e-file Alerts for 2012 Editions of Tax Preparer

e-file Errors and software updates

W-2, W-2G, and 1099-R: When you complete the W-2 Worksheet for 1040 line 7, the 1099-R Worksheet for 1040 line 15a or 16a, or the W-2G Worksheet for 1040 line 21, you must now enter the recipient's name and SSN or else your return could be rejected with one of the following error codes:

• ERC 0123 in Form W-2.
• ERC 0124 in Form W-2G.
• ERC 0125 in Form 1099-R.

These error codes have caused confusion because the descriptions for them in IRS Pub. 1346 site only payer's information as the culprit. However, these error codes were expanded after Pub. 1346 was released to include the recipient's information as well.

Form 5695: If you claimed a credit in Part I of Form 5695 (Residential Energy Credits), an e-filed return could be rejected with errors:

• ERC 0033 in field 0036 of Form 5695.
• ERC 0010 in field 0038 of Form 5695.

You must update to release 2012.01g or later to eliminate the problem.

Supplemental instructions for IRS e-file

• Entering relationship on Dependent Worksheet. The list of IRS-accepted entries is more restrictive than you may expect.
• Entering business or employer Name Controls. 4-character name controls are required for W-2, W-2G, 1099-R, and Care Provider (for 2441) Worksheets.
• Preparing a decedent return. The IRS has special requirements for e-file.

This page applies only to the Tax Preparer 1040 program. For e-file information that applies to the California Supplement (540) program, see the bottom of our California downloads page.

Beware IRS restrictions on entries for Dependent Relationship

A common reason for a return being rejected by the IRS is that your entries for the relationship of a dependent (at line 6c of Form 1040) do not match the restricted set of entries allowed by the IRS for e-file. The only entries that the IRS will allow for e-file are (for the 2012 filing season): FOSTER CHILD, STEPCHILD, GRANDCHILD, GRANDPARENT, PARENT, BROTHER, STEPBROTHER, HALF BROTHER, SISTER, STEPSISTER, HALF SISTER, AUNT, UNCLE, NEPHEW, NIECE, NONE, SON, DAUGHTER, and OTHER. Case doesn't matter, but you must NOT have a leading space in your entry, and such common entries as MOTHER, FATHER, GRANDSON, GRANDDAUGHTER, GRANDMOTHER, and GRANDFATHER are not allowed.

Beware required name Control entries

You can ensure a trouble-free first transmission if you learn and understand the following information about name controls. The IRS requires that special "name controls" be provided for names of taxpayers, dependents, parents, and even businesses. These name controls are 4-character codes derived from the full names they represent, and are used by the IRS in place of the full name in the IRS's own automated software. For most of these entities Tax Preparer generates the name control for you when you just view the relevant form or worksheet. However, there is one important area where the name control is not automatically generated because of the nature of the IRS requirements: name control for business names.

Name control for a business name is a required entry on four of our worksheets:

• Employer's name on W-2 Worksheets (accessed at line 7a or 7b of our Form 1040)
• Payer's name on W-2G Worksheets (accessed at line 21 of our Form 1040)
• Payer's name on 1099-R Worksheets (accessed at line 15a or 16a of our Form 1040)
• Care providers name on Care Provider Worksheets for Form 2441

For all these worksheets you must enter valid name controls or your return will be rejected by the IRS. The complex rules for determining the proper entries to make are found in the 8-page Section 7.05 of IRS Pub. 1346, Part I. However, we have condensed those instructions into a 5-page document Instructions for Entry of Name Controls for Businesses. (CAUTION: You MUST complete the entry on our W-2 Worksheet for "Employer's e-file name control" in accordance with these instructions or else the return will be rejected with IRS Reject Code 0122.)

How to save this document to your desktop. You can place an icon for the document on your screen, so that you can read the document merely by clicking the icon, as follows:

• Right-click the highlighted document title, above.
• From the subsequent menu, left-click the item "Save Target As."
• At the top of the subsequent window, left-click the box labeled "Save in."
• Now choose the location "Desktop" then click the "Save" button.

Your desktop should now contain an icon labeled "NameCtrl" or "NameCtrl.pdf." When you click this icon, the document will be displayed on the screen by Adobe Acrobat Reader. (If you don't yet have Adobe Acrobat Reader, which is the same program you need to read our on-screen manuals and IRS publications, go to the public Downloads page of our Public Website to get your FREE PDF Viewer: Adobe Acrobat Reader.)

Beware special entries required for decedent returns

The IRS imposes several special requirements on e-filed decedent returns, and failure to heed them will cause the return to be rejected:

• Do NOT enter anything in our Special Handling Indicator. For a paper return you would enter DECEASED and the name of the deceased person in our special line at the top of screen 1 of Form 1040. But for an e-file return you must leave the entry blank because the entry is reserved in e-file for combat-related special handling.
• Enter DECD at end of surname of deceased taxpayer(s) unless exception below applies. Unless the exception below applies, you must enter a space then the word DECD at the end of your entry for last name. The software will then automatically format the e-file name (at the bottom of screen 1 of Form 8453) in accordance with IRS rules.
• EXCEPTION: If filing jointly and spouse has the same last name, enter DECD after first name and initial of the deceased person. This case may require some extra effort on your part because first names are automatically shortened when necessary for the combined e-file name to be no longer than 35 characters. Once you enter space DECD at the end of your entry for the appropriate first name, check the resulting combined e-file name at the bottom of Form 8453, screen 1. If DECD does not appear, you will have to abbreviate the rest of the entry until it does.
• Enter date deceased in the standard format for dates. You must enter the date in the standard mo-dy-year format for the appropriate spouse, using only numbers and dashes or slashes.
• Indicate surviving spouse if filing jointly. For e-file, the IRS requires that the last return of the deceased taxpayer be filed by the surviving spouse if the return is filed as married filing jointly. The answer to our question Filing as surviving spouse? on the last screen of Form 1040, page 2, must therefore be Yes in order for the return to be accepted by the IRS.
• Indicate personal representative if not filing jointly or both spouses are deceased. For e-file, the IRS requires that the last return of the deceased taxpayer(s) be filed by a personal representative unless a joint return with a surviving spouse. The answer to our question Personal representative on the last screen of Form 1040, page 2, must therefore be Yes in order for the return to be accepted by the IRS.
• In care of (or other add'l) must have an entry for ALL decedent returns. This is the entry at the top of screen 3 of Form 1040 page 1 for additional addressing information, which the IRS cryptically calls 'Name Line 2.' You must enter here the name of the person responsible for filing the return. For a married taxpayer survived by a spouse, you should generally enter here the surviving spouse's full name. For an unmarried taxpayer (or married but both spouses are deceased), you should generally enter the executor of the estate or the deceased taxpayer's personal representative. (When a Form 1310 exists for the return, an entry appears automatically based on your entries on Form 1310.)
• Form 1310 required for some refund returns. This form is used for a 3rd party to claim a refund for a deceased taxpayer. For refund returns, Form 1310 is always required unless the return is a joint return with a surviving spoues. (This form is built into the Premium Level only, so you will not be able to e-file a return that requires Form 1310 if you use the Standard Level.)

Because of the above requirements there may be some decedent returns that cannot be e-filed. This is unavoidable and a direct result of overly restrictive IRS specifications for e-file. (If you use our California Supplement to e-file a decedent Form 540 return, you must first remove the DECD you entered for the federal return. You must also enter the executor's name and the type of representative on screen 2 of Form 540.)