windows our LMS TAX Pro technicians will NOT be able to assist you in setting up the LMS TAX Pro network You will need to contact your local computer company or network administrator for assistance x Exit the System Network Configuration menu If you have answered YES to Are You Using a Network you will be asked if you wish to share the hard drive on the Transmitting Computer Answer YES to this question The program will then print an information sheet specific to your network setup Follow the instructions on this sheet to complete your office network setup for LMS TAX Pro Network Configuration Menu for the Transmitting Computer note that the Electronic Drive is the hard drive on which LMS TAX Pro is loaded 25 Step 7 The Path Menu will appear next This menu will allow you to specify or change a backup path for your client data The Backup Path is automatically set to your computer s C drive We highly recommend that you leave your Primary Backup Path set to your C drive This will help our support technicians if you should happen to call in for help If you wish to change your Secondary Backup Path you may select this option and choose an alternative from the pick list that appears on the screen All of your tax return data is backed up to the master databases on your computer s local hard drive as well as the backup directory on your Transmitting Computer if you are using a network We recommend that y
87. h the Practitioner PIN Program This program eliminates the process of mailing the Form 8453 However bear in mind that you will need to print and store form 8879 The Signature Authorization so the program is not TOTALLY paperless There are some cases however where the Practitioner PIN cannot be used 5 3 Dia gn Os ti CS and Warnings LMS TAX Pro automatically runs a series of tests on the return you are preparing to make sure there are no inconsistencies in the return being prepared If the program finds any inconsistencies you will be notified through the Diagnostics and Warnings Menu If you have the Warning box turned on a box outlined in red will appear at the bottom of the 1040 menu with the warning listed in the box 97 5 4 Marking the Return Ready to Transmit As you exit the tax return you will be taken to the Receipt Menu Here you have the ability to review your fees print a Bank Application display your client s Estimated First Check and print a Client Invoice You also have the option 11 to edit the client s tax return if necessary LOAN TIER SELECTION If you selected a Refund Anticipation Loan for the taxpayer the program will automatically select the highest eligible loan tier To select a lower tier choose Selected Loan Tier on the Receipt Menu Change the desired Loan Amount in option 2 and press the lt Enter gt key As you exit the Receipt Menu the following question will appear unless the
88. h your left mouse button on the large Tax Returns icon enables you to begin the input process for a client You may also begin a return by pressing the number 1 and lt Enter gt from your keyboard Keep in mind that pressing the corresponding menu item number from your keyboard may access any menu option from any LMS TAX menu This allows you to keep your hands on the keyboard at all times without having to switch back and forth between the keyboard and the mouse LMS TAX Pro Hint From any LMS TAX Pro Menu simply pressing the lt Enter gt key will exit the menu You do not have to click 0 Exit or enter the number 0 from your keyboard in order to exit the menu E File Transmit Returns The Electronic Filing option allows you to file a client s return directly to the IRS or to use LMS TAX Pro s transmitting facilities to file the return for you indirect filing To transmit your electronic returns left click the large E File icon from the LMS TAX Pro Opening Screen or press _2 and lt Enter gt from your keyboard From the Indirect Main Menu choose 1 Transmit Electronic Return s this will take you to the Transmission Table where you can verify delete and add to the list of clients you wish to e file Once your clients Social Security Numbers have been entered and verified click the Transmit button in the lower right corner of the screen Follow the prompts on the screen to e file your returns
89. han filing a separate return for the child The IRS allows you to treat the child s income as your client s For a child under 18 all unearned income above 1 700 must be taxed at the parent s rate and including the income on your client s return forces the LMS TAX Pro software to calculate this amount 81 Tax on Lump Sum Distribution Form 4972 If your client was older than 59 4 before he or she received a lump sum from a qualified employee retirement plan your client may have some other options that can reduce his or her tax bill To use any of these special treatments you must complete IRS Form 4972 and attach it to the tax return 6 Tax from Recapture of an Education Credit After your client has filed a tax return if he or she receives tax free educational assistance or a refund of an expense used to figure a higher education credit on that return your client may have to repay all or part of the credit The education credits must be refigured as if the assistance or refund was received in the present tax year Subtract the amount of the refigured credit from the amount of the credit that was claimed This is the recaptured amount to be entered on this menu option of the LMS TAX program Read Form 8863 Instructions for more details Credits Menu 1 child ana Dependent Care Expenses Credit Form 2441 To claim the credit for child and dependent care expenses you need to fill out Parts I and II of IRS Form 2441 Child and Dependent Ca
90. hase a home gt The mortgage must be secured by the home gt Each year the mortgage interest must be less than the year before Up to 100 000 of interest paid on a home equity loan is deductible There are only two core requirements for home equity loans gt The loan must exceed the amount still owed on the house gt The loan must be used for something other than improving the house Points are an upfront or prepaid interest charge on a mortgage These points are deductible in full in the year that they are incurred as long as the mortgage is used solely for the house and not any other item 78 Qualified Mortgage Insurance Premiums that your client paid for qualified mortgage insurance during 2007 in connection with home acquisition debt on a qualified home are deductible as home mortgage interest Investment Interest Interest paid on margin or through another form of debt to purchase investments or investment property is deductible Investment interest is only deductible to the extent that there is investment income If there is excess investment income then Form 4952 should be filled out Remember that Student Loan Interest is taken as an Adjustment to Income 4 Gifts to Charity Form 8283 Charitable Contributions are recorded in Itemized Deductions using this menu option Form 8283 Noncash Charitable Contributions to be used if the total deduction is over 500 is accessed from this menu If your client made total nonc
91. he IRS You will now be at the Direct Electronic Filing Menu As with Indirect Filing to LMS TAX Pro choose Option 1 Transmit Electronic Return s to send returns The instructions for the Transmission Table are similar to those in the manual Sections 7 2 through 7 3 The only difference is that you are now transmitting your electronic returns DIRECTLY to an IRS Service Center instead of to LMS TAX Pro The procedures to file direct to the IRS are nearly identical to those for filing indirect to LMS TAX Pro The exceptions will be discussed in this section When you create a table for transmission the Direct Electronic Filing Menu will display the number of returns to be transmitted and shows the sequence and batch numbers for the transmission LMS TAX Pro will automatically increment these numbers for you Transmission Sequence Number The sequence number will increment with each transmission on a daily basis For example if you make your first transmission today the transmission sequence number will be 01 If you make a second transmission the sequence number will be 02 Tomorrow the sequence numbers start over with 01 111 7 7 Direct Filing Test Returns In order to file returns directly to the IRS you must have the following 1 An ETIN Electronic Transmitters Identification Number This is a FIVE digit number a User ID and a Direct Filing Password 2 An EFIN Electronic Filers Identification Number This is a SI
92. he actual calculation that divides the refund between your client and his or her spouse 4 Married Filing Joint Married Filing Separate Comparison This option in the Miscellaneous Forms Menu allows you to compare the results of filing a joint return versus filing separate returns for your married clients Most couples file their return jointly combining incomes and sharing deductions But sometimes it pays for couples to re examine how they file There are instances when filing separately might better For example separate returns could produce tax savings if one spouse has lots of medical expenses and a low income By filing separately the partner with the doctor bills might be more likely to meet the 7 5 percent threshold needed to itemize medical costs 5 MFS Allocation Record for Community Property States To electronically file a Married Filing Separate Return in Community Property States you will need to access this menu option in the Miscellaneous Forms Menu 6 Net Operating Loss Worksheet A net operating loss NOL occurs when your client s deductions are more than income for the year A loss from operating a business is the most common reason for an NOL An NOL can be carried back to previous years and carried forward to future years to offset income 7 Installment Agreement Request Form 9465 IRS Form 9465 Installment Agreement can be used to setup a payment plan for your client s outstanding tax liability It allows your client to ma
93. he five test returns have been accepted IRS PROCESSING CENTER HELP DESK PHONE NUMBER 866 255 0654 If you do not receive your acknowledgments from the IRS within 3 days you will need to call the IRS Service Center that you are transmitting to and verify that they received your transmission If the IRS states that they did NOT receive your transmission repeat the steps listed above to send the two batches of Test Returns 7 8 Changing fi rom TEST mode to PRODUCTION mode Once you have received your IRS acknowledgments for your Test Returns follow the steps below to switch to Production Mode Do not update the program for Live Production Transmissions until all test returns have been accepted through the IRS From the LMS TAX Pro Opening Screen select _E File Choose the option for Direct Electronic Filing to the IRS Choose the option for IRS Transmission Mode Answer NO when asked to Send Transmissions to the IRS in TEST MODE ii Your IRS Transmission Mode should now read PRODUCTION 112 The Login Incorrect Message Especially during the beginning of the Tax Season it is possible that you will receive the message Login Incorrect when trying to file live tax returns directly to the IRS This message will appear in your Kermit Terminal screen when transmitting to the IRS If you receive the Login Incorrect message return to Direct Filing Configuration and make certain that your ETIN and Live Passwo
94. his backup data can be fixed by choosing option 8 in the Utilities Menu Repair Corrupt Database Files Within the Repair Menu option number one 1 will allow you to repair your Backup Database 140 CHAPTER 11 Amended Tax Returns Steps for the Federal 1040X 11 1 141 11 1 Steps for the Federal 1 040X The 1040X Module in the LMS TAX Pro Program is designed to quickly produce a Federal and State Amended Return QUICK STEPS TO PRODUCING A 1040X FOR YOUR CLIENT 1 Open the Client s Return 2 Select Miscellaneous or use the Form Finder to select the 1040X 3 Select Edit 1040X Menu 4 Select the Tax Year to amend 5 Click on Original Column data is pulled to the Original Column of the 1040X 6 Exit all the way back to Client s 1040 Screen 7 Select the State Return if there is one 8 Select Amended Return for the state and follow steps 4 5 and 6 9 Make the necessary changes to update the tax return add W 2 s dependents etc 10 Return to the 1040X Menu for the Federal 11 Click on Corrected Column the computer will now pull the corrected data and perform the needed calculations 12 Return to the 1040X Menu for the State Return 13 Click on Corrected Column the computer will now pull the corrected state data and perform the needed calculations 14 Print the 1040X The Following Steps Explain in Detail How to Use Your LMS TAX Pro Program to File an Amended Return for the Current Tax Year or as far back a
