2011 TRAINING PROGRAM Emphasis on Self-training using the internet New Training web site – TaxPrep4Free.org Use of Mentors and Work Shops Familiarization Training – Principally for New Volunteers - How to Use Tax Wise - 8 Problems Federal and NJ Tax Law Modules Note – 2011 Tax Law Modules – In Process - Available on NJ Website Mid/Late Dec

JANUARY, 2012 TRAINING TOPICS What’s New, 2011 Tax Law and Tax Wise Administrative topics NJ Proficiency Problem – Review of Completed Problem NJ Division of Taxation & IRS Presentations Site Assignments

CERTIFICATION REQUIREMENTS (1) Four 4491-W Problems Complete and Review by Assigned Mentor by end of December New Volunteers – 2010 Problems with Refund Monitors Moore, Baylor, Fleming, Sterling TaxPrep4Free.org  Training  Proficiency

CERTIFICATION REQUIREMENTS Returning Volunteers 2011 Problems (from 2011 Pub 4491-W): Moore, Fleming, Sterling & Kent Refund monitors for Moore, Fleming, Sterling TaxPrep4Free.org  Training  What’s New for 2011  TY W Refund Monitors Mentors will be assigned at this meeting

CERTIFICATION REQUIREMENTS (Cont’d) (2)2011 IRS Test - Complete by Jan 12 Includes Standards of Conduct test (New) for All Volunteers Counselors must complete Basic, Intermediate and Advanced tests Complete the test questions in Pub 6744 (some require preparation of a tax return) Submit your answers –Enter your answers on-line (preferred) which will give you immediate feedback on your score. [On-line questions may be worded differently than Pub 6744]. Print your certificates. –Or, complete the answer sheet in Pub 6744 and give to Joe McFadden

CERTIFICATION REQUIREMENTS (Cont’d) (3)NJ Proficiency Exercise Problem Available on NJ Web Site by End of Dec. Complete Using NJ 2011 Software Available Early Jan. Due Date TBD To Be Reviewed/Discussed at Jan Meeting and/or Jan Work Shops

New Topics on IRS Test Sale of securities (new form required) Lump sum Social Security payments Repayment of first-time homebuyers credit Penalty on early withdrawal from retirement plans

SALE OF SECURITIES – 1099B Revised 1099-B in 2011 Brokers Must Report Cost, Date of Acquisition, Long or Short Term for Covered Securities OR Indicate if Security is Uncovered Security The only Covered Security for 2011 is Stock Acquired in 2011 (But Not Stock Acquired as Part of a DRIP) –But Brokers May Report Cost, etc for Sales of Stock Acquired before 2011 If Info is Available Reporting of Cost, etc. for Uncovered Securities, Mutual Funds, Bonds, etc., Will Be Phased In Over Next 2 Years

CAPITAL GAINS WORKSHEET

The worksheet will populate Form 8949 Pg 1 (short term) and Pg 2 (long term): (A) Cost Basis Shown on 1099-B (Box 3) (B) Cost Basis Not Shown on 1099-B (C) No 1099-B Rec’d For Sale (Rare) Sch D is populated with the totals

ADJUSTMENTS TO GAIN/LOSS New Worksheet Also Provides For Adjusting Reported Gain/Loss On Sale Column (b) - Insert Code to Indicate Type of Adj. Such As Exclude Gain on Home Sale or Incorrect 1099-B Column (g) – Amount of Adj. to Reported Gain/Loss NOTE – Codes for Types of Adj. are in Pub 4012, Tab 2, page 2-16

LUMP SUM SOCIAL SECURITY PAYMENTS 2011 portion of lump sum goes on the bottom part of Social Security worksheet:

LUMP SUM SOCIAL SECURITY PAYMENTS (continued) For the portions of lump sum from prior years, link to Lump-Sum Worksheet from “Amounts taxable from previous years” See example in TaxPrep4Free  Training  What’s New for 2011  Lump Sum Payments (in right margin)

REPAYMENT OF FIRST-TIME HOMEBUYERS CREDIT Taxpayers who received First Time Homebuyers Credit in 2008 ($7,500) must repay Over 15 Years beginning in 2010.| - Another payment is due in 2011 Use Form 5405 Page 2, Part IV as shown on the next page Sale of home is out-of-scope

PENALTY ON EARLY WITHDRAWAL FROM RETIREMENT PLANS Early Withdrawal From Qualified Retirement Plans Results in 10% Penalty (Code 1 in Box 7 of 1099-R) If Exception Applies, Penalty Can Be Eliminated/Reduced on Form 5329, Part 1 Record Amount of Exception and Related Code on Line 2 of Form 5329

COMMON EXCEPTIONS TO PENALTY FOR EARLY DISTRIBUTIONS For Higher Education Expenses Due to Total and Permanent Disability For Unreimbursed Medical Expenses In Excess of 7.5% of AGI To Unemployed Persons for Health Insurance Premiums For Purchase of First Home - Up to $10,000 of Penalty Error on 1099-R

2011 SPECIAL TOPICS - TRAINED VOLUNTEERS ONLY Form 1099-Q, Qualified Education Distributions Form 8606, Non-Deductible IRA Contributions/Distributions Form 5405, Repayment of st Time Homebuyers Credit Form 5329 Part 1, Elimination of 10% Penalty On Early Withdrawal From Retirement Plans Lump Sum Social Security payments Part Year NJ Resident Tax Return Foreclosure on Principal Residence and Cancellation of Debt (COD) - Must Pass Special IRS Test Health Savings Accounts (HSA) – Must Pass Special IRS Test