Familiarization Training NJ TAX-AIDE 2014 – 2015 SOMERSET COUNTY 1

2 Purpose of this Training Understand policy & procedures of AARP Tax- Aide Program Understand what is expected of volunteers Understand typical tax documents Understand how to access & use TaxWise Online (TWO) Understand how to prepare a simple tax return using TWO

AARP Tax-Aide Charitable, non-profit program administered by AARP Foundation Free, nationwide confidential service Help low- to mid-income taxpayers with special attention to age 60+ Answer tax questions & prepare returns Funded 1/3 AARP, 2/3 IRS Tax Counseling for the Elderly (TCE) 3

Mission of AARP Tax-Aide To provide high-quality, free income tax assistance & tax form preparation to the greatest number of low- & moderate-income taxpayers which will produce the most beneficial result for the taxpayers we serve No income or age limits Only limits are on complexity of return 4

National, Volunteer-Run Program TY 2013 National Statistics Tax-Aide started in 1968 and is now the largest nationwide, volunteer-run free tax service Taxpayers served: 2.6 million Federal Tax Returns prepared: 1.65 M Volunteers: 35,000 5

Somerset County Tax-Aide Program In Somerset County: For 2013 tax season, we completed over 1,823 returns at 6 sites Hillsborough, Manville, Raritan, Franklin, Bridgewater, Green Brook 100% e-filed on the computer Approximately 60 volunteers 6

AARP Tax-Aide Counselors Are trained Become certified Are assigned to a site Provide free tax counseling Report their service Promote the program 7

AARP Tax-Aide Counselors Are Trained In Federal & NJ tax law In computer tax preparation software (TaxWise) Use personal or loaner computers In administrative requirements In use of appropriate reference materials Publications, forms, schedules provided 8

Publications & Tools Volunteer Resource Guide (spiral bound) (Pub 4012) Process-Based Training (Pub 4491) Your Federal Income Tax (Pub 17) NJ What’s In, What’s Out lists Site Sign-In Sheet & Activity Report Interview & Intake Sheets (Form C) IRS 1040 Instruction Book NJ 1040 Instruction Book & GIT Books 9

Important Reference Websites Somerset County website Training resources Proficiency problem scenarios & refund monitors Volunteer portal includes news, cybertax notifications, links for administration for AARP Tax-Aide volunteers 10

Confidentiality, Privacy & Security Keep taxpayer info strictly confidential Do not retain taxpayer documents Do not leave computer unattended if it has taxpayer data All sites use TaxWise Online where data is stored on secure servers 11

Insurance Coverage & Liability Travel accident insurance coverage if on Tax-Aide business Insurance is supplemental to Medicare or its equivalent & covers medical expenses &/or death only. Does not cover personal property such as cars, computers, etc. Notify district coordinator ASAP By congressional law, counselors are not liable if they follow the rules 12

Types Of Returns You Can/Can’t Prepare Prepare only those returns for which you have been trained & certified & which do not appear on the NJ “Cannot Do” List Refer taxpayer to experienced counselor if tax subject is in Training Module “Topics for Experienced Counselors “ or if you are not comfortable with a particular tax situation Refer taxpayer to paid tax preparer if anything on return is Out Of Scope Do not prepare a tax return when you suspect information is untruthful 13

Counselor Certification Requirements Pass IRS tests with grade of 80%+ (Volunteer Standards of Conduct – Ethics & Advanced level tests) Open book test Demonstrate proficiency in preparing tax returns Complete 3 problems (using 2013 tax law & software) + 1 problem focusing on 2014 changes (using 2014 software) Sign Volunteer Standards of Conduct 14

Getting Started Overall Process & The Interview IRS Form C Intake/Interview Sheet 15

Overall Process Client calls Tax Appointment phone line requesting tax help Client is assigned to site coordinator/volunteer via Tax volunteer calls client to set up appointment & reviews Initial Phone Sheet info with client Client arrives at tax site & completes Intake/Interview Sheet AARP policy mandates use of IRS Intake/Interview Sheet for every client Tax return prepared, quality reviewed, printed and e- filed NOTE: Refer to Process Overview handout for more details 16

Interviewing – The Key To A Good Return Focus on interviewing to be sure you gather all appropriate data to prepare accurate return Use information from Interview/Intake Sheet as starting point, but continue to probe for all relevant details Also review prior year return and ask about items that have changed Entering tax documents into TaxWise software is not sufficient to ensure accurate return Use Volunteer Reference Guide (IRS Pub 4012) decision trees and flow charts to ensure you are asking all the necessary questions to determine the full taxpayer situation 17

