Familiarization Training NJ TAX-AIDE 2015 2016 SOMERSET COUNTY 1 2 Purpose of this Training Understand policy & procedures of AARP Tax- Aide Program Understand what is expected of volunteers Understand typical tax documents Understand how to access & use TaxWise software (TW) Understand how to prepare a simple tax return using TW AARP Foundation Tax-Aide Charitable, non-profit program administered by AARP Foundation Free, nationwide confidential service Help low- to mid-income taxpayers with special attention to age 60+ Answer tax questions & prepare returns Funded 1/3 AARP Foundation, 2/3 IRS Tax Counseling for the Elderly (TCE) 3 Mission of AARP Foundation Tax-Aide To provide high-quality, free income tax assistance & tax form preparation to the greatest number of low- & moderate-income taxpayers which will produce the most beneficial result for the taxpayers we serve No income or age limits Only limits are on complexity of return 4 National, Volunteer-Run Program TY 2014 National Statistics Tax-Aide started in 1968 and is now the largest nationwide, volunteer-run free tax service Taxpayers served: 2.6 million Federal Tax Returns prepared: 1.65 M Volunteers: 36,000 5 Somerset County Tax-Aide Program In Somerset County: For 2014 tax season, we completed 2,034 returns at 6 sites Montgomery, Manville, Raritan, Franklin, Bridgewater, Green Brook 100% e-filed on the computer Approximately 60 volunteers 6 AARP Tax-Aide Counselors Are trained Become certified Are assigned to a site Provide free tax counseling Report their service Promote the program 7 AARP Foundation Tax-Aide Counselors Are Trained In Federal & NJ tax law In computer tax preparation software (TaxWise Online) Use personal or loaner computers In administrative requirements In use of appropriate reference materials Publications, forms, schedules provided 8 Training Publications & Tools Process-Based Training (Pub 4491) & Workbook (Pub 4491-W) IRS Test Booklet (Pub 6744) Learning Slide Decks NTTC Workbook Link and Learn 9 Preparer Publications & Tools Volunteer Resource Guide (Pub 4012) TaxPrep4Free.org Website Laminated Flowcharts Interview & Intake Sheets (Form C) Your Federal Income Tax (Pub 17) IRS 1040 Instruction Book NJ 1040 Instruction Book & GITs NJ Special Handling Document AARP Scope Document & NJ Can/Cannot Do list 10 Important Reference WebsitesTraining resources Preparer page Proficiency problemsSomerset County websiteVolunteer portal includes news, cybertax notifications, links for administration for AARP Tax- Aide volunteers 11 Confidentiality, Privacy & Security Keep taxpayer info strictly confidential Do not retain taxpayer documents Do not leave computer unattended if it has taxpayer data All sites use TaxWise Online where data is stored on secure servers 12 Insurance Coverage & Liability Travel accident insurance coverage if on Tax-Aide business Insurance is supplemental to Medicare or its equivalent & covers medical expenses &/or death only. Does not cover personal property such as cars, computers, etc. Notify district coordinator ASAP By congressional law, counselors are not liable if they follow the rules 13 Types Of Returns You Can/Cant Prepare Prepare only those returns for which you have been trained & certified Refer taxpayer to experienced counselor if tax subject is in Training Module Topics for Experienced Counselors or if you are not comfortable with a particular tax situation Refer taxpayer to paid tax preparer if anything on return is Out Of Scope AARP Scope document & NJ Can/Cannot Do list Do not prepare a tax return when you suspect information is untruthful 14 Counselor Certification Requirements Pass IRS tests with grade of 80%+ (Volunteer Standards of Conduct & Advanced level tests) Open book test Demonstrate proficiency in preparing tax returns Complete assigned problems (using 2014 tax law & software) Complete assigned problem(s) focusing on 2015 changes (using 2015 software) Sign Volunteer Standards of Conduct 15 Getting Started Overall Process & The Interview IRS Form C Intake/Interview Sheet 16 Overall Process (may differ by site) Client calls Tax Appointment phone line requesting tax help Client is assigned