95. inted for any clients who have been declined by the bank Consult your bank manual for an explanation of these codes Bank Fee Deposits This is a list of your fees that the Bank has deposited into your account Bank Funded Bonus Approvals This is a list of IRS deposits received by the bank for your RAL s and Bonus Checks Unfunded Report This report lists RAL s and Bonus accounts that have not been funded by the IRS If an IRS payment is more than seven days past the expected funding date it is your responsibility to investigate and determine why the account has not been funded If you find that the IRS will mail the client a check contact the client and advise him her that they must bring the IRS check to you and make it payable to Bank One If they fail to do this they will not be able to receive a RAL in future years If the account was funded for less than the loan amount advise the client to contact Bank One and setup a payment plan for the outstanding loan balance Message Center LMS TAX Pro will send periodic messages announcing updates and or the latest information from the Bank or IRS If you receive a message it will be displayed on the screen when you have completed your transmission Use this option to view and print the message Additional Old Reports This will allow you to reprint all of your IRS acknowledgments or the IRS acknowledgments for a specified date range After selecting the marked Menu Options to print the reports each
96. interest free loan as it must be repaid over a 15 year period with each yearly payment being just over 500 but no interest is charged 91 Miscellaneous Forms 1 Amended Return Form 1040X This menu option will allow you to create an Amended Return for the current tax year or for tax years back to 2003 A complete discussion of filling out the Amended Return in your LMS TAX Pro program is covered in Chapter 10 2 Claim Refund Due a Deceased Taxpayer Form 1310 If your client is claiming a refund on behalf of a deceased taxpayer Form 1310 must be filed This form can also be electronically filed with the tax return 3 Injured Spouse Claim Form 8379 Injured spouse relief applies when a couple files jointly and has their tax refund reduced or eliminated because of an unpaid tax or other debt that only one of them owes For example one spouse may owe taxes from a year before the couple married The other spouse has a right to his or her share of the refund based on an allocation of income deductions payments and other tax return items between the two spouses If the IRS has applied your client s refund against the spouse s tax liability or your client is concerned that the IRS may do so select Form 8379 Injured Spouse Claim and Allocation The form requests identifying information for your client and spouse and information needed to determine how much of the tax and refund is attributable to each spouse The IRS makes t
97. ion Check Re Issue Department 9 Checks will be re hung periodically throughout the day To receive the new checks choose Receive LMS TAX Acknowledgments through the Indirect Main Menu once the checks have been re hung you will then have the ability to reprint your voided checks If your client misplaces his or her check or if your client s check is accidentally destroyed you will need to fill out and fax the Check Replacement Affidavit which can be found in the Information Booklet supplied to you by your RAL bank This affidavit will need to be faxed to LMS TAX Pro at 706 868 0263 Check replacement for a lost or destroyed check will take from 4 to 6 weeks CHAPTER 10 LMS TAX Utilities Reindexing Your Files 10 1 Backing Up and Recalling Client Data 10 2 Conversions from Other Software 10 3 Backing Up and Recalling Electronic Receipt Data 10 4 Removing a Client s Return 10 5 Married Filing Separate vs Married Filing Joint Comparison 10 6 Quick Calculation 10 7 Sending a Corrupt or Questionable Return to LMS TAX 10 8 Repairing Database Files 10 9 136 1 0 1 R ein d ex i n g Yo ur F il S All databases need to maintain Index files which keep your data in proper sorted order These files are rather delicate and tend to get corrupted due to external factors like power fluctuations Events like sudden fluctuations sometimes cause serious problems Errors may start to creep into your LMS TAX Pro Program especially
98. ion from the Print Copies Setup menu This will take you to the Printer Setup Menu Select the option for the Type of Tax Printer the printers on your computer that are available to your Windows Operating System will appear If your printer does not appear already highlighted in this box click the printer you wish to use to highlight it and it will automatically be selected as your default printer for LMS TAX Pro Click OK to close the Printer dialog box 32 3 12 Editing and Creating the Print Options pvrraiLep sters on CONFIGURING THE PRINT OPTIONS Select Printer Copies Setup from the Configuration Main Menu The setup of an individual print option is explained here Follow the same procedures to set up the business options Select Edit Individual Print Options The Copy Menu will now appear on the screen To change a print option already set up in LMS TAX Pro click the down arrow to reveal the list of print options next select the option you wish to change For example select the print option for TWO COPIES FEDERAL AND STATE and change the number of CLIENT LETTERS that will print with this option to ONE 1 Note that TWO COPIES FEDERAL AND STATE appears in the Print Option window now left click on Client Letter and enter the number 1 33 Once the Done button is clicked the print option for TWO COPIES FEDERAL AND STATE will also include the print out of ONE CLIENT LETTER To C
99. ion in the Check Print Menu allows you to Align Printer Print Test Check To print your test check answer YES to the on screen question and print your test check on A PLAIN SHEET OF PAPER then holding one of your actual checks behind your printed sheet hold both up to an overhead light and make sure that all of the printed figures line up with the correct areas on your check stock The signature should be above the signature line without touching the line and the amount should print correctly in the box NOTE Another testing option is to make a copy of an actual check on your copy machine and print a test check using this copy Again make sure the amounts and signature line up correctly on the test check Orientation of Your Checks in Your Printer Regardless of which test option you use we also recommend printing an X with a pen or pencil in the top right corner of your test page or test check Carefully observe which way the test check is placed into the printer face up or face down this will help you determine the proper orientation of your checks as you feed the real check stock through the printer Observe how the test check printed in relation to the printed X on the page and you will then be able to tell how to place the real checks in your printer upside down right side up printed side down printed side up etc Depending on the model and manufacturer of the printer that you own most printers are diffe
100. ions and health insurance premiums Your client can deduct the portion of his or her medical expenses with itemized deductions that exceeds 7 5 percent of your client s adjusted gross income AGI 2 Taxes Paid State Income Tax Any income taxes that your client paid to the state are deductible LMS TAX Pro will automatically pull the state withholdings from your client s W 2s to the Schedule A Real Estate Taxes Any tax your client paid for real estate property is deductible The tax is deductible on ALL real estate property that is owned and that your client paid the tax on during the current tax year Personal Property Taxes Enter personal property tax paid by your client but only if it is based on value alone and it is charged on a yearly basis for example ad valorem tax on car tags 3 Interest Paid Interest paid on qualified mortgages home equity loans and land may be reported here This is a straight deduction without a minimum amount to meet Your client can deduct home mortgage interest if all of the following conditions are met 1 Your client must itemize deductions on Schedule A 2 Your client must be legally liable for the loan 3 The mortgage must be a secured debt on a qualified home See IRS Publication 936 The interest that your client paid will be reported on Form 1098 There are some requirements that must be met for the interest on a home mortgage to be deductible gt The mortgage was obtained to build or purc
101. ities is that of Removing an Individual Client By choosing this option you will be prompted for the client s Social Security number If you are running a network you will also be given the following option By answering Yes to this question the tax return for this client will be totally removed from your LMS TAX Pro system 138 10 6 Married Filing Separate vs Married Filing Joint Compar ISON Ifyou are filing a return for a married couple you have a choice of filing status married filing jointly or married filing separately To be sure that your clients pay the lowest tax you may want to figure the return both ways ts usually advantageous for a married couple to file jointly However if the husband and wife s incomes are about the same they may end up paying more in taxes by filing jointly than separately Of course this also depends on the rest of the information entered on the return The Quick MFJ vs MFS Comparison option of the Utilities Menu allows you to enter the basic income adjustment and credit information for a client so that you can tell at a glance whether it would be more advantageous to file a Married Filing Joint or Married Filing Separate tax return If the income levels of a taxpayer and spouse are fairly close together you may wish to enter your clients information into the Quick Comparison in order to find the best filing status for your clients A question that comes up every year is one about changing th
102. k the Download button 49 4 3 Downloading Updates from the Support Site we highly recommend downloading and installing your Updates through the program but in the event that you are having difficulty you can download and install your updates through the LMS TAX Pro web site From the Main Menu click the Support icon this will bring up the LMS TAX Pro Support Options Clicking the Support Site icon will take you directly to the LMS TAX Pro technical support web page 50 The LMS TAX Pro Support Site Look for this link on the web site to access the web page for Downloading and Installing Updates to the program 51 The LMS TAX Pro Update Page Once you have accessed the Updates web page read and follow the instructions very carefully example follows on the next few pages 52 First save Update Status A to the LMS TAX 2008 RCS2008 Indirect folder on your computer s hard drive Make sure you are saving the Update Status files and the Update Files to the Indirectl folder save Update Status B to the LMS TAX 2008 RCS2008 Indirect folder on your computer s hard drive 53 Select the Update you need and save the update file to the LMS TAX 2008 RCS2008 Indirect folder on your computer s hard drive Once the update has been downloaded to your computer you must install the update from the Main Menu select Updates by clicking the Updates icon or entering option number 10 from the
103. ke monthly payments typically over a one to three year period 8 Automatic Extension Form Form 4868 This menu option in Miscellaneous Forms is for the printed and mailed Form 4868 If you wish to file an electronic extension return to the LMS TAX Main Menu and select Option 8 Utilities Then choose the option for Enter Electronic Extensions Fill out the client s information for the Electronic Extension Next return to the LMS TAX Pro Main Menu and select the E File option To electronically file the extension select the menu item to Transmit Electronic Extensions Remember that Extensions must be submitted on or before April 15 92 Power of Attorney Form Form 2848 Use Form 2848 to authorize an individual to represent you before the IRS The individual you authorize must be a person eligible to practice before the IRS 10 Mark Return as Private YES or NO Marking a return as Private removes the Social Security Number from the tax return pick list When you select Tax Returns from the LMS TAX Pro opening screen the SSN of a return that is marked Private will not appear in the Client List the return can only be opened for editing if you know the Social Security Number 11 Notes Statements By choosing this option you may enter explanations and other statements to accompany your client s tax return You have the option to electronically send Preparer Notes to the IRS or save them for your own personal files 12 Forms 8
