2024 1040SCANverify Policy - 1040 Return

Contents:

1040SCANverify Policy for 1040 - Work Flow
1040SCANverify Policy - Tax Year 2024
Auto-verified pages
SurePrep Barcode
Document types
IRS Forms
Organizer Pages
Brokerage Statements
Grantor Letters with the same format:
Processing Standards
Schedule K-1
Schedule K-3
1099-MISC with 'SC Only' stamp
SurePrep Standards
Review of Work done by 1040SCANverify Process
Stamps
Additional Resources

1040SCANverify Policy for 1040 - Work Flow

The post verification wizards start with Step 3 and end with Step 7 as follows:
Step 3: Superseded Documents
Step 4: Child Form Association
Step 5: Duplicate Data
Step 6: New Form Review
Step 7: Tax Exempt Income
The '1040SCANverify' section provides two sub-options, SurePrep and Inhouse.
Selecting the
SurePrep
option will select all the wizards to be processed by SurePrep, except for the 'Tax Exempt Income' wizard.
Step 1: Pre-Verification
Step 2: Verification
Step 3: Superseded Documents
Step 4: Child Form Review
Step 5: Duplicate Data
Step 6: New Form Review

If the
Inhouse
option is selected, SurePrep will process the following wizards
Step 1: Pre-Verification
Step 2: Verification

1040SCANverify Policy - Tax Year 2024

Auto-verified pages will not be reviewed by SurePrep during verification unless they appear for review under certain conditions listed below. You can add SurePrep barcodes on pages that require special attention from SurePrep.
The auto-verified pages may appear in the verification step if a required identifier field is missing (e.g., SSN, name, etc.)
If any modifications are made on an auto-verified page, then only entries/fields that were added, deleted, or modified by a verifier in the verification wizard will be charged the entry fee rate. If there were no modifications made by a verifier then "Non-modified Auto verified" page & entry charges will apply for the page and its entries.

SurePrep 'Include' barcode automation- The information from the page will be captured regardless of the standard policy (e.g. Incorrect SSN, Prior Tax Year, etc.)
If the "Bookmark Only" barcode is identified on a page, SurePrep's OCR will automatically skip the document from the (Step 2) Verification Wizard
Verifiers will not see the document appear during verification. Document(s) with the Bookmark Only barcode may appear in the next Review Wizard step, if applicable (e.g., Child Form Association, New Form Review, etc).

For certain multi-page documents (e.g., Consolidated Statements, Schedule K-1, etc.), you only need to place the barcode once on any one of the pages from the set.

Some Consolidated Statements may have more than one account number in a single consolidated statement. When placing a barcode, you will need to place a barcode for each different account number.

IRS Forms
Organizer Pages
Brokerage Statements
Grantor Letters with the same format

W-2: Wages
W-2C: Corrected Wage and Tax Statement
W-2G: Gambling Winnings
W-3: Transmittal of Wages and Tax Statement
1099-B: Sale & Disposition of shares and securities
1099-INT: Interest
1099-DIV: Dividend
1099-C: Cancellation of Debt
1099-G: State/Local Income Tax Refund
1099-LTC: Long Term Care Benefits
1099-MISC: Miscellaneous Income
1099-OID: Original Issue Discount
1099-PATR: Patronage Dividends
1099-R: Retirement Income
1099-RRB
SSA-1099 / SSA-1042S Social Security Benefit Statement
1099-Q: Payment from Qualified Education Programs
1099-QA
1099-SA: Distribution from an HSA, Archer MSA or Medicare advantage MSA Form
1099-NEC – Non Employee Compensation
Schedule K-1 Form 1065(Partnership Income) & Form 8865
Schedule K-1 Form 1120S: S Corporation Income
Schedule K-1 Form 1041: Trust Income
1098: Mortgage Interest Expense
1098-T: Tuition and Fees Expenses
1098-E: Student Loan Interest Expense
5498-QA
5498: Retirement contribution
MA 1099-HC: Individual Mandate – Massachusetts Health Care Coverage
Form 1095-A: Health Insurance Marketplace Statement
Form 1095-B: Health Coverage
Form 1095-C: Employer-Provided Health Insurance Offer and Coverage
Form CCC-1099G
Form CSA 1099R - Statement of Survivor Annuity paid
1065B
1099-K
K-1 Cover Letter
K – 1 Package
Schedule K-3 (Form 1116: Foreign Tax Credit information, Passive Foreign Investment Companies (8621 PFICs for 2024 TY) and its statement)
Note
: OCR will not capture the addresses on PFIC because foreign addresses information are not available in a specific format.
Form 1099-LS - Reportable Life Insurance Sale (Indexing only)
Form 1099-SB - Seller's Investment in Life Insurance Contract (Indexing only)
Form 2439: Notice to Shareholder of Undistributed Long-Term Capital Gains
Form 5498-SA - Contribution from an HSA, Archer MSA or Medicare advantage MSA
Form 8949 Sales and Other Dispositions of Capital Assets
Resident State K-1s* (Applicable to all tax software except for UltraTax CS):
AL
AR
AZ
CA
CO (1065/1120S)
CT (1065/1120S)
DC (1065)
IL
IN
KY
MA
MD
MN
MS
NC
NY
OH
PA
SC
VA
VT
WI
WV
Resident State K-1s*:
GA (1065/1120S - Only applicable to CCH Axcess Tax & Lacerte)
HI (Only applicable to GoSystem Tax RS & Lacerte)
NJ (1041 - Only applicable to Lacerte)
NJ (1065/1120S - Only applicable to CCH Axcess Tax & Lacerte)