to site coordinator/volunteer viaTax volunteer calls client to set up appointment & reviews Initial Phone Sheet info with client Client arrives at tax site & completes Intake/Interview Sheet AARP policy mandates use of IRS Intake/Interview Sheet for every client Tax return prepared, quality reviewed, printed for taxpayer records, & e-filed 17 Interviewing The Key To A Good Return Focus on interviewing to be sure you gather all appropriate data to prepare accurate return Use information from Interview/Intake Sheet as starting point, but continue to probe for all relevant details Also review prior year return and ask about items that have changed Entering tax documents into TaxWise software is not sufficient to ensure accurate return Use Volunteer Reference Guide (Pub 4012) decision trees and flow charts to ensure you are asking all the necessary questions to determine the full taxpayer situation 18 Effective Interviewing Speak clearly, simply, and loud enough Build rapport Have patience Reassure the taxpayer (I understand) Ask effective questions (e.g. - probing and open-ended) Allow the taxpayer time to respond Involve the taxpayer in the process 19 Verification of Taxpayer Identity Identity theft is a major IRS problem verify every taxpayers identity Ask every taxpayer & spouse for photo ID Check accuracy of Social Security #s for taxpayer, spouse & every dependent Social Security card is preferred verification method If not available, can use SSA benefit statement or SSA letter that shows both SS # and name Inaccurate SS #s can cause return rejects & delays If taxpayer is not eligible for a SS #, can use Individual Taxpayer ID # (ITIN) Verify original copy of ITIN card or letter 20 Federal-1040 Overview IRS Form IRS Form 1040 We file Federal 1040 forms, not 1040A, 1040EZ, etc is split up into 4 general areas Taxpayer information Income Taxes & Credits Payments/Refunds Due and Signature 22 Taxpayer Information Includes: Personal information for taxpayer & spouse Presidential election campaign question Filing status (lines 1 5) Exemptions - including Taxpayer, Spouse & Dependents (lines 6a-d) Input into TaxWise on the Main Information Screen 23 Form 1040 Page 1 Taxpayer Info 24 Personal Information Form 1040 Page 1 Taxpayer Info 25 Presidential Election Campaign Form 1040 Page 1 Taxpayer Info 26 Filing Status Form 1040 Page 1 Taxpayer Info 27 Exemptions (including Taxpayer, Spouse & Dependents) Income All sources of income included in this section (lines 7- 22) Income derived from various tax forms usually issued by employer, financial institution, government agency, etc. Information from tax forms and client interview entered into the respective form or worksheet in TaxWise TaxWise puts the appropriate values into the 1040 Adjustments to income included in this section (lines 23-36) Final line on page 1 is Adjusted Gross Income (line 37) 28 1040 Page 1 Income 29 Income 1040 Page 1 Adjustments to Income 30 Adjustments 1040 Page 1 Bottom Line 31 Adjusted Gross Income (AGI) Taxes & Credits Page 2 Taxable Income Start with Adjusted Gross Income (line 38) Deduct Itemized or Standard Deductions (lines 39-41) Deduct Personal Exemptions (line 42) Arrive at Taxable Income (line 43) Calculate Tax on Taxable income (line 44) Total Tax Start with Calculated Tax on Taxable Income (line 44) Add any excess medical insurance premium aid received through the Affordable Care Act that has to be repaid (advance premium tax credits) (line 46) Deduct non-refundable tax credits (Credits that reduce tax down to zero dollars) (lines 48-55) Add other taxes due (lines 57-62) Bottom line is Total Tax (line 63) 32 1040 Page 2 Taxes & Credits 33 Adjusted Gross Income (AGI) 1040 Page 2 Taxes & Credits 34 - Deduct Itemized or Standard Deductions 1040 Page 2 Taxes & Credits 35 - Deduct Exemptions 1040 Page 2 Taxes & Credits 36 = Taxable Income 1040 Page 2 Taxes & Credits 37 Calculated Tax 1040 Page 2 Taxes & Credits 38 + Add Excess Advance Premium Tax Credit Repayment 1040 Page 2 Taxes & Credits 39 - Deduct Nonrefundable Credits 1040 Page 2 Taxes & Credits 40 + Add Other Taxes 1040 Page 2 Taxes & Credits 41 = Total Tax Payments/Refund/Owe