104. le Server Transmitting Computer LMS TAX Pro installed on Drive C Workstation Computer LMS TAX Pro installed on Drive C Workstation Computer LMS TAX Pro installed on Drive C Workstation Computer LMS TAX Pro installed on Drive C 147 13 2 Networking Setup Follow these steps below to setup the LMS TAX Pro Network Transmitting Computer Setup Step 1 Make sure the Transmitting Computer can see is communicating in Windows all Workstations across the network and that the LMS TAX folder is Shared Step 2 Install LMS TAX Pro on all computers that will be accessing the program Step 3 Set the System Network Configuration Menu on the Transmitting Computer to reflect the use of a network as displayed below The System Network Configuration Menu is located in the Configuration Menu The Transmitting Computer s System Network Configuration options should be answered as follows Are You Using a Network YES Transmitting Computer Electronic Drive This is the local drive on the Transmitting computer where LMS TAX Pro is Installed This Computer s Network Name This is the Network ID of the Transmitting Computer This Computer s Workgroup Name The correct name of your Windows Workgroup Backup Recall Returns YES Share LMS TAX Pro to the Network This will share the LMS TAX program folder on your hard drive We highly recommend that you select the
105. lient information you will first want to correct the client file Once this is done you will want to ADD the return to the Transmission Table and send the return again 7 1 0 R ecelivin g Ac k nowl ed gm en ts Twenty four to forty eight hours after transmitting your tax returns to LMS TAX Pro or to the IRS you will want to connect and pick up your IRS acknowledgments The Receive Acknowledgments Only option from the Indirect E File Main Menu is used to pick up IRS acknowledgments check print authorizations bank reports and LMS TAX Pro messages when you do not have any returns to transmit From the LMS TAX Pro Opening Screen select the option for E File If your configuration is set up for Direct Filing you will have two menu options 1 filing through LMS TAX Pro and 2 filing direct to the IRS If you DID NOT set your configuration for Direct Filing you will be at the Indirect Main Menu Option number 2 from the Indirect E File Main Menu allows you to Receive Acknowledgments Only f you transmitted your returns directly to the IRS select the option for Direct Electronic Filing to the IRS select the option to Receive IRS Acknowledgments Only Follow the on screen prompts to pick up your acknowledgments Once you have picked up your acknowledgments you will be notified on your computer s screen that you have Reports to Print 113 7 11 R epor ts P r i n tin g You will receive various reports from LMS TAX Pro
106. menu 54 There is no need to Connectl simply hit the Exit button to access the Updates Menu and install the updates that were downloaded from the LMS TAX Pro Support Site Select Option 2 from the Internet Update Utility Main Menu 55 CHAPTER 5 Preparing a Tax Return Steps in Preparing a Return 5 1 Mark the Return for Electronic Filing 5 2 Diagnostics and Warnings 5 3 Marking the Return Ready to Transmit 5 4 56 5 1 Steps mn Preparing a Return There are 3 main steps in preparing and e filing a client s tax return 1 Entering the client s tax return information into the software 2 Marking the return for electronic filing 3 Transmitting the return and picking up your acknowledgments 1040 Tax Prog ram Entering a Tax Return Double click the 2008 LMS TAX Pro icon on your Windows Desktop to open the LMS TAX Pro Program From the LMS TAX Pro Main Screen left click on the Tax Returns fast access icon You may begin by entering the Social Security Number for a new client and then press the lt Enter gt key If the return does not exist you will be asked if you wish to create a new return LMS TAX Pro Tip If you used LMS TAX Pro last year and if the return exists in last year s database then you will be asked if you wish to create a new return using last year s data Type the client s Social Security Number to begin a new return as you enter returns through the year thi
107. mmunications Package is selected in Communications Configuration left click the START CALL button to dial out Most users will select the Alternate Communications Package in the Communications Configuration Menu 7 4 Addin g R etur ns to the Transmission Table click the Start Call button to send returns or pick up acks if you are using the Alternate Communications Package and NOT using the Internet to transmit returns If your Transmission Table is empty or if you have returns that you want to add to an existing Transmission Table click the Add Client button or press lt Ctrl gt A on your keyboard this will prompt you to double click the Social Security Number for the client that you wish to add once you have finished adding returns to the table you may click the Done button this will take you back to the normal Transmission Table screen with the Add Client Delete Client Cancel and Transmit buttons at the bottom of the screen 109 7 5 Deleting Returns from the Transmission Table If you have returns in your Transmission Table that you wish to delete or if you wish to delete the entire table click the Delete Client button or press lt Alt gt the letter D on your keyboard you will see the following question answering NO will prompt you to enter the Social Security Number s of the clients you wish to remove from the table 7 6 Direct Filing to the
108. ms are not correct the IRS will reject the tax return for electronic filing purposes Once you have pressed the lt Enter gt key on the Dependent Information Entry Screen you may be asked if you wish to enter any Dependent Care Expenses Enter the amount at this time The Dependent Information Menu will appear This menu will allow you to correct or change any previously entered information concerning the Taxpayer s dependent Select the menu option for information that you may need to change or simply press the lt Enter gt key to exit this menu IMPORTANT Option 11 allows you to mark a child who is NOT a dependent but who may qualify the Taxpayer for Head of Household status Click once with the left mouse button to toggle this selection from NO to YES if this is the case 62 Once you exit the Dependent Information Menu you will be taken back to the Edit Dependent Information window You can choose to enter additional dependents by clicking the New button change dependent information that already exists by highlighting the dependent and then clicking the Edit button or delete a dependent by highlighting the dependent and clicking the Delete button Or you may exit this screen by clicking the Exit button Important As in the case of the Taxpayer s information the IRS matches the Social Security Number of the dependent with the FIRST FOUR LETTERS OF THE DEPENDENT S LAST NAME If this information
109. n previously entered In the option to Change Preparer Information you may enter a preparer s PTIN Preparer Tax Identification Number in the event that the PTIN is obtained after tax season has begun The Preparer Tax Identification Number can be applied for in order to prevent having to print the preparer s Social Security Number on the bottom of the tax forms 3 6 Fees Billing Se tup Menu Option Number 2 in the Configuration Main Menu is the Fees Billing Setup clicking this option will allow you to access the Fee Setup Menu Selecting the Fee Setup Menu will allow you to enter or change the fees for a particular form From the Fee Menu simply click the form to enter or change a fee When the screen prompt appears enter your fee If you are charging the same fee for a consecutive range of forms click the Set Rangel button Enter the beginning and ending number of the range and the fee to be charged on the screen prompts If you are a previous LMS TAX Pro user you may click the button to automatically pull last year s fees if you wish If you obtain a PTIN after setting up your initial configuration enter it in the Preparer Edit Menu 29 Fees Billing Setup in the Configuration Main Menu The Fees Billing Questions allow you to activate several options that may assist you in managing your tax office Fees Billing Questions Menu Do you want to generate a printed receipt If you select Yes a four part re
110. ning with a Preparer Number You can click the EXIT button to by pass the preparer information section but we strongly recommend that you click New and enter at least one preparer It is the Preparer Code that enables your Company Information to be printed on the bottom of your clients 1040 forms To begin enter a preparer number this can be any number from 1 to 999 Enter the preparer s SSN You will also be prompted to enter the preparer s full name Indicate whether or not the preparer is self employed Once the preparer information has been entered the Preparer Edit Menu will allow you to review the information for accuracy and make any necessary changes If you or your preparers have a Preparer Tax Identification Number PTIN select the PTIN Option and enter the number This number will then be printed in place of the preparer s Social Security Number on the bottom of the 1040 forms If you do not already have one we strongly encourage you and your preparers to obtain a PTIN by submitting form W 7P Application for Preparer Tax Identification Number to the IRS This form is available online at http www irs gov formspubs While at the Preparer Edit Menu you will also want to enter a Preparer Practitioner PIN This is a 5 digit number that you will create there is no registration process involved this number will print automatically on Form 8879 E File Signature Authorization The only stipulations are
111. nt contract that you pay to your former employer legal fees for example to negotiate an employment contract ti medical exams required by the employer occupational taxes and license fees office supplies and postage passport fee for a business trip tools and other supplies used in your work union dues Form 8829 2 Deductions and Job Expenses Business Use of Home Worksheet If your client uses a part of his or her home for business perhaps to perform paperwork to store records inventory or samples or even to meet customers he or she may be able to claim a tax deduction for some of the expenses of maintaining the home A more detailed discussion of the Form 8829 is found in the section of this Manual that deals with Schedule C Expenses 80 7 Other Miscellaneous Deductions Deductions Not Subject to the 2 Limit Gambling losses up to the amount of gambling winnings incurred in the tax year i Impairment related to work expenses if you have a physical or mental disability that limits your employment or your major life activities i If you had to repay more than 3 000 of income that was included in your income for an earlier year this is known as a claim of right Tax Computation Menu 1 Tax LMS TAX Pro automatically calculates the tax liability for a client s return based on the figures entered into the program The basic formula for federal income taxes is total income adjustments Adjuste
112. nu Once these items are entered select Mark Return Electronic from the MAIN SCREEN of the tax return The next step is to enter the Corporate Officer s PIN Signature Date and the PIN Authorization This will fill in the information for form 8879 C or S depending on which business entity you are filing The 8879 C and S are similar to the individual form 8879 You are required by the IRS to keep these forms on file for three years The 8879 s do not have to be mailed to the IRS Print and have the officer sign the 8879 C S Be sure to mark the return Complete and Ready for Transmission For information on transmitting the return read the chapter entitled E Filing Business Returns 158 Printing To print the Business return select Print Business Returns from the Business Main Menu Select the return to print from the list Continue with the print options just as you would with an individual return 1 6 2 Bu si ness E F il e Overv i W Before you can E file business returns you must first update form 8633 Application to Participate in the IRS E file program You must indicate on the form that you will be filing business returns The IRS will not accept your business returns until this is complete You may call 1 866 255 0654 or sign up for e services at http www irs gov taxpros article 0 id 109646 00 html to update form 8633 If you plan on e filing business returns there is a file that you must install on your transmitting compu
