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Federal Income Tax Template (FITT) Copyright 1984, 1985, 1986, 1987, 1988 by Ronald A. Ruel A Tax Preparation & Planning Aid For Users Of Lotus 1-2-3 (tm) 1988 Version T A B L E O F C O N T E N T S 1. PREFACE.................................................... 1 2. INTRODUCTION............................................... 2 2.1 What is FITT?........................................ 2 2.2 What FITT is not..................................... 2 2.3 New Additions To FITT In 1988........................ 3 2.4 Hardware Requirements................................ 3 2.5 Software Requirements................................ 5 2.6 FITT Files........................................... 5 3. OVERVIEW................................................... 7 4. USING THE MENUS............................................ 10 4.1 The DATA, GO TO, and REINIT menus.................... 10 4.2 The PRINT menu....................................... 12 4.3 How to make a selection from a menu.................. 14 4.4 A shortcut for reaching a menu option................ 14 5. ENTERING YOUR INCOME TAX DATA.............................. 16 5.1 Order Of Data Entry.................................. 16 5.2 Cell Protection...................................... 16 5.3 Two alternative methods for data entry............... 16 5.4 Use of the @NA Value for "Switches".................. 17 5.5 Use of the @ERR Value as an Error Flag............... 18 5.6 A Few Words About Recalculation...................... 19 5.7 Data Entry Specifics................................. 19 5.7.1 Form 1040 - U.S. Individual Income Tax Return......................................... 19 5.7.2 Form 1116 - Computation of Foreign Tax Credit......................................... 22 5.7.3 Form 2106 - Employee Business Expenses........ 22 5.7.4 Form 2119 - Sale Or Exchange Of Principal Residence...................................... 22 5.7.5 Form 2210 - Underpayment Of Estimated Tax By Individuals.................................... 23 5.7.6 Form 2441 - Credit for Child and Dependent Care Expenses.................................. 23 5.7.7 Form 4136 - Computation Of Credit For Federal Tax On Fuels................................... 23 5.7.8 Form 4562 - Depreciation And Amortization..... 24 5.7.9 Form 4684 - Casualties And Thefts............. 24 5.7.10 Form 6251 - Alternative Minimum Tax - Individuals.................................... 24 5.7.11 Form 8396 - Mortgage Interest Credit......... 25 5.7.12 Form 8582 - Passive Activity Loss Limitations.................................... 25 5.7.13 Schedule A - Itemized Deductions............. 25 5.7.14 Schedule B - Interest And Dividend Income.... 26 5.7.15 Schedule C - Profit Or Loss From Business.... 26 5.7.16 Schedule D - Capital Gains And Losses........ 26 5.7.17 Schedule E - Supplemental Income Schedule.... 26 5.7.18 Schedule F - Farm Income and Expenses........ 27 5.7.19 Schedule R - Credit For The Elderly And Disabled....................................... 27 5.7.20 Schedule SE - Computation Of Social Security Self-Employment Tax............................ 27 5.8 Reinitializing Specific Forms and Schedules.......... 28 6. DISCLAIMER................................................. 29 L I S T O F F I G U R E S Figure 1: FORM portion of the DATA, GO TO, & REINIT menu trees.................................................... 11 Figure 2: SCHEDULES portion of the DATA, GO TO, & REINIT menu trees.................................................... 12 Figure 3: WORKSHEETS portion of the DATA, GO TO, & REINIT menu trees............................................... 12 Figure 4: FORM portion of the PRINT menu tree................ 13 Figure 5: SCHEDULE portion of the PRINT menu tree............ 13 Figure 6: WORKSHEET portion of the PRINT menu tree........... 13 February 3 1989 FITT88 User's Manual Page 1 1. PREFACE If you decide to make use of this program, and find it to be of value, I ask that you become a registered user by sending $35.00 to: Ronald A. Ruel 665 Clinton Avenue Washington Township, N.J. 07675 As a registered user, you are entitled to support. In addition, you will be notified of future releases or revisions to the current release. Developing a model of this complexity requires many, many hours of painstaking work. The continued development of this product since 1984 is a direct result of your financial support. Regardless of whether you make a contribution, you are encouraged to copy and share this program with others under the following guidelines: - Do not distribute this program in connection with any other product. - Do not make the program available for any consideration or fee. A nominal fee not to exceed $10.00 may be charged to defray the cost of reproduction and distribution. - This program must be distributed in unmodified form, and include this documentation file. Reference is made in this manual to the following: Lotus 1-2-3 is a copyrighted program of the Lotus Development Corporation. IBM is a trademark of the International Business Machines Corporation. February 3 1989 FITT88 User's Manual Page 2 2. INTRODUCTION This manual should help you get the most out of using the Federal Income Tax Template. It is not necessary for you to read this document all the way through before you get started. FITT is menu driven, and its use should be more or less self-explanatory. It is a good idea to at least read through the sections which deal with the specific forms and schedules that you will be using. If you wish to get started immediately, start up Lotus 1-2-3, retrieve the worksheet file called FITT88.WKS, and watch what happens. This document assumes that you have some basic familiarity with Lotus 1-2-3. You should know how to retrieve and store worksheets. You should also understand the concepts of cell protection, and recalculation. These topics will be touched on briefly, but this is not intended to be a tutorial on how to use Lotus 1-2-3. 2.1 What is FITT? FITT stands for Federal Income Tax Template. FITT is a Lotus 1-2-3 worksheet (or template) intended to simplify the process of preparing a Federal Income Tax Return. It has been designed to be easy to use. You do not have to be an expert user of Lotus 1-2-3 in order to take advantage of the capabilities of FITT. FITT contains a total of 24 tax forms and schedules, making it one of the most comprehensive tax programs available anywhere. This means that the vast majority of taxpayers can prepare their entire Federal Income Tax return using FITT88. In fact, most people will need to use only four or five of these forms and schedules. You use FITT by simply filling in the "blanks" on the appropriate tax forms shown on the screen in the same way you would normally fill out the actual forms. FITT takes care of all the calculations that need to be made including carrying over information from one form to another, looking up numbers in the tax tables, etc. After you've entered the information, FITT will print out those forms that you need in order to file your return. According to the Internal Revenue Service, you cannot computer-generate a tax form that requires a signature and establish tax liability. This means that the 1040 cover page must be government-issue. 2.2 What FITT is not FITT is not a tax advisor. No tax software package can be a substitute for competent professional advice in what is clearly a complex field. If you are in doubt about any aspect of your income tax preparation, do yourself a favor and consult an expert. Furthermore, this document is not an income tax instruction manual. February 3 1989 FITT88 User's Manual Page 3 Many of the instructions from the tax forms have been reproduced in an abbreviated form within FITT for your convenience, however it is a good idea to have the actual 1040 package of forms and instructions available for reference as you use this program. 