Effective Interviewing Speak clearly, simply, and loud enough Build rapport Have patience Reassure the taxpayer (“I understand”) Ask effective questions (e.g. - probing and open-ended) Allow the taxpayer time to respond Involve the taxpayer in the process 18

Verification of Taxpayer Identity Identity theft is a major IRS problem – verify every taxpayer’s identity Ask every taxpayer & spouse for photo ID Check accuracy of Social Security #s for taxpayer, spouse & every dependent Social Security card is preferred verification method If not available, can use SSA benefit statement or SSA letter that shows both SS # and name Inaccurate SS #s can cause return rejects & delays If taxpayer is not eligible for a SS #, can use Individual Taxpayer ID # (ITIN) Verify original copy of ITIN card or letter 19

Federal 1040 Overview IRS Form

IRS Form 1040 Everyone files a 1040 or a version of the 1040 (1040A, 1040EZ, etc) Split up into 4 general areas Taxpayer information Income Taxes & Credits Payments/Refunds Due and Signature 21

Taxpayer Information Includes: Personal information for taxpayer & spouse Presidential election campaign question Filing status Exemptions (including Dependents) Input into TaxWise on the Main Information Sheet 22

Form 1040 Page 1 TP Information 23 Personal Information 2013

Form 1040 Page 1 TP Information 24 Presidential Election Campaign

Form 1040 Page 1 TP Information 25 Filing Status

Form 1040 Page 1 TP Information 26 Exemptions (including Dependents)

Income All sources of income included in this section Income derived from various tax forms usually issued by employer, financial institution, government agency, etc Information from tax forms and client interview entered into the respective form or worksheet in TaxWise TaxWise puts the appropriate values into the 1040 Adjustments to income included in this section Final line on page is “Adjusted Gross Income” 27

1040 Page 1 Income 28 Income

1040 Page 1 Adjustments to Income 29 Adjustments

1040 Page 1 Income 30 Adjusted Gross Income (AGI)

Taxes & Credits Page 2 Taxable Income - Start with “Adjusted Gross Income” - Deduct Itemized or Standard Deduction - Deduct Personal Exemptions - Arrive at “Taxable Income” Calculate Tax on “Taxable income” Total Tax - Start with Calculated Tax on Taxable Income - Deduct non-refundable tax credits (Credits that reduce tax up to zero dollars) - Add other taxes - Bottom line is “Total Tax” 31

1040 Page 2 Taxes & Credits 32 Adjusted Gross Income (AGI)

1040 Page 2 Taxes & Credits 33 - Deduct Itemized or Standard Deductions

1040 Page 2 Taxes & Credits 34 - Deduct Exemptions

1040 Page 2 Taxes & Credits 35 = Arrive at Taxable Income

1040 Page 2 Taxes & Credits 36 Calculated Tax

1040 Page 2 Taxes & Credits 37 - Deduct Nonrefundable Credits

1040 Page 2 Taxes & Credits 38 + Add Other Taxes

1040 Page 2 Taxes & Credits 39 = Bottom Line is “Total Tax”

Payments/Refund/Owe Payments Apply tax withheld and estimated payments Add refundable credits (these credits can exceed the amount of the tax you owe and increase your refund) Total is your total payments Subtract total payments from total tax If payments are greater than total tax, you are entitled to a refund If payments are less than total tax, you owe taxes 40

Payments/Refund/Owe 41 - Apply tax withheld & estimated payments

Payments/Refund/Owe 42 - Apply refundable credits

Payments/Refund/Owe 43 - Total of all payments

Payments/Refund/Owe 44 = Bottom Line (A refund / You owe)

Direct Deposit/ Sign In the box below the refund is a spot for direct deposit information Bottom of the form is the signature box 45

Direct Deposit/Sign 46 Direct Deposit information

Payments/Refund/Owe/Sign 47 Signature Line

NJ-1040 Overview NJ

NJ 1040 Paper Page 1 Page I of the NJ 1040Tax Form includes: Taxpayer personal information County/Municipality Code NJ Filing Status Exemptions Dependent information Gubernatorial Election Fund Check Boxes Signature Box 49

NJ 1040 Page 1 Personal Information, Municipality Code, Filing Status, Exemptions 50

