PATH Act and Appropriations Bill Provisions Presenter Date ------------------------------ Presentation Preparation Research: personal and professional information Develop strategy: Determine why you are presenting to this particular audience What is the benefit to the audience? Presenter references & related reading: Review recommended documents and links provided with each topic Visit www.irs.gov for additional information Practice your presentation: Rehearse 3 to 6 times in a similar environment you’ll be presenting in Attempt to practice your presentation with office peers, leader or DM  

About Me Name Years experience Certifications H&R Block tax professionals must complete at least 18 hours of continuing education annually are required to train on systems, policies and procedures up to an additional 35 hours of education annually. Conversation starters About H&R Block: World’s preeminent tax services provider Served more than 400 million clients since 1955 Close to you with 13,000+ tax offices and through online & software solutions Provides over 10 million hours of tax professional training each year About me / personal interests: My background My certifications Over 30 hours of additional training annually Be clear on why you are presenting this particular topic to this audience Distribute Attendee Leave Behind flyers Inform audiences that you’d like to collect personal contact info: Pass around a sign-up sheet or individual contact cards Follow-up with solutions specific to their tax situations Utilize a “raffle” to collect contact information Personal information will not be used for Marketing purposes

Did you know that? “We look at your life through tax… H&R Block served more than 23.2 million taxpayers in 2015. We have been preparing America’s taxes since 1955. 2016 marked the 61st tax season for H&R Block. H&R Block is close to you, with a retail office within 5 miles of most Americans. “We look at your life through tax… and find ways to help.”

Overview Extenders provisions Some provisions permanently extended Some provisions extended for 5 years Some provisions extended for 2 years Program integrity (compliance) provisions Other tax-related provisions

Non-Business Permanent Extensions Additional child tax credit American opportunity credit (AOC) Enhanced earned income credit (EIC) Educator expenses deduction Deduction for state and local general sales tax Qualified charitable distributions (QDCs) ACTC -- The additional child tax credit is equal to 15% of earned income over a dollar threshold amount. The threshold has been $3,000 since 2009, but was set to revert to $10,000 (indexed for inflation) starting in 2018. The $3,000 earned income threshold is now permanent. AOC -- The AOC is a partly refundable credit of up to $2,500 for the first four years of post-secondary education. EIC -- Several enhancements to the EIC that started in 2009 were set to expire after 2017. These include a higher credit for families with three or more children and a higher phaseout range for joint filers. The EIC enhancements are now permanent. Educator expenses deduction -- The above-the-line educator expenses deduction of up to $250 had expired at the end of 2014 and is now permanent. Starting in 2016, the $250 cap will be adjusted for inflation and professional development expenses will be allowed for the deduction. State and local sales tax deduction -- Taxpayers who itemize may deduct state and local general sales taxes in lieu of state and local income taxes. QDCs – Taxpayers who are 70½ or older may exclude trustee-to-trustee transfers to qualified charitable organizations of all or part of their requirement minimum distributions up to $100,000. The exclusion had expired at the end of 2014 and is now permanent.

Business Permanent Extensions 15-year straight-line cost recovery Qualified leasehold improvements Qualified restaurant property Qualified retail improvement property Enhanced section 179 deduction Reduction of S corporation recognition period for built-in gains Other lesser utilized provisions 15-Year straight-line depreciation -- Qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property may be depreciated using the MACRS straight-line 15-year recovery period. 179 deduction -- Small businesses may expense up to $500,000 of eligible property, with phaseout starting at $2 million. Eligible property includes computer software and qualified real property. The deduction and phaseout amounts reverted to $25,000 and $200,000 respectively after 2014 and the deduction was generally limited to tangible personal property. The enhancements are now permanent. Starting in 2016, the deduction and phaseout caps will be indexed for inflation, air conditioning and heating units placed in service will be eligible property, and the $250,000 cap on qualified real property will be eliminated. S-Corp recognition period for built-in gains -- The period for which an S corporation must hold assets following conversion from a C corporation to avoid tax on built-in gains is permanently reduced from 10 years to five years.

Extended Through 2019 Bonus depreciation Residential energy efficient property credit (phased down through 2021) Bonus depreciation -- The bonus percentage is 50% for 2015, 2016, and 2017, 40% for 2018, and 30% for 2019. The deduction is modified to permit bonus depreciation for certain types of trees and plants when grafted or planted rather than when placed in service and to add certain qualified improvement property as eligible property. Starting in 2016, the amount of unused AMT credits that may be claimed in lieu of bonus depreciation will increase. Residential energy efficient property credit -- The residential energy efficient property “REEP” credit for solar and other alternative home energy equipment that was set to expire after 2016 is now extended through 2021. The credit will remain at 30% of the cost of qualifying property through 2019, then phase down to 26% in 2020 and 22% in 2021.

Extended Through 2016 Qualified principal residence indebtedness (QPRI) exclusion Qualified mortgage insurance premiums Tuition and fees deduction Race horses classified as three-year property Nonbusiness energy property credit Other lesser utilized provisions QPRI -- The exclusion from gross income of a discharge of qualified principal residence indebtedness, which had expired after 2014, is now extended through 2016. The exclusion is modified to apply to debt discharged in 2017 if the discharge is pursuant to a written agreement entered into in 2016. Qualified mortgage insurance premiums -- Taxpayers who itemize deductions may treat qualified mortgage insurance premiums as deductible mortgage interest. Tuition and fees deduction -- Up to $4,000 above-the-line deduction for qualified higher education expenses. Only available in lieu of AOC or Lifetime Learning Credit. Race horses -- A three-year recovery period will apply to certain race horses placed in service during 2015 and 2016. Nonbusiness energy property credit -- The up to $500 credit for qualified home energy improvements, which had expired after 2014, is now extended through 2016. Energy Star requirements are modified.