2.3 New Additions To FITT In 1988 For those of you who have used previous versions of this product in past years, there are a few significant additions in FITT88 worth mentioning. Three new forms have been included: Form 2210- Underpayment of Estimated Tax by Individuals and Fiduciaries, Form 1116-Computation of Foreign Tax Credit, and Form 8615-Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1,000.. In addition to the official IRS forms and schedules, FITT now includes a number of the worksheets that appear within the Form 1040 instruction package. These worksheets are: Taxable Refunds of State & Local Income Taxes, Social Security Benefits, IRA Worksheets 1 and 2, Self-Employed Health Insurance Deduction, and the Schedule SE worksheet. An extra navigational aid has been added to the menus. In addition to the NEXT and PREVIOUS options which appear on all intermediate level menus, the lowest level menus now include a FIRST option. This will bring you directly back to the first menu in the series. Previous, you had to use MAIN to go all the way to the top, and then proceed back down, or use PREVIOUS to back out one level at a time. The reference manual no longer includes a complete set of all the printed forms and schedules. A number of people suggested that they be deleted since anyone who wants to print a complete set can easily do so directly from the FITT Print menu. This has several advantages. The resulting reduction in the size of the documentation file allows all the FITT files to reside on the distribution diskette in uncompressed form. This saves you the trouble of having to "unsqueeze" the files onto another disk before you can use them. This also cuts down on the time required to download these files from bulletin board systems. These are the main differences that will be obvious to previous users. 2.4 Hardware Requirements FITT will run on any computer that can run Lotus 1-2-3, and has sufficient memory to accommodate the FITT worksheet. The minimum memory required may vary from machine to machine, and even from configuration to configuration on a given machine. Once you have loaded Lotus 1-2-3, FITT88 consumes about 206K of February 3 1989 FITT88 User's Manual Page 4 memory under version 1A, and about 204K of memory under version 2.01. The improved memory allocation scheme employed in version 2 doesn't significantly reduce the memory required because FITT is a very "dense" worksheet with little wasted space. On most configurations, this probably means you'll need 512K of RAM to load the entire worksheet. Hopefully, this will not be a problem to the vast majority of you since memory limitations are becoming less of an issue these days. If you don't have sufficient memory to load the entire worksheet, Lotus 1-2-3 will beep and display the MEMORY FULL indicator in the upper left corner of the screen. If this is the case, you should check to see how much of the worksheet got loaded in. You may find that FITT can still be used. Lotus 1-2-3 loads worksheets a row at a time starting from the upper left corner and ending with the lower right corner. The structure of FITT has been designed with this in mind. The most critical portions of the worksheet, and the most commonly used forms and schedules have been positioned so that they will be loaded into memory first. Therefore, it is quite likely that you can still make use of FITT without the benefit of some of the less frequently used forms at the bottom of the worksheet. If you get the MEMORY FULL error message, press the Esc key to clear the error. Then use the GO TO menu to move to each of the forms and schedules you need to prepare your particular tax return and check them to see if they are intact. I will gladly produce special versions of FITT88 containing specific forms and schedules for registered users who want a subset of the complete package to fit within limited memory. There are no special printer requirements. The tax forms and schedules are printed without the use of set-up strings to perform any special printer control functions. This enables any text printer to be used. All of the printed reports are based on an 80 character print line, and a 66 line page. This means that you can insert your own setup string within worksheet to accommodate any special requirements of your printer. For example, if you have an HP LaserJet printer, the page length default is normally 60 lines. You could change it manually by using the front control panel each time you use FITT, or you could use the Print Options Setup (/PPOS\027.......) command to specify the appropriate setup string to change the page length to 66 lines. Lotus 1-2-3 will then send this sequence of characters to the printer at the start of each printing operation. If you enter a setup string, remember to save the worksheet so that it is retained for future use. February 3 1989 FITT88 User's Manual Page 5 2.5 Software Requirements FITT was written and tested using Lotus 1-2-3 Release 1A. I do not know whether there were any differences in the worksheet structure, or the macro command language under release 1 that will prevent FITT from working properly. If you've got release 1A, there is no problem. If you've got release 1, try it and see if it works. FITT88 is compatible with the 1-2-3 release 2 and 2.01 as well. The first time you retrieve FITT, it will take longer than usual because Lotus 1-2-3 is converting the file from Release 1 to Release 2 format as it loads it in. When you save it, the file name extension becomes WK1 instead of WKS, signifying that the worksheet is in Release 2 format. The next time this file is retrieved, the conversion won't have to be repeated, and it will load more quickly. Note that the original file (FITT88.WKS) remains intact. I had also hoped to provide FITT88 in directly executable form by using one of the spreadsheet compilers that are available from third party vendors. Unfortunately, the compiler I tried was unable to successfully process this worksheet for some reason. Since I haven't had time to pursue this problem, FITT88 still requires the use of Lotus 1-2-3 for now. 2.6 FITT Files FITT consists of a collection of three separate files. The worksheet file is named FITTyy.WKS. The yy after the acronym signifies the last two digits of the tax year for which this version was designed. In this case, the file is named FITT88.WKS because it is the version to be used in preparing the federal tax return for the 1988 tax year. Those of you who are users of Lotus 1-2-3 will recognize the familiar WKS extension which signifies that the file is a Lotus 1-2-3 release 1A worksheet. This documentation is contained in a file called FITTyy.DOC. It is a plain ASCII text file which can be displayed or printed by using the DOS TYPE command. A third file called WHATSNEW.DOC contains the contents of section 2.3. This file is intended for experienced users who don't like reading manuals in order to find out what has changed. (I'm one of these people.) There is a fourth file called FITTCOMP.DOC. It contains a chart that compares FITT88 with 13 other commercially available tax preparation programs. The chart shows which forms and schedules are supported by each program. Personally, I think FITT88 compares quite well, but you be the judge. FITT is distributed in two ways. It is available directly from me on diskette, and it can be downloaded from many bulletin board systems. On bulletin boards, FITT is distributed in the form of February 3 1989 FITT88 User's Manual Page 6 an archive file called FITTyy.ARC. This file contains the worksheet (FITTyy.WKS), this documentation file (FITTyy.DOC), and the whats new file (WHATSNEW.DOC). The fourth file is kept separate, and is called FITTCOMP.ARC. The distribution diskettes I send out contain all four files in their normal uncompressed form. To run FITT, start up Lotus 1-2-3, place a diskette containing the file FITTyy.WKS in the drive which is the default start up directory for 1-2-3 (usually B), or copy the file into the subdirectory on your hard disk which serves as the default for Lotus 1-2-3, and enter the following key strokes: /FRFITTyy~ (~ signifies the ENTER key.) FITT will start up by itself, and display the title screen. Pressing the ENTER key will get you to the main menu. That's all there is to it. It is important