Estimate Option 1 Recalculates SE Tax for 2011
Why is estimate option 1 recalculating SE tax?
1
11
cEp2wsxf8r4laPacwZ5xHE
7 Replies
Accountant Man
Questions asked: 132
Questions answered: 10671
Points earned: 29410
Questions answered: 10671
Points earned: 29410
Accountant Community AllStar
Advisory council of Accountant community power users.
04/01/11 6:08am PDT
Does the law which allows the deduction of SE health insurance from SE income(to reduce SE tax) exist for 2011, or is it just for 2010 returns?
If you use Pro Series Basic I might not be able to help you. If you use Turbo Tax I might refuse to help you. All others, watch out! ;-)
04/01/11 7:26am PDT
Yes, there are law changes in both 2010 and 2011 effecting the calculation of SE tax and the deduction for 1/2 of SE Tax. My concern is, we just want Safe Harbor estimates for this client and normally Option 1 would produce those. In this case, because of the one year deduction against SE for SE Health Insurance in 2010 and the 2011 reduction of 2% of SE tax, the amount of the Line 27 and SE tax itself will change in 2011 and Lacerte is making those changes in calculating 2011 estimates which are lower than 110% of 2010. We don't want those changes to be considered. In the past, Option 1 has been just what it says: 100/110% of 2010 tax. Now there does not seem to be a way to achieve that.
04/01/11 9:06am PDT
I don't want it to be the lesser number. I'm trying to get Safe Harbor estimates which should be 110% of 2010 tax.
04/01/11 9:27am PDT
Could you make believe 2011 is just like 2010, and try the "lesser of A or B" thing? What do you get when you do that?
Other than that, could you do "lesser of A or B" and in the expanded screen, tell the program that SE tax will be down by such-and-such an amount, or SE income will be down by such and such an amount (yet not say that income itself will be down).
Or, if you have to fiddle with the income, make the "interest income" go up by the same amount that Schedule C goes down.
sjrcpa
Questions asked: 22
Questions answered: 5561
Points earned: 16637
Questions answered: 5561
Points earned: 16637
Accountant Community AllStar
Advisory council of Accountant community power users.
ProAdvisor
Members of the QuickBooks ProAdvisor Program
Intuit Moderator
Mod/Co-mod
04/01/11 11:15am PDT
The solution
There are always some issues with how Lacerte calculates estimated tax payments, most of the time with the states. Here, since you know you want 110/110% of 2010 tax, once you know 2010 tax, I would just override the 2011 estimates and move on.
The more I know, the more I don't know.
04/01/11 11:40am PDT
Latest post
I have an answer to the issue. Although Lacerte uses the Estimate worksheet and reflects the 2011 law changes on it, once they get to Line 14, they revert back to a calcuation using 2010 tax. The problem was that the Making Work Pay credit is being deducted from 2010 tax before they mark it up to 110%. As some of you have suggested, in these cases you just have to override the calculation. Thanks to all who replied.
