Volunteer Income Tax Preparation January 2013 ACCT 4210 Judith Stilz Ogden Clayton State University http://faculty.clayton.edu/jogden/ judithogden@clayton.edu

What is VITA? The VITA Program offers free tax help to low- to moderate-income (generally, $49,000 and below) people who cannot prepare their own tax returns. Certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing.

What is VITA? In Atlanta, VITA is a joint project of the IRS, and the Atlanta Prosperity Campaign (APC), located in the Atlanta Food Bank. There are 40 sites in the Atlanta area. The Atlanta Prosperity Campaign http://www.atlantaprosperity.org/

Volunteers must Participate in Process Based Training Pass Volunteer Assistors Test(s) Link & Learn Taxes http://www.irs.gov/app/vita/index.jsp There are seven modules to the current application: Basic, Intermediate, Advanced, Military, International, Puerto Rico, Foreign Student. To be a preparer at Clayton State, you must pass the Basic, Intermediate, and Advanced . You must get an 80% or better, and you only get two attempts. You must also do Cancellation of Debt (COD) and  Health Savings Accounts (HSA) The tests are at the end of each module. Volunteer must submit a signed Volunteer Agreement with their score and certificate (Form 13615) to their site coordinator by January 26, 2013.

Volunteers must Complete the Quality Reviewer Training http://irs.linklearn.webtechteam.com/13614c/index_files/frame.html Complete the Cancellation of Debt (COD) and  Health Savings Accounts (HSA) training. Complete the Volunteer Standards of Conduct training found in Pub 4961, http://www.irs.gov/pub/irs-pdf/p4961.pdf and pass the test.

Link & Learn Taxes e-Learning http://www.irs.gov/app/vita/index.jsp For Training and the tests: Click on the Basic, Intermediate, or Advanced. You can do the training online, and then take the test. When you pass all the tests, you print and sign a form to give to me. All tests must be completed by Jan 26th.

Practice Lab 2012 Tax Software The Practice Lab, which is programmed for Tax Year 2011, provides volunteers the opportunity to gain practical experience with the actual software that will be used at most sites when assisting taxpayers. Students may find the Practice Lab helpful for completing their practice exercises, comprehensive problems, and test.

Practice Lab You can also practice using the software, and may want to do the exam returns using this practice software. On Link and Learn page, scroll down and click onto Tax Software Practice Lab. Click on: Leave IRS Site. Enter the Password: learntwo. The first time you go there you should select “Create New User.” Then enter your zip code and email address. The system will give you a 6 digit User ID. You will be using a number of different User IDs and passwords during tax season, so you will want to keep track of them.

Additional Training The APC also provides live training in Atlanta, Cobb and Decatur, as well as Webinar training. You are not required to attend, but the Webinars may be helpful. To register, go to: http://apc.volunteerhub.com/Events/Browse.aspx

VITA Training Materials Using 2011 materials. Pub 4491 Student Training Guide Pub 4491-W, Comprehensive Problems and Exercises Workbook Form 6744 Volunteer Assistor’s Test/Retest (online better) SOME OF THESE ARE ON YOUR CD. Pub 4012 Volunteer Resource Guide ON the CD. Must take to site Pub 17 - Must take to site

VITA Volunteers Greeters: Provides taxpayers with intake forms to complete and help with completion of forms as necessary. Give taxpayers Intake/Interview & Quality Review Sheet (Form 13614-C) Section A, Parts I-V, to complete. Ensures that taxpayers have all necessary documents, including a picture ID and social security cards. Interviewers (At Clayton, the Preparers do this) Ensures that taxpayers have all necessary documents. Ensures the taxpayer qualifies for VITA assistance. Review completed Intake Sheet with taxpayer and complete Section B.

VITA Volunteers Preparers Prepares tax returns for taxpayers who qualify for VITA assistance. Tax returns are typically a simple 1040, 1040A, or 1040-EZ unless the volunteer wants to participate in further training. Answers basic taxpayer questions and refers taxpayers for additional assistance as necessary to local the IRS office, etc. Informs clients about other services available through the Atlanta Prosperity Campaign and its partners.

VITA Volunteers Quality Reviewers EVERY RETURN MUST BE REVIEWED. Performs a quality review of returns prepared by volunteer tax preparers for accuracy and completeness and Completes Section C of Intake Sheet. Prepares tax returns as needed depending on site volume. Informs clients about other services available through the Atlanta Prosperity Campaign and its partners. Complete page 3 of Intake Sheet

Volunteer Standards of Conduct 1.Follow the Quality Site Requirements (QSR). 2. Not accept payment or solicit donations for federal or state tax return preparation. 3. Not solicit business from taxpayers I assist or use the knowledge I gained (their information) about them for any direct or indirect personal benefit for me or any other specific individual.

Volunteer Standards of Conduct 4. Not knowingly prepare false returns. 5. Not engage in criminal, infamous, dishonest, notoriously disgraceful conduct, or any other conduct deemed to have a negative effect on the VITA/TCE Programs. 6. Treat all taxpayers in a professional, courteous, and respectful manner.

OUR PROCEDURES To begin, we will work in pairs. Any returning volunteers will initially conduct the Quality Reviews, but eventually everyone should be able to do this. Coordinator should not be doing the review, or preparing returns. All volunteers must sign in and out. (I turn into APC.) Remember that privacy and confidentiality of taxpayer data is critical. (Make sure no one can see your computer screen.)

OUR PROCEDURES We will receive Tax Alerts and other updates the entire tax season. These are very important. I will forward emails to you. It is critical that you read email messages from me. I will also keep a binder that contains these alerts and will be available for you to review. (IRS will look for this.)