NJ 1040 Page 1 Dependents, Gubernatorial Election Question, Signature Line 51

NJ 1040 Paper Page 2 Page 2 of the NJ Tax Form includes Income Exclusions Exemptions Deductions NJ Taxable income NJ Tax 52

NJ 1040 Page 2 Income 53

NJ 1040 Page 2 Exclusions, Exemptions, Deductions, Taxable Income, Tax 54

NJ 1040 Paper Page 3 Page 3 of the NJ Tax Form includes Credits Use tax on out-of-state purchases Payments Penalties Amount owed Contributions Amount to be refunded 55

NJ 1040 Page 3 Tax, Credits & Penalties 56

NJ 1040 Page 3 More Credits, Payments, Contributions, Refund/Owed 57

NJ1040 Page 4 NJ Page 4 is the NJ 1040H – Property Tax Credit Application Not in TaxWise – Paper file only Used for certain taxpayers that do not file a NJ return but are entitled to a property tax credit Details to follow in Tax Law training modules 58

NJ 1040H 59

TaxWise NJ 1040 Most of the information is carried forward from the TaxWise Federal 1040 to the TaxWise NJ 1040 Page numbers in TaxWise do not match page numbers of the paper return NJ 1040 entries can be tricky 60

TaxWise NJ 1040 Entries The following items are the minimum required manually input entries: County/Municipality Code must be entered in the TaxWise NJ 1040 on page 1 Gubernatorial Election Fund Question must be answered in the TaxWise NJ 1040 on page 3 Retirement Income line 19b Homeowner on Oct 1 question must be answered on the TaxWise NJ 1040 on page 3 Use tax due on out-of-state purchases must be entered in TaxWise NJ 1040 on page3 Worksheet F Property Tax Deduction/Credit in the TaxWise NJ 1040 on page 4 NJ DD Worksheet NJ IRA Worksheet (Taxpayers with IRA withdrawals) 61

NJ 1040 for Familiarization For Familiarization we are entering just basic NJ items Resource for NJ 1040 is “New Jersey Special Handling” document found on the TaxPrep4Free.org web site More detail on NJ coming later 62

Intake/Interview & Quality Review Sheet Form C Intake/Interview & Quality Review Sheet 63

Intake/Interview & Quality Review Sheet Completed by client – Parts I - VI Page 1 – General information about taxpayer, spouse & dependents Page 2 – Summary of income, expenses & life events, & additional information/questions related to preparation of return Completed by preparer Page 1 - Shaded section about dependents Page 4 - Notes Used by quality reviewer Page 3, Part VII 64

Intake/Interview Sheet - Personal Info, Marital Status & Household Info (P. 1) 65

Intake/Interview Sheet – Income, Expenses & Life Events (P. 2) 66

Intake/Interview Sheet –Life Events, Additional Info (P. 2) 67

Intake/Interview Sheet – Quality Review Section (P. 3) 68

Intake/Interview Sheet – Comments & Notes Sections (P. 4) 69

Introduction To TaxWise Pub 4012, Section N 70

TaxWise Online (TWO) Forms-based software used for tax return preparation (not interview style) Only software approved by IRS for free tax preparation sites Developed & maintained by firm called Commerce Clearing House (CCH) Calculations done & returns stored on TWO server Can work on same return from multiple computers (but not simultaneously) No taxpayer data stored on individual computers 71

TaxWise Online (TWO) Most of our training will use 2013 TWO training software Can be accessed on the web at twonline.taxwise.com/training training environment is also available, but will not include NJ software until late January (twonline.taxwise.com/training) You will be given info on production TWO software and IDs at a later time Multiple years are available Returns are separate by training vs production and by tax year 72 cont’d

TaxWise Online (TWO) Returns are kept in separate environments by training vs. production and by tax year Always make sure you are in proper environment before you start a return Can differentiate environment by background color once you are logged in Login screens are exactly the same for all environments Once logged in, 2013 training environment background is green 2013 production environment background is blue 73 cont’d

Logging in to TaxWise Online (TWO) Training Use this URL to access 2013 TWO training website for familiarization training: Use client ID First time logging in, use your assigned ID as both User ID and Password All IDs start with SOMERSET Last 2 digits are your student # 74

TWO Initial Sign-In 75 User Name set up by administrator Initially password is same as User Name