that you keep the original worksheet file intact in case you decide to reinitialize any of the forms or schedules back to their original state. There is a set of menus to facilitate this, but it requires that the original copy of FITTyy.WKS be available in the default directory of 1-2-3. For this reason, you should make a copy of FITTyy.wks, assigning it a different name, and use this copy instead of the original. February 3 1989 FITT88 User's Manual Page 7 3. OVERVIEW FITT has been designed to be as easy to use as possible. The tax forms and schedules included in FITT have been modeled after the actual forms. A "fill-in-the-blanks" approach is used so that the data can be entered in the same way that it is on the actual tax forms. Some changes in format were inevitable due to constraints imposed by Lotus 1-2-3 and the display screen. The form layout and text are close enough to the actual forms so that there should be no confusion. While FITT will considerably simplify tax return preparation, its greatest value is probably in tax planning, and examining the implications of different filing strategies. For example, it can be used to easily determine whether a married couple would be better off filing separate returns, or filing a joint return. After you fill out Schedule A, it will automatically compute the standard deduction to which you are entitled, compare this with your itemized deductions, and use whichever are greater. If you complete Schedule D, FITT will figure the Alternative Tax Computation and use it if it results in less tax compared to the tax schedules. FITT can also be used to prepare Pro Forma returns during the year to estimate your tax liability in advance, so you can take action to minimize it. In addition, it can help you determine the right amount to be withheld from your salary. If too much is being withheld, then you're giving Uncle Sam an interest-free loan. If too little is being withheld, you may be subject to penalties and have to make estimated tax payments. FITT is based on the U.S. Individual Income Tax Return, and contains the following forms and schedules: Form 1040 - U.S. Individual Income Tax Return Form 1116 - Computation of Foreign Tax Credit (Individual, Fiduciary, or Nonresident Alien Individual) Form 2106 - Employee Business Expenses Form 2119 - Sale Or Exchange Of Principal Residence Form 2210 - Underpayment of Estimated Tax by Individuals and Fiduciaries Form 2441 - Credit For Child And Dependent Care Expenses Form 3903 - Moving Expenses Form 4136 - Computation of Credit for Federal Tax on Gasoline and Special Fuels Form 4137 - Computation of Social Security Tax on Unreported Tip Income Form 4562 - Depreciation and Amortization Form 4684 - Casualties And Thefts Form 4835 - Farm Rental Income and Expenses Form 6251 - Alternative Minimum Tax - Individuals Form 8396 - Mortgage Interest Credit Form 8582 - Passive Activity Loss Limitations Form 8615 - Computation of Tax for Children Under Age 14 February 3 1989 FITT88 User's Manual Page 8 Who Have Investment Income of More Than $1,000 Schedule A - Itemized Deductions Schedule B - Interest And Dividend Income Schedule C - Profit Or (Loss) From Business Schedule D - Capital Gains And Losses Schedule E - Supplemental Income Schedule Schedule F - Farm Income And Expenses Schedule R - Credit For The Elderly And The Permanently And Totally Disabled Schedule SE- Computation Of Social Security Self-Employment Tax FITT also contains the following worksheets contained within the Form 1040 instruction package: - Taxable Refunds of State & Local Income Taxes (Form 1040-line 10) - Social Security Benefits Worksheet (Form 1040-lines 21a and 21b) - Self-Employed Health Insurance Deduction Worksheet (Form 1040-line 26) - IRA worksheets 1 and 2 (Form 1040-lines 25a and 25b) - Schedule SE worksheet (Schedule SE-line 8) In addition, FITT contains the Tax Rate Schedules X (Single Taxpayers), Y (Married Taxpayers Filing Joint Returns or Filing Separate Returns, and Qualifying Widows and Widowers), and Z (Unmarried Heads of Household). The Tax Table is not used. The IRS states that it should be used by persons with taxable incomes of less than $50,000. In these cases, FITT uses the Tax Rate Schedules to achieve the same result by adjusting taxable income to place it in the middle of the appropriate bracket before performing the calculation specified by the corresponding Tax Rate Schedule. When FITT uses the Tax Rate Schedules, it checks to see if the taxable income falls within the highest bracket on the schedule being used. If it does, then FITT will automatically use the special Tax Rate Schedule Worksheet to properly compute the tax. On the page in the 1040 instruction package containing the 1988 Tax Rate Schedules, you will see the following notice: "Caution: Pending legislation would require married persons filing separately who did not claim an exemption for their spouse to add $546 to the result otherwise figured on line 7 above. Get Pub. 553, Highlights of 1988 Tax Changes, to find out whether this law was passed." Believe it or not, the IRS could not tell me if in fact this change had passed until today (2/3/89). Publication 553 is still not available (I've had it on order for two months, and neither the central or local IRS offices have it yet.) For those of you who would be affected by this change, I can only relay the answer I just received after repeated calls over the last February 3 1989 FITT88 User's Manual Page 9 month had been fruitless: "As far as we know, nothing has changed." Therefore, I have not included this extra $546 in the tax calculation. It's no wonder that the IRS has difficulty in getting people to file their returns earlier. When FITT is retrieved, the title screen will appear. Pressing the enter key causes the main menu screen to be displayed. You will notice that a version letter appears on this screen. FITT is initially released as Version A for a particular tax year. Should subsequent versions be released with improvements or corrections, the version letter will be updated accordingly. This will enable you to identify whether or not you have the most current version. February 3 1989 FITT88 User's Manual Page 10 4. USING THE MENUS FITT utilizes menus which appear on the top two lines of the screen. The first line contains the available choices on that particular menu. You select a choice by using the left and right arrow keys to move the pointer from one item to another. You will note that as the pointer is moved to each item, the item appears in inverse video. The text on the line below also changes to provide a brief description of that particular menu choice. The main menu choices are: DATA (to enter your tax data), GO TO (to quickly go to a particular form or schedule), PRINT (to print out one or more of your completed forms), REINIT (to reinitialize a particular form or schedule), and QUIT (to leave the menu system.) They appear like the standard Lotus 1-2-3 command menus with the choices listed across the top of the screen. The main menu appears as follows: DATA GOTO PRINT REINIT QUIT Each of these options will be described in more detail in the following sections. The menu structure has been designed so that at any point, you can return to the previous menu used, or return to the main menu. This flexibility permits you to efficiently move back and forth through the various choices. 