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17648: AL - Federal Income Tax Deduction Worksheet Changes (Drake21)


Alabama

How do I make entries for the new AL federal income tax deduction worksheet? Why do I see note 68 on this Alabama return? 

 

The recent Alabama Act 2022-37 modified the guidelines for the Alabama federal income tax deduction worksheet. Part II now states

"Pursuant to Act 2022-37 (HB 231) which provides that any federal income tax reductions attributable to the federal child tax credit, the earned income tax credit, and the federal child and dependent care tax credits, the federal income tax deduction shall be calculated as if the individual paid the federal income tax that would otherwise have been paid under the provisions of the Internal Revenue Code in effect on December 31, 2020."

This change requires 2020 calculations to be used for lines 3, 4, 8b, 9e  on the 2021 worksheet. The calculations are now done automatically by the program (AL Update 18 in Drake21). Note 68 generates in view mode to explain:

AL 2021 Federal Income Tax Deduction

AL Act 2022-37 (HB 231) provides that any federal income tax reductions attributable to the federal child tax credit, earned income tax credit, and the federal child and dependent care tax credits shall be calculated as if the individual paid the federal income tax that would otherwise have been paid under the provisions of the Internal Revenue Code in effect 12/31/2020.

The amount of the credits based on 2020 federal law will automatically be calculated on lines 3, 4, 8b, and 9e of AL INC WK, Federal Income Tax Deduction Worksheet. The corresponding federal worksheets for each credit will also be printed. If necessary, overrides to these amounts may be made on AL screen ITDW.

AL screen ITDW can be used to override amounts for the AL FIT Deduction Worksheet lines 3, 4, 8b, 9e, if needed. These amounts would have to be calculated by the preparer based on the instructions. Preparers should fully review the instructions before making entries on these lines.

For taxpayers using “DIY” Drake products (such as 1040.com), the amounts are calculated automatically per AL DOR guidelines. No direct entry for lines 3, 4, 8b, or 9e is allowed for taxpayers using the online “DIY” products. 

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