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Screen PAAdj - Pennsylvania Income and Adjustments (1040)
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Overview
Use this screen to complete portions of Form PA-40.
Interest and Dividends
Interest income / Ordinary dividend income
Interest and dividend income from the federal B&D, SDE, K1, and K1T screens transfer to the statement windows attached to these fields. The
F/S
field is no longer applicable to the Pennsylvania application because the Schedules A and B start with the income reported on the federal return.For Pennsylvania source interest and dividends reportable on part-year Pennsylvania returns, enter
PA
in the State
field. For part-year returns, Force
fields are available in these statement windows to override the calculated in-state source amounts on an item-by-item basis.Nonresidents aren't subject to Pennsylvania personal income tax on ordinary interest and dividend income from investments from sources within Pennsylvania.
Schedule A (Interest Income):
The Tax-exempt interest income field is calculated using the
Interest income: Municipal obligations
statement window found on the PAAdj screen. For both resident and part-year returns, UltraTax CS calculates the tax-exempt interest by taking the total of column Total Muni Int.The interest income from direct obligations of the Commonwealth of Pennsylvania and/or its municipalities field is calculated using the
Interest Income: Municipal obligations
statement window on the PAAdj screen.- For Resident returns:UltraTax CS takes the total of column Total Muni Int and subtracts out the total of column Txbl Muni Full-Year.
- For Part-year returns:UltraTax CS starts with column Total Muni Int and subtracts out column Force Txbl Muni In-St or column Txbl Muni In-State on a item-by-item basis.
Part-year returns:
- In theInterest income: Taxable interest and US obligationsstatement window, the Non-Residency Period Interest adjustment that shows up on theOther reduction adjustmentsline is calculated by taking column Reg Int Full-Year and subtracting out column Force Reg In-St or column Reg Int In-State on a item-by-item basis.
Schedule B (Dividend Income):
The tax-exempt dividend income field is calculated using the
Ordinary dividend income: Municipal obligations
statement window and the Ordinary dividend income: Taxable dividends and US obligations
statement window found on the PAAdj screen as calculated below for resident and part-year returns:Resident returns:
- In theOrdinary dividend income: Taxable dividends and US obligationsstatement window, UltraTax CS calculates the US obs by taking the total of column US Govt Full-Yr.
- In theOrdinary dividend income: Municipal obligationsstatement window, UltraTax CS calculates the Pennsylvania Municipal interest by taking the total of column Total Muni Div and subtracting out the column Txbl Muni Full-Year.
Part-year returns:
- In theOrdinary dividend income: Municipal obligationsstatement window, UltraTax CS starts with column Total Muni Div and subtracts out column Force Txbl Muni In-St or column Txbl Muni In-State on a item by item.
- In theOrdinary dividend income: Taxable dividends and US obligationsstatement window, UltraTax CS calculates the US obs by taking the total of column US Govt Full-Yr.
The
Other addition adjustments
field includes:- The full year municipal dividends entered in the return. From theMunicipal obligationsstatement window, UltraTax CS takes the amount in the column Total Muni Div on a item by item basis.
- TheNon-Residency Period Interestadjustment for part-year returns is calculated using theTaxable dividends and US obligationsstatement window by taking column Reg Div Full-Yr and subtracting out column Force Reg In-St or column Reg Div In-State on a item by item basis.
- Distributions from non-PAS corporations with the K1 Name of entity used as the description.
Other additions / Other reductions
Use the
Other additions
statement windows to enter interest / dividend income not entered on the federal Interest / Dividend income
statement windows.Use the
Other reductions
statement windows to enter state specific reductions of interest / dividend income not entered in the federal Interest / Dividend income
statement windows. The following deductions entered in the federal Interest / Dividend income
statement dialogs are automatically included on the Pennsylvania Schedule A or Schedule B and shouldn't be entered in these statement windows:- Nominee distribution
- Accrued interest
- Original Issue Discount (OID) adjustment
- Amortizable Bond Premium (ABP) adjustment
Interest Income: Other reductions
statement window: To force an amount different than the calculated Installment sale interest deduction, enter 1
in the Type code, a description for Payer and an amount. If 0
(zero) is entered as the amount, the deduction is removed.Penalty on early withdrawal
UltraTax CS uses the information entered in the
Interest Income
statement window attached to the federal B&D screen to calculate a Pennsylvania loss when the early withdrawal penalty is greater than the related interest income. Early withdrawal penalty is included on Pennsylvania Schedule A and if the penalty is greater than the Interest income the difference appears on Pennsylvania Schedule D.On the Pennsylvania Schedule D, the Date Acquired defaults to
Various
, the Date Sold defaults to 12/31 of the current year and the Gross Sales Price defaults to 0 (zero). Use this statement window to change the information as needed. The In-State columns in the statement window are applicable only for part-year residents. For part-year residents, the date sold defaults to the Residency date To
on the PANRPY screen. UltraTax CS ignores any data entered in these fields for Resident returns
. The Force Interest In-State column is used only to determine the amount of early withdrawal penalty that should appear on Schedule A and Schedule D. If you need to force the interest amount, use the column in the Taxable interest and US obligations
statement window.Capital Gains and Losses
Sale detail
UltraTax CS uses the information entered in the
Schedule D
statement window attached to the federal B&D screen to calculate Pennsylvania gains and losses from the sale or exchange of capital assets. UltraTax CS transfers information from the federal Schedule D