4.1 The DATA, GO TO, and REINIT menus The DATA, GO TO, and REINIT choices on the main menu bring up very similar looking menus, the primary difference being the operation they invoke. DATA allows you to enter data on one or more forms using a guided "fill-in-the-blanks" approach. GO TO provides you with a facility to quickly "jump" from one form to another. REINIT allows you to reinitialize a particular form or schedule back to its original state using the copy on the original FITTyy.WKS file on the distribution disk. All of the forms are grouped within one set of menus, and the schedules grouped within a second set. The sub-menus for forms present the menu choices in numerical order. Thus, Form 1040 is shown first, and Form 8615 is shown last. Schedules are ordered alphabetically, with Schedule A appearing first, and Schedule SE appearing last. Many of the forms and schedules supplied by the Internal Revenue Service must be filled out on both the front and back sides. This structure has been preserved in FITT. The front and back sides of the affected forms are listed as separate menu choices within the DATA, GO TO, and REINIT menus even though they are part of the same form. Each form is identified in the menus by its number, and each schedule by its letter. When the form or schedule has two sides, the suffix -Frt designates the front sheet, and -Bak designates the February 3 1989 FITT88 User's Manual Page 11 back sheet. For example, the actual Form 1040 consists of one sheet of paper on which both front and back sides are used. In this case, the front sheet of form 1040 appears in the menus as 1040-Frt, and the back sheet as 1040-Bak. Within the FITT worksheet, a row of equal signs is used to identify the start and the end of a physical page on the corresponding IRS forms and schedules. This convention makes it easier to navigate throughout the worksheet, and know when you've moved from one form to another, or one side to another. The distinction between front and back sheets is not made within the PRINT menus. My rationale is that a form or schedule should always be printed in its entirety. The GO TO, DATA, and REINIT menus deal specifically with the front and back sheets because you may wish to enter, change, or view data on one side of a form only. When you choose either the DATA, GOTO, or REINIT option shown on the main menu, a second level menu appears as follows: FORMS SCHEDULES WORKSHEETS MAIN From here, choosing Forms, Schedules, or Worksheets will bring you to a third menu level. From this level down, the menu trees are the same regardless of which option you started with. The structure of the form menu tree is shown in Figure 1. All figures only show the brief menu option name. The actual menus themselves have a second line of explanatory text that appears directly below the command line. This text fully names the specific form, schedule, or worksheet that is currently being highlighted. ---------------------------------------------------------------- Figure 1: FORM portion of the DATA, GO TO, & REINIT menu trees 1040-FRT 1040-BAK 1116-FRT 1116-BAK 2106-FRT NEXT PREV MAIN 2106-BAK 2119 2210-FRT 2210-BAK 2441 NEXT PREV MAIN 3903 4136 4137 4562-FRT 4562-BAK NEXT PREV MAIN 4684-FRT 4684-BAK 4835 6251 8396 NEXT PREV MAIN 8582 8615 FRONT PREV MAIN ----------------------------------------------------------------- The structure of the schedule menu tree is shown in Figure 2. February 3 1989 FITT88 User's Manual Page 12 ---------------------------------------------------------------- Figure 2: SCHEDULES portion of the DATA, GO TO, & REINIT menu trees A B C-FRT C-BAK D-FRT NEXT PREV MAIN D-BAK E-FRT E-BAK F-FRT F-BAK NEXT PREV MAIN R-FRT R-BAK SE-FRT SE-BAK FIRST PREV MAIN ---------------------------------------------------------------- The structure of the worksheet menu is shown in Figure 3. ---------------------------------------------------------------- Figure 3: WORKSHEETS portion of the DATA, GO TO, & REINIT menu trees 1040-L10 1040-L21 1040-L26 IRA-1 IRA-2 SE-L8 PREV MAIN ---------------------------------------------------------------- There is one case where the Worksheet menu is slightly different from what is shown in Figure 3. The Schedule SE-Line 8 worksheet does not appear as an option within the DATA menu tree. This worksheet does not contain any locations for entry of data by the user. FITT automatically activates this worksheet when necessary, and fills in all of the required information. For this reason, you can access it from the GOTO, PRINT, and REINIT menus only. 4.2 The PRINT menu The print menu allows you to select individual forms and schedules to be printed. In addition, groups of forms and schedules can be printed automatically. FITT automatically initiates a recalculation before printing anything to guarantee that the printed results will be up-to-date. Each printed page contains a standard heading which consists of the date on the left, a title in the center, and a page number on the right. The title consists of the word "Schedule" or "Form" followed by the appropriate number or letter, and the words "-Front Sheet" or "- Back Sheet" where applicable. The page number corresponds to the printed page, and it always begins with 1 for each form or schedule, even if a group of them are being printed at one time. For example, Form 2119 - Sale or Exchange of Principal Residence requires two printed pages, even though the IRS form is contained entirely on the front sheet. Schedule D on the other hand consists of a front sheet printed as pages 1 and 2, and a back sheet printed as page 3. The printouts have been designed to make the page breaks fall in a logical place. This is accomplished by dynamically changing the February 3 1989 FITT88 User's Manual Page 13 top and bottom margins during the printing process. Therefore you shouldn't think anything is wrong with your printer when some forms begin printing farther down the page than others. The page breaks were calculated on the basis of a 66 line page. When you choose the PRINT option shown on the main menu, a second level menu appears as follows: FORMS SCHED WRKSHEETS 1040-ABD ALL-Frms ALL-Schs ALL-F&S MAIN From here, choosing the Forms, Schedules, or Worksheets options will bring you to a third menu level. From this level down, the menu trees are similar to those shown in Figures 1-3. The difference is that each form or schedule is always printed in its entirety. You do not have the option of printing out only the front side or back side. The structure of the form menu tree is shown in Figure 4. ---------------------------------------------------------------- Figure 4: FORM portion of the PRINT menu tree 1040 1116 2106 2119 2210 NEXT PREV MAIN 2441 3903 4136 4137 4562 NEXT PREV MAIN 4684 4835 6251 8396 8582 NEXT PREV MAIN 8615 FIRST PREV MAIN ---------------------------------------------------------------- Figure 5 shows the structure of the SCHEDULE portion of the PRINT menu tree. ---------------------------------------------------------------- Figure 5: SCHEDULE portion of the PRINT menu tree A B C D E NEXT PREV MAIN F R SE PREV MAIN ---------------------------------------------------------------- The WORKSHEET print menu is shown below in Figure 6. ---------------------------------------------------------------- Figure 6: WORKSHEET portion of the PRINT menu tree 1040-L10 1040-L21 1040-L26 IRA-1 IRA-2 SE-L8 PREV MAIN ---------------------------------------------------------------- The 1040-ABD option on the PRINT menu prints out the Form 1040, and Schedules A, B, and D. These are probably the most commonly used set of forms, and this option provides a convenient way to print February 3 1989 FITT88 User's Manual Page 14 this group out at once. The All-Frms option prints out each and every form in numerical order. The All-Schs option will print out each Schedule in alphabetical order. Finally, the All-F&S option will produce a complete set of all forms and schedules. For these print options that print out a group of forms, recalculation is initiated only once at the start of the group, and not repeated after each form since FITT retains control and updating is not possible until after the operation is completed. 