Nonresident State K-1s* (Applicable to all tax software except for UltraTax CS):
AL
AR
AZ
CA
CO (1065/1120S)
CT (1065/1120S)
GA (1065/1120S)
IL
MA
IN
KY
MD
MN
MS
NC
NJ
NY
OH
PA
SC
VA
VT
WV
Nonresident State K-1s*:
HI (Only applicable to GoSystem Tax RS & Lacerte)

GoSystem Tax RS - The following organizer pages are indexed and all the data on it is captured:

GoSystem Tax RS
- The following organizer pages are only indexed (i.e. no data is captured):

CCH Axcess Tax- The following organizer pages are indexed and all the data on it is captured:

CCH Axcess Tax
- The following organizer pages are only indexed (i.e. no data is captured):

Lacerte Tax - The following organizer pages are indexed and all the data on it is captured:

Lacerte Tax -
The following organizer pages are only indexed (i.e. no data is captured):

UltraTax CS - The following organizer pages are indexed and all the data on it is captured:

UltraTax CS
- The following organizer page are only indexed (i.e. no data is captured):

For Consolidated statements & Grantor Trust Letter - If, the source document type is any consolidated brokerage statement or grantor trust Letter and the recipient Id # is an EIN (i.e. xx-xxxxxxx) that does not match the proforma’d SSN’s but the recipient name includes the taxpayer or spouse’s last name, then the reference of recipient id is selected as EIN and all the relevant data from these document types are captured, or else ‘Incorrect SSN’ is selected.
For Schedule K-1 - If the source document type is Schedule K-1 and the recipient Id # is an EIN (i.e. xx-xxxxxxx) that does not match the proforma’d SSN’s but the recipient name includes the taxpayer or spouse’s last name, then the recipient id is selected as EIN and all the relevant data from these document types is captured, or else ‘Incorrect SSN’ is selected.
For any other type of documents the recipient id # is selected as
Incorrect SSN
.

Cash Contributions Letters: Cash Contribution letters and receipts in letter format are captured. Information provided in the email /check format is not captured.
Vehicle Registration Renewal Notice; DMV receipts (License Fees - CA & NE State only)
Fields captured for CA: License Fee, License Plate, and Ownership code.
Fields captured for NE: Motor Vehicle Tax, License Plate, and Ownership code.

Processing Standards

All standard box numbers on IRS Forms, brokerage statements and the fields on organizer pages are captured. If data on a source document matches data already entered in the tax software, 1040SCANverify does not capture source document data again. However, if the data does not match, 1040SCANverify overrides the data on export in the tax software to match the data on the source document.
1040SCANverify addresses source documents of the tax year for which the return is submitted. E.g. source documents pertaining to the 2024 tax year are only captured for a 2024 tax return.
Payer’s details (i.e., address, EIN etc, if applicable) are captured only for Forms W-2, 1099-R, W2G, 1099RRB, Schedule K-1, and Form 1098-T. For Form 1099MISC and 1099-NEC, only EIN is captured.
Form 1098-T and 1099-Q will be placed (i.e., indexed) in the
Other Information
folder in SPbinder if the taxpayer is claimed as a dependent on another return (e.g., the taxpayer is marked as
Dependent of another
in the tax software).
Based on firm-level settings, only documents that appear under
In Verification
for review will be signed off.
The Sign off Management at the domain helps to customize and define the sign-off rights for different levels.
For certain forms, SurePrep will capture foreign (non-US) countries as
Various /Other Countries
while selecting the country code in the Verification template (e.g., Form 1099-DIV - Box 8 Countries).
Personal Information (e.g., address, spouse details, email address) values extracted from OCR during verification are prioritized over the proforma information in the tax software. This is because fields like occupation, address, spouse, and email may change from year to year. Therefore, the system may replace proforma'd values with the latest extracted value from an Organizer form.
To prevent the extracted OCR data from overriding personal information in the tax software, go to
Account Admin
,
Review Wizard
,
Verification Rules
. Create a new verification rule, select
Document Type
as
Organizer
,
Form Name
as
Personal Information, Rule
as
Bookmark Only
.

