SaveFirst Basic Tax Training 2012. SaveFirst Basic Training ● 2011 © Training Outline 1.Tax...

SaveFirst Basic Tax Training

2012

SaveFirst Basic Training ● 2011 ©

Training Outline1.1. Tax TerminologyTax Terminology

2.2. Exemptions Exemptions

3.3. Filing Status Filing Status

4.4. IncomeIncome

5.5. Standard Deduction Standard Deduction

6.6. Earned Income Credit Earned Income Credit


Training Outline7.7. Child Tax CreditChild Tax Credit

8.8. Child and Dependent Care CreditChild and Dependent Care Credit

9.9. Miscellaneous CreditsMiscellaneous Credits

10.10. Form 8888Form 8888

11.11. Alabama ReturnAlabama Return

12.12. Finishing the Return & Volunteer Finishing the Return & Volunteer RequirementsRequirements


Volunteer Resources

This is A LOT of material!

Use your resources!

• Use your books.Use your books. Pub 4012 (spiral notebook)Pub 4012 (spiral notebook) Pub 17 (Your Federal Income Tax)Pub 17 (Your Federal Income Tax) Pub 4491 (Student Training Guide)Pub 4491 (Student Training Guide)

• Refer to your Tax Prep Process HandoutRefer to your Tax Prep Process Handout

• Ask questions.Ask questions.

• Visit www.irs.govVisit www.irs.gov


Intake & Interview Form1.1. Taxpayers complete pages 1, 2, and 3Taxpayers complete pages 1, 2, and 3

2.2. You review pages 1 and 2 (BEFORE You review pages 1 and 2 (BEFORE logging into TaxWise!)logging into TaxWise!)

Collect all necessary forms during the interview.Collect all necessary forms during the interview. Make sure nothing it outside your scope or the Make sure nothing it outside your scope or the

scope of VITAscope of VITA

3.3. You complete Section B on page 4.You complete Section B on page 4.

REMEMBER: Always involve the taxpayer!


Identification: Social Security #• Verify social security numbers for each Verify social security numbers for each

person on the return. person on the return. Children too!Children too!

• Obtain a social security card (original or Obtain a social security card (original or copy) OR statement of social security copy) OR statement of social security benefits displaying both name and social benefits displaying both name and social security number.security number.

• Enter name Enter name EXACTLYEXACTLY as it appears. as it appears.


Identification: ITIN• Taxpayers with an Individual Taxpayer Taxpayers with an Individual Taxpayer

Identification Number (ITIN) Identification Number (ITIN) Are ineligible for a social security number.Are ineligible for a social security number. CAN file taxes and receive a refund.CAN file taxes and receive a refund. CANNOT receive the Earned Income Credit.CANNOT receive the Earned Income Credit.


Training Outline

1.1. Tax TerminologyTax Terminology2.2. ExemptionsExemptions

3.3. Filing StatusFiling Status

4.4. IncomeIncome

5.5. Standard DeductionStandard Deduction

6.6. Earned Income CreditEarned Income Credit


Form 1040

Tax Terminology

Filing Status• Impacts tax liability; based on marital

status and family situation. Single Married Filing Jointly Married Filing Separately Head of Household Qualifying Widow(er) with Dependent Child

Choose correct Filing Status on lines 1-5SaveFirst Basic Training ● 2011 ©


Exemption

Amount the taxpayer can claim for himself, Amount the taxpayer can claim for himself, his spouse, and his dependents that his spouse, and his dependents that

decreases taxable income. decreases taxable income.

Total # of Exemptions found on line 6dTotal # of Exemptions found on line 6d

Tax Terminology

Exemption

A taxpayer may claim 2 types of exemptions:

1) Personal exemption (lines 6a/6b) Taxpayer can claim herself (and spouse)

2) Dependency exemption (line 6c) Taxpayer can claim qualifying dependents



Dependent

An individual whom the taxpayer supports or An individual whom the taxpayer supports or who lives with the taxpayer (i.e. a who lives with the taxpayer (i.e. a

qualifying child or qualifying relative)qualifying child or qualifying relative)

Tax Terminology


Earned vs Unearned Income1) Earned: income received through work1) Earned: income received through work

- wages, salary, tips…- wages, salary, tips…

2) Unearned: income other than pay from work2) Unearned: income other than pay from work

- interest, social security, retirement...- interest, social security, retirement...

Income found on lines 7-21Income found on lines 7-21

Total income found on line 22Total income found on line 22

Tax Terminology


Adjustment

Decreases the amount of income on which Decreases the amount of income on which the taxpayer will be taxed.the taxpayer will be taxed.

Adjustments found on lines 23-35Adjustments found on lines 23-35

Total adjustments found on line 36Total adjustments found on line 36

Tax Terminology


Adjusted Gross Income (AGI)

Amount of taxable income after adjustments Amount of taxable income after adjustments are made.are made.

AGI found on lines 37/38AGI found on lines 37/38

Tax Terminology


Deduction

Amount subtracted from the AGI to further Amount subtracted from the AGI to further decrease taxable income.decrease taxable income.

Standard /Itemized Deduction(s) Standard /Itemized Deduction(s)

found on line 40found on line 40

Tax Terminology


Taxable Income

Any income subject to federal income tax. Any income subject to federal income tax. Can include both earned and unearned Can include both earned and unearned

income.income.

Taxable Income found on line 43

Tax Terminology


Tax Liability

The amount of tax that must be paid based The amount of tax that must be paid based on the taxable incomeon the taxable income

Tax Liability (before credits) Tax Liability (before credits)

found on Line 46found on Line 46

Tax Terminology


Tax Credit

A direct reduction of the taxpayerA direct reduction of the taxpayer’’s liabilitys liability

1) Nonrefundable credits1) Nonrefundable credits

2) Refundable credits

Tax Terminology


Nonrefundable Tax Credit

Reduces the tax liability – only to zero. (Child and Dependent Care Expenses, Retirement Savings Contribution Credit,

Child Tax Credit)

Nonrefundable Credits found on lines 47-53Total found on line 54

Tax Terminology


Refundable Tax CreditReduces tax liability to zero, then taxpayer will

receive the remainder of the credit value as a refund.

(Earned Income Credit,

Additional Child Tax Credit,

First Time Homebuyer Credit)

Refundable Tax Credits

found on lines 64-66

Tax Terminology


Withholding

The amount of money that can be taken The amount of money that can be taken from each form of income and received by from each form of income and received by

the government each pay periodthe government each pay period

Total Withholding found on line 62Total Withholding found on line 62

Tax Terminology


TOTAL INCOME

Earned Income


TOTAL INCOME

Earned Income

Unearned Income


TAXABLE INCOME

after adjustments,

deductions, and exemptions

TOTAL INCOME

Earned Income

Unearned Income


Unearned Income

TOTAL INCOME

Earned Income

TAXABLE INCOME

after adjustments,


TAX LIABILITY


Unearned Income

TOTAL INCOME

Earned Income

TAXABLE INCOME

after adjustments,


TAX LIABILITY

TAX CREDITS

AMOUNT OWED OR REFUNDED

QUESTIONS on Tax Terminology?

SaveFirst Basic Training ● 2012©



2.2. ExemptionsExemptions3.3. Filing StatusFiling Status

4.4. IncomeIncome



Exemptions/Dependents – Line 6• Refer to Pub 4012 – Tab C

C-1: Exemption Chart C-2: Personal Exemptions C-3: Overview of Rules for Claiming an

Exemption for a Dependent; Qualifying Child of More Than One Person

C-4: Dependency Exemption (Qualifying Child) C-5/6: Dependency Exemption (Qualifying

Relative)

Personal Exemptions – Lines 6a/6b

• Each personal exemption decreases the taxable income by $3,800.

• Taxpayers can claim exemptions for: Taxpayer UNLESS the taxpayer can be Taxpayer UNLESS the taxpayer can be

claimed as a dependent by someone else.claimed as a dependent by someone else. Spouse UNLESS the spouse can be claimed Spouse UNLESS the spouse can be claimed

as a dependent by someone else.as a dependent by someone else.


Personal Exemptions• Remember: It’s not whether the taxpayer Remember: It’s not whether the taxpayer

ISIS claimed as a dependent, but whether claimed as a dependent, but whether the taxpayer the taxpayer CAN BECAN BE claimed as a claimed as a dependent that determines whether the dependent that determines whether the taxpayer can claim an exemption.taxpayer can claim an exemption.

Exemptions


Dependency Exemptions – 6c• Each dependency exemption decreases Each dependency exemption decreases

taxable income by $3,800.taxable income by $3,800.

• A taxpayer can claim exemptions for A taxpayer can claim exemptions for qualifying childrenqualifying children qualifying relativesqualifying relatives

• These qualifying individuals typically live in These qualifying individuals typically live in the taxpayer the taxpayer’’s home and generally s home and generally receive significant support from him/her.receive significant support from him/her.

Exemptions

Review• Where should you look for help in

determining dependency exemptions? Tab C in Pub 4012

Turn to Tab C-4

ALWAYS USE THIS CHART TO DETERMINE THE NUMBER OF

QUALIFYING PERSONS!

Qualifying Child or Relative?• If no one else can claim the taxpayer or

spouse as a dependent, you need to determine if the taxpayer’s possible dependents can be Qualifying Children, and if not see if they can be Qualifying Relatives.

• Why is it important to know if there are Qualifying Children or Qualifying Relatives? Each one decreases taxable income by $3,800


Determining Exemptions• ALWAYS begin with the chart on C-4:

1) Qualifying Child

2) Qualifying Child of More Than One Person

3) Qualifying Child of Divorced/Separated Parents

4) Qualifying Relative



Qualifying Child: The Taxpayer Eligibility Test

Exemptions

Step 1Step 1

Can you or your spouse (if filing Can you or your spouse (if filing jointly) be claimed as a dependent jointly) be claimed as a dependent on someone elseon someone else’’s tax return this s tax return this

year?year?