4.3 How to make a selection from a menu You make your selection by moving the pointer using the left arrow and right arrow keys on the numeric pad on the right side of the keyboard until the desired choice is highlighted in inverse video. Pressing the ENTER key will then invoke your choice. Note that the Num Lock key must be disengaged in order for the arrow keys to work. Lotus 1-2-3 displays NUM in the bottom right corner of the screen if it is engaged. Pressing the Num Lock key once causes the indicator to disappear showing that it has been disengaged. If you have the newer keyboard with separate cursor control keys, then you can use these keys regardless of how Num Lock is set. The NEXT, FIRST, PREVIOUS, and MAIN selections can be invoked by the method described above, or simply pressing the letter N key for NEXT, F for FIRST, P for PREVIOUS, and M for MAIN. 4.4 A shortcut for reaching a menu option The main menu is automatically brought up after FITT is loaded, and the initial title screen is displayed. If you leave the menu command mode via the QUIT selection, you may wish to reactivate the main menu without restarting FITT. Holding down the Alt key and pressing the M key (Alt-M) will bring up the main menu anytime you are not in the menu command mode. Schedule A, for example, could be printed out by following these steps: - Bring up the main menu (Alt-M) if not under menu control - Select the PRINT option - Select the SCHEDULE option - Select the A option to print Schedule A There is a shortcut available for you to use if you wish. Holding down the Alt key and pressing the P key (Alt-P) will immediately bring up the PRINT menu, bypassing the first and second steps February 3 1989 FITT88 User's Manual Page 15 shown above. Similarly, Alt-D will bring up the DATA menu, Alt-G will bring up the GO TO menu, and Alt-R will bring up the REINIT menu. February 3 1989 FITT88 User's Manual Page 16 5. ENTERING YOUR INCOME TAX DATA Entering your income tax data involves inputting your data on the appropriate forms which apply to you. It is unlikely that you will need to use every one of the forms and schedules that FITT provides. A few people will only need to use Form 1040. Most people will probably need to use Schedules B and D to report interest and dividend income and capital gains and losses. Many will need to use Schedule A to report itemized deductions. The remaining forms and schedules will apply to a relatively small number of taxpayers. They have been included to insure that FITT will have maximum utility for the vast majority of people. 5.1 Order Of Data Entry In general, the order in which you enter your data doesn't matter. I recommend that you start with Form 1040, and enter your filing status and exemptions. Then you should complete the income section line by line and use the supplementary forms when you reach a line that requires it. You can complete the forms in a different order if you wish. You will see the Lotus 1-2-3 indicators NA or ERR displayed in those locations where there are calculations which require data that has not yet been entered. This won't matter since the errors will be removed once all of the required data has been entered. 5.2 Cell Protection To safeguard the contents of those cell locations which should not be altered by the user, the cell protection feature has been employed. Those cells in which the user may enter data are in an "unprotected" state. These cells are highlighted in green if you are using a color monitor, or appear in a higher intensity if you are using a monochrome monitor. The remaining cells are "protected". If you attempt to enter data in one of these cells, you will hear a beep, and the message "Protected Cell" will appear in the lower left corner of the display. You will not be able to proceed until you reset the error condition by pressing the Esc key. 5.3 Two alternative methods for data entry There are two different methods that you can use to enter your data. The method you choose is purely a matter of personal preference. The first method is to use the DATA menu, and select the specific form or schedule in which you wish to enter data. This will cause the designated form to appear, and move the cell pointer (the rectangular bar in inverse video that points to the current cell) February 3 1989 FITT88 User's Manual Page 17 to the first unprotected cell. When you use the arrow keys on the numeric keypad to move the cell pointer, it will skip over any intervening protected cells to the next unprotected cell. In general, pressing the right arrow key will move you through the unprotected cells on a form in the proper sequence from top to bottom. Pressing the HOME key on the numeric keypad moves the cell pointer to the unprotected cell closest to the upper left corner of the form. Pressing the END key moves the cell pointer to the unprotected cell closest to the lower right corner of the form. When you are done entering data on the form, pressing the ENTER key without entering any data will return you back to the DATA menu. From here, you can select the next form or schedule that you wish to complete. The second method for entering data is to use the GO TO menu to move to the form or schedule of your choice. You then move the cell pointer to the unprotected cells on that form and enter the data. There are distinct differences between these two methods of data entry. When you use the DATA menu, you automatically skip from one unprotected cell to another which makes it easier to determine where the data needs to be entered. The disadvantage is that you may not see all parts of the form or schedule; you will only see those parts containing the unprotected cells. This becomes more of a problem when you wish to view the bottom of a form where the results are shown, but can't get there because there are no unprotected cells in that vicinity. You also don't have complete flexibility of movement. When you enter data outside of the control of the menu system, you will have to move the cell pointer through a greater range of cell locations yourself. While this requires more manipulation of the cell pointer on your part, you do have the flexibility to move anywhere on the forms you wish. The choice of method is yours. 5.4 Use of the @NA Value for "Switches" As you look through the various forms and schedules, you will see that NA appears in a number of different places. They have special significance, and it is important for you to understand how they are used within FITT88. In Lotus 1-2-3, there is a special function: @NA. This means Not Available. The important thing is that there is another function which can be used to test for the presence or absence of this value in a specific cell. FITT88 makes extensive use of this value as a switch. In many places within the Federal Tax Return, you are supposed to check a box in answer to a question, and follow different calculation methods depending on your answer. FITT88 uses the NA value to indicate the absence of one of these check marks. When you "check" a box in FITT88 that contains NA, you are February 3 1989 FITT88 User's Manual Page 18 in effect setting a switch (by removing the NA value) which will cause a different sequence or method of calculation to occur. An example should make this clear. On the back sheet of Form 1040, there are a series of questions on lines 33a, 33b and 33c. An NA appears next to each of these questions. Whether or not you remove the NA values from these lines will make a significant difference in the way FITT88 works. If you haven't removed any of the NA values on these lines, FITT88 will apply the standard deduction rules, and compare the appropriate standard deduction with your itemized deductions (if any) from Schedule A to determine which would be more advantageous. If you remove the NA value from line 33c, you are signaling FITT88 that you are married filing a separate return and your spouse itemizes deductions, or that you are a dual- status alien. This means that you are not allowed to claim the standard deduction. Accordingly, FITT88 will not calculate one. If you removed any of the NA values from line 33a, then the special Standard Deduction tables are used. This usually results in a higher deduction. If you remove the NA value from line 33b indicating that you can be claimed as a dependent on another person's return, FITT88 will use the special Worksheet for Dependents to compute the proper deduction. There are two points to this lengthy explanation. First, it is important for you to answer these types of questions carefully and correctly by removing or not removing the appropriate NA values. Secondly, if you remove an NA value and change your mind, you must enter @NA to restore this special