Release notes 26.00

Release Highlights

New and revised tax codes for 1099-R reporting
New income codes and Chapter 3 status codes for 1042-S reporting
1099 register updates for extension filing of information returns

New Features

The
Second logo to be used........Grantor letter
option description was revised to
Second logo image to be used for 1041, 5227 greeting letters, and beginning tax year 2025 for 1099 greeting letters, content and tax summary pages. This prevents logos from printing on Grantor letters
.

When used, the second logo is positioned in the upper right side of the page directly above the "Account Number" field as illustrated on the Contents page example in the following graphic:

Tax code
267 – 1099-R Distribution of IRA assets not having a readily available FMV u/s 408(d)(8) – YK
was added for reporting YK distributions on 1099-R


Tax code 257 was repurposed for distribution code Y4 and tax code 259 was repurposed for distribution code Y7. The highlighted text in the following graphics will only print on returns prior to tax year 2025.

Special Gain Code
dropdown listing now includes the code associated with each description in the
Part I
and
Part II
grids.
The
H - Adjustment to basis 7-year
option was added to the dropdown list.

The following Income codes were added:
59-Consent fees
60-Loan syndication fees
61-Settlement payments
The following Chapter 3 status codes
were added:
40-Partnership QDD
41-U.S. government entity or tax exempt entity (other than section 501(c) entities)

Accounts receivable – Beneficiaries (Under Assets section)
Other liabilities – Beneficiaries (Under Liabilities section)

Undistributed taxable income

Undistributed tax-exempt income
Undistributed income

1099 Federal Pre-Filing Validation Errors
1099 Federal E-filing Errors

The
DIRECT DEPOSIT INSTRUCTIONS
section
was
moved from the
Compute-States
category to the
Fiduciary Info
category.

The
Apply direct deposit details below to (For tax years prior to 2025, the options below apply only to state returns)
dropdown
option was added within the DIRECT DEPOSIT INSTRUCTIONS section providing three selections:
Only State Returns
(default selection)
Only Federal Returns
State and Federal Returns

The
Mask direct deposit routing and account number with asterisks (Option applicable beginning with tax year 2025)
option was added with
Yes
as default selection Masking the routing and account numbers pertains to printed returns only. If provided, these numbers will be included in the e-file XML datafile(s) based upon the preceding option if the return is e-filed.

The title of collapsible section
Taxes Not Subject to $10,000 Deduction Limitation
was renamed to
Taxes Not Subject to Deduction Limitation
The description of existing field
State income taxes not subject to $10,000 limitation
was updated to
State income taxes not subject to deduction limitation
The description of existing field
Real estate tax on non-rental property not subject to $10,000 limitation
was updated to
Real estate tax on non-rental property not subject to deduction limitation
The
Modified Adjusted Gross Income Override
collapsible section containing the following fields was added:
Adjusted Gross Income (AGI) to be used in state and local income tax limitation (Override)
Force diagnostic which indicates state tax limitation is incorrect to be an informational rather than a severe diagnostic

Taxes and interest are not deductible in determining AGI, but they are deductible in determining DNI.
DNI directly impacts computation of the distribution deduction which is a deduction against AGI.

OTT automatically computes AGI and the SALT limitation through an iterative process and checks itself at end of compute to verify that ending AGI equals that used in the SALT limitation. If there’s a mismatch (which should be rare), a diagnostic is generated which provides instructions on how to work around the issue. Here is an example of the diagnostic message:

Four credits were added following the Innovate Alabama Credit. Each credit includes specific fields for entering relevant information, including beneficiary allocation and a grid for entering FEIN and Credit Amount details.
Alabama Workforce Housing Tax Credit
with Project Name, Project Number, Amount from Alabama Workforce Housing Credit Certificate, and Credit allocated to beneficiaries (Override) fields.

Employer Tax Credit
with Amount from Employer Tax Certificate, and Credit allocated to beneficiaries (Override) fields.
Childcare Facility Tax Credit
with Amount from Childcare Facility Tax Credit Certificate, and Credit allocated to beneficiaries (Override) fields.
Employer Provider Credit
with amount from Employer Provider Credit Certificate, and Credit allocated to beneficiaries (Override) fields.
The
Alabama Workforce Housing Tax Credit
was added to the
Type of Credit
dropdown within the
Credit Carryforward from Prior Years
grid (located at the bottom of the Payments and Credits section), enabling its carryforward.
The
Apprenticeship Tax Credit Act
was removed as it is no longer applicable.

