56627

[#1]

What is the informational diagnostic stating your proforma occurred before the changes made to IRS for penalties and interest calculation and you either need to re proforma or manually enter the tax from line 26e of Schedule SE? When I look at the penalties and interest amounts for AGI and tax liability it appears correct.

Solution: There was a change made to the IRS calculations in regards to the 2020 SE tax deferral and the 2021 Underpayment Penalty calculation (Form 2210). This change was made after we released our Proforma version of Lacerte. Therefore, we inserted this diagnostic on affected returns to inform the preparer the 2020 tax liability should now include line 26 of the 2020 Schedule SE. As an alternative to re-transferring the client from last year, you can simply add the amount of the 2020 Schedule SE, line 26 to the prior year tax liability field in screen 8, Penalties and Interest.

[qbteachmt]

The issue is from 2020 SE deferral, which did not affect total tax you owed, but the total you needed to pay. You could defer some of that SE payment. The estimated safe harbor for 2021 would still need to include the SE tax amount, as that is Tax, not payment, for safe harbor purposes.

"Is it only applicable to clients who had Sch SE?"

It depends on the tax year you are working on, but in general:

For 2020, the amount that should have been paid in for safe harbor is adequate as long as it works with the math of current year/prior year (standard safe harbor provision) Total tax owed minus the SE deferral provision amount, even if not using that option.

For 2021, the only issue is to figure the amount that safe harbor would be based on, not reducing it for SE tax (which was owed and just the payment was the deferral), and adjusting for the various credits that would not be part of 2021. One ProSeries user mentioned that their 2020 est projection reduced the 2021 amount taking into consideration that optional deferral for SE, but first, that is wrong and second, their taxpayer did not even make that deferral, anyway.

Just run the numbers for yourself and confirm the right data is there. I found a message from Feb that tells you to re-proforma, if you need to try this.

[qbteachmt]

The issue is from 2020 SE deferral, which did not affect total tax you owed, but the total you needed to pay. You could defer some of that SE payment. The estimated safe harbor for 2021 would still need to include the SE tax amount, as that is Tax, not payment, for safe harbor purposes.

"Is it only applicable to clients who had Sch SE?"

It depends on the tax year you are working on, but in general:

For 2020, the amount that should have been paid in for safe harbor is adequate as long as it works with the math of current year/prior year (standard safe harbor provision) Total tax owed minus the SE deferral provision amount, even if not using that option.

For 2021, the only issue is to figure the amount that safe harbor would be based on, not reducing it for SE tax (which was owed and just the payment was the deferral), and adjusting for the various credits that would not be part of 2021. One ProSeries user mentioned that their 2020 est projection reduced the 2021 amount taking into consideration that optional deferral for SE, but first, that is wrong and second, their taxpayer did not even make that deferral, anyway.

Just run the numbers for yourself and confirm the right data is there. I found a message from Feb that tells you to re-proforma, if you need to try this.