value. Simply entering the letters NA will not have the same affect even though the cell display may appear that way. 5.5 Use of the @ERR Value as an Error Flag As we all know, simply filling in the correct information on a tax return is tough enough by itself even if a program is doing all the calculations for us. There are lots of opportunities to make mistakes. For example, on some forms losses are to be entered as negative numbers, and on others as positive numbers. I have tried to build in as much error checking as possible to help you catch these kinds of errors. The ERR value is used to indicate that you've entered something that doesn't make sense. Therefore, if you see ERR displayed on a form or schedule, don't ignore it. Check the information that you've entered in the immediate vicinity because something is wrong. For example, on line 5 of the front of Form 1040, you must enter your filing status in the form of a number from 1 to 5. There is a formula in the cell immediately to the right which checks this value. If it is less than 1 or more than 5, the ERR value will be displayed in this cell. February 3 1989 FITT88 User's Manual Page 19 5.6 A Few Words About Recalculation Due to the size and complexity of FITT, recalculation of the worksheet takes several seconds on an 8088-based PC (which really isn't very long - one of my 1-2-3 worksheets takes over 10 minutes). If this recalculation took place every time a data item was entered, the resulting pause after each entry would quickly become annoying. Since it isn't necessary to recalculate this often, the recalculation mode has been set to manual. This means that recalculation will only take place on demand when you press the F9 function key. The disadvantage of this approach is that you must remember to invoke recalculation before examining any results. You can tell if recalculation is required by looking for the CALC indicator in the lower right portion of the screen. If it is present, it signifies that something has been changed since the last time the worksheet was recalculated. If you enter data through the use of the DATA menu, the worksheet is automatically recalculated for you when you exit from entering data in a particular form or schedule. This is another advantage of the DATA menus; you don't have to be concerned about invoking recalculation. Whenever you initiate a printing operation from the print menu, the worksheet is recalculated first before printing. This guarantees that the printed information is correct and up-to-date. I'm emphasizing this subject because all too often, I've seen worksheets yield incorrect answers because the user (myself included) forgot to invoke recalculation before recording the results. 5.7 Data Entry Specifics In general, you need only follow the instructions contained in your 1040 package to supply the data required by FITT. In the sections that follow, specific areas that may require clarification are treated on a form-by-form basis. In forms where several alternative calculation methods are possible, certain "switches" may need to be set as described earlier to indicate the method you've chosen. These "switches" will be described as well. A number of the forms and schedules are not treated in the following sections because their operation within FITT88 is self- explanatory. 5.7.1 Form 1040 - U.S. Individual Income Tax Return On the top of this form, you will see space for identifying February 3 1989 FITT88 User's Manual Page 20 information like your name and social security number. Completing this section is entirely optional since it does not affect the calculations in any way. This is also true for the other tax forms and schedules as well. If you are preparing several alternate tax returns, you might wish to enter some text in this section to identify which alternative this return represents. In the Filing Status section, you must enter a number (1 through 5) to indicate your filing status instead of the check mark in a box on the real Form 1040. Entering a number outside this range will cause the ERR indicator to be displayed immediately to the right. In the exemptions section, you must remove the NA on those parts of lines 6a, and 6b which apply to you. Complete section 6c to add your dependents. You are to enter the total of your wages, salaries, tips, etc. on line 7. FITT88 will add the excess reimbursement reported on line 9 of Form 2106, and unreported tips reported on line 3 of Form 4137 to the number that you enter, and place the total in the cell immediately to the right. There are three cases where the use of a supplementary schedule is optional. FITT has been set up under the assumption that Schedule B for interest and dividend income will be used, and brings the totals from this schedule forward onto lines 8a and 9 of Form 1040. Similarly, the appropriate amount from Schedule D for capital gains and losses is brought forward to line 13. If you do not have to file these schedules, it is possible for you to enter the data directly onto the appropriate lines of Form 1040. Line 8 contains the total interest income reported on Part I of Schedule B. If this total is $400 or less, you don't need to complete Part I of Schedule B. The amount can be entered directly on this line. This cell location has been protected to prevent accidental obliteration of its formula. (See section 5.2 for more information about cell protection.) Therefore you will have to unprotect this cell before you can enter your total interest income. You cannot unprotect a cell when you have entered data entry mode via the DATA menu. If you are in data entry mode, you must first exit this mode by pressing the ENTER key. Then use the GO TO menu to bring you to the first page of Form 1040, and move the cell pointer to line 8a of this form. Once the cell pointer is positioned on line 8a where interest income is to be entered, you can unprotect the cell by pressing the Alt-U keys. Now you can enter your interest income directly on line 8 without using Schedule B. Similarly, line 9 contains dividend income from Part II of Schedule B. If the amount of your dividends are $400 or less, then you may unprotect this cell and enter the total directly. February 3 1989 FITT88 User's Manual Page 21 Line 13 should only be completed if you do not need Schedule D for other capital transactions. You will have to unprotect this cell before entering your capital gain distributions. Line 16b should contain the taxable portion of line 16a. Therefore if the amount entered on line 16b is larger than 16a, the ERR indicator will appear immediately above the amount on line 16b. The same check is performed on line 20b. A number of lines on the front sheet of Form 1040 require you to complete the associated forms, schedules, or worksheets. They are: - lines 8a & 9-Schedule B (Interest And Dividend Income) - line 10-Taxable Refunds of State and Local Income Taxes worksheet - line 12-Schedule C (Business Income Or Loss) - line 13-Schedule D (Capital Gains and Loss) - line 18-Schedule E (Supplemental Income Schedule) - line 19-Schedule F (Farm Income Or Loss) and - lines 21a and 21b-Social Security Benefits Worksheet - line 24-Form 2106 (Employee Business Expenses). - lines 25a and 25b-IRA Worksheet 1 or 2 - line 26-Self-Employed Health Insurance Deduction Worksheet If the ERR indicator appears on any of these lines, then you should go back and recheck the information that you entered on the related form, schedule, or worksheet. For example, you can only use one of the two IRA worksheets to compute the deduction. FITT checks to make certain that only one of those worksheets contain non-zero values. If this is not the case, FITT alerts you to this fact by displaying the ERR indicator on lines 25a and 25b. Once you have put zero values back in one of these worksheets (either through data entry or the reinitialization function), the ERR indicators will disappear after the first recalculation. On the back sheet of Form 1040, line 34 contains your total deductions from Schedule A if they exceed the standard deduction to which you are entitled. Line 38 