113. omputer it is recommended that you restart at this time in order for the lines and characters on the 1040 Form to appear correctly 18 After the installation and restart are complete you can start your LMS TAX Pro program by 1 Double clicking on the LMS TAX Pro icon on your Windows desktop or 2 Clicking on the Start button All Programs LMS TAX and then clicking on the LMS TAX Pro icon When you open the LMS TAX Pro program for the first time you will be asked to answer a few preliminary Configuration questions We will discuss Configuration options in more detail in Chapter 3 2 3 R em ovin g th e S of twar The most efficient method of removing the LMS TAX Pro software from your computer is through the Windows Control Panel and the Programs icon Click on the year of the LMS TAX Pro program you wish to uninstall and follow the instructions on your computer screen An alternative method to deleting the program follows In Windows you also have the option of clicking the Computer icon and then double clicking on the icon for the drive letter that contains your LMS TAX Pro program After you have opened the contents of this drive on the screen you will find the LMS TAX program folder Double click the LMS TAX program folder and you will see a folder labeled 2008 You can right click this folder and then left click on the word Delete in the resulting menu box 2 4 P rior Year S Tax P r ogr aMS If y
114. on the set of instructions by clicking the drop down arrows Use drive letter N if it is available for number 4 Connect to Transmitting Computer As If not choose another drive letter Click Connect once you have entered the information You should see a message stating Drive Mapped Successfully appear on the screen If so you have successfully set up your LMS TAX Pro network If you received a message stating Error Mapping Drive refer to the Network Troubleshooting Section Step 7 Complete each of the previous steps beginning with Step 4 for each of the other Workstations in your office Click the drop down arrow and enter N as the connecting drive letter if available then click the Connect button 149 13 3 Network Troubleshooting 1 you are having trouble setting up your LMS TAX Pro Network look at the following situations Situation 1 The Transmitting Computer cannot be mapped from the Workstation Step 1 Make sure the Configuration has been set up correctly on both the Transmitting Computer and the Workstation Computers Refer to the Network Setup instructions to see the correct settings Step 2 Make sure all of the computers on the network are turned on especially the Transmitting Computer Step 3 Check your Network Connections Make sure the Workstation Computers can see the Transmitting Computer You can check this by following the steps below 1 From one of the Workstation
115. ondeductible to a Classic Individual Retirement Annuity IRA for the tax reporting year Use this menu option to enter these amounts as an adjustment to income 11 Nondeductible IRAs Form 8606 This menu option is the entry point for Form 8606 which covers Nondeductible Contributions to IRAs Traditional IRA Distributions Received During the Tax Year Net Amount of Traditional 76 IRAs Converted to Roth IRAs Distributions From Roth IRAs and Distributions From Educational IRAs For detailed questions concerning Form 8606 see IRS Publication 590 Individual Retirement Arrangements 12 Student Loan Interest Deduction Your client may be able to deduct up to 2 500 for interest he or she paid on a qualified student loan The deduction is claimed as an adjustment to income so your client does not need to itemize deductions on Schedule A Form 1040 A qualified student loan is a loan your client took out to pay qualified expenses The expenses must have been gt For your client your client s spouse or a person who was your client s dependent when the loan was taken out gt Paid or incurred within a reasonable time before or after your client took out the loan and gt For education furnished during a period when the recipient was an eligible student Qualified higher education expenses are the costs of attending an eligible educational institution including graduate school These costs include tuition fees room and board books equipmen
116. ort 15 Enter Prior Year s Data for Comparison This option will allow you to enter tax return data from 2006 and 2007 in order to compare the figures to the 2008 return 93 State Returns Selecting the State Return option in the Client s 1040 Menu brings up the pick list of states supported by your LMS TAX Pro software In the State Menu notice also that option number 1 in the pick list allows you to DELETE A STATE RETURN One case where it may be necessary to delete a state return is that of completing a state resident return that should have been marked as a part year or nonresident instead If this should occur simply delete the state return and re select your state return from the pick list There is no way in the software to change from a resident state to a part year or non resident state without first deleting the state return We will discuss state returns in more detail in Chapter 6 of this manual View Results The View Results menu option allows you to bring up the forms onto the computer screen that have been completed on your client s return You also have the Quick Summary option which 94 will show the current refund or balance due according to the figures entered into the client s return up to that point If you used LMS TAX Pro software to prepare last year s tax return for your client or if you have allowed us to run the conversion from another software package you can also use Prior Years Comparison to view a comp
117. ou backup your returns to a USB flash drive or to a Zip Drive in the event you have a hard drive failure The program will automatically backup each tax return that you are working on to your designated backup path as you exit the client s return The Secondary Backup Path option allows you to designate an additional backup drive if you wish This will create two simultaneous backups of each tax return as you exit the client s return At this time the program will not backup your data directly to a CD ROM drive You will need to use your CD burning software to copy your LMS TAX Pro data to a CD Step 8 If you used LMS TAX Pro last year set the Prior Path to the location of last year s tax data on your computer The program will look to this path when you enter a client s SSN upon starting a tax return If the prior year information is found you will be asked if you wish to create a new return using last year s personal data Step 9 LMS TAX Pro allows you to setup macros that will reduce the number of keystrokes when entering a return Macros hold common information that will be frequently used If you select YES you will be given the chance to enter the most common employers childcare providers and payers of interest and dividends The screen display however is limited to the first twenty 20 items entered in the system If you used LMS TAX Pro last year you will be able to pull the macro data from last year s configuration Thi
118. ou need earlier versions of LMS TAX Pro you can find the three prior years by logging into your My Account web page There you will find a link to download and install the 2007 2006 and 2005 LMS TAX Pro programs There is no need to download updates when you install a prior year version of LMS TAX Pro from the website For example if you download and install the 2007 LMS TAX Pro software you have the complete program including all Federal Updates the Business Package and the latest versions of all state programs 19 CHAPTER 3 Setting Up Your Configuration First Time Configuration 3 1 Personalizing Configuration 3 2 COMPANY SETUP MENU 3 3 ERO s Menu 3 4 Preparer s Menu 3 5 Fee Menu 3 6 CONFIGURATION MAIN MENU Electronic Filing Bank Setup 3 7 Updating DCN Batch Numbers 3 8 Bank Setup River City Republic Santa Barbara 3 9 Printer Copies Setup 3 10 Printer Setup Menu 3 11 Editing Print Options 3 12 Printing Mailing Labels 3 13 Edit the Client Letter 3 14 Mailing Addresses 3 15 System Network Configuration 3 16 Path Menu 3 17 Configuration Utilities 3 18 20 3 1 First Time Configura tion 22 Step 1 Double Click the LMS TAX Pro icon on your desktop When you first open the program you are asked if you wish to Restore the Configuration from a Backup Disk Click No You will see the following message appear Click OK to proceed Step 2 In this step you are asked to enter your firm information If
119. port to have your checks re hung for you As the Tax Season progresses you will become more comfortable with check printing and you will then be able to print multiple checks The LMS TAX Pro software will limit you to printing eight 8 checks per batch 130 The next screen in the check printing process enables you to input the correct check number from your check stock As the screen tells you MAKE SURE THAT THE CHECK NUMBER ON THE COMPUTER SCREEN MATCHES THE NUMBER IMPRINTED ON THE CHECK ABOUT TO BE PRINTED FOR YOUR CLIENT This will avoid delays in getting your checks to your clients After entering the check number and making sure that all is correct you will see the following screen Your checks will be sent to your printer at this point remove the checks from your printer and examine them carefully for the correct information Double check to see that the number PRINTED on the check by your printer matches the number PREPRINTED BY THE BANK on the check stock A message will appear on your screen which reads Click OK After All Check s have Finished Printing wait until you have all checks in hand before clicking OK After carefully examining your printed checks you will be given a chance to reprint a bad check or carry on and print your remaining checks if any Important Do not answer the question shown in the screen print below until all checks have printed and you have thoroughly reviewed each check for accuracy
120. ransmitting Computer select Business from the LMS TAX Pro Main Menu Choose Electronic Filing Menu and then select Receive Acknowledgments Step 2 The Transmit Receive from LMS TAX Pro screen will be displayed Make sure your Internet browser is up and running if you are using a dial up Internet connection Click on the Connect button In the box you will see a description of each action taken through the retrieval process When prompted click on the Exit button Step 3 You will see a message that reads You Have Reports to Print From the Electronic Filing Main Menu select Print Reports Each report you have to print will be marked with an arrow next to the report
121. rd are entered correctly Make sure that the case of the letters in your Live Password usually sent to you in a letter from the IRS matches the case of the letters in your Direct Filing Configuration If your ETIN and Live Password are correct in your LMS TAX Pro Configuration and you are still receiving the Login Incorrect message then the IRS does not have you set up for PRODUCTION MODE live processing You will need to contact your IRS Service Center and make sure that you are in Production Mode Be sure to use this phrase when speaking to the IRS Representative Setting you up for Production Mode can sometimes take up to 48 hours from the time your IRS Test Returns are accepted 7 9 R etr ansm i ttin g R e tur NS To Retransmit a tax return or returns that you feel were not successfully transmitted From the LMS TAX Pro Opening Screen select the option for E File then Indirect Electronic Filing Through LMS TAX Pro or Direct Electronic Filing to the IRS from the Direct E File Main Menu option 2 allows you to Retransmit your last transmission From the Indirect E File Main Menu select 5 Indirect Utilities and then 1 Send Previous Transmission By choosing the Retransmit option you are not forced to re enter a batch of tax returns into a Transmission Table that may not have been sent on the first try If you have transmitted a tax return and the return has been either a rejected or b sent with incorrect c
