EKS TrainingScenario Five

Ground Rules

oDon’t work ahead – stay on the current taskoTurn off your cell phoneoQuestion/Comments – raise your hand, stay in your

seatoNo side conversations - don’t even ask your

neighbor for helpoReturning volunteers sit next to new volunteersoBring your materials every dayoAt least try to do your homework – bring your

questions

Class Structure

4 Steps:

1. As a class, we will review Interview Notes, Intake & Interview Sheet (13614-C) & supporting documents for each scenario.

2. Instructor will teach Tax Law – referencing Publication 4012 and 13614-C

3. Instructor will show you how to enter information into TaxWise. WATCH!

4. Now DO! Students will enter information on TaxWise

Scenario #5

Scenario #5

What you will learn in this scenario:1. Dividends2. Social Security Income3. Cancellation of Debt – Credit Card4. Affordable Care Act – Marketplace coverage and

premium tax credit

What you will review in this scenario:5. Filing Status6. Personal Exemptions7. Income – W-28. Itemized Deductions versus Standard Deduction9. Form 8888

Scenario #5

Let’s review Anthony and Courtney’s Information:

Interview Notes Intake & Interview sheet - 13614-CTax Documents

Interview Notes Review

What did you learn about Anthony and Courtney?

Intake & Interview

Deep Dive with the 13614-C Did they bring all the required documents? Everything accurate?

What’s missing/wrong/mismatched that needs to be changed?

Compare tax documents and interview notes Make any corrections needed on 13614-C Fill out greyed out boxes (dependency and ACA)

Publication 4012, Tabs K-3 and K-4

Who should file?

Does this taxpayer need to file their return?

Or should they?

Publication 4012, Tab A

In Scope?

Is client eligible for VITA services?

What certification level is needed to prepare this return?

Publication 4012, pages 8-10Scope of Services Chart

Scenario #5

You Got This!Determine filing status and personal exemption

Publication 4012, Tab B-1 and Tab C-1

TaxWise

You Got This!Enter Anthony and Courtney’s: Personal information on Main Information Sheet

Everything on page one of 13614-C goes on Main Info

Publication 4012, K-6 to K-11 for Main Info

TaxWiseYou Got This!Enter Anthony and Courtney’s: Income documents:

W-2Publication 4012, D-3 to D-9 for Income

Tax Law Topic #1

Dividend Income Corporate distributions such as ordinary dividends, qualified dividends, capital gain distributions and nondividend distributions are reported on 1099-DIV

Ordinary dividends are corporate distributions paid out of the earnings and profit of the corporation

Qualified dividends are ordinary dividends that qualify for lower, long term capital gains tax rates

Capital gains distributions come from mutual funds and real estate investment trusts

Nondividend distributions are nontaxable because it is part of a taxpayers cost or other basis

They are treated like interest income in TaxWise – you’ll enter them on the Dividend Statement

Publication 4012, Tab D-3 to D-5 and D-10 to D-11

TaxWise

Students: WATCH instructor

Enter Anthony’s 1099-DIV on the Dividend Statement

Publication 4012, Tab D-10 through D-11

TaxWise

Students:

Enter Anthony’s 1099-DIV on the Dividend Statement

Publication 4012, Tab D-10 through D-11

Tax Law Topic #2

Social Security Income Taxpayers receive a SSA -1099 if they receive benefits from Social Security Administration – retirement, survivor and disability benefits

If taxpayers have other income, part of their Social Security benefits may be taxable

Social Security income alone does not require someone to file their taxes in most cases

Publication 4012, Tab D-26

TaxWise

Students: WATCH instructor

Enter Courtney’s social security benefits on 1040 Worksheet 1

Publication 4012, Tab D-26

TaxWise

Students: WATCH instructorEnter Courtney’s social security benefits on 1040 Worksheet 1

Publication 4012, Tab D-26

Tax Law Topic #3

Cancellation of Debt

Any debt forgiven by a creditor is considered income by the IRS.

