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Optimizing Donations

I’ve done a few T1’s for students who have made current year donations (no carryforward expiring). The program, set to optimize donations, is claiming donations on these returns, even though the credit is not needed. I thought that it might be due to the ordering of tax credits but I checked the Act and tuition has to be claimed before donations. Is there a reason why this optimization doesn’t appear to work?

Don’t know but the optimization is not working in general for donations at the moment as I had a case this morning with a husband and wife where the wife was taxable at the federal level and not the provincial level yet the optimization wanted to claim all the donations on her return rather than shift them over to the fully taxable on both husband. I couldn’t override it either - when I said yes to claim different amounts - $0 on hers, $200 on his, it would not transfer them over and claim on his.

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Not sure what happened, but today’s TaxCycle update messed up my setting for donations optimization.

I had TaxCycle set to allow me to decide (at the top of the Donations Worksheet) who claimed the donations. Somehow that area is now missing from the Donations Worksheet and I must go to the Optimization screen and manually set the Optimize Donations area to “NO” (with an over-ride) in order to be able to allocate donations between spouses (and get that top area back in the worksheet)

After installing today’s update, TaxCycle has completely changed the returns for clients with donations that have been completed, PRINTED, but not yet efiled or locked. This is not fun.

I am getting a big red banner now that says Calculations have changed, and I have traced the problem down to donations optimization. In order to get the Tax Returns back to the way I had them prior to the update I now need to go to the Optimizations Screen and override the “YES” to “NO” for donations. Ironically when I don’t optimize, the clients refunds increase.

How do I change it back so that I can decide how to divide up the donations without having to go to Optimizations page and override the YES in the donations section on every file? It worked fine until today.

Now, the area at the top of the Donation Worksheet where you can choose who claims the donations is missing until you turn off Donation optimization.

If I open a T1 file that I completed (and locked) a few days ago can see the area at the top of the worksheet where you can select how to allocate the donations AND the donation optimization is set to YES on those files… so something obviously changed.

Is there a setting somewhere that got changed on this update?

Having TaxCycle change returns that were ready and set to file is troubling.

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I’m following up with our optimizations guy. Stay tuned.

I had a couple files that this occurred for as well.

I am really thankful we get the alert. :+1:

Yikes. Thanks for the heads-up. I won’t install the update for now.

I will e-courier the file in case that helps.

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For me it occurred with the previous update. I usually am taking every update as they come available. It might have more to do with a previous update that the file was previously saved with.

In any event the alert saves us from filing it not as previously finalized as we can make the switch back with a little work.

I had this happen as well and found out about the issue as I was about to do up my batch for efiling. Was not happy about this as it took some time to find out the issue and yes had to go to the optimization page to fix it. This is time away from processing other returns, something I am sure no one has extra of.

Why would you not optimize the return?

… because in some cases (like with the file I e-couriered to TaxCycle) software optimization results in a higher overall tax payable than if we use our professional training to allocate credits in such a way that causes an overall better result.

TaxCycle does a great job at optimizing the returns for the most part. In many instances, however, there are just too many variables for the software to be able to calculate the most optimal result for a family. Of course, if I was simply punching slips into the software perhaps I would never know the difference or realize I could achieve better results if I did some of the thinking myself… but this goes to the question is the software a tool of the preparer, or the other way around.

The most important thing for me … and it doesn’t involve the optimization of donations or other credits… but is when the software takes it upon itself to make material changes to tax returns that I have already prepared, printed, and are ready to e-file once the T-183 forms come back.

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Let me be more specific, I meant why would you not pool the donations on one persons return to get the optimum refund as its a tax credit. I did not know you were referring to other optimization features, sorry.

There are some situations where the combined outcome is the same no matter who claims the donations and if I can reduce a balance owing by one spouse by choosing who will claim what donations I will as most clients do not like CRA bills. Optimisation is great but isn’t always in the best interest of the clients.

In this case I was referring to the optimization of Donations.

There are many instances, especially in Ontario where we have to contend with the Ontario Tax Reduction, where you might divide up donations between spouses to obtain a better overall result… even when the first $200 for each taxpayer gets credited at the low rate of tax. It happens quite often, and TaxCycle can’t possibly do all of the thinking involved with a bunch of different variables and other potential credits.

A large portion of my clientele have annual charitable contributions into the tens of thousands, so it’s not always as cut and dry as claiming donations on one return.

Ironically, In the case that I have been discussing, there were about $9,000 in donations, and I had claimed them all on one spouse’s return. After the return was completed, printed, and awaiting the T183 forms I decided to update TaxCycle. After the upgrade TaxCycle decided to change who it thought should have claimed those donations, which changed both returns. These changes (optimizations) caused a higher amount of income tax to be payable.

What I am saying is prior to the upgrade TaxCycle gave us some autonomy over how we wanted to handle charitable contributions. After my system took the upgrade I can only reclaim that autonomy by going to the Optimizations page and over-riding the optimization of donations from YES to NO.

I probably shouldn’t have posted my initial reply in the “Optimizing Donations” topic, but more likely under Bug Reports.

@thomasvennercfp
For example, if the amount of pooled donations can be used by either spouse to reduce that spouse’s tax payable to zero, but the other spouse had some tax payable. The donations could be split between spouses to achieve a better overall result - perhaps even reducing BOTH spouses’ tax payable to zero.

Fair enough.

As odd as this may sound, I have several clients who do not want the donations optimized… or only some of them are shared… as they maintain
separate finances and prefer to each claim what came out of their own banks.

The choice to optimize or not is important…and am very grateful this software offers us choices depending on how each clients needs.

Also, overall maximum refund is fabulous but just had a case where this now puts the other spouse owing more than $3K , thus triggering
installment payments… so moving some or all of the donations… or medical… or taking a different approach to pension splitting will drop the debt down past the $3K threshold. Knowing my client, they are not likely to remit these installments and could face
interest charges which will negate the benefit of the “optimization”

We need to use our brains… that is what we are paid for.
:blush:

I’m glad to hear there’s a problem. I fought with a return a while ago and I didn’t know there were issues. I transferred the donation from one spouse to the other (just so it would the same as the previous year). It then showed on neither return. Yet the donation was showing on the input screen … but not S9. I put it aside to work on other returns because I couldn’t figure it out.

I too overrode the optimization and it worked but I didn’t want to leave it that way.

Have told people at the office to hold off on e-fling these, as there likely will be an update fix this issue. Is that correct, @Cameron?

Same problem here, I’m opening returns to marked them as signed and they have changed because the donations have been switched from one partner to another