122. rd before the fee can be changed from the system s Fee Menu calculated fee You may want to give the password to your office manager to ensure changed fees have proper approval 30 3 7 Electronic Filing Bank Setup By selecting the Electronic Filing Bank Setup option from the Configuration Main Menu you may enter or change 1 Your Transmitter s Electronic Filing Identification Number EFIN this number is attached to your electronically filed returns it is critical that this number is correct in your Configuration or your e filed returns will reject 2 The bank you wish to use for Refund Anticipation Loans LMS TAX Pro Hint If your acknowledgment records indicate that you have checks to print but the Check Printing Option is unavailable or the program gives the message that there are no checks to print try the following gt From the LMS TAX Pro Main Menu click Option 7 Configuration gt Click Option 4 Electronic Filing Bank Setup gt Click Option 2 Bank RAL Setup Menu gt Click Check Printing Handled By nswer YES to the question Do You Want to Print Checks in Your Office This will refresh the check printing database in the program you should now try to print your checks again 3 Your Direct Filing Information this information may include your processing center your ETIN number and your password for electronic filing directly to the IRS Enter or change this information b
123. re Expenses This form requires your client to provide identification information for both the care provider s and the qualifying children or disabled persons The form helps to compute the credit by comparing allowable expenses with the client s wages and other earnings and those of the spouse if married The credit amount as shown on Line 13 of the 2441 is carried to Line 48 of the Form 1040 where it will be directly subtracted from the taxes your client owes In the Form 2441 Menu be sure to start with the Amount Paid to Child Care Providers For the return to be accepted electronically this information will have to be filled out correctly The tax return cannot be filed electronically without a valid Employer Identification Number or Social Security Number for the Daycare Provider How to fill out the Taxpayer s Earned Income or the Spouse s Earned Income on Form 2441 if one is a full time student or disabled If you are filing a joint return for your client and either the taxpayer or spouse was a full time student or disabled the Earned Income to be placed in the program for the non working spouse is 250 per month 500 per month if more than one qualifying person was cared for during the year For example if the taxpayer s wife is attending college full time and the couple has one child in daycare you would enter 3000 in the LMS TAX Form 2441 menu option 5 Spouse s Earned Income 2 Income for Being a Student or Disabled
124. reate Your Own Personal Print Option For our example we will create a new Print Option that will print 2 copies of the client s W 2 Forms when we select the new option from the Print Menu Begin by clicking the down arrow in the Print Option Window scroll down until you find the first print option described by a letter of the alphabet for example OPTION K click this option to highlight it and it will appear in the Print Option Window You will now be asked to Enter a Print Option Title delete the words OPTION K you can now create and enter the name of a Print Option that makes sense to you for example TWO COPIES OF W2 Scroll Down highlight OPTION K by left clicking with your mouse the words OPTION K will now appear in the Enter Print Option Title window 34 we have now created the Print Option Title and TWO COPIES OF W2 now appears in the Print Option Window in the next step we need to assign the number of copies as well as which forms will be printed whenever the Print Option TWO COPIES W2 is chosen For our example we will delete the words OPTION K and replace with TWO COPIES OF W2 35 for this example since the only forms we want to print are 2 copies of the client s W 2s we will scroll down until Form W 2 Wages and Tax is located in the forms list left click on Form W 2 and enter the number of copies desired for our example 2 copies click the Done
125. rent in the way that they feed paper through the rollers and also the side of the paper on which they print This is why you will need to determine how paper feeds through your printer so that you will be able to line up your checks correctly when you are ready to print live checks If your initial test fails keep trying until you know exactly which way the checks should be placed in your printer Knowing the correct alignment for your checks will prevent delays during Tax Season for both you and your clients 127 If you decide that your printer needs alignment you will see the following menu Increasing the value of one of the Line settings moves the check printing DOWN on the check stock I e changing 48 00 to 49 00 moves the printing down one line Increasing the Column setting moves the check printing to the RIGHT on the check stock Decreasing these settings has the opposite effect Below is an example of a blank Bank One Chase check The signature should print above the line and not cross the line at any point Most printers will work without any adjustment However if you need to LOWER the print for one particular area on the check you will INCREASE the value for that option to RAISE the print on the check you will DECREASE the value for a particular option It may be necessary to experiment with the settings before your check prints correctly Start out by moving the print by 0 50 lines and then increase the value if neede
126. return has previously been marked as Ready for Transmission If the return is complete and ready to be transmitted choose Yes The return will be pulled into the transmission table and is now ready for e filing If you are not ready to finalize the tax return and wish to make later changes to the return choose No This will make an automatic back up of the tax return and you will be returned to the LMS TAX Pro opening screen where you can begin entry of another tax return 98 CHAPTER 6 Preparing the State Returns Entering State Return Data 6 1 State Resident Programs 6 2 State Part Year Residents 6 3 State Nonresidents 6 4 Accessing State Instructions 6 5 Credits for Taxes Paid to Other States 6 6 99 6 1 Entering Sta te Return Da ta From the Client s 1040 Screen select Option 10 State Return This will give you the list of states supported by LMS TAX Pro along with the option to Delete a State Return Ifa state return has already been done it will be indicated in your state menu by the words Resident Nonresident or Part Year for that particular state Clicking the state of your choice and then clicking the OK button will take you to that state s main Tax Program Menu Here you will select a Resident Part Year or Nonresident Tax Return depending on your client s situation Your LMS TAX Pro software will automatically pull the Federal Personal Information Income and other relevan
127. rs coated metal roofs that reduce heat gain plus 83 100 of cost of eligible a heat pumps central air conditioners and water heaters up to 300 b natural gas propane or oil furnaces and hot water boilers up to 150 and c advanced main air circulating fans up to 50 Residential energy efficient property credit Credit is up to 30 of qualified photovoltaic solar water heating and qualified fuel cell property costs Additional limits apply Mortgage Interest Credit Form 8396 If your client resides in one of the few states or localities that have chosen to issue MCCs Mortgage Credit Certificates and he or she obtains a certificate then your client can claim a tax credit rather than a deduction based on the amount of interest you paid Prior Year Minimum Tax Credit Form 8801 If your client paid Alternative Minimum Tax AMT last year or had a minimum tax credit carryforward from last year your client may be able to claim a tax credit on Form 8801 Credit for Prior Year Minimum Tax Qualified Electric Vehicle Credit Form 8834 To be eligible for the tax credit a vehicle must be powered primarily by an electric motor drawing current from rechargeable batteries fuel cells or other portable sources of electrical current Form 8839 Qualified Adoption Expenses Be sure to fill out all of the required information for the child and enter the total Qualified Adoption Expenses in Option 9 of the Eligible Child Edit Menu
128. rt Year Resident from that state s Main Menu allow the program to fill in the state data and then Exit back to the Client s 1040 Menu The state program will automatically calculate according to the figures entered on the Federal 1040 program Again as with the Resident States you may be required to make some entries which are unique to the particular state on which you are working 6 4 S ta te N onr esi den ts For the 2008 LMS TAX Pro program the software is designed to pull all relevant Federal information into the Nonresident State programs Keep in mind that your client will most often receive a credit in the state of residency for taxes paid to a foreign or nonresident state To calculate this credit for taxes paid to other states you will always want to complete the Nonresident state tax return first 6 5 Ac C essi n g S ta te Ins tr uc tions To access each state s web site from your LMS TAX Pro Software Package Select the desired state from the state pick list E Choose Resident Part Year or Nonresident E At the state s Main Menu click the State Web Info icon located at the top of the screen 100 6 6 Credits for Taxes Paid to Other States s If your client lives in one state and works in another he or she may be eligible for a tax credit on the resident return for the taxes paid to the nonresident state To properly apply the credit s you will want to fill out the tax return s for the nonresi
129. s 5 Years Step 1 From the LMS TAX Pro Main Screen select Tax Returns Double click your client s return or simply enter the Social Security number of the client whose return you wish to amend Step 2 From the Client s 1040 Screen select Miscellaneous or enter 1040X in the Form Finder Select Amended Return 1040X Select Edit 1040X Menu Select the year of the Amended Return to be processed and then select 1 Original Column Click OK to Exit The software has now automatically filled in data for the Original Column of the federal amended return 142 Step 3 Continue to press lt ENTER gt or click 0 to Exit until you have returned all the way back to the Client s 1040 Screen Step 4 If there is a State Return present or if you need to amend the State Return also select option 10 State Return from the Client s 1040 Screen Each state menu is a bit different but all state menus should have an option for Amended Return located toward the bottom of the main state menu Step 5 Select the year of the State Amended Return to be processed and then select Original Column Now click OK to Exit The software has now automatically filled in data for the Original Column of the amended state return Note Some states only allow an Amended Return for the current Tax Year if this is the case you will not be given an option to choose a tax year also if you have data already present in the Original Column you will be asked if you wi
130. s area will fill with your client list 57 ENTERING PERSONAL INFORMATION If information for a new client is being entered you are then prompted to enter the correct filing status Single Married Filing Joint etc and date of birth for the client in a mm dd yyyy format For example 03 01 1954 LMS TAX Pro Tip Note that the Menu for Selecting the Correct Filing Status is also the entry point for the 1040NR Program Entering Client s Name and Address Once you have entered the client s correct Filing Status you will be prompted to enter the client s Personal Information Name Address Date of Birth etc Enter the client s first name press the lt Enter gt key enter the client s middle initial if any press the lt Enter gt key and then enter the client s last name If the client is a Junior or a II enter the appropriate information in the Suffix field The Personal Information Filing Status Menu also contains the option to enter the 1040NR NonResident Program 58 LMS TAX Pro Tip How to avoid a few Reject Codes when electronically filing a tax return The IRS matches a client s Social Security Number with the FIRST FOUR LETTERS OF THE LAST NAME in the case of a client who may have four or more names that appear on the Social Security card the IRS generally expects the THIRD NAME on the card to be the Last Name A spouse who has not notified the Social Security Administration of her mari
