Every year this comes up just once or twice, so I can never remember - - I am frustrated, so I’ll ask the question this way: WHY IS IT SO HARD TO TRANSFER DONATIONS BETWEEN SPOUSES IN TAX CYCLE??!!! I love TaxCycle 99% of the time, but this is really aggravating. Why isn’t there a simple check box to say who claims donations??? Grateful to anyone who can help - -Thanks, Mike Hyde
In the Optimizations Tab you can set whether it is automatic or not. Once you set that is not automatic, on the Donations Tab you select who claims what.
I have never been able to find that.
If I go to Optimizations and scroll down to Donations I can toggle between “Yes” and “No” to Optimize. Unfortunately, switching to “No” shows up as a red over-ride. Although you can now then select which client you would like to claim the donations you now need to be careful TaxCycle doesn’t claim more than necessary.
It has always frustrated me how we aren’t able to select which spouse we want to claim donations without disabling optimizations or over riding.
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I just go to the donations page and “transfer all donations” and look at the result. Generally that’s enough…but yes, would be nice if the optimization just worked on it.
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Many Thanks to everyone who replied to my message. I did figure things out after a few minutes (as I do with this donation question every year…) If anyone from TaxCycle sees this message, I want to repeat that TaxCycle Y1 is a greta product, but one of your selling features is that you want to “Save Users Time”. This donation page problem is a huge time-waster for me every year!! I would be grateful if you would fix it!
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Many Thanks to everyone who replied to my message. I did figure things out after a few minutes (as I do with this donation question every year…) If anyone from TaxCycle sees this message, I want to repeat that TaxCycle T1 is a great product, but one of your selling features is that you want to “Save Users Time”. This donation page problem is a huge time-waster for me every year!! I would be grateful if you would fix it!
I agree would like this more straightforward… There are reasons for claiming the donations on a particular spouse that come directly from the client. I also move donations to decrease debt owed… particularly to lower past the $3K threshold of making installment payments… Oh My… every year re explain that to taxpayers… not fun. Also, when I am aware that the donations will be carried forward… and one spouse is quite poorly… we would prefer to save the donations on the healthier spouse.
Definitely love Taxcycle… and they do Listen to our suggestions.
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Agreed.
I think they want to keep all the “Optimizations” on the one page but In this area though I think it would be better right at the top of the donation worksheet where it is suddenly when you turn optimizations off on the worksheet.
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I’m confused - why would you want to override the Optimal allocation of donations? The product will ALWAYS give the result that gives the highest FAMILY refund (or lowest amount due) - ie: best family result of paying the least taxes legally possible. If you are messing with the allocation, you are not getting your client(s) the best result.
As for not being able to find the switch for Optimizing donations, I believe it is in your Options
Alternatively, look at the top of the Donations worksheet - answer the 2 questions and your problem is solved.
dklassencga: My clients (spouses) requested that the donations be transferred from one to the other. They had their own good reasons for making the request. It was a simple request and I was hoping for a simplified solution that did not involve an override.
I understand that clients have their own reasons for these requests - I reply with “Why would you want to give the government more tax dollars that they are entitled to, which in turn leaves you less to donate in the future?”. Most often it is simply a vanity thing that they want their donations to show on their returns. Frankly, CRA doesn’t care, or even look at it, so why lose out?
Most times clients will see the light at that point. The goal should always be to pay the least amount of tax as legally possible.
If your clients can give a better reason, then great. Then the suggestion to TaxCycle is to allow negative amounts on the worksheet so we coud do a line “Transfer to spouse” and enter a negative number - go to the spouse return and enter “Transferred from spouse” with the positive value.
We could do that in Cantax years ago (another Cameron product) and it wouldn’t involve re-writing the Optimization sheets.
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I find instances where Taxcycle’s optimizations are not the most optimized.
I do like to leave automatic optimizations on however but I often find a little tweaking can be warranted.
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If I had T1 clients who tried to tell me how to do my work, they wouldn’t be clients for long. Unless they can show me that the net result is more cash (credits, eligibility for some other funding…unlikley in this case). Vanity or “they wanted it” is just not good enough for me. (I’m OK with someone deciding on optional deductions, say CCA or not on a rental…fine, b/c there can be a long-term strategy to that.)