contains the tax which is computed from the appropriate tax rate schedule based on your filing status, and taxable income. As described earlier, a complete copy of the tax table is not used. Taxable incomes below $50,000 are rounded to the center of the tax bracket to yield the same result as if the tax table were used. Note that if you've completed Form 8615-Computation of Tax for Children Under Age 14 Who Have Investment Income of More Than $1,000, FITT88 will use the amount calculated on line 18 of this form. In the Credits section, lines 41, and 42 are brought forward from Form 2441 (Credit for Child and Dependent Care Expenses), and Schedule R (Credit for the Elderly or the Disabled) respectively. Below line 42, the Mortgage Interest Credit is transferred from line 13 of Form 8396. February 3 1989 FITT88 User's Manual Page 22 In the Other Taxes section, line 48 comes from Schedule SE (Computation of Social Security Self- Employment Tax), line 49 from Form 6251 (Alternative Minimum Tax - Individuals), and line 51 from Form 4137 (Computation of Social Security Tax on Unreported Tip Income). In the Payments section, the Credit for Federal tax on fuels (line 59) is transferred from Form 4136 (line 11.) If you have completed Form 2210 to calculate any penalty that you owe because of underpayment of estimated taxes, the penalty will appear under line 65. 5.7.2 Form 1116 - Computation of Foreign Tax Credit The IRS wants you to complete a separate Form 1116 for each type of income listed on the top of this form. If you have some knowledge of Lotus 1-2-3, you can place additional copies of this form within the worksheet if your computer has sufficient memory to accommodate them. Within this form, absolute cell references were used to facilitate copying it. Just be sure that you add the credits together, and enter them in Part IV of the original form so they are properly recognized by FITT. 5.7.3 Form 2106 - Employee Business Expenses On this form, you have a choice of using the standard mileage rate (Part II, Section B), or actual expenses (Part II, Section C), in computing vehicle expenses on line 1. If you choose to use the standard mileage rate, you must remove the NA above line 11. This tells FITT that you want Section B to serve as the basis for the vehicle expense calculations. If you wish to use Section C instead, no special action is required. 5.7.4 Form 2119 - Sale Or Exchange Of Principal Residence There are several "switches" that may need to be set on this form. If your former residence was held six months or less, be sure to enter YES in the cell to the right of line 1a. This will remove the NA on this line which causes the gain to be treated as a short term capital gain instead of a long term capital gain. If you bought a new residence, be sure to check YES on line 2a replacing the NA indicator on that line. This will activate the calculations in Part III - Gain To Be Postponed and Adjusted Basis of New Residence. If you elect to take the once in a lifetime exclusion of the gain on the sale, be sure to check YES on line 3d. This will activate February 3 1989 FITT88 User's Manual Page 23 the calculations in Part II - Age 55 or Over One-Time Exclusion. If you have indicated that the gain is to be treated as short term, and you have not elected to take the once in a lifetime exclusion, the gain on line 8a is carried forward to line 3 of Schedule D. Otherwise, any gain is reported on line 10 of Schedule D. 5.7.5 Form 2210 - Underpayment Of Estimated Tax By Individuals When completing this form, be sure to replace the number of days shown on lines 23b, 24b, and 25b with the actual number of days between the start of the periods and the payment dates. The numbers initially supplied with FITT represent the "worst case" values - ie. no payments were made at all. 5.7.6 Form 2441 - Credit for Child and Dependent Care Expenses Under certain circumstances, you may need to complete Form 6251 - Alternative Minimum Tax. If FITT determines that this is indeed the case, it checks to see whether you've activated Form 6251 (indicating that you've completed it.) If you need to complete Form 6251, and it hasn't been activated, then the ERR indicator will be displayed on line 8 of Form 2441. Once you activate Form 6251, and fill it out, the ERR indicator will disappear after the next recalculation. 5.7.7 Form 4136 - Computation Of Credit For Federal Tax On Fuels In column A of lines 2 - 10 of this form, you are to enter the number of gallons of fuel used in 1988, and then multiply by one of several alternative tax rates in column B depending on the type of fuel. The subtotals of these calculations are to be entered in column C. FITT88 does all of these calculations for you. Simply enter the proper numbers in column A. Then enter the index of the proper tax rate in the cell to the right of column B. For example, on line 2a i, there are three tax rates: .03, .0333, & .09. If you enter 1 to the right of column B, then the number of gallons in column A will be multiplied by .03. If you enter a 2, .0333 will be used. A 3 will cause .09 to be used. The results of this calculation for lines 2a i-iii are totaled in column C. The tax index that you enter is checked to be certain that it is within the permissible range for that line. If you see the ERR indicator anywhere on this form, go back and recheck the tax indices that you've entered. The results from this form are reported on Form 1040, line 59. February 3 1989 FITT88 User's Manual Page 24 5.7.8 Form 4562 - Depreciation And Amortization Much of the information that you must enter on this form is of a descriptive nature. The values that you enter on lines 6 - 10 in column F are added to the calculated amount on line 5 to arrive at your total depreciation deduction on line 11. This amount is reported on the depreciation lines of the return (Schedule C - line 12, Schedule F - line 17, and Form 4835 - line 12.) Total Amortization calculated in Part II - line 3, is reported on the Other Deductions or Other Expenses lines of the return (Schedule C - line 29a, Schedule F - line 35a, and Form 4835 - line 31a. In Part III, Section B on the back of this form, the total business miles, commuting miles, and other personal miles are added and compared with the total miles you've entered. If they are not the same, the ERR indicator will be displayed above the line 4 totals. 5.7.9 Form 4684 - Casualties And Thefts If there was a gain from casualty or theft, lines 5 through 13 in Section A, and lines 5 through 10 in Section B should be skipped. If you have a gain, and mistakenly enter values on lines 5 or 6 of Section A or B, the ERR indicator will appear immediately below the cells in which you've entered non-zero values. Also, the amount entered on line 6 can't be greater than line 5 in Section A and B. This condition will also cause the ERR indicator to be displayed. In Section A, if you are completing more than one Form 4684, the sum of the line 12 amounts are to be entered on line 13, and the sum of the line 4 amounts are to be entered on line 14. In this case, you should unprotect the cells for lines 13 & 14, and enter the totals directly. If the result on line 18 of Section A is greater than zero, it is reported on Schedule A - line 18. The amount on line 20b of Section B - Part II is reported on Schedule A, line 21. 