131. s is the last step to the configuration process Make sure that your System Date is Correct or your electronically filed returns will reject The program will automatically exit save the configuration and take you back to your Windows desktop You are now ready to prepare tax returns 26 3 2 Personalizing Configura tion Ifyou wish you can later change several options in the LMS TAX Pro configuration to suit your own personal taste You may also need to change your configuration from time to time if you make changes to your system for example the addition of a new printer From the Windows Desktop double click the LMS TAX Pro icon You will now be at the LMS TAX Pro Opening Screen Select Configuration to access the Configuration Main Menu Review the following options to the configuration and make changes as needed To Change Your LMS TAX Pro Color Scheme Select Configuration and then Advanced Configuration next select Display Settings and Background Being Used to personalize your LMS TAX Pro color scheme Display Settings Menu Edit Client 1040 List Start Return Using Client List When you select _Tax Returns from the LMS TAX Opening Screen your current list of clients will be displayed on the screen If you wish for your client list to remain hidden from view click the Display Settings menu option _Edit Client s 1040 List _Start Return Using Client List this will toggle the setting to
132. s return Installation and configuration is a quick and easy step by step process The user has the option of not having to use the mouse to navigate within the program This allows you to keep your hands on the keyboard making data entry quicker and more efficient Full networking capability is built into the software 15 CHAPTER 2 Installing Your LMS TAX Pro Software Hardware Requirements 2 1 Installing the Federal 1040 Software 2 2 Removing the Software 2 3 Prior Year Tax Programs 2 4 16 2 1 Hardware Requirements Computer System in order for LMS TAX Pro to operate smoothly we recommend the following as minimum requirements for your computer system a A computer with at least a Pentium II or compatible processor we recommend as fast a processor as is available along with at least 128 megabytes MB of RAM installed Windows 2000 Windows XP or Windows Vista operating system LMS TAX Pro and Microsoft no longer support Windows 98 or Windows Me A CD ROM drive and at least 300 megabytes MB of free space on the computer s hard drive A CD DVD burner or rewriter a flash drive or a ZIP drive for backing up tax returns Internet access via modem cable or DSL WE HIGHLY RECOMMEND OBTAINING A HIGH SPEED INTERNET CONNECTION IF AVAILABLE IN YOUR AREA Printer Recommendations We recommend any HP Hewlett Packard compatible printer When considering the purchase of a printer for your of
133. s up then your client will need to call the appropriate phone number found in the Help Center to clear up any fees or past due balances to the appropriate agency 117 The rest of the information on the Summary tab lists bank refund and fee information Only bank product users will have the Bank Code filled in on their client status if a Bank Product has been created for the return The Bank Code will display one of four possible messages Approved Rejected Countered or Switched Approved or Rejected means that the bank has either approved the Bank Product or Rejected the Bank Product Switched means that the bank has switched your client from a RAL the 24 hour product to a Bonus 10 14 day refund You may see the word Countered appear when the bank is only going to give your client part of their refund as a first check The bank will then send a second check once the IRS has made a deposit Please note that LMS TAX Pro has absolutely NO Control over a RAL Bank s decisions If you have any questions or problems regarding your client s refund you will need to contact your RAL bank for further assistance Also notice the Earliest Possible Deposit field If your client chose to do a bank Bonus product he or she will not receive a check until this date at the earliest Generally it takes from ten 10 days to two 2 weeks before a bank bonus check will be ready for your client If you need to check your fees or see the f
134. sh to continue to pull information to the Original Column Step 6 Continue to click the menu options to Exit until you return to the Client s 1040 Screen Now you may update the tax return with the new information provided by the client new W 2 s Filing Status Dependent Information Additional Deductions etc enter this information by choosing the appropriate menu options from the Client s 1040 Screen Step 7 Once the new information has been entered return to the Client s 1040 Screen Next re access the Amended Return and the Edit 1040X Menu Once again select the year which should already be flagged by a double set of small arrows and now select the option for Corrected Column Step 8 You will now be at the Edit Form 1040X Menu Here you may click on menu option 4 Part II Explanation of Changes Once you have typed in your explanation click the OK button and return to the Form 1040X Edit Menu Exit the 1040X Edit Menu Step 9 You will now be at the Form 1040X Menu Option 3 allows you to View and or Print the Form 1040X You may print the Federal 1040X now The Federal 1040X is now complete Step 10 You will need to access the State Amended Return pull the data to the Corrected Column as in the Federal Amended and then print the State Amended Return Note You should manually verify that any overpayment made with the original return or refund from the original return is correct You should also verify th
135. ssing State Instructions 99 Credits for Taxes Paid to Other States 0c cece ccc ec ee eee e ee ea ee eeeeeean anaes 100 6 Chapter 7 Electronic Filing Topic Page Number Indirect Filing Through LMS TAX Pro 104 Creating the Filing Table cc ceeeeeeeeeee tees eeeeeenes 105 Transmitting REUS 3s wang iclastietg eis edeiele data tatitese ete 106 Adding Returns to the Transmission Table 4 108 Deleting Returns from the Transmission Table 109 Direct Filing to the RSie A ENE 109 Direct Filing Test Returns cceceeeeeeeee eee eee eee eeee 111 Changing from TEST to PRODUCTION ee 111 Retransmitting Returns c cee ceeeeeeeeee eee ee eee eed 112 Receiving Acknowledgment ceeeeeeeeeeeneeee ees 112 Reports Printing EEE N a neata ie ya 113 Accepted ReturnS acncnrrcncrnanaaaaaa 115 Rejected RROTUINS 2 e N eee eee 115 Checking Client Status cece eee eee eee ee ea ees 116 Federal Reject Codes ccccceeceeeseeeeeeeeeeeeneeeeeeeeenaees 117 State Electronic FUNG E T T cialg es igapuv eh ET 118 E Filing State Only Returns 119 Chapter 8 Printing Returns Topic Page Number Using the Print Menu ceeeeeeeeee ee eee teen ee eees 121 Using the View Results Menu ccceeeeeeeeeeneeeeeees 122 Printer Troubleshooting ccceceeeeeeeeeeeeeeeeeeeeeees 123 Chapter 9 Check Printing and Bank Products Topic Pag
136. subject to the AMT if his or her AMT liability is more than the regular tax liability for the year and these calculations are automatically calculated by the software on Form 6251 What types of things can trigger the AMT The most common items that can cause your client to become subject to the AMT are listed below These items must be added back to taxable income in order to compute the AMT all personal exemptions the standard deduction if your client claimed it a itemized deductions for state and local income taxes and real estate taxes ii itemized deductions for home equity loan interest this does not include interest on a loan to buy build or improve a home ti itemized deductions for miscellaneous deductions 85 itemized deductions for any portion of medical expenses that exceed 7 5 percent of AGI but not 10 percent of AGI ii deductions claimed for accelerated depreciation that exceed what your client could have claimed under straight line depreciation differences between gain or loss on the sale of property for AMT purposes and for regular tax purposes these differences most commonly occur as a result of the different depreciation methods required under AMT as described above addition of certain income from incentive stock options changes in income from installment sales since the installment sale method generally can t be used for AMT purposes changes in certain passive activity loss deductions If your cli
137. swer this as Yes the return cannot be marked for transmission on the Receipt Screen until the return is marked PAID Answering this question No will allow the return to be transmitted even though it hasn t been marked PAID Advanced Fee Setup Menu Ask why preparer fee is less than calculated If you select Yes the preparer will be required to enter a reason for changing the fee for a tax return to a fee that is less than the fee calculated by the system Advanced Fee Setup Menu Ask why a return was done for free If you select Yes a reason must be entered to explain why the return was done for free Advanced Fee Setup Menu Ask for last year s fee If you answer yes the preparer will be prompted to enter last year s fee Advanced Fee Setup Menu Take the greater of Last Year s Fee 0 amp Current Fee This will compare last year s fee multiplied by the percentage you have specified against the fees in your fee table The greater of the two fees will be charged Advanced Fee Setup Menu Do DD and EM returns for free This question applies to electronic returns that you transmit directly to the IRS If you answer Yes a transmission fee will not be charged for the return Important The transmission fee is automatically deducted for all Chase Bank returns Advanced Fee Setup Menu Require Authorization Code for Fee Change If you answer this question Yes the preparer will be asked to enter a passwo
138. t and other necessary expenses such as transportation See IRS Publication 17 for additional information 13 Tuition and Fees Deduction If your client s Adjusted Gross Income is 80 000 or less 160 000 or less if filing a joint return your client may be eligible to deduct up to 4 000 of tuition and fees paid to an eligible institution of higher education even if he she doesn t itemize deductions Before you claim the deduction on the return check to see if one of the education credits provides a larger benefit Your client may not claim the adjustment if the credit is claimed 14 Domestic Production Activities For more information on this adjustment see the instructions for Form 8903 15 Medical Savings Account Form 8853 The Medical Savings Account Form in LMS TAX Pro must be input manually Distributions from a Medical Savings Account are reported to recipients on Form 1099 MSA 16 Other Adjustments The Other Adjustments Menu will offer up to six descriptions for other adjustments to income in addition to the adjustments previously described Further discussion of these adjustments can be found in IRS Publication 17 re Schedule A Itemized Deductions 1 Medical and Dental Expenses These are your client s reasonable and necessary unreimbursed expenses relating to health care for your client and dependents This includes but is not limited to expenses for doctors dentists and hospitals transportation to medical care prescript
139. t begin by selecting Payments Estimates EIC from the Client s 1040 Screen then Earned Income Credit in the Payments Estimates EIC Menu Earned Income Credit is included on the Payments Menu because it appears in the Payments block of the Form 1040 Choosing the Earned Income Credit menu option will allow you to choose from the following pick list on your screen Selecting option 1 from the pick list will take you directly to the input menu for Earned Income Credit Next select the option for Form 8867 EIC Checklist By choosing the correct answers for the Due Diligence questions the program will calculate the Earned Income Credit if your client is truly eligible Notice also from this pick list that option 4 gives you the ability to adjust the Investment Income in the return which may be keeping the software from automatically calculating the Earned Income Credit 89 Additional Child Tax Credit Form 8812 Your LMS TAX Pro software will automatically calculate any Additional Child Tax Credit for the return being prepared 8 Amount Paid With Extension Form 4868 If your client wants an automatic four month extension to file his or her tax return you can file Form 4868 by April 15 However your client must pay any tax that you and your client estimate will be due by April 15 9 Excess FICA amp Medicare Tax If your client or spouse if filing a joint return had more than one employer for 2007 and total wages of more than 97 5