TWO Password Change Request 76

TWO Password Change 77

TWO Main Screen & Starting a New Return 78 Start a new return

TWO Start New Return 79 Enter SS # twice SS# in XXX-YY-ZZZZ format XXX=First 3 #s from problem YY=Student ID ZZZZ=4139 (EFIN)

TWO Open Existing Return (Select SS #) 80 Open an existing return by clicking on SS #

TWO Open Existing Return (Enter SS #) 81 Open existing return by: Click on Open return icon Enter SS# Always click on Go to Tax Forms; never use Go to Interview

TaxWise Refund Monitor & Navigation Tree 82 Incomplete or Incorrect Form: All Red and Red Exclamation Point Complete & Correct Form: Check Mark State Forms Loaded when State is Selected Refund Monitor Adjusted Gross Income (AGI) amount & Refund Amount provide running totals

TaxWise Forms Menu 83 Forms Menu: List of all Forms & Worksheets in TaxWise Includes State Forms

Calculated entry Non-Calculated or Direct Entry Required entry Overridden field Green Black Red Blue TWO Field Color Coding 84 Underline Color in TWO

Entering Basic Taxpayer Information into TaxWise 85

Sample Intake/Interview Sheet 86

Sample Intake/Interview Sheet (cont’d) 87

TaxWise Main Information Screen 88 Basic taxpayer & Spouse info

Main Information Screen Basic Information – TaxWise Tips  Enter names  Without punctuation marks (., -)  Last name of spouse is only needed if different from taxpayer  Primary SS # is automatically populated  Spouse’s SS # must be entered  Enter zip code - TW populates city and state 89

TaxWise Main Information Screen cont’d 90 Blind & disabled questions Age & occupation info

Main Information Screen Filing Status – TaxWise Tips 91 Enter birth date as mmddyyyy (TW inserts slashes). Age is calculated Check box for blind or disabled, if applicable. This is used to calculate Federal standard deduction & NJ exemption Enter date of death (if taxpayer died in 2013 or 2014 only - since using 2013 software) Check box to indicate who is filing return for deceased taxpayer

TaxWise Main Information Screen cont’d 92 Presidential Election Campaign question Filing Status

Main Information Screen Filing Status – TaxWise Tips 93  Donation for Presidential Election Campaign does not impact client’s refund/balance due  Click on box to choose filing status  For Married Filing Single (MFS) Enter spouse’s name, SS #, & answer questions  For Head of Household (HOH) Only enter child’s name and SS # if child is not being claimed as a dependent  For QW, must enter year of death (2011 or 2012, since we are using 2013 software)

TaxWise Main Information Screen cont’d 94 Personal Exemptions Dependent Info

Main Information Screen Exemptions – TaxWise Tips 95  TaxWise calculates first line of Exemptions based on previous data  Check box on lines 6A, B or C only if appropriate

Main Information Screen Dependents – TaxWise Tips List dependents from youngest to oldest Enter 1-12 in M in HM (Months in Home) box Use Code box drop down to select relationship code Only way to indicate non-dependent Check DC box (Child & Dependent Care) if there are eligible expenses Always check EIC box for children CTC box is automatically checked by TaxWise if child is eligible 96

TaxWise Main Information Screen cont’d 97 State Info

Main Information Screen – TaxWise Tips State Information Section State Return defaults to “NJ” NJ state return automatically e-filed after Federal return is accepted. If TaxPayer does not have to file NJ return, click NO on box “Do You Want to Electronically File This Return” on Page 3 of NJ return Leaves NJ return as part of file, but does not e- file it. If NJ taken out on Main Info screen, NJ return deleted 98

TaxWise Main Information Screen cont’d 99 Bank Account Info for Direct Deposit & Direct Debit

Main Information Screen – TaxWise Tips 100 Bank Information Section If Direct Deposit of refund or Direct Debit of amount due is desired, enter 9-digit routing number and account number as per client’s sample check Do not use deposit slip info Will also have to enter information a second time at bottom of Form 1040 for verification purposes

TaxWise Main Information Screen cont’d 101 Taxpayer & Spouse PINs Identity Theft PINs

TaxWise NJ 1040 Page Municipality Code Name & Address Changes

Additional NJ Exemption for Full- Time College Student NJ allows an additional exemption for a college student if: Student is under 22 years of age (at year end) for entire tax year Student attends college full-time Student spends at least some part of each of 5 calendar months of tax year in school Educational institution is accredited Taxpayer paid ½ or more of tuition & maintenance costs (not including financial aid) 103

