Calcuating Adjustments

Facts

Start the Tax Planner and open the plan you saved for A Couple, Basic and Average (A Couple.pl5). The sample client wants you to show them what the effects might be if the spouse works part-time to grow her Web Design business. Make the following adjustments to the plan:

Copy Case 1 2005 to Case 2 2005 and copy Case 1 2006 to Case 2 2006 (entire scenario). Rename Case 1 "Full-time" and rename Case 2 "Part-time."

Make these adjustments to the 2005 year in the "Part-time" case:

Income

• The spouse will take a 30% pay decrease for the year. Adjust the W-2's wages and federal tax withholdings by 30%.
• The spouse's business (Web Page Design) could get potential orders that would increase overall receipts by $8,500.

View the results on the Summary Worksheet.

Program Considerations

The Adjust feature can be used to adjust a selected amount by a percent or dollar amount. Use the Percent (xxx.xxxx) field to increase or decrease the selected amount by a percent. You must type the percent in xxx.xxxx format. Enter a decrease as a negative number (for example, type -5.5 or 5.5-). Use the Amount field to increase or decrease the selected amount by a dollar amount. Enter a decrease as a negative number (for example, type -500 or 500-). For the Apply To section, the All Future Years Only selection applies the adjustment percent or amount to all future years in the plan, and the Subsequent Year Only selection applies the adjustment percent or amount to the following year only.

How?

To copy a case:

1. Start the 2005 Tax Planner program and open the sample plan (A Couple.pl5).
2. Click Plan Info on the toolbar.
   
3. Set the Number of cases to "2" and click OK.
   
4. Click Copy Column on the Edit menu.
5. Click Entire Scenario at the top of the Copy Columns dialog.
6. Select Case 1- 2005 in the Copy From list and check Case 2- 2005 in the Copy To list.
7. Click OK.
8. Click Yes when prompted to override.
9. The program copies the information to the case.
10. Repeat for Case 1- 2006.

To rename cases:

1. Click Case Titles on the Edit menu.
   
2. Type the new titles.
   
3. Click OK.

To adjust amounts:

1. Highlight the desired field in the 2005 column.
   Note: To avoid overriding, enter the adjustment at the activity level (or the lowest-level worksheet).
2. Click Adjust Amounts.
   
3. Enter the desired amount or percentage. For the wage adjustment, use -30% for Her Employer (Wages and federal withholding). For the Schedule C part adjustment, use $8,500 for the Gross Receipts field on the Web Page Design activity.
   
4. Click Subsequent Year Only in the Apply To section.
5. Click OK.

Tips & Shortcuts

• You can quickly add or delete a case by using the icons in the toolbar.
  
• You can also edit case titles by clicking the case title.
  
• You can click the Adjust icon in the vertical toolbar to open the Adjust Amounts box.
  

Review

You should have generated the following results on the Main Summary:

Troubleshooting

Problem: The adjustments I made had no effect on the plan.

Solution: Make sure you adjust the 2005 column since the changes are being applied to the subsequent year.

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