If YES: StopIf YES: Stop

If NO, go to If NO, go to Step 2Step 2


Qualifying Child: The Marital Status Test

Exemptions

Step 2Step 2Was this Was this ““childchild”” considered considered

married on December 31, 2012?married on December 31, 2012?

If YES, If YES,

go to Step 3go to Step 3



Qualifying Child: The Joint Return Test

Exemptions

Step 3Step 3

Is the Is the ““childchild”” filing a joint return filing a joint return

for this tax year?for this tax year?

(Answer “NO” if the child is filing a (Answer “NO” if the child is filing a joint return only to claim a refund joint return only to claim a refund and no tax liability would exist for and no tax liability would exist for

either spouse if they had filed either spouse if they had filed separate returns.)separate returns.)

If YES, StopIf YES, Stop



Qualifying Child: The Citizenship Test

Exemptions

Step 4Step 4Was the Was the ““childchild”” a U.S. citizen, U.S. a U.S. citizen, U.S. resident alien, U.S. national, or a resident alien, U.S. national, or a resident of Canada, or Mexico?resident of Canada, or Mexico?

If YES, If YES,


If NO, StopIf NO, Stop


Qualifying Child: The Relationship Test

Exemptions

Step 5Step 5

Was the Was the ““childchild”” your son, daughter, your son, daughter, stepchild, eligible foster child, stepchild, eligible foster child,

brother, sister, half brother, half brother, sister, half brother, half sister, stepbrother, stepsister, or a sister, stepbrother, stepsister, or a

descendant of any of them (i.e. your descendant of any of them (i.e. your grandchild, niece, or nephew)?grandchild, niece, or nephew)?

If YES, If YES,


If No, go to If No, go to Table 2Table 2


Qualifying Child: The Age Test

Exemptions

Step 6Step 6

Was the Was the ““childchild””: : -under age 19 at the end of the year and under age 19 at the end of the year and younger than you (or spouse if MFJ)? younger than you (or spouse if MFJ)? OROR-a full-time student under age 24 at the a full-time student under age 24 at the end of the year and younger than you end of the year and younger than you (or spouse if MFJ)? (or spouse if MFJ)? OROR-permanently and totally disabled* at permanently and totally disabled* at any time during the year?any time during the year?

If YES, If YES,


If NO, go to If NO, go to Table 2Table 2


Qualifying Child: The Residency Test

Exemptions

Step 7Step 7

Did the child live with you as a Did the child live with you as a member of your household, except member of your household, except

for temporary absences for for temporary absences for

more than half the year?more than half the year?

(Answer “YES” if the child was (Answer “YES” if the child was born or died during the year.)born or died during the year.)

If YES, If YES,

go to Step 8 go to Step 8 (Use Table 3 (Use Table 3

if parents live if parents live apart)apart)

If NO, go to If NO, go to Table 2Table 2

Residency Note• A child is considered to have lived with

you during periods of time when one of you, or both are temporarily absent due to illness, education, business, vacation or military service.


Qualifying Child: The Support Test

Exemptions

Step 8Step 8Did the Did the ““childchild”” provide more than half provide more than half

of his or her own support* of his or her own support*

for the year?for the year?

If YES, StopIf YES, Stop

If NO, If NO,



Qualifying Child: The Other Adults Test

Exemptions

Step 9Step 9Is the Is the ““childchild”” a qualifying child of a qualifying child of

any other person?any other person?

If YES, go to If YES, go to QC of More QC of More Than One Than One

Person ChartPerson Chart

If NO, you If NO, you can claim can claim

this child as this child as a dependent.a dependent.


Practice

TRUE or FALSE: TRUE or FALSE:

Every taxpayer can claim a personal Every taxpayer can claim a personal exemption for himself.exemption for himself.

Exemptions


Practice

TRUE or FALSE: TRUE or FALSE: Every taxpayer can claim a personal Every taxpayer can claim a personal

exemption for himself.exemption for himself.

FALSEFALSE A taxpayer who can be claimed as a dependent by A taxpayer who can be claimed as a dependent by

someone else CANNOT claim an exemption for someone else CANNOT claim an exemption for himself.himself.

Exemptions

Practice Scenario #1Rebecca is unmarried with one child, Colin. Rebecca is unmarried with one child, Colin.

Colin is 8 years old and lives full time with Colin is 8 years old and lives full time with his mother, who provides all of his support. his mother, who provides all of his support.

He is a U.S. citizen, and no other adults He is a U.S. citizen, and no other adults live in their household. Can Rebecca live in their household. Can Rebecca

claim Colin as a dependent?claim Colin as a dependent?

Use the Chart on C-4

Practice Scenario #1: AnswerRebecca is unmarried with one child, Colin. Rebecca is unmarried with one child, Colin.

Colin is 8 years old and lives full time with Colin is 8 years old and lives full time with his mother, who provides all of his support. his mother, who provides all of his support.

He is a U.S. citizen, and no other adults He is a U.S. citizen, and no other adults live in their household. Can Rebecca live in their household. Can Rebecca

claim Colin as a dependent?claim Colin as a dependent? YES YES. .

Colin meets all the requirements to be claimed as Colin meets all the requirements to be claimed as a qualifying child.a qualifying child.


Practice Scenario #1Paul is a U.S. citizen who is 26 years old, permanently disabled, unmarried, did not pay for more than half of his support and

lived with his parents for the

entire year.

Can Paul be claimed as a dependent by his parents?

Exemptions

Practice Scenario #1Paul is a U.S. citizen who is 26 years old, permanently disabled, unmarried, did not pay for more than half of his support and

lived with his parents for the

entire year.

Can Paul be claimed as a dependent by his parents? YES


1) Qualifying Child






Qualifying Child of More Than One Person

Exemptions

Write these questions under

STEP 9!

• Did any other adult live in your home?Did any other adult live in your home?• What was that other adultWhat was that other adult’’s relationship to the s relationship to the

child?child?• Could the other adult be Could the other adult be

claimed as a dependent claimed as a dependent

by someone else?by someone else?



• Sometimes, a child meets all of the tests to be Sometimes, a child meets all of the tests to be claimed by more than one taxpayer.claimed by more than one taxpayer. Example: a mother and a grandmotherExample: a mother and a grandmother

• Parenthood and AGI are taken into consideration in determining who is eligible to claim the child.

Use the Chart on C-3

Exemptions



If only one taxpayer is the childIf only one taxpayer is the child’’s parent, the s parent, the child is the qualifying person of the parent.child is the qualifying person of the parent.

Parenthood trumps all.Parenthood trumps all.

Exemptions



• If two parents claim the same child on separate If two parents claim the same child on separate returns, the exemption goes to the custodial returns, the exemption goes to the custodial parent (the parent the child lived with for the parent (the parent the child lived with for the longer period).longer period).

• If the parents are equal custodial parents, the If the parents are equal custodial parents, the exemption goes to the parent with the highest exemption goes to the parent with the highest AGI.AGI.

Parenthood, then AGI.Parenthood, then AGI.

Exemptions



• If neither parent can claim the child as a If neither parent can claim the child as a qualifying child, the child is treated as the qualifying child, the child is treated as the qualifying child of the person who had the qualifying child of the person who had the highest AGI.highest AGI.

If no parent, then AGI.If no parent, then AGI.

Exemptions



• If a parent can claim the child but agrees not to, then the If a parent can claim the child but agrees not to, then the child is treated as the qualifying child of the person who child is treated as the qualifying child of the person who had the highest AGI, but only if had the highest AGI, but only if the person’s AGI is the person’s AGI is higher than the highest AGI of any of the child’s parents. higher than the highest AGI of any of the child’s parents.

• The taxpayer’s AGI must be higher than AGIs of all other The taxpayer’s AGI must be higher than AGIs of all other taxpayers who are eligible to claim the child.taxpayers who are eligible to claim the child.

If no parent, then AGI If no parent, then AGI (if higher than parents).(if higher than parents).

Exemptions


Practice Scenario #2

Janet has a 2-year-old son Jacob and both Janet has a 2-year-old son Jacob and both live with Janetlive with Janet’’s sister, Lisa. Janets sister, Lisa. Janet’’s AGI s AGI

is $25,000 and Lisais $25,000 and Lisa’’s AGI is $16,000. s AGI is $16,000. Both Janet and Lisa meet all of the tests to Both Janet and Lisa meet all of the tests to

claim Jacob. claim Jacob.

If Janet agrees not to claim Jacob, is Lisa If Janet agrees not to claim Jacob, is Lisa allowed to claim him on her tax return?allowed to claim him on her tax return?

Exemptions


Practice Scenario #2: AnswerJanet has a 2-year-old son Jacob and both live with Janet has a 2-year-old son Jacob and both live with

JanetJanet’’s sister Lisa. Janets sister Lisa. Janet’’s AGI is $25,000 and s AGI is $25,000 and LisaLisa’’s AGI is $16,000. Both Janet and Lisa meet all s AGI is $16,000. Both Janet and Lisa meet all

of the tests to claim Jacob. If Janet agrees not to of the tests to claim Jacob. If Janet agrees not to claim Jacob, is Lisa allowed to claim him on her tax claim Jacob, is Lisa allowed to claim him on her tax

return?return?

No.No.

Lisa is not allowed to claim Jacob, even if Janet Lisa is not allowed to claim Jacob, even if Janet agrees, because her AGI is less than Janetagrees, because her AGI is less than Janet’’s AGI.s AGI.

Exemptions


1) Qualifying Child





What if the parents live apart?• The The custodialcustodial parent generally claims the parent generally claims the

dependency exemption for his/her child.dependency exemption for his/her child.