TW Additional NJ Exemption for Full-Time College Student – NJ 1040 Page Dependents Attending College

TaxWise Dependents’ Health Insurance & Gubernatorial Elections Fund - NJ 1040 Page Dependents’ Health Insurance Info Gubernatorial Elections Fund Questions

TaxWise NJ Dependents Information Worksheet 106 Link to Dependents Worksheet from NJ 1040 Page 3 Line 13 Dependent Health Insurance

Preparer Use Form 107 Foreign Language Question Counselor initials Quality Reviewer Initials Disability Question

Preparer Use Form – TaxWise Tips 108 Must answer language/disability questions on Lines 11/12 from info on Interview/Intake Sheet, Page 3 Answers are used for grant and statistical purposes only Enter preparer’s/quality reviewer’s initials on Lines 13/14 Qualify reviewer’s initials should be entered after quality review is complete Taxpayer reminders can be entered at bottom of screen

Entering Data into TaxWise for 1040 Page1 Pub

Entering Data into TaxWise for 1040 Page 1 Income: W-2 Wage & Tax Statement 1099-INT Interest Statement 1099-DIV Dividend Statement 1099-R Distributions from Pensions, IRAs, etc G Unemployment Statement SSA-1099 Social Security Statement Adjustments: Student loan interest deduction All entries are made on appropriate forms & TaxWise transfers to 1040 Page 1 110

W-2 Wage & Tax Statement Employer issues to employee for tax year Includes: Employer identification info Employee identification info Wages earned Taxes withheld All info to be copied to TaxWise EXACTLY as shown on W-2 form TaxWise puts info entered in proper place 111

W-2 Wages & Tax Statement NJ Specific Taxes State Wage & Tax Info Federal Wage &Tax Info Employer Info Check BoxesEmployee Info

TaxWise W-2 Screen 113

Interest & Dividends Statements 1099-INT & 1099-DIV Issued by financial institutions for interest &/or dividends received Enter info from these forms in TaxWise on Sch B Interest/Dividend Statement screens TaxWise transfers info onto Sch B Interest & Ordinary Dividends & then to

1099-INT Interest Statement 115 Interest Income Early Withdrawal Penalty Federal Income Tax Withheld Payer Info Payee Info

TaxWise Schedule B Interest Statement Screen 116

1099-DIV Dividend Statement 117 Payer Info Ordinary Dividends Qualified Dividends Capital Gains Distribution Federal Taxes Withheld Payee Info

TaxWise Schedule B Dividend Statement Screen 118

Retirement Income 1099-R Distribution from pension, IRA, annuities, etc. Enter info on TaxWise 1099-R screen TaxWise puts the proper info on the correct 1040 lines 119

1099-R Retirement Income 120 Payer Info Gross Distribution If taxable amount not determined, there is more to do Distribution Codes (on back or in Help) Taxable Amount Payee Info Checked if IRA

TaxWise 1099-R Screen 121

Determining NJ Taxability of IRA Distribution – NJ IRA Worksheet May be able to claim Federal tax exclusion when income is contributed to IRA; contributions all taxable on NJ return To determine NJ taxability of IRA distributions, complete separate NJ IRA Worksheet for each IRA 1099-R If taxpayer does not have info needed for Worksheet, must still complete by “getting the red out;” otherwise, income will not be included in NJ income 122

NJ IRA Worksheet 123 Copy # of IRA being worked on “Get the red out” if info not available

Unemployment Compensation 1099-G Unemployment compensation received from government Enter info on TaxWise 1099-G screen TaxWise puts the proper info on the correct 1040 line 124

TaxWise 1099-G 125 Payer Info Payee Info Unemployment Info Federal tax withheld Unemployment Amount Federal & NJ Tax Withheld

TaxWise 1099-G Screen 126

Social Security SSA-1099 Enter info from SSA-1099 onto TaxWise 1040 Worksheet 1 screen Includes: 2013 net benefits (from Box 5) Medicare Parts B, C & D (from Description box) TaxWise transfers to Schedule A Detail Medical Expenses Federal income taxes withheld (from Box 6) 127

SSA Box 5 Amount to 1040 Wkt 1 Medicare Part B to 1040 Wkt 1 If Medicare Part D, link to Scratch pad for both Parts B & D Federal Tax Withheld To 1040 Wkt 1

