1 ARIZONA TRAINING 2011 WHAT'S NEW IN 2011? What we are going to cover:  Training and Certification  2010 Tax Relief Act - New tax provisions in 2011  Items affecting tax preparation in 2011 and beyond

2 ARIZONA TRAINING 2011 TRAINING & CERTIFICATION  Counselors – six (6) steps  Noncounselors – four (4) steps  All must pass IRS Standards of Conduct test with 80% accuracy  All must sign Volunteer Standards of Conduct  All Counselors must pass IRS test at 80%, Standards of Conduct, Basic, Intermediate & Advanced levels, using Pub 6744 or IRS Link & Learn test system

3 ARIZONA TRAINING 2011

4 Volunteer Training Process For Volunteers Not Providing Tax Assistance

5 ARIZONA TRAINING 2011 Standards of Conduct Training  Training module in Pub 6744 and Link and Learn  Includes 6 Standards of Conduct  Includes 10 Quality Site Requirements  All volunteers must answer 4 of 5 questions correctly

6 ARIZONA TRAINING 2011 Volunteer Standards of Conduct Agreement – VITA/TCE Programs Form 13615

7 ARIZONA TRAINING 2011

8

9

10 ARIZONA TRAINING 2011

11 ARIZONA TRAINING 2011 TRAINING PACKETS  Link & Learn Training has been redeveloped  More people use online for tax law training and learning TaxWise  IRS - SPEC's ultimate goal is to have all partners transitioned to e-learning products and training by 2014

12 ARIZONA TRAINING 2011 Redesign of Link & Learn Taxes

13 ARIZONA TRAINING 2011 Training on TaxWise  Train on TW10 for AZ through Jan 2012  Train on TW returns  TWO EROs can setup training users for both TW10 and TW11  TW11 users will carryover to TW11  Desktop EROs can setup TWO training users for both TW10 and TW11  Training TWO will be deactived 2/12  Procedure available on AZ TaxAide

14 ARIZONA TRAINING 2011 TAX RATES CONTINUED*  The 2010 Tax Relief Act:  Extends all individual rates at 10, 15, 25, 28, 33 and 35 percent  Continues for two years – through December 31, 2012 * Affects 2011 and 2012 tax returns

15 ARIZONA TRAINING 2011 PAYROLL TAX CUT  The 2010 Tax Relief Act reduces the employee-share of Social Security taxes from 6.2 % percent to 4.2 %  The change is for wages earned in calendar year 2011 up to the taxable wage base of $106,800  Self-employed individuals will pay 10.4 % (down from 12.4%)on self-employment income up to the threshold

16 ARIZONA TRAINING 2011 QUALIFIED CAPITAL GAINS AND DIVIDENDS*  Qualified capital gains and dividends currently are taxed at a maximum rate of 15 percent (zero percent for taxpayers in the 10 and 15 percent income tax brackets)  The 2010 Tax Relief Act continues for two years – until December 31, 2012 * Affects 2011 and 2012 tax returns

17 ARIZONA TRAINING 2011 Schedule D and Form 8949  Schedule D for 2011 – has new reporting lines using Form 8949 (New in 2011)  Form 8949 has three boxes that need to be completed for each taxpayer  Box A – Cost basis shown on 1099-B  Box B – Cost basis not shown on 1099-B  Box C – No 1099-B received

18 ARIZONA TRAINING 2011 SCH D & FORM 8949, cont’d  For each asset sold, the 1099 will have an A/B/C designator  Assets can no longer be entered on Schedule D  All assets information goes on Forms 8949  Page 1 is for short term; Page 2 is for long term

19 ARIZONA TRAINING 2011 SCH D & FORM 8949, cont’d Tab 2  In TaxWise, Capital Gain or Loss Transactions Worksheet (Cap Gain Wkt) will load 8949s and put assets on appropriate pages  Long Term/Short Term Capital Gains/Losses Wkts will no longer be in Forms list  A/B/C designators will be located on Cap Gain Wkt under 1099 column  Column (b) is code for adjustments to gain/loss, wash sales, exclusion of gain on main home, etc  Column (g) is the amount of the adjustment

20 ARIZONA TRAINING 2011 SCH D & FORM 8949, cont’d  Column (b) is for gain/loss adjustment codes; see F1 help and Form 8949 instructions  Column (g) is for amount of adjustment