• The The noncustodialnoncustodial parent can claim the parent can claim the exemption if the parents have signed an exemption if the parents have signed an agreement.agreement. Form 8332 (REQUIRED for post-2008 Form 8332 (REQUIRED for post-2008

divorce)divorce) Other legally binding document (if divorce Other legally binding document (if divorce

went into effect BEFORE 2009)went into effect BEFORE 2009)


Division of Benefits: Form 8332

• Custodial parent gives noncustodial parent Custodial parent gives noncustodial parent right to claim dependency exemption forright to claim dependency exemption for Current Tax Year ORCurrent Tax Year OR Group of YearsGroup of Years

• Noncustodial parent must send physical Noncustodial parent must send physical copy every yearcopy every year




Normally, only ONE TAXPAYER can claim a particular Normally, only ONE TAXPAYER can claim a particular child for ALL of these benefits:child for ALL of these benefits:

Dependency Exemption

Child Tax Credit

Head of Household

Child & Dependent Care Credit

Earned Income Credit




When parents sign a Form 8332:When parents sign a Form 8332:


Child Tax Credit

Head of Household



The noncustodial parent

gets

The custodial parent

gets


Practice Scenario #3

Randy and Mary are divorced. They Randy and Mary are divorced. They have one child, Paul (age 5). Paul lives have one child, Paul (age 5). Paul lives

with his mother, but Randy provides with his mother, but Randy provides over half of Paulover half of Paul’’s support. s support.

Can Mary claim Paul as a dependent?Can Mary claim Paul as a dependent?

Can Randy claim Paul as a dependent?Can Randy claim Paul as a dependent?


Practice Scenario #3Randy and Mary are divorced. They have one child, Paul Randy and Mary are divorced. They have one child, Paul

(age 5). Paul lives with his mother, but Randy provides (age 5). Paul lives with his mother, but Randy provides over half of Paulover half of Paul’’s support. Can Mary claim Paul as a s support. Can Mary claim Paul as a

dependent? dependent? YES. YES.

Paul is the qualifying child of his mother even though is Paul is the qualifying child of his mother even though is father provides over half of his support. However, Randy father provides over half of his support. However, Randy cancan claim Paul if Paul claim Paul if Paul’’s mother has signed a Form 8332.s mother has signed a Form 8332.

Exemptions

Determining Exemptions

• ALWAYS begin with the chart on C-4:1) Qualifying Child






Qualifying Relative: The Qualifying Child Test

Exemptions

Step 1Step 1Is the person your qualifying Is the person your qualifying child or the qualifying child of child or the qualifying child of

anyone else?anyone else?

If YES, not a If YES, not a qualifying qualifying relative.relative.

If NO, If NO,



Qualifying Relative: The Relationship Test

Exemptions

Step 2Step 2

Was the person your son, daughter, stepchild, Was the person your son, daughter, stepchild, foster child, or a descendant of any of them? foster child, or a descendant of any of them?

OROR

Was the person your brother, sister, or a son or Was the person your brother, sister, or a son or daughter of either of them?daughter of either of them?

OROR

Was the person your father, mother, or an ancestor Was the person your father, mother, or an ancestor or sibling of either of them? or sibling of either of them?

OROR

Was the person your half brother, half sister, Was the person your half brother, half sister, stepbrother, stepsister, stepfather, stepmother, son-stepbrother, stepsister, stepfather, stepmother, son-

in-law, daughter-in-law, father-in-law, mother-in-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law?law, brother-in-law, or sister-in-law?

If NO, If NO,

go to Step 3.go to Step 3.

If YES, If YES,


Note• The relatives listed in Step 2 are

considered “Relatives who do not have to live with you.”



Qualifying Relative: The Residency Test

Exemptions

Step 3Step 3

Was the person any other Was the person any other person (other than your spouse) person (other than your spouse) who lived with you ALL YEAR who lived with you ALL YEAR

as a member of your as a member of your

household?household?

If NO, you If NO, you can’t claim can’t claim this person.this person.

If YES, If YES,


Note• There are exceptions for kidnapped

children; a child who was born or died during the year; certain temporary absences – school, vacation, medical care, etc.



Qualifying Relative: The Gross Income Test

Exemptions

Step 4Step 4Did the person have a gross Did the person have a gross taxable income of less than taxable income of less than

$3,800 in 2012?$3,800 in 2012?

If NO, you If NO, you can’t claim can’t claim this person.this person.

If YES, If YES,



Qualifying Relative: The Support Test

Exemptions

Step 5Step 5

Did YOU provide more than Did YOU provide more than

half of the personhalf of the person’’s s

total support for the year?total support for the year?

If YES, you If YES, you can claim this can claim this

person as person as your your

dependentdependent

If NO, If NO,



Qualifying Relative: Multiple Support Tests

Exemptions

Step 6Step 6 Did another person provide more than half of the Did another person provide more than half of the personperson’’s total support?s total support?

If NO, If NO,


Step 7Step 7 Did two or more people together provide more Did two or more people together provide more than half the personthan half the person’’s total support?s total support?

If YES, If YES,


Step 8Step 8 Did you provide more than 10% of the personDid you provide more than 10% of the person’’s s total support for the year?total support for the year?

If YES, If YES,


Step 9Step 9

Did the other person(s) providing more than 10% Did the other person(s) providing more than 10% of the personof the person’’s total support for the year provide s total support for the year provide

you with a signed statement (Form 2120) you with a signed statement (Form 2120) agreeing not to claim the exemption?agreeing not to claim the exemption?

If YES, If YES,

you can claim an you can claim an exemption for this exemption for this

personperson


Qualifying Relative: Multiple Support Tests

• If a relative passes all except the support test, a If a relative passes all except the support test, a taxpayer still may be able to claim the taxpayer still may be able to claim the dependency exemption for him/her IFdependency exemption for him/her IF The taxpayer, The taxpayer, togethertogether with another individual, with another individual,

provided over 50% of the total support, ANDprovided over 50% of the total support, AND The taxpayer contributed over 10% of the total The taxpayer contributed over 10% of the total

support, ANDsupport, AND Each other person who contributed over 10% signs a Each other person who contributed over 10% signs a

statement waiving his rights to claim the exemption statement waiving his rights to claim the exemption (Form 2120).(Form 2120).

Exemptions


Practice Scenario #4 Roderick, age 29, lives with his uncle. Last Roderick, age 29, lives with his uncle. Last

year, he worked part-time and earned year, he worked part-time and earned $2,100. His uncle provided for the rest of his $2,100. His uncle provided for the rest of his support, including rent and household costs.support, including rent and household costs.

Can his uncle claim Roderick as a dependent? Can his uncle claim Roderick as a dependent? Can Roderick claim a personal exemption?Can Roderick claim a personal exemption?

Start with the Chart on C-4Start with the Chart on C-4

Exemptions


PracticeRoderick, age 29, lives with his uncle. Last year, Roderick, age 29, lives with his uncle. Last year,

he worked part-time and earned $2,100. His he worked part-time and earned $2,100. His uncle provided for the rest of his support, uncle provided for the rest of his support,

including rent and household costs. Can his including rent and household costs. Can his uncle claim Roderick as a dependent? Can uncle claim Roderick as a dependent? Can

Roderick claim a personal exemption?Roderick claim a personal exemption?

YES.YES.His uncle can claim Roderick as a qualifying relative. His uncle can claim Roderick as a qualifying relative.

NO.NO.Roderick cannot claim a personal exemption because he Roderick cannot claim a personal exemption because he

can be claimed as a dependent.can be claimed as a dependent.

Exemptions


Practice Scenario #4Gina Brown provides all support for her Gina Brown provides all support for her uncle. Uncle Jim is unmarried, 72 years uncle. Uncle Jim is unmarried, 72 years old, and lives in another city. He has no old, and lives in another city. He has no gross income for the calendar year. Can gross income for the calendar year. Can Gina claim Uncle Jim as a dependent?Gina claim Uncle Jim as a dependent?

Start with the Chart on C-4Start with the Chart on C-4

Exemptions


PracticeGina Brown provides all support for her Gina Brown provides all support for her uncle. Uncle Jim is unmarried, 72 years uncle. Uncle Jim is unmarried, 72 years old, and lives in another city. He has no old, and lives in another city. He has no gross income for the calendar year. Can gross income for the calendar year. Can Gina claim Uncle Jim as a dependent?Gina claim Uncle Jim as a dependent?

YES. YES. Jim meets all of the requirements to be a Jim meets all of the requirements to be a

qualifying relative of Gina.qualifying relative of Gina.

Exemptions

Questions on Exemptions?• REMEMBER: There are scenarios

concerning exemptions in your training documents that you can complete for additional practice when you have some time during the training.

• We will post the answers at the end of the training.



2.2. ExemptionsExemptions

3.3. Filing StatusFiling Status4.4. IncomeIncome




Five Filing Statuses• Single

• Married Filing Jointly

• Married Filing Separately

• Head of Household

• Qualifying Widow(er) with Dependent Child

Use Charts on B-1, B-2 and B-3

Filing Status


Single• If on December 31, 2012, the taxpayer wasIf on December 31, 2012, the taxpayer was

Not married ORNot married OR Legally separated/divorced ORLegally separated/divorced OR WidowedWidowed

Filing Status

IMPORTANT:Some taxpayers considered single can also file

under a more advantageous status (Head of Household or Qualifying Widow(er)).

Be sure to check all options!


Married Filing Jointly• If on December 31, 2012, If on December 31, 2012,

They lived together as a married couple ORThey lived together as a married couple OR They lived apart but were not legally They lived apart but were not legally

separated/divorced ORseparated/divorced OR One spouse died during the year, and the One spouse died during the year, and the

taxpayer did not remarry.taxpayer did not remarry.