My work is to make the best decisions for them and to minimize their taxes, where possible, legal and available. Because they want “Bob” to claim something instead of “Jane” and they pay more tax…nope. I’d just send them away personally. I don’t want someone looking at a return I prepared and thinking “Why on earth would he have done that?”.
SMH. Maybe that’s just me and I’m old and crotchety at this time of year LOL.
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If you are a resident of ONtario this is absolutely not true. Perhaps if a family has a few hundred dollars in annual charitable contributions you can just leave it to the software. Almost half of my clients will have at least 10,000 or more in cash donations, with the largest this year being just under $352,000 given to several different organizations. Very often I find myself needing to turn off optimizations in order to gain the lowest overall family tax payable… or perhaps I will split up the donations to lose the $40.10 (combined tax on the first $200 in donations in Ontario) but gain literally hundreds more than that.
Optimization does not work in at least these situations, where a transfer to the other spouse or a splitting of donations produces much better results ;
- Using some or all of the donations on the lower income spouse because they are inside the Ontario Tax Reduction window.
- Using some or all of the donations on the lower income spouse because the higher income spouse pays no provincial tax (as in cases where having several children under 19 cause the Ontario Tax to be zero)
- Situations where a client can use enough donations to bring their Ontario Tax to zero but would still have federal income tax. In these cases you would use enough donations to bring their provincial tax to zero and then transfer the remaining.
- Situations where one spouse owes income tax but the other has a refund, the donations are worth exactly the same amount to either spouse, and claiming on the lower income spouse would create a refund on both returns.
- Situations where the clients have variable credits (pension splitting, medical expenses, and charitable contributions) where the software can’t possibly determine the best overall outcome without the preparer doing some leg work and what-if analysis. Sometimes this might only create a carry-forward of donations to the following year which the software would have otherwise just used up.
I have prepared at least 20 returns this year where I’ve had to manually allocate donations in order to obtain the best overall results.
Why does the software allow me to manually allocate medical expenses to one spouse or another without having to fight with it? Presumably because the developers understand sometimes claiming them on the spouse with the higher net income produces better results. Donations are no different in my personal experience.
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A much more detailed explanation of what some of us do.
Thank you for hopefully encouraging some tax preparers to take a second look. I am in NB and depending on the situation, I too modify the charitable contributions… when required.
The optimization doesn’t and cannot take every possible situation into account. It is a fabulous tool but should not be solely relied upon. We are educated professionals and we should use all of our tools in our tool box.
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Snoplowguy is absolutely spot on. Only thing I would add is the more variable/optional claims you have available the less likely clicking “max refund” will get it right.
On optimizations in general, if anyone uses the options to reduce federal and/or provincial tax to zero I would like to know if you would find it useful to have the program reduce those tax amounts to $1.00 instead. When we manually adjust a return we will do this so (especially looking at a prior year return) that at a glance you can see that a good optimization we achieved.
Thoughts?
Jim
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I ran across another less than optimal donation situation today.
Client has about $5,500 in donations from 2016 that are set to expire in 2021.
TaxCycle “optimized” the client’s Donation claim by claiming $3,980 of the 2016 donations and allowing about $1,520 expire. This would be fine other than the optimized claim left the client with some federal tax owing. When I chose to claim a different amount I was able to increase the donation claim until the federal tax became zero (causing the client to owe less) … and a smaller amount of her donations expired worthless. 
Fascinating! Can’t say I’ve ever run across that - but most of my large donors are single, divorced or widowed…so not much to move around!! But I’ll keep that in mind…interesting thread - had not considered such an occurrence, even though I’ve occasionally played with the donations between spouses, more for fun than result.
Learn something new every day!
On couple cases I read, about buy low, donate high donation, and donation in the year of death. The rulings that I read, where those were denied by CRA, were the fact that the intent was for the tax credit benefits, not with a pure intent of donating to help , generosity of spirit or something. it’s mind boggling for me, but CRA can easily apply the same ruling for every donation, large or small?