Payments Apply tax withheld and estimated payments Add refundable credits (these credits can exceed the amount of the tax you owe and increase your refund) Total is your total payments Subtract total payments from total tax If payments are greater than total tax, you are entitled to a refund If payments are less than total tax, you owe taxes 42 Payments/Refund/Owe 43 Apply tax withheld & estimated payments Payments/Refund/Owe 44 Apply refundable credits Payments/Refund/Owe 45 = Total of all payments Payments/Refund/Owe 46 = Bottom Line (A refund / You owe) Direct Deposit/ Sign In the box below the refund is a spot for direct deposit information Bottom of the form is the signature box 47 Direct Deposit/Sign 48 Direct Deposit information Payments/Refund/Owe/Sign 49 Signature Line NJ-1040 Overview NJ NJ 1040 Paper Page 1 Page I of the Paper NJ 1040 Tax Form includes Taxpayer personal information County/Municipality Code NJ Filing Status Exemptions Dependent information Gubernatorial Election Fund Check Boxes Signature Box 51 NJ 1040 Paper Page 1 Personal Information, Municipality Code, Filing Status, Exemptions 52 NJ 1040 Paper Page 1 Dependents, Gubernatorial Election Question, Signature Line 53 NJ 1040 Paper Page 2 Page 2 of the Paper NJ 1040 Tax Form includes Income Exclusions Exemptions Deductions NJ Taxable income NJ Tax 54 NJ 1040 Paper Page 2 Income 55 NJ 1040 Paper Page 2 Exclusions, Exemptions, Deductions, Taxable Income 56 NJ 1040 Paper Page 3 Page 3 of the Paper NJ 1040 Tax Form includes Tax Credits Use tax on out-of-state purchases Payments Penalties Amount owed Contributions Amount to be refunded 57 NJ 1040 Paper Page 3 Tax, Credits, Use Tax & Penalties 58 NJ 1040 Page 3 More Credits, Payments, Contributions, Refund/Owed 59 NJ1040 Paper Page 4 NJ Paper Page 4 is the NJ 1040H Property Tax Credit Application Not in TaxWise Paper file only Used for certain taxpayers that do not file a NJ return but are entitled to a property tax credit Details to follow in Tax Law training modules 60 NJ 1040H 61 TaxWise NJ 1040 Page numbers in TaxWise do not match page numbers of the paper return, but all information is the same Most of the information is carried forward from the TaxWise Federal 1040 to the TaxWise NJ 1040 NJ 1040 entries can be tricky 62 TaxWise NJ 1040 Entries The following items are the minimum required manually input entries (do not come from Federal): County/Municipality Code must be entered on page 1 of TaxWise NJ 1040 Gubernatorial Election Fund Question must be answered on page 2 of TaxWise NJ 1040 Property tax info for block/lot & municipality code must be entered on page 3 of TaxWise NJ 1040 Use tax due on out-of-state purchases must be entered on page 3 of TaxWise NJ 1040 Worksheet F Property Tax Deduction/Credit info must be entered on page 3 of the TaxWise NJ 1040 NJ DD Worksheet must be completed 63 NJ 1040 for Familiarization For Familiarization we are entering just basic NJ items Resource for NJ 1040 is New Jersey Special Handling document found on the TaxPrep4Free.org web site More detail on NJ coming later 64 Intake/Interview & Quality Review Sheet Form C Intake/Interview & Quality Review Sheet 65 IRS Intake/Interview Sheet Form C Must be completed for every tax return Required starting point for taxpayer(s) is to complete Intake/Interview Sheet Contains basic information needed for tax return Taxpayer fills out most, but volunteers may assist Counselors starting point with taxpayer(s) 66 Intake/Interview & Quality Review Sheet (13614-C) - Page 1 General information about taxpayer, spouse and dependents. Completed by taxpayer except for Part II shaded area Information on this page entered on Main Information Sheet in TaxWise by preparer Part I - Taxpayer personal information Part II - Marital Status & Household information Part II shaded area to be completed by preparer 67 Intake Sheet Page 1 Personal Information Part I 68 Intake Sheet Page 1 Marital & Household Information Part II 69 Intake/Interview & Quality Review Sheet (13614-C) - Page 2 Part III Income questions Part IV Expense questions Part V Life events questions Answers to all the questions must agree with documents presented