Filing Status


Married Filing Separately• Married taxpayers can choose to file Married taxpayers can choose to file

separately; HOWEVER,separately; HOWEVER, If one spouse itemizes, the other spouse must If one spouse itemizes, the other spouse must

itemize.itemize. Taxpayers filing with this status are not Taxpayers filing with this status are not

eligible to claim several tax credits.eligible to claim several tax credits.

Filing Status

Be careful! This status generally results in a HIGHER overall TAX.


Head of Household• Taxpayers can file HoH if they Taxpayers can file HoH if they

Are considered unmarried* ANDAre considered unmarried* AND Live with a dependent child or relative ANDLive with a dependent child or relative AND Maintain half the costs of keeping a home.Maintain half the costs of keeping a home.

Filing Status

*A legally married taxpayer can be considered *A legally married taxpayer can be considered unmarried and file as HoH if he/she has not lived unmarried and file as HoH if he/she has not lived

with the spouse at any time during the last six with the spouse at any time during the last six months of the tax year.months of the tax year.


Head of Household: Qualifying Person

• There are different eligibility requirements for the There are different eligibility requirements for the dependency exemption than there are for the dependency exemption than there are for the qualifying person for HoH. qualifying person for HoH.

• Just because the taxpayer has a qualifying Just because the taxpayer has a qualifying dependent/relative, it does not necessarily mean dependent/relative, it does not necessarily mean that the dependent will be a qualifying person for that the dependent will be a qualifying person for HoH and vice versa.HoH and vice versa.

Turn to the Chart on B-3!Turn to the Chart on B-3!

Filing Status

Qualifying Persons for HoH Include:

1) Qualifying children who are single or for whom the taxpayer can claim an exemption;

2) Parents for whom the taxpayer can claim an exemption (even if they don’t live with you);

3) Qualifying relatives that live with the taxpayer for more than half the year and for whom the taxpayer can claim an exemption.

A qualifying relative who is unrelated to the A qualifying relative who is unrelated to the taxpayer is NOT a qualifying person for H of H.taxpayer is NOT a qualifying person for H of H.



Head of Household: Separated Parents

• Even if the custodial parent has given up his/her right to claim the dependency exemption for a child (Form 8332), he/she can file HoH using that child as his/her qualifying person.

• Noncustodial parent can never claim HoH.

Filing Status


Remember: Division of Benefits

When parents sign a Form 8332:When parents sign a Form 8332:


Child Tax Credit

Head of Household



The noncustodial parent

gets

The custodial parent

gets



Qualifying Widow(er) with Dependent Child

• A taxpayer files QW if his/herA taxpayer files QW if his/her Spouse died recently, ANDSpouse died recently, AND The taxpayer did not remarry, ANDThe taxpayer did not remarry, AND The taxpayer has a dependent child (son, The taxpayer has a dependent child (son,

daughter, stepson, stepdaughter), ANDdaughter, stepson, stepdaughter), AND The taxpayer provides over half the costs to The taxpayer provides over half the costs to

maintain the main home for himself and the maintain the main home for himself and the child.child.

Filing Status


Unmarried, Widowed Taxpayer: Unmarried, Widowed Taxpayer: MFJ, QW, or Single?MFJ, QW, or Single?

• If the spouse died during the current tax year If the spouse died during the current tax year (2012): (2012): Married Filing JointlyMarried Filing Jointly

• If the spouse died during one of the two preceding If the spouse died during one of the two preceding tax years (2010, 2011) and taxpayer has a tax years (2010, 2011) and taxpayer has a qualifying child: qualifying child: Qualifying Widow(er)Qualifying Widow(er)

• If the spouse died three or more years before the If the spouse died three or more years before the current year (2009 or earlier): current year (2009 or earlier): Single, Head of Single, Head of HouseholdHousehold

Filing Status


From Lowest to Highest Tax Burden

• Married Filing Jointly and Qualifying Married Filing Jointly and Qualifying Widow(er) with Dependent ChildWidow(er) with Dependent Child

• Head of HouseholdHead of Household

• SingleSingle

• Married Filing SeparatelyMarried Filing Separately

Filing Status

Practice• Use the Charts on B-1, B-2, B-3



PracticeLily left her husband in August 2012, Lily left her husband in August 2012,

but they did not get divorced. She took but they did not get divorced. She took her children with her, supported them her children with her, supported them during all of 2012, and will claim them during all of 2012, and will claim them as dependents. Lily refuses to file a as dependents. Lily refuses to file a

joint return with her husband. joint return with her husband.

Which filing status should she use?Which filing status should she use?

Filing Status


PracticeLily left her husband in August 2012, but they Lily left her husband in August 2012, but they

did not get divorced. She took her children did not get divorced. She took her children with her, supported them during all of 2012, with her, supported them during all of 2012,

and will claim them as dependents. Lily and will claim them as dependents. Lily refuses to file a joint return with her husband. refuses to file a joint return with her husband.


MFS. MFS. Because Lily lived with her husband for Because Lily lived with her husband for some part some part

of the last six months of the year, she cannot of the last six months of the year, she cannot claim HoH.claim HoH.

Filing Status


PracticeLily left her husband in February 2012, but Lily left her husband in February 2012, but

they did not get divorced. She took her they did not get divorced. She took her children with her, supported them during children with her, supported them during

all of 2012, and will claim them as all of 2012, and will claim them as dependents. Lily refuses to file a joint dependents. Lily refuses to file a joint

return with her husband. return with her husband.


Filing Status


PracticeLily left her husband in Lily left her husband in February 2012February 2012, but they , but they

did not get divorced. She took her children with did not get divorced. She took her children with her, supported them during all of 2012, and will her, supported them during all of 2012, and will claim them as dependents. Lily refuses to file a claim them as dependents. Lily refuses to file a joint return with her husband. Which filing status joint return with her husband. Which filing status

should she use?should she use?

Head of Household: A Head of Household: A legally married taxpayer can be considered unmarried and file as HoH if he/she has not lived with the spouse at any time

during the last six months of the tax year.

Filing Status


PracticeLane, a single woman, lives alone. She Lane, a single woman, lives alone. She

provides full support for her mother provides full support for her mother Theresa who lives in a nearby town. Theresa who lives in a nearby town.

Since Theresa had no income for the year, Since Theresa had no income for the year, Lane paid all costs to maintain her home Lane paid all costs to maintain her home

and will claim her as a dependent. and will claim her as a dependent.

What is Lane’s filing status?What is Lane’s filing status?

Filing Status


PracticeLane, a single woman, lives alone. She provides Lane, a single woman, lives alone. She provides

full support for her mother Theresa who lives in full support for her mother Theresa who lives in a nearby town. Since Theresa had no income a nearby town. Since Theresa had no income for the year, Lane paid all costs to maintain her for the year, Lane paid all costs to maintain her home and will claim her as a dependent. What home and will claim her as a dependent. What

is Lane's filing status?is Lane's filing status?

Head of Household.Head of Household.A taxpayer can claim HoH filing status on the basis A taxpayer can claim HoH filing status on the basis

of a dependent parent who does not live with of a dependent parent who does not live with him/her only if the taxpayer pays ½ of the costs him/her only if the taxpayer pays ½ of the costs

of keeping up the parentof keeping up the parent’’s home.s home.

Filing Status

PracticeBrian and Ashley have been happily married

since 1965. They have no children, but Brian’s brother has lived with them for the

last 10 years. Ashley passed away in March 2011. Even after her death, Brian continued to maintain the entire cost for the home and

his brother still lived there.

What is Brian’s filing status?SaveFirst Basic Training ● 2012 ©

PracticeBrian and Ashley have been happily married

since 1965. They have no children, but Brian’s brother lived with him for the entire year. Ashley

passed away in March 2011. Even after her death, Brian continued to maintain the entire

cost for the home.

Head of Household: Brian cannot file as QW because his brother is NOT his dependent child.


QUESTIONS on Filing Status?


Remember• There are scenarios concerning filing

status in your training documents that you can complete for additional practice when you have some time during the training.

• We will post the answers at the end of the training.

Entering Filing Status and Exemptions in TaxWise

• Once you have entered the SSN of the taxpayer, you will enter in the personal information as well as the filing status and dependents.

• Start with the INTERVIEW


Filing Status


Personal Information

Make sure to ask if the Earned Income Credit was disallowed!


Address


Special Processing

Call your SUPERVISOR if the answer is anything but NONE.


General Questions


Dependents: Click Edit


Dependents


Dependents List• Dependent Codes:

1: Your Child who Lives with You 2: Your Child who does NOT live with you due to

divorce/separation 3: All Other Dependents 4: Non-Dependents

• Make sure to check the Child and Dependent Care Expenses if it applies.

• Always check EIC, and then answer the questions on the worksheet later.


Switch to Tax Forms!

Loaded Forms & Refund Monitor


Main Info Form:• Check all of the taxpayer’s information

• Check the filing status

• Check the information about the dependents, including if the boxes for Dependent Care Expenses, Child Tax Credit and the Earned Income Credit should be checked

• Check the number of exemptions


Main Info Form• In the State Information Section, either

check the box if you are not preparing a state return for the taxpayer or type in AL for either the full year resident or part-year resident box.


Main Info Form• In the PIN section, have each taxpayer

enter a 5-number pin.






4.4. IncomeIncome5.5. Standard DeductionStandard Deduction


1040 Form in TaxWise• Information such as income, adjustments

and credits is added to the 1040 by linking to specific forms.



Taxable Income• WagesWages• TipsTips• Gambling WinningsGambling Winnings• IRA DistributionsIRA Distributions• Some Social Security Some Social Security

BenefitsBenefits• Awards and PrizesAwards and Prizes

Income

• InterestInterest• AlimonyAlimony• All Unemployment All Unemployment

CompensationCompensation• Jury Duty PayJury Duty Pay• EtcEtc


Nontaxable Income

Income

• Child SupportChild Support

• Inheritances Inheritances

• Life InsuranceLife Insurance

• Supplemental Supplemental Security IncomeSecurity Income

• Insurance Insurance PaymentsPayments

• GiftsGifts

• Public Assistance Public Assistance PaymentsPayments

• VeteransVeterans’’ Disability Disability BenefitsBenefits

• WorkerWorker’’s s CompensationCompensation

For a more complete listing of income, see the chart on D-1.