140. t data into the state tax return For some states you may have to enter other income adjustment credit or deduction figures that are applicable to that particular state 6 2 S ta te R es i d ent P r ogr amMsS For the majority of the Resident State programs supported by LMS TAX Pro you will have to do nothing more than click the state from the State Menu choose Resident Program allow the program to fill in the state data and then Exit back to the Client s 1040 Menu The state program will automatically calculate according to the figures entered on the Federal 1040 program In some cases you may have to fill in a foreign state tax credit if your client had income and withholdings from a state other than the state of residency These other state credit menu options are most often found in the items labeled Other State Credits Total Prepayment Credits Nonrefundable Credits Total Credit and sometimes the menu option simply labeled State Tax If you are having trouble finding a particular line item on a state return use the state Jump To option to help you find the line or form that you are looking for 6 3 S ta te P ar t Yea r R esi d en ts a At the start you will more than likely be asked to enter the dates of part year residency for the state with which you are working As with the Resident State Programs you will have to do nothing more than click the state from the State Menu choose Pa
141. tain situations in which the Schedule SE requires manual input of tax information includes Ministers and Members of Religious Orders who receive a W 2 with no Social Security withheld Also in this category are ministers who may receive a Housing Allowance The following steps outline the procedure in handling clients of this type From the LMS TAX Client s 1040 Menu select Option Number 7 Other Taxes Menu From the Other Taxes Menu select menu option 1 Self Employment Tax From the Schedule SE Information Menu select menu option number 1 Is This Schedule SE Being Filed for a Minister Clergy and answer YES Select option 8 NonFarm Regular including Ministers Income and then 1 Clergy Tax Free Income Worksheet Enter the rental value of the home or a housing allowance The LMS TAX Pro software will automatically calculate the amount of Self Employment tax owed 2 Alternative Minimum Tax Form 6251 Because some taxpayers particularly wealthy taxpayers have been so successful in their efforts to legally minimize their tax bills Congress came up with another way to tax them the alternative minimum tax AMT The AMT provides a formula for computing tax that ignores certain preferential tax treatments and deductions that taxpayers would otherwise be entitled to claim So many taxpayers are required to compute their income tax liability twice once under the regular method and once again under the AMT method An individual will be
142. tal status will also cause a return to reject For example you may have e filed a joint return for William and Mary Jones Mary s maiden name is Tucker The IRS rejects the return because Mary never notified the Social Security Administration to change her last name from Tucker to her married name of Jones You may change Mary s last name to her maiden name in the software and re file the tax return Be certain that you have spelled the last name correctly especially the first four letters and that you have entered the client s correct Social Security number Foreign Address If the client has a Foreign Address be sure to place a checkmark in the box for Foreign Address the Personal Information screen will change and you will then be prompted to enter the names of the Foreign City and Foreign Country Continue to fill out the client s personal information until you have entered the phone numbers At this point you will be taken to the Personal Information Name and Address Menu To enter a Foreign Address click the checkbox for Foreign Address 59 In the Personal Information Name amp Address Menu you are given the opportunity to review the information that you have entered so far If any changes or corrections are needed you may simply click on the desired menu option or enter the corresponding menu option number from your keyboard This is also the menu to mark the client Blind Deceased or a Dependent on Another Return
143. te Return through Bank to have your Loan Bank process the state refund Click on the Type of Electronic Return to change from Electronic Mailed Check to Direct Deposit 119 7 17 K Filing State Only Returns Under most circumstances a client s electronically filed state return will piggyback along with the federal portion both will be transmitted at the same time However there will be occasions when it will be necessary to electronically file just the state portion of a tax return only To e file a state only return in LMS TAX Pro do the following o From the Main Menu of LMS TAX Pro select the E File option o If you are set up for Direct Filing to the IRS you will have the option of Indirect or Direct Electronic Filing o Choose the option to Transmit Electronic Returns you will now be at the Transmission Table o Add the client s return to the Transmission Table o Left click in the box in the State Only column of the table to place a check in the State Only box this will tell the software to e file the state return and not the federal With LMS TAX Pro you have the ability in the software to mark more than one state return for electronic filing and you may also transmit more than one state return along with your federal return 120 CHAPTER 8 Printing Returns Using the Print Menu 8 1 Using the View Results Menu 8 2 Printer Troubleshooting 8 3 121 8 1 Using the Print Menu There are two ways to print a return
144. ter The file is called MSXML 4 0 for Business E file To install this file select the Business Utilities Menu located inside the Business Main Menu Select Install MSXML4 0 for Business E file Follow through the steps by selecting Next and then Finish Once you select Finish the file will be setup on your computer and you will be ready to e file business returns Install MSXML 4 0 from the Business Utilities Menu before trying to e file your Business Returns 159 1 6 3 E Filing Business Returns To e file business returns you must be in the Business Main Menu Once the return has been marked ready to transmit the return will show up in the business transmission table Step 1 Select Electronic Filing Menu from the Business Main Menu to enter the Business Electronic Filing Main Menu Select Transmit Electronic Return The returns that are ready to send will be listed in the transmission table A check mark will already be in the box indicating that the return will be sent to the IRS If you do not want to send the return simply uncheck the box If you need to re send a return that has rejected and is not listed in the table select Add Return Enter the EIN of the return to add The return will appear in the table Step 2 When you are ready to transmit the returns select Send Returns A message should appear advising that the returns passed all tests Click OK Step 3 The Transmit Receive from LMS TAX Pro screen will
145. the Personal Information Menu you will be asked to enter W 2 information If your client does not have a W 2 you may answer the question NO and you will be taken to the LMS TAX Pro Income Menu From the Income Menu you may choose the correct menu option to enter the type of income that your client may have 65 Entering W 2 Information Answering YES to the W 2 question takes you immediately to the Form W 2 Menu Just as with the Dependent entry and Child Care Provider entry you will click the New button to begin the input of your client s W 2 information If the return is a joint return you will be asked to select whether the W 2 is for a Taxpayer or a Spouse Important The EIN Employer s Identification Number must be entered correctly for an electronically filed tax return If the EIN and the employer s company name do not match the IRS will reject the tax return if you attempt to electronically file the return 66 Once the employer information has been entered you will be prompted to enter the W 2 Wages The LMS TAX Pro software uses whole dollar amounts only for all fields Once the wages have been entered you will be asked to enter the Federal Tax withheld again enter whole dollar amounts only The program will automatically calculate Social Security and Medicare Tax Withholdings Enter the state abbreviation and the state ID number from the W 2 if applicable Notice that the wages field will automatically fill but
146. the Tax Season The option for Updates Installed allows you to tell at a glance whether your program is current and up to date 42 CHAPTER 4 Downloading and Installing Updates Downloading the States and Business Packages 4 1 Downloading Updates Through the Program 4 2 Downloading Updates from the Support Site 4 343 4 1 Downloading the States and Business Packages When you download the program or receive your LMS TAX Pro CD in December you are getting the Federal 1040 Program ONLY Several of the states do not release their Record Layouts and forms to us until after the first of the year As soon as the state software is finished we make these programs available for download through the Updates Menu Begin by testing your internet connection outside of the tax program Next click the Updates menu option from your LMS TAX Pro opening screen You will now have access to the Internet Update Utility Main Menu We recommend that you print the Instructions on Downloading and familiarize yourself with this process When the State and Business Packages are made available you will have the option to check only those states that you wish to download You may wish to initially download only those states that you will be using at the beginning of the Tax Season In other words download your home state and maybe a few bordering states As the Tax Season progresses you may find that you need additional states These can be downloaded at any time
147. to Mark Exceptions to the 10 Penalty in the LMS TAX Pro Program On the 1099 R Information Screen if the Distribution Code is entered as 1 Early Distribution a question will appear on the screen asking you to select the Transfer Option to the Form 5329 10 Penalty Form You will select option 1 for the majority of your clients The following question will then appear to mark the exception to the 10 penalty for early withdrawal choose YES You will then be presented with a pick list of exceptions click on the correct exception from the list and click OK enter the Amount that Qualifies for the Exclusion and press lt Enter gt exit to the 1040 Screen 72 Income Menu Rents Royalties Entities Sch E K 1 Form 4835 and Form 8582 input Rents amp Royalties Schedule E Input Schedule E is used to report income or loss from rental real estate royalties Partnerships S Corporations Estates and Trusts In the Schedule E Menu you will find the options to enter K 1 input and Form 4835 Farm Rental Income and Loss K 1 Input The LMS TAX Pro K 1 entry screens are designed to follow the K 1 form that your client will give you Be sure to correctly designate Passive or Nonpassive income in Screen under Ordinary Income or Loss from Trade or Business Activities If you should see the following message while entering figures for your client s K 1 the program is telling you that you will need to make the determin
148. transmitting is to click Transmit or press lt Alt gt the letter T on your keyboard you will then see the message box illustrated below click OK or hit the lt ENTER gt key to continue as shown on the next page you will have the option of printing out a list of the clients that you are transmitting we recommend that you print this list for your records 106 1f the transmission file is created correctly you will see the following message appear on your screen click OK to continue 7 3 Tr ans mi tti n g R e tur NS The next screen that you see during the transmission process outlines the steps that are occurring as you transmit your returns You can follow these steps as they take place in your Transmit Receive window Transmitting to LMS TAX Pro over the Internet If you have set your Communications Configuration to Transmit and Receive over the Internet you will see a dialog informing you about the status of your Internet connection and transmission to LMS TAX Make sure your Internet connection is open and click on the Connect button to transmit your returns to LMS TAX Pro by Internet your screen will indicate the status of your connection once your connection to LMS TAX Pro has closed click the Exit button you will see a prompt on your screen telling you that you have Reports to Print this will be your Transmission Confirmation as well as any LMS TAX Pro M
