New Tax Law Impacts 2006 Version of Divorce Planner

How to Update the 2006 Software

Your version of Divorce Planner is designed to let you update certain tax variables without getting a new CD from Thomson West. The President signed into effect a new tax law on May 17, 2006 which sets forth new exemption limits for the Alternative Minimum Tax (AMT). As such, you will need to utilize the Utility design feature as instructed below.

When you received your 2006 software, it included the AMT exemption amounts for 2006 that are equal to the AMT amounts that were in effect for 2005. The Tax Increase Prevention and Reconciliation Act of 2005 increased the 2006 exemption amounts as follows:

Exemption Amount*	Current	New
Single	40,250	42,500
Hd Hsld	40,250	42,500
Married, Jt	58,000	62,550

*These are the only amounts to be changed. Other variables within the AMT Utility feature remain unchanged.

It is recommended that you update your existing program immediately, since it could impact the tax savings which are very important in divorce. The change in the AMT exemption amount is expected to reduce taxes for divorcing individuals by approximately $600 in 2006 when an individual is impacted by the AMT.

You are able to update your existing program without receiving any new software from Thomson West. To do so, you will need to perform the following steps on each computer where Divorce Planner is installed.

How to Update Your Divorce Planner Software

Step 1. Launch Divorce Planner.

Note: You must have a case open before you can proceed with these steps. If you are using Divorce Planner for the first time, then perform these steps after you have begun your first case. Save the new case from the General tab menu and proceed to the next step.

Step 2. Open a Case.

Step 3. Select the Utilities button found on the General tab menu. The Utilities button includes an option to update your software for this tax change.

Step 4. Select the Update Federal Tax Rates button from the Utilities submenu of the General tab menu. On the Informational Popup, select Next.

Step 5. Select Update Variable for Alternative Minimum Tax to update the software for this new tax law change.

Step 6. Change the white columns to the new values as instructed below.

Exemption Amount	Current	New
Single	40,250	42,500
Hd Hsld	40,250	42,500
Married, Jt	58,000	62,550

Insert the new AMT deduction/exemption amounts in the columns for 2006, 2007 and 2008. Do NOT change any other figures on the AMT table. The new law has only increased the exemption amount. See the before and after examples below to implement the changes.

Before

After

Step 7. After you have made each of the necessary changes, select the Save button. Close out of each screen as needed to return back to the General tab menu.

Step 8. Once you have completed steps 1 through 7, return to your currently opened case and recalculate to activate the new tax change which will then apply to all of your cases going forward.

Note: You need only make this change once. These steps, however, will need to be performed on each PC on which Divorce Planner 2006 has been installed.

All cases you have saved in the Support Summary or the Tax Summary reports will reflect any prior settings. As needed, you should recalculate and resave the cases now posted to the Summary Report of Support Cases Saved and the Summary Report of Tax Options for 2006. This procedure is similar to transferring cases from the prior year’s update to the current year’s update. The summary reports are not automatically recalculated, and only display information as previously posted.

Additional Legislation in 2006

A second tax bill is expected to be enacted in 2006 which will allow for the existing deductions for higher education expenses and for state sales tax as part of Itemized Deductions to be continued in 2006. These two deductions technically expired at the end of 2005 but legislators have agreed that they should be continued in 2006. Your current software allows for these deductions and it is recommended that you continue to utilize them in your tax analysis.

Call Thomson West at 1-800-848-3475 if you have any questions on making the AMT changes to your FinPlan software.