Program Integrity Provisions Filing date now Jan. 31st for W-2s reporting wages and 1099-MISC reporting nonemployee compensation Refunds delayed if return has EIC or refundable CTC ITINs will expire on a set schedule; or after 3 years of non-use No retroactive EIC, CTC, or AOC claims with newly acquired ITINs or SSNs Due diligence expanded to include CTC, ACTC, and AOC claims Accelerated W-2 filing date – Employers now required to file W-2 and certain 1099-MISC with the appropriate agency by January 31. Refund delays -- Refund claims based even partially on the EIC and/or refundable CTC will not be paid before February 15. This is to allow time to match tax return entries with W-2 data. ITINs – ITINs with middle digits 78 or 79 (i.e. 9XX-78-XXXX through 9XX-79-XXXX) will expire Jan. 1, 2017. Additionally, an ITIN will expire after 3 years of non-use (e.g. a taxpayer doesn’t file any tax returns for tax years 2013-2015.) Affected ITIN holders who intend to file a tax return must renew their ITINs by completing a W-7. Our Certifying Acceptance Agents (CAAs) can help taxpayers complete their ITIN renewal application for free. Renewal applications do not have to be attached to a tax return. Retroactive EIC, CTC, or AOC claims -- Taxpayers will not be able to claim the EIC, CTC, or AOC for any year for which the taxpayer or taxpayer’s child is issued the required tax identification number (ITIN or SSN) after the due date of the return. For example, a taxpayer who is issued an SSN in February of 2016 cannot claim retroactively claim the EIC for 2012, 2013, or 2014 even if all other requirements are met. Due diligence expansion -- Paid tax preparers who prepare returns with the CTC, ACTC, or AOC will have to meet due diligence requirements similar to those applicable to EIC claims.

Program Integrity Provisions (cont.) New 10-year disallowance period for improper CTC and AOC claims Expansion of 20% accuracy related penalty to erroneous claims for refundable credits including the EIC, ACTC, and AOC. Increase in paid preparer penalty for willful or reckless conduct Beginning in TS18, colleges and universities must report amount actually paid (not billed) on Form 1098-T Improper CTC and AOC claims -- The current provision barring an individual from claiming the EIC for ten years if they are convicted of fraud or two years for reckless or intentional disregard of the rules is expanded to include the CTC and AOC. Such individuals will also have to provide additional information to the IRS before being allowed to claim the credit again. Accuracy related penalty -- The 20% accuracy related penalty will apply to erroneous claims for refundable credits including the EIC. Paid preparer penalty -- The penalty for paid tax preparers who engage in willful or reckless conduct will be the greater of 75% of income with respect to the return (increased from 50% of income) or $5,000. Form 1098-T reporting -- Educational institutions will be required to report only qualified tuition and related expenses actually paid on Form 1098-T. The option to report amounts billed will no longer be available. After temporary relief from this provision was granted for 2016 by the IRS, this provision is now effective for expenses paid after December 31, 2016 for education furnished in academic periods starting in 2017.

Other Provisions Section 529 plan improvements ABLE account improvements Rollovers to SIMPLE plans 529 plan improvements -- Qualified higher education expenses are expanded to include computer equipment and technology. Distributions used for tuition that are later refunded will be treated as a qualified distribution if the amount is re-contributed to a 529 account within 60 days. ABLE account improvements -- Individuals may now set up ABLE accounts in any state they wish to. The requirement that the account be located in the beneficiary’s state of residency is eliminated. Rollovers to SIMPLE plans -- Taxpayers may rollover amounts from employer-sponsored retirement plans, such as a 401(k) plan, to a SIMPLE plan provided the SIMPLE plan has existed for at least two years.

Questions?

How can H&R Block help?  Let us take a Second Look® at your tax returns for free If we do a Second Look on your prior year returns, you can get rid of that nagging worry that your return may be incorrect If we find it’s correct, we’ll support your return with our H&R Block guarantee If we find mistakes, we’ll help you get it right. We can help clients and non-clients with an IRS/taxing authority notice or provide audit representation through our Audit Services Two levels of assistance: Help in understanding correspondence and advice on what to do Communicate directly with the tax authority on the client’s behalf and/or representing the client at an audit

Why risk a mistake on your taxes? Why seek a tax expert… Between 2001 and 2013, IRS compliance activity increased significantly: Face-to-face audits by 66%. Mail audits by 103%. Unpaid balance investigations by 79%. Automated underreporter investigations by 272%. Lien filing and levies issues by 127%. Taxpayers' appeals cases by 81%. Accordingly, from 2001 to 2014, the IRS increased the number of notices it sent annually by 570%. Why risk a mistake on your taxes?

Taxes are complicated… Taxes are complicated and the tax code even more so! Ask yourself: Are you keeping up with the latest tax law changes? Are you applying new tax laws correctly and to your advantage? Are you sure you are getting the most refund possible? If the IRS calls are you prepared to answer? If you answered NO to any of these questions, schedule an appointment TODAY with a tax expert at H&R Block.

Objective: Close with a compelling call to action Review your key points, possibly paraphrasing them What questions did the audience ask? What are the key points of this tax topic for this audience? Describe the action you want the audience to consider Encourage attendees to get a Second Look at their prior year returns (see below) Describe the benefits to listeners for taking action with a Second Look “What this means to you…” Ensure your taxes were done correctly Maximize your return with expert tax planning assistance Close with a memorable statement Personal story specifically highlighting savings for a client related to this tax topic   Distribute business cards while asking for any final questions Pick-up contact sheet and/or personal contact cards Ask if any audience members would like to discuss any personal matters Schedule appointments if applicable “I would be honored/happy/etc to help you with your tax questions or issues.” “Would you like to schedule an appointment to discuss these issues?”