5.7.10 Form 6251 - Alternative Minimum Tax - Individuals In order to activate this form, you must remove the NA value located directly above the value in line 1. You have to determine from the instructions whether or not you are liable for the alternative minimum tax. There are several forms which may require information from Form 6251. These forms check to be sure that this form has been activated. If it has not, FITT won't use any data from this form. Instead, it will display the ERR indicator within the forms that require this information. For purposes of computing your regular tax for the line 18 calculation, FITT assumes that the entire amount, if any, that February 3 1989 FITT88 User's Manual Page 25 you've entered on line 39 of Form 1040 is due to tax from Form 4970. If in fact, the Form 1040-line 39 amount comes from Form 4972, then the formula on line 18 should be modified to exclude this cell. 5.7.11 Form 8396 - Mortgage Interest Credit The amount used on line 8 of this form includes the credits reported on lines 40 and 41 of Form 1040 as well as any Residential Energy Credit carryforward (REC). Line 10 requires that Form 6251, Alternative Minimum Tax - Individuals, be completed through line 15. It does not require that Form 6251 actually be filed. It only uses that Form for the purposes of this specific calculation. It is important that you complete Form 6251 through line 15 to satisfy the requirements of this form. However, don't activate Form 6251 by removing the NA value above line 1 (described above) unless you actually intend to file that form. The amount calculated on line 12 is reported on Form 1040 - line 41 next to the "MIC" acronym. 5.7.12 Form 8582 - Passive Activity Loss Limitations You must be careful on lines 1a - 1g, and 2a - 2g to enter net income as positive numbers, and net losses as negative numbers. The amounts you enter on each line are checked for proper sign. If you've made a mistake, the ERR indicator will appear directly to the right of the value you've entered with the wrong sign. The amount you enter on line 5 is also checked. The default is $150,000. FITT88 can't automatically enter $75,000 if you are married filing separately because in this case there is the additional stipulation that you have lived apart for the entire year. If you do change this value, it can't be anything other than $75,000, and you must be married filing separately. If any of these conditions are not met, the ERR indicator will appear immediately to the right of this value. 5.7.13 Schedule A - Itemized Deductions Casualty or theft losses reported on line 18 are taken from Section A of Form 4684 - line 18. Moving expenses on line 19 are taken from line 23 of Form 3903. Other expenses on line 21 consists of two values. The value shown next to line 21b is available for you to enter. The second value February 3 1989 FITT88 User's Manual Page 26 is automatically added by FITT. This consists of the sum of any amounts from Section B of Form 4684 - line 14 & line 20b. These two amounts are included in the total shown on line 22. 5.7.14 Schedule B - Interest And Dividend Income There is nothing unusual about filling out this form. Space has been provided for you to enter the descriptive information regarding the names of payers. Line 3 of Part I is carried forward to line 8a of Form 1040, and line 9 of Part II is carried forward to line 9 of Form 1040. Also, line 6 containing capital gain distributions is brought over to line 13 of Schedule D. 5.7.15 Schedule C - Profit Or Loss From Business Line 12 for Depreciation is brought forward from Form 4562, Section D-line 12. Line 29a for Other Expenses contains Amortization calculated in Part II of Form 4562, line 3. 5.7.16 Schedule D - Capital Gains And Losses Columns d (Gross sales price) and e (Cost or other basis) are used to compute the loss (column f) or gain (column g) for each item of property described on line 2a of Part I and line 9a of Part II. Columns a, b, and c are not used in the calculations, but contain descriptive information only. When completing lines 5, 6, 12, & 15, be sure that you enter any losses as negative numbers in the loss column (column f). If they are gains, they should be entered as positive numbers in the gain column (column g). A check is made to insure that any values entered in the loss column are negative. Line 13 in Part II contains the capital gain distributions reported on line 6 of Schedule B. If you did not use Schedule B, and have capital gain distributions to report, enter them directly on line 13 of Schedule D after unprotecting that cell. 5.7.17 Schedule E - Supplemental Income Schedule Any deductible rental losses reported on line 24 of Part I must be entered as negative numbers. If they are not, the ERR indicator will appear immediately above the incorrect value. Net farm rental profit or (loss) on line 28 of Part I is taken from Form 4835 - line 35 or 36c. In Parts II and III on the back of this form, income and losses for February 3 1989 FITT88 User's Manual Page 27 both Passive and Nonpassive activities must be entered. Again, it is important to remember that losses must be entered as negative values, and income as positive values. Error checking is performed to insure that you've used the correct signs. If not, the ERR indicator will appear at the bottom of the column where the error has occurred. 5.7.18 Schedule F - Farm Income and Expenses Depreciation and section 179 expense deduction on line 17 is taken from Part I of Form 4562, line 12. Amortization is shown on line 35a for Other Expenses. This also comes from Form 4562, line 3 of Part II. 5.7.19 Schedule R - Credit For The Elderly And Disabled Be sure that you check one, and only one line in lines 1 through 9. The line you check determines how the calculations are performed. If you check more than one line, or you do not check any lines, the ERR indicator will appear on line 10. On line 21 of Part III, the credit is figured as follows. Schedules C, D, E, and F are checked for zero values. If this is true, then you haven't filed any of these forms and the credit can be calculated directly and reported on line 42 of Form 1040. If you have filed Schedule C, D, E, or F, you may not be entitled to the full amount of the credit. The detailed instructions for Schedule R spell out how the limitation on the credit must be calculated. The procedure is rather complex, and has been completely automated within FITT88. You should however, fill out Form 6251 through line 15 since that value may be required to properly carry out the calculation of the credit limit. This does not necessarily mean that you must file Form 6251. 5.7.20 Schedule SE - Computation Of Social Security Self-Employment Tax FITT will use the short schedule SE by default. If you need to use the long form on the back, you need to set one of the three "switches" at the top of this schedule. If you elect to complete Part II - Optional Method To Figure Net Earnings, you must indicate if you are using the Farm option, or Non-Farm option of calculating net earnings from self- employment. There are two "switches" appropriately labeled at the top of the form for this purpose. If you are not using Part II, then leave the FARM OPT, and NON-FARM OPT switches set to a value of NA. February 3 1989 FITT88 User's Manual Page 28 5.8 Reinitializing Specific Forms and Schedules FITT is distributed with zero values in the input cells on all of the forms and schedules. You may find yourself in a position where it would be desirable to reinitialize one or more of the schedules with zeros, while retaining the values you've entered into the rest of FITT. This can be done quite easily by combining specific schedules from the original FITT worksheet into your working copy, replacing the schedule you wish to initialize. This is done using the REINIT option on the main menu. This operation requires that the original FITTyy.WKS file on the distribution disk be present in the default directory of 1-2-3. If the default directory is drive A or B, simply place the original disk in that drive before initiating the REINIT selection on the main menu. If the default directory is on a hard disk (drive C or D), then make sure that a copy of FITTyy.WKS exists in that directory. Your other option is to temporarily change the default directory from your fixed disk to one of the floppy diskette drives (eg. /FDB:\). February 3 1989 FITT88 User's Manual Page 29 6. DISCLAIMER The author makes no representations or warranties with respect to the contents hereof and specifically disclaims any implied warranties of merchantability of fitness for any particular purpose. Further, the author reserves the right to revise this publication and to make changes from time to time in the content hereof without obligation of the author to notify any person or organization of such revision or changes.