Federal Depreciation Previously Accelerated via State Bonus
to the
Additions
category
Bonus Depreciation
to the
Subtractions
category

The following fields were added to the
Schedule NRC-P1 - Nonrefundable Priority 1 Credits
group box:
Donations to Eligible Maternal Wellness Center
Other
The
Bone Marrow
field was removed
The
Prison Industry Enhancement
field was removed from the
Schedule RC-P2 Refundable Priority 2 Credits
group box
The following fields were removed from the
Schedule NRC-P3 - Nonrefundable Priority 3 Credits
group box
New Jobs Credit
Eligible Re-Entrants
Apprenticeship (2007)

Payments and Credits
collapsible section.
Following credits were removed from Credit Category:
Capital Investment Credit
Other Tax Credits
Following credits were added under Credit Category:
Dirigo Business Incentives Tax Credit (Refundable)
Dirigo Business Incentives Tax Credit (Non-Refundable)

The following credits were added to the
Refundable
category in the
Other Tax Credits
grid:
Paper Manufacturing Facility Investment
Professional Baseball Facilities Investment
Income and Deductions
collapsible section
Following fields were removed from the
Additions
category
State Retirement Contributions
Maine Capital Investment Credit Bonus Depreciation Add-Back
Following field was added under
Other Subtractions
Category
Gain on Sale of Housing Business to a Housing Authority or Co-op

Income and Deductions
collapsible section
The
Employee Retention Credit subtraction
field was added to the
Additions and Subtractions
grid
Schedule M2NC, Federal Adjustments: (US 3075746)
grid was completely revised

Nonresident Returns
collapsible section:
The following new fields have been added to the subtractions category of the
Additions and Subtractions - Fiduciary Portion
grid in the
Schedule M2NM
:
Employee Retention Credit Subtraction Column Total (Non-ESBT)
Employee Retention Credit Subtraction column MN Portion (Non-ESBT)
Employee Retention Credit Subtraction Column Total (ESBT)
Employee Retention Credit subtraction column MN Portion (ESBT)

The
Enter a certificate number from the certificate received from the MN Department of Transportation
field was added
The
Check this box if you are electing a refundable portion of this credit
field was added

Credit for Increasing Research Activities
has been updated to
Nonrefundable Credit for Increasing Research Activities

Unused current-year nonrefundable credit
was added
Current-year credit carryover
was added
Refundable Credit for Increasing Research Activities
was added
ESBT
collapsible section
The
Employee Retention Credit subtraction
field was added to the
Additions, Subtractions, and Alternative Minimum Tax
grid
The
Schedule M2SBNC, Federal Adjustments
grid was completely revised
Amended Return
collapsible section:
The
Check this box if you are electing a refundable portion of this credit
checkbox
was added
The following fields were added to the
Payments and Credits
category of the
Income, Taxes, Payments, Credits, Additions and Subtractions
grid:
Unused current-year nonrefundable credit
Current-year credit carryover
check this box if you are electing a refundable portion of this credit
Refundable Credit for Increasing Research Activities (Column Previously reported)
Refundable Credit for Increasing Research Activities (Column Corrected Amount)

The
Employee Retention Credit subtraction (Column Corrected Amount)
field was added to the
Subtractions
category of the
Income, Taxes, Payments, Credits, Additions and Subtractions
grid

Work-based learning experiences
Nonrefundable job retention credit
Eligible new employee in an enterprise zone
Commercial vehicle operator training expenses
Welcome Home Ohio credit
Transformational mixed used development tax credit
Sale/rental of agricultural assets to beginning farmers
Grape production credit
InvestOhio credit
Lead abatement credit
Opportunity zone investment credit
Technology investment credit carryforward
Enterprise zone day care & training credits
Research and development credit
Nonrefundable Ohio history preservation credit
Ohio low-income housing credit
Affordable single-family housing credit

90 - Previously Taxed Retirement Income
was added to the
Other Deductions
grid in the
Income and Deductions
collapsible section.
The following were added to the
Nonrefundable Credits
grid in the
Payments and Credits
collapsible section:
AX: Employer-provided Childcare Construction Credit
AW: Employer-provided Childcare Expenses Credit

Fixes

Known Issues