If you live in the U.S. and haven't yet filed your tax return, chances are you're planning a small adventure in accounting in the next few days.
If you use MacInTax, be aware that the program pinches pennies differently from last year. ChipSoft modified MacInTax so that it only uses the Whole Dollar Method (where you round entries on the forms and schedules to the nearest dollar, instead of entering in the actual dollars and cents amount). It seems that the initial release of MacInTax not only did not allow you to enter pennies on the main 1040, it also truncated the amount. In response to what appears to have been a fair amount of customer outcry, ChipSoft released MacInTax 11.01b, which instead of truncating, rounds the dollar and cents amount that you enter on the 1040. To acquire 11.01b (or more likely, the latest revision, 11.01c), call the 800 number below. Expect about a week to receive the update unless you want to pay the Fed-Ex charge yourself. Sorry, you can't update via modem or the nets.
If you want the rounding capabilities in 11.01b, but don't yet have the update, Mark Goines, ChipSoft Director of Product Marketing, suggests the following workarounds:
All itemizations in MacInTax accept both dollars and cents, then round the total of all the line items and transfer that total to the appropriate form. If you wish, you can create an itemization for any field, and so produce a return in which all amounts have been rounded to the nearest dollar.
You may simply round the amounts before entering them. And, note that on the W-2s and 1099s, which the IRS requires to contain both dollars and cents, MacInTax does indeed accept both dollars and cents.
Some people want to enter pennies on their 1040s, a perfectly legal practice. The ChipSoft response on their CompuServe forum was that the pennies option was removed by request of the IRS. A call to tech support revealed additional possible reasons for the software change. According to Bunny Bedell, the Whole Dollar Method helps to speed up the program and reduce memory consumption. Bunny's take on the situation was that next year's MacInTax will probably let you enter pennies, if you wish. Bunny also commented that from the IRS's perspective, rounded amounts are simpler to work with.
Ed Fortmiller <email@example.com> points out that "the problem with this approach is that it doesn't allow the user to optionally retain the cents, which in some cases results in users paying more than the legal minimum tax. The higher tax results when rounding to achieve the Whole Dollar Method pushes the user who uses the tax tables into the next higher grouping. For instance a single person with an income of $49999.99 would pay $14 more tax using MacInTax since the income would be rounded to $50,000 thus pushing the person into the next higher $50 group."
Mark acknowledged the problem, and pointed out more specifically how the problem could occur, saying that you would only be moved to $50,000 and thus incur the $14 more in tax if you took only the standard deduction. If you itemize deductions, as 84 percent of MacInTax users did last year, you likely would not be pushed into the $50,000 level.
Although it looks like many of the problems could be fixed by itemizing or paying attention, a quick read of the CompuServe forum for ChipSoft reveals a number of examples of people penalized by not being able to enter cents, so if you use MacInTax, you'll want to be aware of what you do with your pennies.
On a related note, although my contact with ChipSoft about the problem was entirely positive (Bunny at tech support acknowledged the issues involved and Mark Goines promptly wrote back with clarifications), Ed had much worse luck in feeling that ChipSoft cared about his problems with the lack of being able to enter pennies - and based on my quick tour through the CompuServe forum, I see why. Responses were generic and corporate and gave little sense that the company cared about its customers - whether or not removing the feature was a good business decision in terms of improving the program, failing to be sufficiently sympathetic in an area as charged as tax filing is a guaranteed way to lose customers to the competition.
ChipSoft -- 800/964-1040 (sales) -- 602/295-3080 (support)
Ed Fortmiller <firstname.lastname@example.org>
Bunny Bedell, MacInTax Technical Support
Mark Goines, ChipSoft Director of Product Marketing