NEW INSCOPE 2008 RENTAL ROYALTY INCOME ON 1099

NEW IN-SCOPE - 2008 RENTAL & ROYALTY INCOME ON 1099 -MISC FORM 8606 NON-CASH CONTRIBUTIONS NTTC Training 2008 1

RENTAL & ROYALTY INCOME PUB 17, CHAPTER 12 o Rental and Royalty Income from: o Oil leases o Other similar “income only” sources o Income reported to taxpayer on Form 1099 -MISC o Use Sched E to report income o Cannot accept if expenses must be reported against income NTTC Training 2008 2

DATA ENTRY INTO TAXWISE o From Line 17, Form 1040, Link to Sched E q Complete Line A of Sched E q Go to line 3 or 4, Col A, and link to 1099 MISC. q Complete 1099 -MISC o Back out to form 1040. Income should now show on line 17 NTTC Training 2008 3

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SCHED E, PAGE 1 NTTC Training 2008 5

FORM 8606 PUB 17, CHAPTER 17 IRA NON-DEDUCTIBLE CONTRIBUTIONS IRA DISTRIBUTIONS AFTER NONDEDUCTIBLE CONTRIBUTIONS ROTH IRA NONQUALIFIED DISTRIBUTIONS NTTC Training 2008 6

IRA NON-DEDUCTIBLE CONTRIBUTIONS o Non-Deductible Contributions q Alternative when Deductible are limited by Income and/or Retirement Plan o Can be made up to maximum for year q Total of Deductible and Non-Deductible cannot exceed maximum for year. q $5, 000($6, 000 over 50 yrs of age) max for 2008 NTTC Training 2008 7

REPORT DEDUCTIONS ON FORM 8606 o Non-Deductible contributions MUST be reported on Form 8606 q Creates Basis in IRA q If not reported, no benefit on distribution o Form 8606 provides cumulative record q Non-Deductible Contributions q Distributions NTTC Training 2008 8

FORM 8606 o Part I – For reporting non-deductible contributions and distributions q Distributions reported here only if there were non-deductible contributions o Part II – Conversions q Out-Of-Scope o Part III – Distributions from Roth IRAs NTTC Training 2008 9

NON-DEDUCTIBLE CONTRIBUTIONS o Enter amount in Line 1, Part I. o Taxpayer must provide amount for entry into Line 2 (Basis for earlier year). q Found on Form 5498 NTTC Training 2008 10

FORM 8606 Taxpayer info. NTTC Training 2008 11

NON-DEDUCTIBLE CONTRIBUTIONS o Distribution? q No – Done o Yes – Complete Lines 4 – 14 of Form 8606 o Taxwise does calculation automatically o Purpose of this is to pro-rate non-taxable amount (basis) over life of IRA. o Taxpayer must provide value of IRAs NTTC Training 2008 12

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IRA DISTRIBUTIONS o If there have been non-deductible contributions: q KEY: Taxwise - must check box on 1099 -R screen, exclusion worksheet NTTC Training 2008 14

FORM 1099 -R NTTC Training 2008 15

NON-CASH CONTRIBUTIONS PUB 17, CHAPTER 24; INSTRUCTIONS, FORM 8283 REPORTING NON-CASH CONTRIBUTIONS $500 - $5, 000 NTTC Training 2008 16

NON-CASH CONTRIBUTIONS o Claim non-cash charitable contributions q Part of Itemized deductions (sched A) o >$500, must complete Form 8283 o In-Scope, $500 - $5, 000 q Form 8283, Section A, Part 1, page 1 o Out-of-Scope, >$5, 000 NTTC Training 2008 17

NON-CASH DEDUCTIONS o Report items (groups of similar items) of <$5, 000 o Securities listed on daily exchange o Taxpayer must provide his/her cost o Taxpayer must provide Fair Mkt Value o Preparer completes form NTTC Training 2008 18

FORM 8283, SECTION A o In Taxwise: Select Form 8283 from Forms List o Complete Section A o Information carries back to Sched A detail worksheet and to Sched A, Gifts to Charity NTTC Training 2008 19

FORM 8283, PAGE 1 NTTC Training 2008 20

FORM 8283, PAGE 1 NTTC Training 2008 21