Line 7: Wages, Salaries, TipsForm W-2

Income

Link: Line 7 W2

Filling out a Form W-2• Check taxpayer or spouse at top• Make sure to type in all information exactly

as you see it on the W-2 Do not change the address if it is different

than the taxpayer’s current address.

• The calculations on lines 3, 4, 5, 6 and 16 automatically fill in, so click the box at the top of the W-2 if you need to enter in different numbers than appear.

W-2 Form in TaxWise

LINK


W-2 Form in TaxWise



Tips• Tips totaling more than $20/month Tips totaling more than $20/month

Reported to employerReported to employer Already totaled in Box 1 of Form W-2.Already totaled in Box 1 of Form W-2.

• Allocated tips of any amountAllocated tips of any amount Appear in Box 8 of W-2Appear in Box 8 of W-2

• Tips totaling less than $20/monthTips totaling less than $20/month Not reported to employerNot reported to employer Must be reported to the federal government Must be reported to the federal government

on a Form 4137on a Form 4137

Income

Line 7: Tips Not Reported (Form 4137)

Link: Line 7 Form 4137

(Enter in unreported tips in Line 5)


InterestInterest• Money earns interest when it is:Money earns interest when it is:

Deposited in accounts.Deposited in accounts. Used to buy certificates of deposit (CDs) or Used to buy certificates of deposit (CDs) or

bonds.bonds.

• Classified asClassified as unearned unearned income income

Income


Interest: Savings and Checking Interest: Savings and Checking Accounts, CDsAccounts, CDs

• Interest is earned in the year and is Interest is earned in the year and is credited to a taxpayer’s account.credited to a taxpayer’s account.

• If an early withdrawal penalty is incurred, If an early withdrawal penalty is incurred, fill in the amount in Early Penalty line on fill in the amount in Early Penalty line on the Interest Statement.the Interest Statement. This amount will carry over to Line 30 on the This amount will carry over to Line 30 on the

1040.1040.

Income


Line 8: InterestLine 8: InterestForm 1099-INTForm 1099-INT

Income

Link: Line 8a Sch B 1b Interest Stmt

Line 8: Interest (Form 1099-INT)Line 8: Interest (Form 1099-INT) Line 8a

Sch B

1b

Interest Stmt


Income


Dividends• Unearned IncomeUnearned Income

• Payments made by corporations to Payments made by corporations to shareholdersshareholders

• Reported to federal government annuallyReported to federal government annually

Income


Line 9: DividendsLine 9: DividendsForm 1099-DIVForm 1099-DIV

Income

Link: Line 9a Sch B 5a Dividend Stmt

Line 9: Dividends (Form 1099-DIV)Line 9: Dividends (Form 1099-DIV) Line 9a

Sch B

5a

Dividend Stmt


Income


Line 10: 2011 State Tax Refund

• The 2011 State Tax Refund may be The 2011 State Tax Refund may be taxable and need to be reported.taxable and need to be reported.

• Answer question in Box under Line 9.Answer question in Box under Line 9.

NO: Check no.NO: Check no. YES: SEE YOUR SUPERVISOR.YES: SEE YOUR SUPERVISOR.

Income


Line 19: Unemployment CompensationLine 19: Unemployment CompensationForm 1099-GForm 1099-G

Income

Link: Line 19 1099G Wkt

1099-G Wkt in TaxWise



Social Security BenefitsSocial Security Benefits• Part of social security benefits might be Part of social security benefits might be

taxable taxable

• Supplemental security income (SSI) is Supplemental security income (SSI) is never taxablenever taxable SSI is aimed at helping low-income elderly,

blind, and disabled individuals pay for their basic needs.

Income


Reporting SS Benefits• If the taxpayer also has other forms of If the taxpayer also has other forms of

income, link to the 1040 Wkt .income, link to the 1040 Wkt .

OROR

• If the taxpayer has no other source of If the taxpayer has no other source of income (only SS benefits), consult the income (only SS benefits), consult the Chart on A-1Chart on A-1 Taxpayer Taxpayer MIGHTMIGHT not need to file a return. not need to file a return.

Income


Line 20: Social Security BenefitsForm SSA-1099

Income

Link: Line 20a 1040 Wkt1

Medicare premiums

Don’t miss withholding!

Total benefits

Lump-Sum Benefit

Payments

Reporting SS Benefits• If the taxpayer has lump-sum benefits

listed on the SSA-1099, CONTACT YOUR SUPERVISOR.


1040 Wkt1 in TaxWise

- Social security

received this year

- Medicare

- Federal tax withheld



Line 21: Gambling WinningsLine 21: Gambling WinningsForm W-2GForm W-2G

Income

Link: Line 21 (Other Income) W2G

(If taxpayer doesn’t have a W2G, Link: Line 21 Line 21)


W2-G in TaxWise

Link: Line 21 (Other Income) W2G


Out of Scope• Self-Employment/Business Income Self-Employment/Business Income

(including Form 1099-MISC)(including Form 1099-MISC)

• Sale of Stock (Form 1099-B)Sale of Stock (Form 1099-B)

• IRA/Pension Income (Form 1099-R)IRA/Pension Income (Form 1099-R)

• Any form not covered in this trainingAny form not covered in this training

Income

If you encounter ANY of these,CALL YOUR SUPERVISOR!

PracticeWhat line do you link these forms from?

1.Interest statement

2.Wages

3.Social security

4.Unemployment

5.Dividend statement

6.Tips

7.GamblingSaveFirst Basic Training ● 2012 ©


1.Interest statement Line 8a

2.Wages

3.Social security

4.Unemployment


6.Tips




2.Wages Line 7

3.Social security

4.Unemployment


6.Tips




2.Wages Line 7

3.Social security Line 20a

4.Unemployment


6.Tips




2.Wages Line 7


4.Unemployment Line 19


6.Tips




2.Wages Line 7



5.Dividend statement Line 9a

6.Tips




2.Wages Line 7




6.Tips Line 7




2.Wages Line 7




6.Tips Line 7

7.Gambling Line 21SaveFirst Basic Training ● 2012 ©

QUESTIONS on Income?






4.4. IncomeIncome

5.5. Standard DeductionStandard Deduction6.6. Earned Income CreditEarned Income Credit


Standard Deduction• Reduces amount of income that is taxedReduces amount of income that is taxed

• Amount of deduction based onAmount of deduction based on Filing StatusFiling Status AgeAge Whether taxpayer/spouse is blindWhether taxpayer/spouse is blind Whether taxpayer is a dependentWhether taxpayer is a dependent

• TaxWise calculates automaticallyTaxWise calculates automatically

Deductions


Standard Deduction for Most filers

Deductions

MFJ or QWMFJ or QW $11,900$11,900

HoHHoH $8,700$8,700

Single or MFSSingle or MFS $5,950$5,950

See the Chart on F-6See the Chart on F-6

Standard Deduction for Others: Tab F-7



Itemized DeductionsInstead of taking the standard deduction, a Instead of taking the standard deduction, a

taxpayer can choose to itemize, which is taxpayer can choose to itemize, which is to list certain deductible expenses to list certain deductible expenses

separately, in order to receive a separately, in order to receive a greatergreater deduction.deduction.

Deductions


Itemized Deductions• Itemized deductions include (but are not Itemized deductions include (but are not

limited to):limited to): Un-reimbursed medical expensesUn-reimbursed medical expenses Charitable contributionsCharitable contributions Home mortgage paymentsHome mortgage payments

• If the taxpayer has some or all of these If the taxpayer has some or all of these expenses, expenses, SEE YOUR SUPERVISOR! SEE YOUR SUPERVISOR!

Deductions

QUESTIONS on Standard Deduction?






4.4. IncomeIncome




Earned Income Credit• The EIC is a refundable tax credit that applies to The EIC is a refundable tax credit that applies to

individuals who work but make low to moderate individuals who work but make low to moderate incomes.incomes.

• The EIC is the largest federal anti-poverty The EIC is the largest federal anti-poverty program and has been one of the most program and has been one of the most successful programs to lift families, especially successful programs to lift families, especially families with children, out of poverty.families with children, out of poverty.

• The EIC has been especially successful in The EIC has been especially successful in providing an incentive for single mothers with providing an incentive for single mothers with children to find work.children to find work.



Maximum Credits


Tax Year 2012:

Three+ Children = $5,751

Two Children: $5,112

One Child: $3,094

No Children: $464


Line 64a: Earned Income Credit(Form Sch EIC Wkt)

Use the Charts in Tab H

(Turn to H-1 and H-2)


EIC Eligibility• Rules for everyone:

Must have earned income (and AGI has limits) Valid SSNs and U.S. citizens/resident aliens Not MFS No foreign earned income Investment income less than $3,150 Taxpayer cannot be qualifying child of another person

• If taxpayers meet the rules for everyone, then follow the chart based on if the taxpayer has a qualifying child or not.

EIC Eligibility: Tab H-2



Qualifying Child of More than One Person

• Sometimes, a child meets all of the tests Sometimes, a child meets all of the tests to be claimed by more than one taxpayer.to be claimed by more than one taxpayer.

• Same rules for QUALIFYING CHILDREN Same rules for QUALIFYING CHILDREN OF MORE THAN ONE PERSON.OF MORE THAN ONE PERSON.

See Chart on H-5See Chart on H-5



Who can claim the EIC?

1)1) If only one taxpayer is the childIf only one taxpayer is the child’’s parent, s parent, the child is the qualifying person of the the child is the qualifying person of the parent.parent.