149. ults menu Select the option Print Return The Select Print Option Box will appear Choose how many copies you would prefer Click the OK button How to Change the Print Options to Suit Your Needs Steps to edit a print option o Select the Configuration Menu O Choose Printer Copies Setup and then select Edit Individual Print Options O You can edit an existing print option by choosing one of the print options listed in the drop down menu For example select the drop down arrow and choose Two Copies Federal and State O Now adjust the number of forms that you want to print with the return For example if you want three invoices to print double click Invoice and enter the number 3 123 Steps to create a customized Print Option O Select the Configuration Menu O Choose Printer Copies Setup and then select Edit Individual Print Options O Select the Print Option drop down arrow and choose Option J o Delete the words Option J and change to your own customized Print Option Title for example One Copy W2 Form and press the lt Enter gt key O Now the number of copies for the entire list of forms will be defaulted to zero 0 o Left click the chosen form s and enter how many copies you wish to print when you select the new customized print option 8 3 Printer Troubleshooting The following are a list of the most common printing problems and solutions Problem 1 When printing a tax return the forms
150. vironment LMS TAX Pro technicians will not be able to assist you in setting up your LMS TAX Pro Network 150 Situation 2 Errors mapping the Transmitting Computer s hard drive If the Workstation Computer can see the Transmitting Computer and you can double click on the transmitting computer and access its hard drive but you are still having trouble with your LMS TAX network try the following Step 1 Make sure the LMS TAX folder is shared on the Transmitting Computer Double click My Computer and find the C drive if the C drive is where you installed the LMS TAX Pro software Locate the LMS TAX folder if the folder has been shared you should see a small hand underneath the folder If you do not see a hand or if you see a hand and your operating system is Windows XP follow the procedure below Open LMS TAX Pro and select Configuration and then System Network Configuration Menu If you have Windows Vista XP Home or XP Professional select Share LMS TAX Pro to the Network For the network to work properly the LMS TAX Pro folder must be fully shared if you are using Windows XP After going through these steps you may need to re select your Electronic Drive on the Workstation Computer On the Workstation Computer select Configuration and then System Network Configuration Menu Select Electronic Drive If the drive letter that you used to map over to the Transmitting Computer is present highlight the nam
151. when opening a tax return that has already been partially prepared Reindexing helps to assure that the database files and associated indexes the means of accessing the files are kept in alignment Reindexing helps to clean up loose ends The reindexing feature of your LMS TAX Pro program can be set to run automatically on a daily basis From the Opening Screen select Configuration From the Configuration Main Menu select Advanced Configuration By clicking on the option to Perform Daily Reindex Automatically you can toggle this option to YES or NO We highly suggest you leave this option set to YES If you choose not to perform the daily reindex you will periodically need to select Utilities from the LMS TAX Pro Opening Screen and then select option 1 Reindex Files 1 0 2 Ba ckin g Up an d R eca I li n g CI i en t Da ta To backup your returns to a Flash Drive Jump or USB drive or separate Hard Drive select the Utilities Menu from the LMS TAX Pro Main Menu Choose Backup Returns The program will prompt you select your desired backup drive letter If you are using ZIP disks or a Flash Jump Drive you will need to know the drive letter that Windows assigns to the drive Once the correct drive letter is selected click OK If you are using a Network a message will appear asking if you would like to use the Network Backup Directory or the Data Directory Choose YES to use the Network Backup Dir
152. who are eligible to receive certain Trade Adjustment Assistance or who are eligible for the Alternate Trade Adjustment Assistance program Your client will need to answer YES to the eligibility questions for form 8885 90 13 Apply Refund This menu option in the Payments Estimates and 2210 Menu allows you to enter an amount of your client s overpayment refund from this year 5 taxes to be credited to next year 5 tax return The program will not accept an amount larger than the refund for this year 14 Direct Deposit Information If the tax return has been marked for electronic filing you must update the Direct Deposit Information by returning to the Client s 1040 Menu and then selecting menu option 12 Mark Return Electronic If the tax return has not been marked for electronic filing choosing this menu option will prompt you to enter the Routing Transit Number Account Number and Type of Account checking or savings Be sure to double check your entries for these fields Also be sure to use one of your client s CHECKS and NOT A DEPOSIT SLIP when filling out the RTN and Account Numbers 15 Generate 2009 Estimates 1040 ES This menu option will allow you to enter and print Estimate Coupons for your client s quarterly estimated tax payments in the coming year The Estimates to Apply to 2008 Menu also features a 1040 ES Calculator This calculator will help you and your client project how much your client should pay in on a quart
153. will see the numbered Main Menu in the middle right of your screen If you would prefer to use your keyboard to access the basic program functions you may enter the number of the desired option from your keyboard for example press the number _7 and the lt Enter gt key to get to the Configuration Main Menu press the number _9 and lt Enter gt to get to the Reports Menu and so on This is the Main Menu You may click on a menu option or enter the number from your keyboard for the desired task and the number will show up in the Enter Option box then press the lt Enter gt key to go to that selection You may use your mouse click on the traditional Windows pull down menus such as File Electronic Filing View etc or your keyboard enter the number corresponding to the menu options listed below to work with the LMS TAX Pro tax program Click one of these fast access icons to get to the four most often used sections of LMS TAX Pro if you prefer to use your computer s mouse you may left click on the menu options at the top of the screen Filetklectronic Filing4d Viewatc the icons at the top of the screen Calculator Client Status Support etc the fast access icons in the middle of the screen Tax Returns E File Print Support or left click the options in the numbered Main Menu 12 A Quick Start Overview of the Fast Access Icons Tax Returns Open and Edit Individual Returns One single click wit
154. x return Interest income this amount is entered directly on Form 1040 or on Schedule B if required and is completely taxable Early withdrawal penalty this amount is charged when a time investment such as a CD is withdrawn early This amount may be used as an Adjustment to Income on Form 1040 Interest on U S Savings Bonds and Treasury Obligations this is interest received from U S Savings Bonds or Treasury obligations This interest is reported on Form 1040 or Schedule B if required and is generally taxable on your federal return but not taxable on your state return Interest or Dividends Less than 1 500 Enter interest and dividends here if the total amount is less than 1 500 The amount will carry to the appropriate line of the Form 1040 State and Local Refunds If you received a state income tax refund from a previous tax year and you itemized deductions in the prior year this refund is generally taxable If you did not itemize deductions in the prior year the refund is tax free Alimony Received Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument It does not include child support Amounts you receive for child support are not income to you Alimony is deductible by the payer and must be included in the spouse s or former spouse s income 68 Business Income or Loss Schedule C This option will take you directly to the Schedule C Menu to enter your client s
155. y pressing the number on the keyboard associated with each menu item 3 8 Upda ting DCN Ba tch Numbers a Select the Electronic Filing Bank Setup option from the Configuration Main Menu and then select Last DCN Batch Serial Numbers Used If you are on a network the batch and serial numbers for your tax returns will be obtained from your Transmitting Computer for all tax returns If you are using multiple computers in your office and you are not on a network you must assign a block of numbers to each computer to prevent duplicate DCN numbers On your main transmitting computer leave the number range at 00000 to begin On the second computer enter 10000 and on the third enter 20000 These ranges allow up to 10 000 DCN numbers to be generated on each computer You have the option to change or update the Document Control Numbers DCNs for your electronically filed tax returns Again this is especially important if you have two or more computers in your office that are not connected by a network You will need to change the range of DCNs on one of these stand alone computers to make sure that the DCNs on two different tax returns do not duplicate For example if your office has two stand alone computers you will need to complete the following steps on one of the computers From the LMS TAX Pro Main Screen select Configuration ti Click Option 4 Electronic Filing Bank Setup Click Option 6 Last DCN Batch Serial Numbers Used
156. your client received an excess parachute payment EPP your client must pay a 20 tax on it This tax should be shown in box 12 of the W 2 form with code K If your client received a Form 1099 MISC the tax is 20 of the EPP shown in box 13 Identify as EPP Uncollected Social Security and Medicare or RRTA Tax on Tips or Group Term Life Insurance This tax should be shown in box 12 of Form W 2 with codes A and B or M and N Identify as UT Section 72 m 5 Excess Benefits Tax see IRS Publication 560 Identify as Sec 72 m 5 Payments Estimates EIC Menu 1 Estimated Payments Made for 2008 By clicking this menu option you may enter the quarterly estimated payments made by your client during the tax year There is also an option to include any amounts applied from a prior year refund 2 Estimated Payments from K 1 This option automatically pulls the amount from Estimated Payments entered in the 1041 K 1 menu 3 State Estimated Payments Here you will enter the amounts paid as quarterly estimates on your client s state tax return Enter the amounts and if amounts were paid to ONE state enter the state abbreviation 4 Other Federal Withholdings From 1099 Forms If your client has a Form 1099 that shows Federal Tax Withheld include the withholdings on this line of the LMS TAX Pro tax program and indicate that the withholdings are from a 1099 Also include any additional withholdings that MAY NOT be included on a Form 1099 in this m
157. your company as you will be able to talk with other LMS TAX Pro Users and ask them questions or answer the questions they have Internet Support You may reach our web site at www LMS TAXpro com to download updates and contact our technical support staff by e mail You may also search our online database of technical support issues Fax Machine Our fax machine is available 24 hours a day for software issues that you would like for us to see Our fax number is 706 868 0263 We ask that before you Call please research this Reference Manual for the answer to your question Chances are someone else may have already asked the same question and the answer may be found in here Also you may wish to do all of the simple things that you can before you call These may include Turning off and then RESTARTING your computer Closing and then RESTARTING the tax program Checking all of the connections to your computer including your printer network and modem cables Periodically run the Windows Error check and Defragment programs Ifyou have a lot of programs that run in the background when you start your computer you will want to disable or turn off those that you will not use This will free up more of your computer s resources and help prevent hang ups and memory errors 3 Attention Windows Vista Users if you will be installing LMS TAX Pro on a Windows Vista computer please follow the steps below

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