Creditors and debt collectors that agree to accept at least $600 less than the original balance of the debt are required by law to file a 1099-C form with the IRS and to send it to debtor.

There are exclusions - use the screening tool in Publication 4012 Tab D-33 to determine if the client’s COD is in scope of VITA services.

Publication 4012, Tab D-33

TaxWise

Students: WATCH instructor

Enter Courtney’s cancelled credit card debt on Line 21 – link to worksheet 7

Publication 4012, Tab D-33

TaxWise

Students:

Enter Courtney’s cancelled credit card debt on Line 21 – link to worksheet 7

Publication 4012, Tab D-33

TaxWise

You got this!

Enter the Websters’ deductions on Schedule A.

Mortgage Interest Real Estate Taxes Charitable Contributions

Interview notes & Publication 4012, Tab F-5

Tax Law Topic #4

Affordable Care Act - Marketplace & APTC

Did the Websters have coverage all year? If no, let’s review the exemptions before assessing the Shared Responsibility Payment Did they purchase coverage from the marketplace (Covered CA)?

If yes, did they receive the advanced premium tax credit (APTC)?

Interview Notes, 13614-C, 1095-A and Publication 4012, Tab ACA

TaxWise

You got this!

Enter coverage information for Courtney on the ACA worksheet

Publication 4012, Tab ACA

TaxWise

Students: WATCH instructor

Enter Anthony’s marketplace coverage information (1095-A) on Form 8962

Publication 4012, Tab ACA

TaxWise

Students:

Enter Anthony’s marketplace coverage information (1095-A) on Form 8962

Publication 4012, Tab ACA

Completing the CA return

1. Get the red out! Most information will automatically

populate from the federal return2. State EITC Form – 3514*3. If you have entered more than one W-2 on the

1040, you will have to manually add the additional W-2’s. The first W-2 will carry over, but the rest won’t.

4. Make sure to complete the direct deposit or balance due portion of the return

5. Complete the CA Renters Credit Worksheet when applicable.

*At the time of this ppt creation, details on what TaxWise will auto populate are not available

TaxWise

You got this!

Complete the Websters’ CA return (540)

RefundDo the Websters want to direct deposit their refund?

If so, are they requesting to split their refund?

Do they want to buy a savings bond?

13614-C and Interview Notes

Savings Ask Every Taxpayer (AET)! Remind the Websters of the savings optionAnswer QuestionsBe enthusiastic and positive!

TaxWise

You got this!

Enter checking and savings account information for the Websters on Form 8888

Remember to enter the 540 account numbers twice

Publication 4012, Tab ACA

Finishing the return

THINGS YOU NEED TO KNOW ABOUT FINISHING A RETURN1. Ask the questions in the Prep Use Fields2. All returns must be Quality Reviewed (checklist on

13614-C) Tab, K-253. Run Diagnostics to check for errors4. Print returns (Federal and State) for Taxpayer5. Review return with taxpayer (Formula 1040 activity)6. Have Taxpayer and Spouse sign 8879s for Federal and

State and remind them they are responsible for their return and by signing, they are agreeing it is accurate: One copy for the taxpayer One copy for the VITA Site

Publication 4012, Tab K

Check our work

Do we have matching AGI, refund?Let’s review entry of:

- W-2- Schedule A- 1040 Worksheet 1- Dividend Statement- Line 21- ACA Marketplace and Premium Tax Credit

Look it up!

Where do we enter Dividends in TaxWise? Publication 4012, Tab D-11Dividend Statement

True or False: All Social Security benefits received are always taxable. Publication 4012, Tab D-26False – depends on what other income was received; automatically calculated by TaxWise

Name a reason that cancelled debt would be out of scope for VITA.Publication 4012, Tab D-33Insolvency, related to a business, didn’t receive a form

Look it up!

What form will a taxpayer receive if they purchased insurance on Covered CA?Publication 4012, Tab ACA1095-A

True or False: The amount of advance premium tax credit reported on the 1095-A is always what the taxpayer is eligible for. Publication 4012, Tab ACAFalse– it will depend on actual income information on the tax return.