2)2) If separated parents both claim the child, If separated parents both claim the child, the child is the qualifying child of the the child is the qualifying child of the parent with whom the child lived with parent with whom the child lived with longer. (Remember the Division of longer. (Remember the Division of Benefits – custodial parent gets EIC.)Benefits – custodial parent gets EIC.)



Who can claim the EIC?

3)3) If no parent is eligible to claim the child, the If no parent is eligible to claim the child, the only person allowed to claim the EIC is the only person allowed to claim the EIC is the taxpayer with the highest AGI who meets all of taxpayer with the highest AGI who meets all of the tests.the tests.

4)4) Another taxpayer may claim the child if the Another taxpayer may claim the child if the parent agrees ONLY IF the other taxpayerparent agrees ONLY IF the other taxpayer’’s s AGI is higher than the parentAGI is higher than the parent’’s AGI and those s AGI and those of all other taxpayers who are eligible to claim of all other taxpayers who are eligible to claim the child.the child.



Disallowance• EIC disallowed forEIC disallowed for

Reckless or Intentional Disregard of the Reckless or Intentional Disregard of the Rules: 2 yearsRules: 2 years

Fraudulent Claim: 10 YearsFraudulent Claim: 10 Years

• To claim EIC again, a taxpayer mustTo claim EIC again, a taxpayer must Wait full period of disallowanceWait full period of disallowance Submit a Form 8862Submit a Form 8862

IMPORTANT NOTE:Mathematical and clerical errors are NOT bases for disallowance.


Disallowance• If the taxpayer had the EIC disallowed,

make sure to check the correct box when filling out the taxpayer’s information.

• Then, CALL YOUR SUPERVISOR!


Advance EIC• New in 2011New in 2011: Recipients no longer receive : Recipients no longer receive

Advance EIC payments.Advance EIC payments.



PracticeSharon, who has an earned income and Sharon, who has an earned income and

an AGI of $15,525, takes care of her sistean AGI of $15,525, takes care of her sisterr’’s son, Eric. If Eric is 12 years old and s son, Eric. If Eric is 12 years old and

began living with Sharon in August 2012, began living with Sharon in August 2012, can Sharon claim the EIC?can Sharon claim the EIC?

Use the Charts on Tab HUse the Charts on Tab H



PracticeSharon, who has an earned income and Sharon, who has an earned income and AGI of $15,525, takes care of her sisterAGI of $15,525, takes care of her sister’’s s

son, Eric. If Eric is 12 years old and son, Eric. If Eric is 12 years old and began living with Sharon in August 2012, began living with Sharon in August 2012,

can Sharon claim the EIC?can Sharon claim the EIC?

NO. Sharon’s AGI is too high to claim the EIC alone,

and since Eric lived with her for less than half a year, he is not her qualifying child.



PracticeDoug and Donna are married and live Doug and Donna are married and live

together with their 4-year-old son Sam. together with their 4-year-old son Sam. Their combined earned income is $25,000, Their combined earned income is $25,000,

but they choose to file separately. Doug but they choose to file separately. Doug reports an AGI of $11,000 on his return, reports an AGI of $11,000 on his return,

and Donna reports AGI of $14,000.and Donna reports AGI of $14,000.

Can Doug and/or Donna claim the EIC?Can Doug and/or Donna claim the EIC?



PracticeDoug and Donna are married and live together Doug and Donna are married and live together with their 4-year-old son Sam. Their combined with their 4-year-old son Sam. Their combined

earned income is $25,000, but they file earned income is $25,000, but they file separately. Doug reports an AGI of $11,000 on separately. Doug reports an AGI of $11,000 on his return, and Donna reports AGI of $14,000. his return, and Donna reports AGI of $14,000.

Can Doug and/or Donna claim the EIC?Can Doug and/or Donna claim the EIC?

No. No.

Neither can claim the EIC because both have a filing status Neither can claim the EIC because both have a filing status of Married Filing Separately.of Married Filing Separately.



PracticeDoug and Donna are still married and still Doug and Donna are still married and still

live together with Sam, but now they live together with Sam, but now they decide to file a joint return. Their decide to file a joint return. Their

combined earned income and AGI are combined earned income and AGI are $25,000. Can they claim the EIC on this $25,000. Can they claim the EIC on this

return?return?



PracticeDoug and Donna are still married and still Doug and Donna are still married and still

live together with Sam, but now they live together with Sam, but now they decide to file a joint return. Their decide to file a joint return. Their

combined earned income and AGI are combined earned income and AGI are $25,000. Can they claim the EIC on this $25,000. Can they claim the EIC on this

return?return?

YesYes. . Their joint income is low enough to claim the EIC Their joint income is low enough to claim the EIC

with one qualifying child (Sam).with one qualifying child (Sam).


PracticeTom is 64 years old, retired and collected $10,000 of social security during 2012. He

does not have any qualifying children.

Can he claim the EIC on his return?

PracticeTom is 64 years old, retired and collected $10,000 of social security during 2012. He

does not have any qualifying children.

Can he claim the EIC on his return?

No. Tom does not have any earned income.

QUESTIONS on Earned Income Credit?



Training Outline

7.7. Child Tax CreditChild Tax Credit8.8. Child and Dependent Care CreditChild and Dependent Care Credit


10.10. Form 8888Form 8888




Line 51: Child Tax Credit• One credit for each qualifying child One credit for each qualifying child under

17 years of age.• A taxpayer can claim a Child Tax Credit A taxpayer can claim a Child Tax Credit

for their child only if they CAN AND DO for their child only if they CAN AND DO claim a dependency exemption for the claim a dependency exemption for the child. child.

• Nonrefundable credit with a maximum of Nonrefundable credit with a maximum of $1,000 per child.$1,000 per child. TaxWise will calculate this automaticallyTaxWise will calculate this automatically

Child Tax Credit


Line 65: Additional Child Tax Credit

• Refundable portion of the CTC.Refundable portion of the CTC.

• Applied if taxpayer cannot take full Child Applied if taxpayer cannot take full Child Tax Credit because tax liability is less than Tax Credit because tax liability is less than $1,000.$1,000.

• Must have at least $3,000 of earned Must have at least $3,000 of earned income.income.

Child Tax Credit

QUESTIONS on Child Tax Credit?




8.8. Child and Dependent Care Child and Dependent Care CreditCredit


10.10. Form 8888Form 8888




Child & Dependent Care Credit• Nonrefundable creditNonrefundable credit• Applied to offset expenses paid so Applied to offset expenses paid so

taxpayer taxpayer can work or look for workcan work or look for work Qualifying child must be under 13 and be Qualifying child must be under 13 and be

claimed as a dependentclaimed as a dependent Care can also be for a person who cannot Care can also be for a person who cannot

take care of him/herselftake care of him/herself

See Chart on G-1See Chart on G-1


Eligibility• To claim the Child and Dependent Care Credit:

Care had to be for qualifying persons Taxpayer had to have earned income Expenses must have been paid in order for the

taxpayer to work or to look for work Payments can’t have been made to taxpayer’s

spouse, dependent or child under 19 Have care provider’s name, address and SSN or

EIN See Chart on G-2


Line 48: Child and Dependent Care Credit(Form 2441)

Link: Line 48 2441



Line 48: Child and Dependent Care Credit(Form 2441)

You will enter the qualified expenses again in Part II, but make sure to split the expenses for the

amount paid for each child.



Divorced/Separated Parents• Custodial parent can claim the Child and Custodial parent can claim the Child and

Dependent Care Expenses Credit even if Dependent Care Expenses Credit even if he/she did not claim the dependency he/she did not claim the dependency exemption.exemption. Reminder: Division of BenefitsReminder: Division of Benefits Has signed a Form 8332 (or another written Has signed a Form 8332 (or another written

agreement)agreement)



PracticeAndrea and Bill, the parents of 7-year-old Charles, Andrea and Bill, the parents of 7-year-old Charles,

are divorced. For the entire year, Charles lived are divorced. For the entire year, Charles lived with his mother. She paid all the expenses of with his mother. She paid all the expenses of

keeping up the home, as well as bills for before-keeping up the home, as well as bills for before-school and after-school child care totaling $1,800. school and after-school child care totaling $1,800.

Nevertheless, as part of their divorce, Andrea Nevertheless, as part of their divorce, Andrea signed a Form 8332 allowing Bill to claim the signed a Form 8332 allowing Bill to claim the dependency exemption for Charles. Who can dependency exemption for Charles. Who can claim the Child and Dependent Care Credit?claim the Child and Dependent Care Credit?

Use the information on G-1Use the information on G-1



PracticeAndrea and Bill, the parents of 7-year-old Charles, are Andrea and Bill, the parents of 7-year-old Charles, are

divorced. For the entire year, Charles lived with his divorced. For the entire year, Charles lived with his mother. She paid all the expenses of keeping up the mother. She paid all the expenses of keeping up the

home, as well as bills for before-school and after-school home, as well as bills for before-school and after-school child care totaling $1,800. Nevertheless, as part of their child care totaling $1,800. Nevertheless, as part of their

divorce, Andrea signed a Form 8332 allowing Bill to divorce, Andrea signed a Form 8332 allowing Bill to claim the dependency exemption for Charles. Who can claim the dependency exemption for Charles. Who can

claim the Child and Dependent Care Credit?claim the Child and Dependent Care Credit?

Andrea.Andrea. She paid the expenses, and Form 8332 does not She paid the expenses, and Form 8332 does not allow the noncustodial parent to claim this credit.allow the noncustodial parent to claim this credit.



PracticeJulie spent the following amounts on child Julie spent the following amounts on child

care for her 10-year-old daughter care for her 10-year-old daughter Melissa. Are any of these eligible costs Melissa. Are any of these eligible costs for the Child & Dependent Care Credit?for the Child & Dependent Care Credit?