TaxWise 1040 Worksheet 1 Screen (for Social Security) 129 From SSA-1099 Box 5 From Medicare scratch pad

TaxWise Scratch Pad for Medical Expenses 130 Medicare Premiums for Parts B & D

Student Loan Interest Deduction Can deduct qualified student loan interest as an adjustment to income On 1040 Line 33 Link to 1040 Worksheet 2 to enter into TaxWise 131

TaxWise 1040 Worksheet 2 Screen (for Student Loan Interest) 132 Student Loan Interest

Other Sources of Income Not Covered in Familiarization Examples of other sources of income we might see but not covered in familiarization: Sale of stocks and bonds Sale of home Partnership income on Schedule K-1 Gambling income Income tax and property tax refunds Alimony Business income 133

Entering Data into TaxWise for 1040 Page2 Pub

Form 1040 Page 2 Taxes & Credits Start with AGI Deduct itemized or standard deductions Deduct personal exemptions Arrive at taxable income Alternative Minimum Tax (Out of Scope) Apply non-refundable tax credits Add other taxes Bottom line is Total Tax 135

Standard vs. Itemized Deductions Everyone is allowed a standard deduction TaxWise determines amount of standard deduction depending on: Filing status If taxpayer is age 65 and older If taxpayer is blind For some, itemized deductions can be more beneficial than standard deduction 136

Standard/Itemized Deductions on Extra standard deduction – 65 or older Standard deduction

Standard vs. Itemized Deductions cont’d Itemized deductions include: Medical Taxes (e.g.-state/local taxes paid, real estate taxes) Mortgage Interest Charitable Contributions Miscellaneous deductions Enter itemized deductions in TaxWise on Sch A & Sch A Detail TaxWise determines whether standard or itemized is better & transfers to 1040 Line

Schedule A Itemized Deductions Medical Expenses Taxes You Paid Interest You Paid Gifts to Charity Casualty & Theft Losses Miscellaneous Deductions

Clients frequently bring in extra documents that cannot be claimed as deductions Counselor must determine which documents are not needed for tax return. Examples include: Household bills (water, sewer, credit cards, etc.) Funeral expenses Life insurance proceeds Ineligible charitable contributions Items Not Eligible as Itemized Deductions 140

Medical Expenses Paid Medical expenses can be claimed on both Federal and NJ tax returns On Federal, can claim medical expenses above 10% of AGI; 7.5% if 65 or older On NJ, can claim medical expenses above 2% of NJ gross income Enter expenses on Sch A Detail screen & TW will do appropriate calculations for both Federal & NJ 141

TaxWise Schedule A Detail for Medical Expenses 142 Medicare Premiums from 1040 Wkt 1)

Real Estate Taxes Paid Real estate taxes paid can be claimed on both Federal and NJ tax returns On Federal, real estate taxes claimed as an itemized deduction on Schedule A On NJ, taxpayer can claim a property tax deduction or credit (whichever is greater) Property taxes entered on NJ Worksheet F TaxWise automatically determines whether deduction or credit is greater 143

TaxWise Schedule A Real Estate Taxes 144 Property Taxes on Principal Residence

TaxWise NJ Worksheet F for Property Taxes 145 Property Taxes on Main Home TW determines whether Property Tax Deduction or Credit is better

Rent Paid Rent paid cannot be claimed on Federal tax return Portion of rent paid can be claimed on NJ tax return Rent paid entered on NJ Worksheet F TaxWise calculates the 18% of rent paid that constitutes property taxes TaxWise automatically determines if property tax deduction or credit is greater 146

TaxWise NJ Worksheet F for Rent 147 TW determines whether Property Tax Deduction or Credit is better Rent Paid 18% of Rent can be Claimed as Property Taxes

Child Tax Credit (CTC) Non-refundable credit that allows taxpayers to claim tax credit per qualifying child TaxWise automatically populates CTC box on Main Info screen if eligible& calculates this credit If not claimed in full, taxpayer may be eligible for refundable Additional Child Tax credit 148

CTC Box on Main Info Screen 149 TW automatically populates if eligible

CTC on Child Tax Credit

Payment/Refund/Owe/Sign Start with total tax Apply tax withheld & estimated payments Apply refundable credits Bottom line Refund You owe Direct deposit information Signature line 151

Earned Income Credit (EIC) Refundable tax credit for people who work but do not earn high incomes There are requirements that must be met to get this credit (details in later Tax Training) For this class: Check EIC box next to dependent’s name on Main Info Screen Follow form questions on EIC Worksheet in order they are shown 152