1040SCANverify addresses only documents that are submitted in the required orientation. Documents with a portrait or landscape view must be scanned right side up.
All standard documents will be verified based on the regular verification process.
If the SSN on the document does not match the taxpayer’s, spouses or dependent’s SSN, then the document is indexed under 'Incorrect SSN' folder under 'Unused' category and no data is captured.
SurePrep verification standards for Association of the document in post wizards for Proforma’d entities with ownership codes T (Taxpayer ), S (Spouse ) and J (Joint)
A document with ownership code(T) will be linked with proforma’d entity with ownership code (T)
A document with ownership code(S) will be linked with proforma’d entity with ownership code (S)
A document with ownership code (J) will be linked with the proforma’d entity with ownership code (T/S) and vice versa.
The verifier must attend each mandatory field on the Form template during the verification process.
Brokerage statements received from IRA accounts (e.g. IRA, 401Keogh plan, Pension plan & Defined Benefit plan) are not captured.
Documents with some indication on a 1099-MISC or 1098 that it belongs to Sch C or Sch E, etc. are moved to the specific schedule under Child Form Association wizard. If more than 1 entity exists, then the verifier specifically looks for information on the document that identifies the schedule and then moves the document accordingly. If no matching Proforma is available or a verifier is unable to identify where the document belongs (due to unclear proforma), then the document will be left unmatched and later will get indexed into "Unassociated Documents" node in SPbinder.

State K-1’s – State K-1’s are only captured if it follows the Federal K-1.
Schedule K-1(1065) where the type of entity is IRA, 401Keogh plan, Pension plan or Defined Benefit plan, is not captured.
No data from Sch K-1 is captured except EIN, Payer Name, and SSN, if the
Bookmark only
barcode is placed on the Federal K-1. Please avoid placing barcodes on Cover Letter pages for Schedule K-1 and Consolidated statements.
If the text 'Do not Use Part III….See 2024 Supplemental Information Statement' is written on the first page of PTP K-1, then no data will be captured; it will only be bookmarked.
For a 2024 tax year binder, if the tax year on the Federal Sch K-1 document does not match the tax year of the binder, then the data is captured based on the fiscal year-end. Example: In 2024 tax year binder, if the tax year of the Schedule K-1 document shows 2023 on top of the document (in bold) but the fiscal year ends in 2024, then all data is captured/verified from that Schedule K-1.
If the Fiscal Tax year ends in 2025 then the document will be considered for the next tax year. No data will be verified /captured.
Federal K-1 and Supplemental pages (K-3, State K-1) should be placed at the end of the source document file. Click here to learn more about scanning and ordering K-1 documents.
Note
: To prevent the K-1 and its supplemental documents from unlinking with each other, do not place another source document between the K-1 documents (e.g., Form W-2).

Form 1116: Foreign Tax Credit information
Passive Foreign Investment Companies (PFICs) (Starting 2024 TY)

South Carolina State K-1 has a 1099-MISC document after it
The 1099-MISC document has 'SC Only' on the document.

SurePreSurePrdardsep Stanar

Proforma'd Entity with text "Enter Payer Name" - SurePrep Verification team will not associate any document to the proforma'd entity with text "Enter Payer Name" while processing post wizards like CFA and NFR. The document will be left unmatched.
The following forms are placed in different folder locations in the SPBinder when left unassociated (unmatched) to the Child Form Association (CFA) wizard (Click here to learn more):
Form 1099-MISC : Miscellaneous Income
Form 1099-K : Merchant Card and Third Party Network Payments
Form 1098 : Mortgage Interest Statement
Form 1099-NEC
Form 1099-G
Form 1099-PATR

Grantor letters get auto-indexed based on the domain settings. Default Tax Form Setup allows you to specify the forms in the tax software to which you want the SPbinder information to be exported.
For example, if you need 'Grantor Letter' information to export to individual 'Schedule K-1' form instead of the default consolidated statements. In that case, you can change the default tax form. When the information is exported from SPbinder to the tax software, the information will go to the form you specified. Please note, that this is a firm-level setting and will apply to all users at the firm.
Note
: The document will first prioritize the match with an existing proforma. If no match is found, then a new folder will be created under the default input form set by your firm.

Review of Work done by 1040SCANverify Process

Stamps