1.1. $300 for overnight camp$300 for overnight camp2.2. $1500 to her mother for after-school care$1500 to her mother for after-school care3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for

babysittingbabysitting



PracticeJulie spent the following amounts on child Julie spent the following amounts on child

care for her 10-year-old daughter care for her 10-year-old daughter Melissa. Are any of these eligible costs Melissa. Are any of these eligible costs for the Child & Dependent Care Credit?for the Child & Dependent Care Credit?

1.1. $300 for overnight camp - $300 for overnight camp - NONO2.2. $1500 to her mother for after-school care$1500 to her mother for after-school care3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for

babysittingbabysitting



PracticeJulie spent the following amounts on child care for Julie spent the following amounts on child care for

her 10-year-old daughter Melissa. Are any of her 10-year-old daughter Melissa. Are any of these eligible costs for the Child & Dependent these eligible costs for the Child & Dependent

Care Credit?Care Credit?

1.1. $300 for overnight camp - $300 for overnight camp - NONO

2.2. $1500 to her mother for after-school care - $1500 to her mother for after-school care - YESYES

3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for babysittingbabysitting



PracticeJulie spent the following amounts on child care for Julie spent the following amounts on child care for

her 10-year-old daughter Melissa. Are any of her 10-year-old daughter Melissa. Are any of these eligible costs for the Child & Dependent these eligible costs for the Child & Dependent

Care Credit?Care Credit?

1.1. $300 for overnight camp - $300 for overnight camp - NONO

2.2. $1500 to her mother for after-school care - $1500 to her mother for after-school care - YESYES

3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for babysitting - babysitting - NONO


QUESTIONS on Child and Dependent Care Credits?





9.9. Miscellaneous CreditsMiscellaneous Credits10.10. Form 8888Form 8888




Miscellaneous Credits• Retirement Savings Contribution CreditRetirement Savings Contribution Credit

• First Time Homebuyers CreditFirst Time Homebuyers Credit

Miscellaneous Credits


Line 50: Retirement Savings Contribution Credit (Form 8880)

• Taxpayers who Taxpayers who Contributed to a retirement plan or IRAContributed to a retirement plan or IRA Meet AGI and age limitationsMeet AGI and age limitations Cannot be claimed as dependentsCannot be claimed as dependents Are not full-time studentsAre not full-time students

See Chart on G-6See Chart on G-6



Retirement Saving Contribution: Testing Period

• Taxpayers must reduce their eligible Taxpayers must reduce their eligible contributions by the amount of contributions by the amount of distributions received during these years: distributions received during these years: 2009, 2010, 2011, and 2012 until April 15.2009, 2010, 2011, and 2012 until April 15.



Retirement Savings Contribution Credit: Contributions Record

• Contribution information could appear in Contribution information could appear in Box 12 of Form W-2 (typically code D or Box 12 of Form W-2 (typically code D or E) or as a check in Box 13E) or as a check in Box 13

• If contribution information is listed If contribution information is listed somewhere else, somewhere else, contact your supervisorcontact your supervisor!! Box 14 of Form W-2Box 14 of Form W-2 Not reported on the W-2 Not reported on the W-2 (ask the taxpayer!)(ask the taxpayer!)



Retirement Savings Contribution: W-2

Link: Line 50 8880


Filling out the 88801) Check the correct box for if either the

taxpayer and spouse was a full-time student (make sure each W2 is labeled correctly as taxpayer or spouse)

2) On line 4, enter the amount (if any) distributions were made before the due date OR enter F3 if no distributions were made

Form 8880 in TaxWise


PracticeBob, age 48, contributed $600 to an IRA in Bob, age 48, contributed $600 to an IRA in 2012. During the year, he worked full-time 2012. During the year, he worked full-time

and had an AGI of $24,000. Is Bob and had an AGI of $24,000. Is Bob eligible to claim the Retirement Savings eligible to claim the Retirement Savings

Contribution Credit?Contribution Credit?

Use the Chart on G-6Use the Chart on G-6



PracticeBob, age 48, contributed $600 to an IRA in Bob, age 48, contributed $600 to an IRA in 2012. During the year, he worked full-time 2012. During the year, he worked full-time

and had an AGI of $24,000. Is Bob and had an AGI of $24,000. Is Bob eligible to claim the Retirement Savings eligible to claim the Retirement Savings

Contribution Credit?Contribution Credit?

Yes. Yes. Bob meets all of the requirements of the Bob meets all of the requirements of the

RSCC.RSCC.



Line 59b: Repayment of First-time Homebuyers Credit (Form 5405)

• Individuals who took $7,500 credit in Individuals who took $7,500 credit in 20082008 to buy a home had to begin to repay in to buy a home had to begin to repay in 20102010

• At least $500 (1/15 of that owed) has to be At least $500 (1/15 of that owed) has to be paid and reported in paid and reported in ““Additional TaxesAdditional Taxes”” section on Line 59bsection on Line 59b

• Use Form 5405

Link: Line 59b 5405 Pg 2

Filling out the 5405 Pg 21) Line 11: If the taxpayer ceased using the

home as the main home, enter the date2) Line 14: Enter the amount of credit

claimed during 2008-20103) Line 15: Enter the amount of credit

repaid in 20104) Line 18: Enter the amount the taxpayer is

repaying for the year; has to be at least $500

Form 5405 Pg 2 in TaxWise

QUESTIONS on Retirement Savings Contribution Credit or Repayment of First-time

Homebuyer Credit?






10.10. Form 8888Form 888811.11. Alabama ReturnAlabama Return



Bond Order Process• With their refund, taxpayers are able to With their refund, taxpayers are able to

order $50 savings bonds when they file order $50 savings bonds when they file their tax return.their tax return.

• Our RoleOur Role Explain opportunityExplain opportunity - describe savings - describe savings

bonds & chance to order at tax sitebonds & chance to order at tax site Seek decisionSeek decision – ask client to decide if, how – ask client to decide if, how

much & for whom to order bondsmuch & for whom to order bonds Process orderProcess order – complete IRS Form 8888 – complete IRS Form 8888

Form 8888


SaveNow WinLater• For every $50 bond a taxpayer buys,

he/she receives a chance to win a drawing for $5000 at the end of tax season or to kick off the season next year!

• This program links the excitement of the lottery to saving!

Form 8888

John Q. Saver123 Main StreetAnywhere, WA 99000-0000OR Jen Saver

123-45-6789 01 2009

FRB-MPLS

04-15-07

2

:C000090007 :04000000000000

C000000000I


Savings Bonds• All taxpayers can buy bonds for

Themselves And/or 2 other people (kids, grandkids,

spouses, nieces / nephews, godchildren, etc)

• How it works Taxpayer needs only name of gift recipient Client & gift recipient will be listed on bond as

co-owners Either party may redeem bond

Form 8888


Bonds vs. Savings Accounts, CDs

Form 8888

Savings Account*

1 Year CD*Series I U.S.

Savings Bond

Rate of Return .17% .73% 3.06%

Annual Fees $0 $0 $0

Minimum to Open $100 $1,000 $50

Rate Fixed No YesAdjusts bi-annually

Minimum Holding Period

None 1 year 1 year

Early RedemptionPenalty / Forfeiture

None

All interest earned to withdrawal

date

3 months interest (redemptions

within 5 years of purchase)

ChexSystems Review

Yes Yes No

May Buy as a Gift No No Yes


Form 8888 in TaxWise1) Add Form 8888 in the Loaded Forms Menu

2) Fill out Part II with the recipient(s) name and amount first.

Form 8888

Form 8888 in TaxWise3) Then fill out either Part I (Direct Deposit)

or Part III (Paper Check).

Form 8888 in TaxWise4) Subtract the amount of bonds purchased from the total refund to get the allocation.

Total refund – bond purchases = allocation

(Total on Line 8 must equal the Federal refund)


Important Note• If a taxpayer invests in savings bonds,

ONLY fill out the routing and account numbers on the Form 8888.

• If a taxpayer does not invest in savings bonds, fill out the routing and account numbers on the main page and on line 74.

QUESTIONS on Form 8888?


PracticeTo what line and form are these credits linked?

1.1st Time Homebuyer

2.Child & Dependent Care

3.Savings Bonds Purchase

4.Earned Income Credit

5.Retirement Savings Contribution



1.1st Time Homebuyer 59b, Form 5405 Pg 2

2.Child & Dependent Care







2.Child & Dependent Care 48, Form 2441








3.Savings Bonds Purchase 74, Form 8888








4.Earned Income Credit 64a, Sch EIC







4.Earned Income Credit 64a, Sch EIC

5.Retirement Savings Contribution 50, Form 8880



BREAK


TaxWise ExerciseQuincy Scott

• You will need:You will need: Tax Preparation Process handout.Tax Preparation Process handout. Resource Guide (Pub 4012).Resource Guide (Pub 4012). Workbook (Pub 4491-W).Workbook (Pub 4491-W).

TaxWise


BEFORE You Sign In• DetermineDetermine

If the taxpayer and spouse can be claimed as If the taxpayer and spouse can be claimed as dependents. (dependents. (Tab C) Tab C)

If the taxpayer and spouse can claim If the taxpayer and spouse can claim dependents. dependents. (Tab C)(Tab C)

Appropriate Filing Status. Appropriate Filing Status. (Tab B)(Tab B)

TaxWise


Signing In

TaxWise

https://twonline.TaxWise.com/trainingClient ID:

Get from trainer Write in appropriate blank on volunteer packet

Username: All Caps Last name followed by first initial (SMITHJ) Write in appropriate blank on volunteer packet

Password: Same as username Must reset password before logging in the first time Write in appropriate blank on volunteer packet





10.10. Form 8888Form 8888

11.11. Alabama ReturnAlabama Return12.12. Finishing the Return & Volunteer Finishing the Return & Volunteer

Requirements Requirements

Alabama Return



Who Must File

Source: http://ador.alabama.gov/incometax/itfaq01.htm

Alabama Return

Full Year Residents

Single MFS HoF MFJ

Gross Income $4,000 $5,250 $7,700 $10,500

Part Year Residents

Single MFS HoF MFJ

Gross Income

$4,000 $5,250 $7,700 $10,500


Creating a Return On the Main Information page in TaxWise,

type AL into the appropriate blank under state information so it creates an AL-40 Form.