statement window to the statement window attached to this field. After entering 1
in the State Use column in this statement window, UltraTax CS excludes the gain / loss from being reported on Form PA-40 Schedule D. UltraTax CS includes the nontaxable portion in Form PA-40 Schedule SP, Special Tax Forgiveness Schedule, eligibility income calculation.When both the
Form
and Unit
fields within the statement window include entries, UltraTax CS matches the form and corresponding activity unit number so that the amounts transfer to the proper activity. UltraTax CS then reports the gain or loss in the Other income
field for the proper activity. Otherwise, if these fields are blank, the amounts transfer to Form PA-40 Schedule D. UltraTax CS matches only items coded C
, F
, or 4835
in the statement window attached to the Form
field.Schedule D-71 sale detail
UltraTax CS uses the information entered in the
Schedule D
statement window attached to the federal B&D screen to calculate Pennsylvania gains and losses from the sale or exchange of capital assets. UltraTax CS transfers information for sales with a date purchased before June 1, 1971, and entered in federal Schedule D
statement window to the statement window attached to this field. UltraTax CS automatically calculates the alternate basis when the field Method of computing 6/1/71
value is P
. For all other sale codes, enter the alternate basis in the alternate basis column, if applicable.Section 1256 contract and straddles (Force)
UltraTax CS calculates Section 1256 contract and straddles from federal Form 6781. Schedule D columns are completed as follows:
Description used is Form 6781, Date acquired is Various, Date sold is 12/31 of the current year, Gross sales price is from federal Form 6781 or
Force
field, Cost or adjusted basis is 0. If columns a, b or c need to be modified, enter the data directly on Schedule D for that specific item. Use this field to enter another amount if different than the one calculated. For part-year residents, the date sold defaults to the Residency date To
on the PANRPY screen.Adjusted basis
Enter the adjusted basis of all capital distributions received. UltraTax CS calculates the taxable return of capital.
Gain from exchange of insurance contracts (Force)
UltraTax CS calculates the gain from exchange of insurance contracts (Section 1035 exchange) when distribution code 6 is entered in the federal 1099 screen. Use this field to enter another amount if different than the one calculated.
Adjustments
Military wages (Force)
For part-year returns, UltraTax CS automatically includes military income as taxable gross compensation when the wage code in the federal W2 screen indicates military. To exclude military wages or National Guard wages from the Pennsylvania return, enter code
10
(combat zone wages) in the State use
field in the federal W2 screen in the State and City information section.For nonresident returns, UltraTax CS doesn't include military income as taxable income. Use these fields to force a different amount of taxable military income, if desired. If the
Military wages (Force)
field is used, UltraTax CS updates the Pennsylvania Gross Compensation Worksheet which is used throughout the calculation of the Pennsylvania tax return. The Schedule W2S column PA compensation from box 16 needs to be manually updated.Distributions from life insurance, annuities or endowments (Force)
UltraTax CS calculates the taxable amount from the distributions from life insurance, annuities or endowment contracts when the
Distribution from Life Insurance, Annuity, or Endowment Contracts
field is marked in the PA1099 screen. Use this field to enter another amount if different than the one calculated.Distributions from charitable gift annuities (Force)
UltraTax CS calculates the income from the charitable gift annuity when distribution code
F
is entered in the federal 1099 screen. Use this field to enter another amount if different than the one calculated.Distributions from IRC Section 529 qualified tuition programs (Force)
UltraTax CS uses the taxable distribution from the federal return. Use these fields if the taxable amount is different for state purposes. If the taxable distribution from the federal return is coded
T
for taxpayer, use the Taxpayer
force field, and if coded S
for spouse, use the Spouse
force field.W2G Lottery winnings (Force)
UltraTax CS includes the W2G Lottery winnings from data entered. Use these fields to enter another amount if different than the amounts included.
Other gambling winnings (Force)
UltraTax CS includes the
Gambling income
and State lottery winnings
entered on the federal Income screen in the statement window attached to the Other income
field. Use these fields to enter another amount if different than the amounts included.Gambling losses
UltraTax CS uses information entered in the
Gambling losses
statement window in the federal A screen to determine allowable gambling losses for the Pennsylvania return and transfers such amount to the statement window attached to this field. UltraTax CS applies gambling losses with PA
in the Postal Code
field against any income from gambling.Miscellaneous income
UltraTax CS uses the information entered in the
Other Income
statement window in the federal Income screen to complete the statement attached to this field. Only those entries with a code entered are used to complete Schedule W-2S. If you enter an amount in the PA Taxable Income Force column, UltraTax CS takes the difference between this field and the Federal Taxable Income column amount and includes the difference in the Pennsylvania Gross Compensation Worksheet, Other Income line.For part-year and nonresident returns, if a pension amount is entered in the federal 1099 screen and the postal code is
PA
, the distribution code is 1
or 2
with a state use code of 29
, UltraTax CS includes the necessary information directly on Form PA-40 Schedules W-2S. For resident returns, the postal code isn't required.When an amount is transferred to this field and the PA Taxable Income (Force) column is used, UltraTax CS takes the difference between the Total Federal Amount column and the PA Taxable Income (Force) column and includes this difference on the Pennsylvania Gross Compensation Worksheet, Other Income line.