by taxpayer Preparer to make corrections and initial where changes are made 70 Intake Sheet Page 2 Income Part III 71 Intake Sheet Page 2 Expenses Part IV 72 Intake Sheet Page 2 Life Events Part V 73 Intake/Interview & Quality Review Sheet (13614-C) Page 3 Part VI Health Care Coverage Questions 1 & 2 Completed by Taxpayer Shaded Area Completed by preparer by interviewing taxpayer Part VII Additional Information & Questions 1. Presidential Election Campaign Fund question 2. Tax refund questions 3. Tax payment question 4. & 5. Grant money questions Additional Comments 74 Intake Sheet Page 3 Health Care Coverage - Part VI 75 Intake Sheet Page 3 Additional Information & Questions Part VII 76 Intake/Interview & Quality Review Sheet (13614-C) Page 4 Part VIII Information for the preparer & quality reviewer Initials of Preparer & Quality Reviewer (Leave Blank) Additional Tax Preparer Notes Privacy Act and Paperwork Reduction Act Notice 77 Intake Sheet Page 4 78 Introduction To TaxWise Pub 4012, Section N 79 TaxWise Online (TWO) Forms-based software used for tax return preparation (not interview style) Only software approved by IRS for free tax preparation sites Developed & maintained by Commerce Clearing House (CCH) Calculations done & returns stored on TWO server Can work on same return from multiple computers (but not simultaneously) No taxpayer data stored on individual computers 80 TaxWise Online (TWO) Training TWO Software: Most of our training will use 2014 TWO training https://twonline.taxwise.com/training training environment is also available, but will not include NJ software until late January (https://twonline.taxwise.com/training) Production 2015 TWO Software: Access to be provided after counselor is certified Prior years TWO software is available for prior year returns/amendments 81 contd TaxWise Online (TWO) Returns are kept in separate environments by training vs. production and by tax year Always make sure you are in proper environment before you start a return Opening screen look for 2014 vs User Guide Can differentiate production vs. training environments by background color once you are logged in Login screens are exactly the same for all environments Training environments - background is green Production environments - background is blue 82 contd Logging in to TaxWise Online (TWO) Training Use this URL to access 2014 TWO training website for familiarization training: https://twonline.taxwise.com/training14 Use client ID First time logging in, use your assigned ID as both User ID and Password All IDs start with SOMERSET Last 2 digits are your student # 83 TWO Initial Sign-In 84 User Name set up by administrator Initially password is same as User Name TWO Password Change Request 85 TWO Password Change 86 TWO Main Screen & Starting a New Return 87 Start a new return TWO Start New Return 88 SS # entered twice SS # in XXX-YY-ZZZZ format XXX=First 3 #s from problem YY=Student ID ZZZZ=4139 (EFIN) TWO First Method of Opening Existing Return (Select SS #) 89 Open an existing return by clicking on SS # Can sort return listing order by clicking on heading of column TWO Second Method of Opening Existing Return (Enter SS #) 90 Open existing return by: Click on Open return icon Enter SS # Always click on Go to Tax Forms; never use Go to Interview TWO Third Method of Opening Existing Return (Use Search Returns Box) 91 Can enter full or partial name, full or partial SS #, student ID (e.g. -06- to see just a particular students returns), username, etc. TaxWise Refund Monitor & Navigation Tree 92 Red & Exclamation Point: Incomplete or Incorrect Form Green & Check Mark: No obvious fields missing & can be e-filed State forms loaded when State is selected; no NJ Refund Monitor check NJ 1040 Pg 3 Refund Monitor : Adjusted Gross Income (AGI) amount & Refund Amount provide running totals Gray: Form will not be e-filed TaxWise Forms Menu 93 Forms Menu: List of all Forms & Worksheets in TaxWise Includes State Forms Can search by entering name or partial name of form or topic Calculated entry Non-Calculated or Direct Entry Required entry Overridden field Green Black Red Blue TWO Field Color Coding 94 Underline Color in TWO