OUR PROCEDURES We have been chosen as a test site to offer to prepare FAFSA applications. Details will follow, but we must have prepared their tax return in order to prepare the FAFSA application.

OUR PROCEDURES Taxpayers can have their refunds deposited in their bank accounts. The IRS will no longer give taxpayers a date for their refunds to show up in their accounts. We will tell them 7-10 days. We are also required to have them complete a 5 question survey for demographic information. If they refuse, we cannot file electronically. April 28th will be Volunteer Appreciation Day sponsored by the APC.

IDENTITY THEFT Taxpayers who have been the victims of Identity Theft may have been given PIN numbers by the IRS. Be sure that IP PIN is input correctly on the tax return

Visits We will receive visits from the IRS and/or VITA. Some will be announced; some will involve secret shoppers.

Who is eligible for our help? Forms 1040EZ, 1040A, and simple 1040s-NO schedule C or E, or most schedule D.s. If they have a business, tell them to use Turbo Tax and call their Turbo Tax support team. (A location may be set up to help small businesses.) 2012 returns ONLY Income of $49,000 or less. State returns for Georgia ONLY. Do only what you feel comfortable doing, and what you have time to do.

Items that Taxpayers MUST bring to the VITA/TCE site Proof of identification Social Security Cards for TP, spouse and dependents and/or a Social Security Number verification letter issued by the Social Security Administration Individual Taxpayer Identification Number (ITIN) assignment letter for TP, spouse and dependents Proof of foreign status, if applying for an ITIN Birth dates for TP, spouse, and dependents on the tax return They can not longer use previous years returns for this information.

Items that Taxpayers must bring to the VITA/TCE site Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers Interest and dividend statements from banks (Forms 1099) A copy of last year’s federal and state returns if available Bank routing numbers and account numbers for Direct Deposit Total paid for daycare provider and the daycare provider's tax identifying number (the provider's Social Security Number or the provider's business Employer Identification Number) To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms.

It is extremely important that each person use the correct Social Security Number. The most accurate information is usually located on a person’s original Social Security card.  Each year hundreds of thousands of returns are delayed in processing, or credit/deductions are disallowed because names and Social Security Numbers do not match Social Security Administration records.  Make sure we have the Taxpayers’ phone numbers and email addresses!

Who must file a return? Income over certain level. A combination of gross income filing status, and age. Due a refund Eligible for EIC Additional child tax credit Health coverage tax credit. Form 8885 First-time homebuyers credit. Form 5405 American opportunity Credit Sold a home Will you owe any special tax on a qualified retirement plan (including an individual retirement account (IRA) or medical savings account (MSA)?

Who must file a return? Must pay social security tax (Self-employment income.) Owe social security and Medicare tax on tips you did not report to your employer See Publication 4012, pages A-1 through A-3, for a useful charts.

Partial List of Gross Income Items (slide 1 of 2) See Page D-1 of Pub 4012 Wages, salaries, bonuses, commissions Alimony Annuities Awards Back pay Breach of contract Business income/Self-employment income Compensations for personal services Debts forgiven Director’s fees Disability benefits (employer-funded) Discounts Dividends Employee awards Employee bonuses Estate and trust income Farm income Fees Gains from sale of property or securities Gambling winnings Hobby income Interest Interest on life insurance dividends IRA distributions Jury duty fees Military pay (not exempt from taxation) Military pension Notary fees Partnership, Estate and S-Corporation income (taxpayer’s share) Pensions Prizes Punitive damage

Partial List of Gross Income Items (slide 2 of 2) Railroad retirement—Tier I (portion may be taxable) Railroad retirement—Tier II Refund of state taxes* Rents (gross rent) Rewards Royalties Severance pay Self-employment Non-employee compensation Social security payment (portion may be taxable) Supplemental unemployment benefits Taxable scholarships and grants Tips and gratuities Unemployment compensation

Examples of Non-Taxable Income Aid to Families with Dependent Children (AFDC) Child support Damages for physical injury (other than punitive) Death payments Dividends on life insurance Federal Employees’ Compensation Act payments Federal income tax refunds Gifts, bequests, and inheritances Insurance proceeds • Accident • Casualty • Health • Life Interest on tax-free securities Interest on EE/I bonds redeemed for qualified higher education expenses Meals and lodging for the convenience of employer Payments to the beneficiary of a deceased employee Relocation payments or payments in lieu of worker’s compensation Rental allowance of clergyman Sickness and injury payments Supplemental Security Income (SSI) Temporary Assistance for Needy Families (TANF) Veterans’ benefits Welfare payments (including TANF) and food stamps Worker’s compensation and similar payments

Using TaxWise Returns will be prepared and filed online. Webpage: https://twonline.taxwise.com. Make sure your browser is Internet Explorer. You cannot use Firefox, etc. You will need a client ID, User Name and Password. The client ID is 243444. We will set up your user name.

Using TaxWise and Pub 4012 Flow Charts: 1-1 and 8-8 Enter TaxWise 7-1 Bottom of 7-2: Shortcuts. Use sparingly. Start with online Interview 8-2 Do NOT override. Let the quality reviewer do it if Necessary. 8-4: To add information about dependents, click edit. Go next to Main Information Sheet. Form Tree on the left. 8-5: “get the Red out.” Yellow blocks are calculated entries 10-2: Always Run Diagnostics

Complete the Return Run diagnostic Quality review Make any corrections Print, have taxpayer(s) sign, give taxpayer a copy Create an electronic file

Print/Keep these copies (Tentative) 2 Form 8879 (We keep 1) 3 Form 8453 (We keep 2) 1 W-2 Disclosure Forms