21 ARIZONA TRAINING 2011

22 ARIZONA TRAINING 2011 CAPITAL GAINS ENTRY TAXWISE

23 ARIZONA TRAINING 2011 Capital Gains Transactions – 2011

24 ARIZONA TRAINING 2011

25 ARIZONA TRAINING 2011

26 ARIZONA TRAINING 2011

27 ARIZONA TRAINING 2011

28 ARIZONA TRAINING – Page 1

29 ARIZONA TRAINING 2011 Standard Deduction/Exemptions  Standard deduction  MFJ - $11,600 (up $200)  Head of Household and $8,500 (up $100)  Single/MFS - $5,800 (up $100)  Personal/Dependency Exemption  $3,700 (up $50)

30 ARIZONA TRAINING 2011 CHILD TAX CREDIT  The 2010 Tax Relief Act extends the $1,000 child tax credit for two years, through December 31,  The qualifying child must be under age 17 at the close of the year and satisfy relationship, residency, support, citizenship, and dependent tests.

31 ARIZONA TRAINING 2011 EITC AND DEPENDENT CARE  Extends the enhanced EITC for two years (i.e., three or more qualifying children)  Extends the enhanced dependent care credit and eligible expenses for two years  From $2,400 to $3,000 and $4,800 to $6,000 for more than one qualifying individual  Maximum credit from 30 % to 35 % of qualifying expenses

32 ARIZONA TRAINING 2011 EITC  Earned Income and adjusted gross income (AGI) must each be less than:  $43,998 ($49,078 married filing jointly) with three or more qualifying children  $40,964 ($46,044 married filing jointly) with two qualifying children  $36,052 ($41,132 married filing jointly) with one qualifying child  $13,660 ($18,740 married filing jointly) with no qualifying children

33 ARIZONA TRAINING 2011 EITC (continued)  Tax Year 2011 maximum credit:  $5,751 - three or more qualifying children  $5,112 - two qualifying children  $3,094 - one qualifying child  $464 - no qualifying children  Investment income must be $3,150 or less for the year.  Advance EITC no longer exists.

34 ARIZONA TRAINING 2011

35 ARIZONA TRAINING 2011 AMT PATCH*  The 2010 Tax Relief Act increases the exemption amounts for 2010 and 2011:  $47,450 for individual taxpayers  $72,450 for married taxpayers filing jointly and surviving spouses  $36,225 for married couples filing separately. * Affects 2011 and 2012 tax returns

36 ARIZONA TRAINING 2011 Standard Mileage Rates  Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:  51 cents/mile for business miles (55.5 cents effective 07/01/2011)  19 cents/ mile driven for medical or moving purposes  14 cents per mile driven in service of charitable organizations

37 ARIZONA TRAINING 2011 LTC Premiums deduction  For 2011, the maximum amount of qualified long-term care premiums includible as medical expenses has increased on Schedule A (Form 1040) Itemized Deductions (per person)  $340 - Age 40 or under  $640 - Age 41 to 50  $1,270 - Age 51 to 60  $3,390 - Age 61 to 70  $4,240 - Age 71 and over

38 ARIZONA TRAINING 2011 EXTENDERS  Qualified Charitable Distributions from certain individual retirement plans for charitable purposes (thru 2011)  Deduction for educator expenses in figuring AGI (thru 2011)  Tuition and fees deduction in figuring AGI (thru 2011)  Itemized deduction for state and local general sales taxes (thru 2011)

39 ARIZONA TRAINING 2011 EXTENDERS (continued)  American Oppor Tax Credit (thru 2012)  Child tax credit of $1,000 and the earned income threshold of $3,000 for the child tax credit (thru 2012)  Private mortgage insurance deduction (through 2011)  Non-business energy property credit (with some limitations) (thru 2011)  EITC increased credit for three or more qualifying children (thru 2012)

40 ARIZONA TRAINING 2011 Non-business Energy Property Credit  This credit has been extended for 1 year with a reduced rate of 10%.  Amounts provided by subsidized federal, state, or local energy financing do not qualify for the credit.  The energy-efficiency standards for qualified natural gas, propane, or oil furnaces, or hot water boilers have been increased.

