Lesson 1 Getting Started – Taxpayer Identification Numbers and Exemptions

Objectives Explain the importance of the taxpayer identification number (TIN) Identify the 3 types of Taxpayer Identification Numbers (TINs) Define the terms personal and dependency exemption Apply the dependency exemption tests for qualifying child/relative

Form Intake and Interview Sheet: Part I

Form Intake and Interview Sheet: Part II

Form Intake and Interview Sheet: Part III

Taxpayer Identification Numbers The Taxpayer Will Need TINs – What are they? TINs – Who Needs One? TINs – How to obtain them?

Individual Taxpayer Identification Numbers Who Needs an ITIN? Assisting Taxpayers with No ITIN Assisting Taxpayers with an ITIN

Individual Taxpayer Identification Numbers SSN/ITIN Mismatches ITIN Resources for Volunteers

Summing Up Taxpayer Identification Numbers Required Supporting Documentation TINs – SSNs, ATINs, ITINs ITIN/SSN Mismatches ITIN support

Exemptions Personal exemptions Dependency exemptions $3,300 each for Tax Year 2006 Additional exemption amounts of $500 for each displaced individual as a result of Hurricane Katrina (up to a maximum of $2,000, $1,000 for married filing separate)

Personal Exemptions – Taxpayer Exemption – Exemption for a Spouse

Dependency Exemptions The Uniformed Definition of a Child Qualifying Child Qualifying Relative

Tax Year 2006 Dependency Tests Qualifying Child Tie-Breaker Rule Qualifying Relative The Dependent Worksheets

Tax Year 2006 Dependency Test Qualifying Child Qualifying Child Age Test Support Test Residence Test Citizen or Resident Test

Tax Year 2006 Dependency Test Qualifying Relative Relationship or Member of Household Not a Qualifying Child Gross Income Support Citizen or Resident

Tax Year 2006 Dependency Test Summary of the Rules Dependents on more than 1 return Joint Returns and Dependents Residency Requirement Dependent - Qualifying Child Dependent - Qualifying Relative

Tax Year 2006 Dependency Support Test A qualifying child must not have provided more than half of his/her own support The taxpayer must provide more than half of the support of a qualifying relative Exceptions to the Support Test

Support Test Sources of Support –The individual’s contributions –The taxpayer’s contributions –State contributions

Determining Support Worksheet for Determining Support What’s Included What’s Not included

Support Exceptions Multiple Support Custodial and Non-Custodial Parents

Tax Relief for Temporary Relocation Special rules apply for determining support for taxpayers relocated as a result of Hurricane Katrina, Rita, or Wilma.

Additional Exemption Amount Claim an additional exemption amount of $500 per person (up to $2,000 - $1,000 if married filing separately) for providing housing to a person displaced from main home as a result of Hurricane Katrina Claim an additional exemption amount on Form 8914, Exemption Amount for Taxpayers Housing Individuals displaced by Hurricane Katrina

Form 8158 Quality Review Checklist

Tax Year 2006 Tools for Determining Dependency Tools for Determining Personal and Dependency Exemptions Claiming the Exemption on the return Apply what you have learned

Summing Up Exemptions Exemptions impact taxable income Change in exemption tax law last year Use the Dependency Tools

Military Matters Explain how to obtain an SSN for children born abroad Determine whether an individual is a nonresident alien or a resident alien Determine if an exemption can be claimed for a nonresident spouse Determine if an individual can be claimed as a dependent

Children Born Abroad Must have a Tax Identification Number to be claimed as a dependent

Determining Residency Status Resident Nonresident Dual Status

Residency Status Tests Green Card Substantial Presence

Exceptions to the Substantial Presence Test Commuter Short stay Medical condition Exempt Individual

Residency Status Part Year Resident Enlistees as Resident Aliens Choices – Nonresident Spouse Dual-Status Aliens Undocumented Aliens

Exemptions Foreign Spouse Married Filing Separate

Dependents – Armed Forces Members Change in Tax Law Last Year Claiming a Dependent Citizen and Residency Test

Summing Up This Military Segment Resident or nonresident Personal exemptions Dependents