153 EIC on Main Info Screen Check EIC box for all dependents. TW determines if eligible

EIC Worksheet 154 Answer only questions in red. Follow “go to” directions

Additional NJ Entries NJ 1040 Instruction Booklet 155

NJ 1040 Use Tax Individual buys a product/service outside of NJ (or on Internet), intended for use in NJ If seller did not collect sales tax purchaser should pay NJ sales tax If seller did collect sales tax but at a rate lower than New Jersey's purchaser should pay the difference in sales tax Use NJ 1040 line 45 with scratch pad 156

TaxWise NJ 1040 Line 45 - Use Tax Due on Out-of-State Purchases 157 Use Tax Due on Out- of-State Purchases. If 0, “get the red out.” If > 0, document on scratch pad

TaxWise 1040 Page 2 Screen cont’d nd Entry of Bank Account Info for Direct Deposit & Direct Debit

Finalizing the Return & Concluding The Interview IRS Form C Intake/Interview & Quality Review Sheet 159

Finalizing Return cont’d After return is completed: Ensure all forms in red in Forms Tree are corrected (GET THE RED OUT) Click on red item in Forms Tree & TaxWise will take you to correct screen Scroll down until you find item underlined in red Correct or complete red item(s) Enter direct deposit/direct debit info if client desires 160

Forms to be Corrected in Forms Tree 161 Click on item(s) in red on Forms Tree

Items to be Corrected 162 Scroll down to item underlined in red & correct/complete

Bank Account Information Taxpayer can have refund deposited directly into bank account or have tax due electronically transferred from bank account to IRS Must enter routing number and bank account number twice on 2 different TaxWise screens Main Info screen 1040 Page 2 163

Finding Routing Number & Account Number on a Check 164 Robert & Mary Smith 54 Main Street Bridgewater, NJ Routing NumberAccount Number

TaxWise Main Info Screen – Bank Account Information Section 165 Routing & Bank Account Info (from check)

TaxWise 1040 Page 2 Screen cont’d nd Entry of Bank Account Info for Direct Deposit & Direct Debit

NJ Direct Deposit or Direct Debit Worksheet 167 Check to use same bank info as Federal Check if taxpayer desires check Check to use different bank info from Federal or if Federal balance due/ NJ refund

Finalizing Return cont’d Run Diagnostics (icon at top of TW screen) Click on item in Diagnostics that needs correction. TaxWise will take you to correct screen Correct error(s) Verify need for any overrides Read warnings & determine if any action needs to be taken Must re-run Diagnostics after corrections 168

Run Diagnostics 169 Click on Run Diagnostics icon. Review and fix identified errors

Quality Review (QR) QR is a requirement on 100% of returns When the tax return has been completed in TaxWise, another certified counselor (second pair of eyes) performs a quality review QR counselor continues probing while referring to Part VII C of the Intake/Interview Sheet Verify all info from Intake/Interview form & source documents Re-run diagnostics & correct errors 170

Finalizing Return cont’d Click on “Create e-File(s)” box (at bottom of diagnostics box) OR Set the return stage, if not ready to e-file Click on Return Summary icon or close return & go to appropriate client return Select appropriate return status from drop down box Print copy of return for taxpayer Do not need to keep copies of W-2s & 1099s or signed 8879s; return everything to taxpayer ERO will e-file returns & notify counselor of any rejects 171

Setting Return Stage 172 Click on Return Summary Icon

Return Stages in E-File Status Section of Return Summary 173

Printing Return 174 Click on Print Return icon

Finalizing Return with Taxpayer Review printed return with taxpayer Line-by-line Federal & NJ 1040s Highlight any carryovers or “issues” Have taxpayer(s) sign Form 8879 IRS E-File Signature Authorization If joint return, BOTH taxpayers MUST sign Tell taxpayers they are responsible for return Assemble packet for taxpayer in envelope Return all source documents, Intake/Interview sheet, 8879, etc. 175

TW IRS e-file Signature Authorization - Form By signing 8879, taxpayer(s) are acknowledging they are responsible for return and are giving permission to e-file

Benefits of E-Filing Returns File federal & state returns simultaneously Faster/more accurate processing – Calculations done by TaxWise Faster processing for refunds Direct deposit within 7-14 days Proof of filing – IRS/State acknowledge File early, delay payment until April