Even if the taxpayer is a part-year resident or nonresident in another state, do not input that state into TaxWise, as it may create out-of-state tax forms that we are not qualified to file.

Alabama Return


Filling Out a Return Fill out the Federal return first – most of

the information that you need for the AL return will carry over.

When you have finished the federal return, pull up the AL-40, page 1.

Scroll to the bottom and click “yes” to e-file the return.

Alabama Return


Personal ExemptionsBased on Filing Status

• TaxWise calculates automatically• Single and MFS: $1,500• HoF and MFJ: $3,000• Dependents: Taxpayers receive a personal

exemption in AL even if they CAN be claimed as a dependent by someone else.

Alabama Return

DependentsUnder Alabama law, a dependent is an individual other than the taxpayer and his or her spouse who received over 50% of his or her support from the taxpayer during the year and is also related to the taxpayer in one of the following relationships:

*Alabama's dependency laws state that a qualified person must be the taxpayer's son, daughter, step-son, step-daughter, legally adopted child, parent, grandparent,

grandchild, brother, sister, step-brother, step-sister, step-mother, step-father, mother-in-law, father-in-law, brother-in-

law, sister-in-law, son-in-law, father-in-law, and IF RELATED BY BLOOD, uncle, aunt, nephew, niece



Dependents• Most federal dependents also qualify on the

state level EXCEPT: Foster children Non-related individuals who lived with the

taxpayer for the entire year*

You cannot claim a foster child, friend, cousin, yourself, or your spouse as a dependent on your

Alabama income tax return.

Alabama Return

Dependents


Determining AL Filing Status• A taxpayer’s filing status is the same on the AL

return as it is on the federal return, except for Qualifying Widow(er) and Head of Household.

• QW does not exist in Alabama TaxWise will automatically choose Head of Family on

the AL return

• Taxpayers can only file Head of Family on their AL return if: They are unmarried or legally separated at the end of

2012 AND Their qualifying person is NOT a foster child

Alabama Return

AL Filing Status


Income• TaxWise automatically pulls the income

from the Federal return to the state return• However, TaxWise recognizes that there

are several types of income that are taxable federally, but not in Alabama. It will not transfer these amounts to the state return.

Alabama Return


Non-taxable Income• Types of non-taxable income that are

not carried over to the AL return: Unemployment Compensation Social Security Benefits

Though not taxable, these amounts must be reported in the appropriate blanks on the AL-40,

Page 2.

Alabama Return


Standard Deduction• In Alabama the standard deduction depends on

the filing status and AGI.

Alabama Return

Filing Status Deduction Range

Single $2000-$2500

Head of Family $2000-$4700

Married Filing Jointly $4000-$7500

Married Filing Separately $2000-$3750


Itemized Deductions• Because the standard deduction is so

much lower on the state level than the federal level, many individuals may itemize on the state return, even if they don’t on the federal level.

See your supervisor if the taxpayer wants to itemize deductions!

Alabama Return


Finishing the AL Return• Questions at the bottom of the AL 40,

page 2: Did the taxpayer file an AL return during the

previous tax year? Who is the taxpayer's current employer? Does the taxpayer have any income on their

federal return that is not on their state return?

Alabama Return

Previous Year AL Return Did the taxpayer file an AL return for the

previous tax year?• Answer YES or NO

If NO, provide an explanation:• Taxable income too low• Lived in a different state• Neglected to file

Current Employer Information Who is the taxpayer's current employer? Need information from the taxpayer’s W-2

• Enter the copy number of the W-2 for both the taxpayer and spouse

• If the taxpayer is currently unemployed, leave “0” in the blank

Current Employer Information

Non-taxable Income• Does the taxpayer have any income on

their federal return that is not on their state return Unemployment Compensation Social Security Benefits

• You must input this information manually on the AL-40, Page 2.

Non-taxable Income

Answer “Yes” or “No”

Fill out the Description and Amount


Paying a Balance/Receiving a Refund• Taxpayers can have their refunds directly

deposited or they can receive a check.• Taxpayers can have their liabilities directly

debited or they can send a check.• If a taxpayer wants to send a check, TaxWise

will generate a voucher to send along with it.• Choose the correct option and ONLY enter the

account information IF:• Taxpayer wants the state refund deposited to a

different account• Taxpayer requests a direct debit

Alabama Return

Paying a Balance/Receiving a Refund

Practicing a Return• Now log into TaxWise

• http://twonline.TaxWise.com/training

• Client ID: 778068

• Username: Last name followed by first initial (all caps).

• Prepare the Alabama return for Quincy Scott





10.10. Form 8888Form 8888


12.12. Finishing the Return & Finishing the Return & Volunteer RequirementsVolunteer Requirements


Refunds• Taxpayers can choose to receive their Taxpayers can choose to receive their

refund either by check or direct depositrefund either by check or direct deposit• Checks take 6-8 weeks to be mailed.Checks take 6-8 weeks to be mailed.• Electronic deposits will be made in 1-2 Electronic deposits will be made in 1-2

weeks – be sure to enter routing number weeks – be sure to enter routing number and account number.and account number.

• Remind taxpayers that they can choose to Remind taxpayers that they can choose to allocate part of their refund to order allocate part of their refund to order savings bonds. savings bonds.

Finishing the Return


Tax Due• If an amount is owed, a taxpayer canIf an amount is owed, a taxpayer can

Pay by check or money orderPay by check or money order Pay by direct debit from their bank account on a date Pay by direct debit from their bank account on a date

that they choose (up to the due date)that they choose (up to the due date) Tax due can also be paid with a credit or debit card.Tax due can also be paid with a credit or debit card. File Form 9465, Installment Agreement, to pay the tax File Form 9465, Installment Agreement, to pay the tax

in monthly installments (plus interest and penalties).in monthly installments (plus interest and penalties). File an Online Payment Agreement (OPA).File an Online Payment Agreement (OPA). Request a “full pay within 60 to 120 days.”Request a “full pay within 60 to 120 days.”



Tax Due• To avoid having tax due next year:To avoid having tax due next year:

Adjust withholding on Form W-4 (from Adjust withholding on Form W-4 (from employer)employer)

Make quarterly estimated tax payments (Form Make quarterly estimated tax payments (Form 1040-ES)1040-ES)



Quality Review



Printing the Return• Provide taxpayer with one complete copy of

the return• Documents to be signed by and returned to

taxpayer: 1 copy of a signed Federal 8879 1 copy of a signed Alabama 8453

• Forms to retain for our records: Completed Intake/Interview & Quality Review Sheet Signed copies of consent to use form and consent to

disclose form ONLY IF volunteer enters pin # on consent to use/disclose forms for taxpayer

SNWL form and copy of Form 8888 if applicable


IRS Volunteer Standards of Conduct

If volunteers act unethically, consequences to the tax site may include: Removal from the program Criminal investigation Discontinuing IRS support and removing IRS

supplies Revoking or retrieving the sponsoring

organization’s grant funds Deactivating IRS EFIN (site identification #)


Volunteer Etiquette• DO NOT accept gifts.DO NOT accept gifts.

• DO NOT solicit business from those you help.DO NOT solicit business from those you help.

• DO NOT use knowledge gained about DO NOT use knowledge gained about taxpayers for personal benefit.taxpayers for personal benefit.

• DO NOT knowingly complete a false return or DO NOT knowingly complete a false return or complete a return if you feel the taxpayer is complete a return if you feel the taxpayer is lying.lying.

• DO NOT retain documents for a follow-up DO NOT retain documents for a follow-up visit.visit.

Volunteer Requirements


Volunteer Etiquette• Follow the Quality Site Requirements.Follow the Quality Site Requirements.

• Learn the process.Learn the process.

• Conduct a thorough interview.Conduct a thorough interview.

• Be sensitive to the taxpayer.Be sensitive to the taxpayer.

• Keep personal information confidential.Keep personal information confidential.

• Do only what you are trained and certified Do only what you are trained and certified to do.to do.

Volunteer Requirements

IRS Certification TestsVolunteer Standards of Conduct Test:

All volunteers must take the Volunteer Standards of Conduct test.

Please take the 5-question IRS test in the back of your training packet.

Turn the test in to your trainer BEFORE we move on.

IRS Certification Tests

Basic Certification Test: You must pass the open book, open note test

before you volunteer at the site.• You can take this on your own time or sign up for a

test session on www.eventbrite.com

To submit answers and receive certification, follow instructions in training packet to link to http://www.impactalabama.org/taxprep.php


TaxWise ExerciseMary Beringer

• You will need:You will need: Tax Preparation Process handout.Tax Preparation Process handout. Resource Guide (Pub 4012).Resource Guide (Pub 4012). Workbook (Pub 4491-W).Workbook (Pub 4491-W).

TaxWise


BEFORE You Sign In• DetermineDetermine

If the taxpayer and spouse can be claimed as If the taxpayer and spouse can be claimed as dependents. (dependents. (Tab C) Tab C)

If the taxpayer and spouse can claim If the taxpayer and spouse can claim dependents. dependents. (Tab C)(Tab C)

Appropriate Filing Status. Appropriate Filing Status. (Tab B)(Tab B)

TaxWise

SaveFirst Basic Tax Training 2012. SaveFirst Basic Training ● 2011 © Training Outline 1.Tax...

Documents

Transcript of SaveFirst Basic Tax Training 2012. SaveFirst Basic Training ● 2011 © Training Outline 1.Tax...