41 ARIZONA TRAINING 2011 Non-business Energy Property Credit (continued)  For 2011, the credit is limited as follows.  Total combined credit limit of $500 for all tax years after 2005 (Form 5695, Part I).  Combined credit limit of $200 for windows for all the amount of your tax years after  Maximum credit for residential energy property costs:  $50 for any advanced main air circulating fan;  $150 for any qualified natural gas, propane, or oil furnace, or hot water boiler;  $300 for any item of energy-efficient building property.

42 ARIZONA TRAINING 2011 Residential Energy Credits

43 ARIZONA TRAINING 2011 IRS CHANGES FOR VITA-TCE  Lump-sum social security payments are included as Basic competency  Last year, only current year taxability in scope, but use of numbers from previous year returns in scope this year  No second copy of Form 8879 and income attachments, i.e. W2s’, 1099s’, etc retained at the site or by the ERO  SPEC no longer requires copy for storage; taxpayer still signs single copy prior to efile submission and retains the copy with their tax records

44 ARIZONA TRAINING 2011 NEW PREPARER USE FORM  Dedicated to Preparer’s Use Fields  Prep Use Fields no longer on Main Info Sheet  Prep Use Fields increase from 15 to 25  Standardized to 15-character alphanumeric  Enter up to 25 questions in column A

45 ARIZONA TRAINING 2011 PREPARER USE FORM, cont’d

46 ARIZONA TRAINING 2011

47 ARIZONA TRAINING 2011 Intake/Interview & Quality Review Sheet Form C

48 ARIZONA TRAINING 2011

49 ARIZONA TRAINING 2011

50 ARIZONA TRAINING 2011

51 ARIZONA TRAINING 2011

52 ARIZONA TRAINING 2011

53 ARIZONA TRAINING 2011

54 ARIZONA TRAINING 2011

55 ARIZONA TRAINING 2011

56 ARIZONA TRAINING 2011

57 ARIZONA TRAINING 2011

58 ARIZONA TRAINING 2011 TaxWise Online Enhancements  TWO Users have the ability to utilize the same functions keys which work with the Desktop platform. This will make the transition from Desktop to TWO easier.  F1 – Opens program Help  F3 – Toggles between required/not required  F8 – Toggles the override feature  F9- Links (already available)

59 ARIZONA TRAINING 2011 ITIN Returns  W-2 will not be auto-populated with SSN  Must manually enter SSN

60 ARIZONA TRAINING 2011 RECORD KEEPING  Beginning 2011 tax filing season, we no longer will retain and send to the IRS:  A signed copy of Form 8879 and income statements (W2, W2G and 1099s’)  AARP will no longer permit retaining a copy with supporting documents at the site except for use with Form 8453 mailing  This will require sites to revise their e-filing procedures

61 ARIZONA TRAINING 2011 Tracking of Returns for E-filing  Each site will track returns to make sure the ERO knows which returns are ready for e-filing  Returns must be transmitted and accepted in a timely manner.  Each site must adopt a method to protect TP data and privacy

62 ARIZONA TRAINING 2011 Taxpayer Data and Privacy Policy  The Site or ERO will not keep any forms or documents with a taxpayer identity and/or SSN that is not mandated by the IRS or a State. ie. Form 8453 if used for mailing

63 ARIZONA TRAINING 2011 Site sign-in/log sheet  In addition to using Return Stage in TaxWise;  The site will record on the site sign-in/log sheet the status of the return:  Ready to e-file;  Waiting for signature of Form 8879;  Return will be paper filed;  Waiting for Taxpayer documents  Question only – no return prepared

64 ARIZONA TRAINING 2011 Modified TaxAide Site Sign-In Sheet

65 ARIZONA TRAINING 2011 Activity Report for Reporting

66 ARIZONA TRAINING 2011 Activity Report for Tracking E-File Returns - Transmitted

67 ARIZONA TRAINING 2011 Activity Report for Tracking E- Files - Acknowledged

68 ARIZONA TRAINING 2011 Line Added on AZ140 for Unpaid Use Tax

69 NTTC/NTC ERO Training 2011

70 ARIZONA TRAINING 2011

71 ARIZONA TRAINING 2011

72 ARIZONA TRAINING 2011 WHAT’S NEW IN 2011 QUESTIONS? COMMENTS?