CA-2 State Meeting Jay Wiedwald, CA-2 TRS Training for Tax Year 2015 CA-2 State Meeting Jay Wiedwald, CA-2 TRS Sep 2015 Regional Meetings

Teachable Qualities of a Counselor? (Responses from audience) Develop Listening Skills Ask probing questions Use Resources Learn and use trouble- shooting techniques Tax law knowledge Learn how to explain tax law in everyday English Knowing when to ask for help – and willingness to actually do so Sep 2015 Regional Meetings

Habits you’d like to Break! (Responses from audience) Starting a return “too soon” Complete interview before touching the keyboard Trusting that CF or other reviewed Intake sheet sufficiently Ignoring Intake Sheet during QR Rushing under pressure of clients waiting Not checking Duck Book before asking for help Incomplete passing of return info to the QR Complete grey sections on Intake Sheet Relying too much on pro forma Not using the Comment section at bottom of Main Info Sheet Sep 2015 Regional Meetings

THANKS! I’ll consider those as I prepare for the Instructor Workshop Sep 2015 Regional Meetings

Married, Single, and More Filing Status Married, Single, and More Pace and Depth will depend on the experience of the audience, but broadly suitable for all levels. Objective is to recognize factors that Pub 4012 – Tab B Pub 4491 – Part 2 Pub 17 – Chapter 2

TWO Immersion Training – 2015 [BACKGROUND] Objectives: Recognize factors that determine filing status options See how filing status affects tax issues Focused TWO entry/outcome relationships Cultivate habit of using resources Broadly suitable for all experience levels Pace and Depth of presentation will depend on audience experience TWO Immersion Training – 2015 6

Married, Single, and More Filing Status Married, Single, and More https://aarptaxaide.webex.com/aarptaxaide/ldr.php?RCID=0895e16d9eb616aa7c7b7ab078f22d4b 16:42 mark, xx minutes long Followed by Donald Duck demo for new counselors Pub 4012 – Tab B Pub 4491 – Part 2 Pub 17 – Chapter 2

TWO Immersion Training – 2015 Filing Status Pub 17 Ch 2 Two criteria: Marital status on last day of tax year Federal definition – “married” Legal marriage under laws of any state or country Does not include civil unions or registered domestic partners Type of dependents, if any U.S. state includes the district of Columbia and U.S. territories Dependent: An individual who may be claimed as a dependent on another person’s tax return; that is, someone who meets all applicable dependency tests. Will discuss dependents in a later lesson There is no requirement for taxpayers to substantiate their marriage – their statement that they are married is enough TWO Immersion Training – 2015 8

Five Choices for Filing Status Pub 4012 Tab B Single Married filing jointly (MFJ) Married filing separately (MFS) Head of household (HH) Qualified widow(er) (QW) Dependent: An individual who may be claimed as a dependent on another person’s tax return; that is, someone who meets all applicable dependency tests. Head of Household Filing Status: This filing status is generally for unmarried taxpayers who paid more than half the cost of keeping up a home for a qualified dependent relative during the tax year. Married Filing Jointly: Filing status for taxpayers who are married to each other or live together in a common law marriage and combine their income and deductions on the same tax return. The status also applies to taxpayers who are separated but not divorced and to taxpayers whose spouse died during the tax year and has not remarried, as long as one tax return is used for both individuals. Married Filing Separately: Filing status for taxpayers who are married to each other or live together in a common law marriage and report their own incomes and deductions on separate returns. Qualifying Widow(er) with Dependent Child: Filing status is for widow or widower with one or more dependent children. Single Filing Status: Filing status that applies to a taxpayer who (1) has never married, or (2) is legally separated or divorced. TWO Immersion Training – 2015

TWO Immersion Training – 2015 Form 1040 TWO Immersion Training – 2015

Filing Status Importance Many tax items affected by filing status Necessity to file a return (Page A-1) Standard deduction (Page F-1) Tax rate bracket Eligibility for certain credits (Page I-3 Step 3) TWO Immersion Training – 2015 11

TWO Immersion Training – 2015 MFS Disadvantages Highest tax rate/lower standard deduction Cannot claim most tax credits Cannot deduct student loan interest Capital loss limit $1,500 (not $3,000)‏ … and a few more. MFS – Lived With Spouse Anytime During The Year Cannot claim credit for the elderly or the disabled, cannot claim education credits, EIC Must include social security benefits as income (up to 85% can be taxable)‏ Cannot roll over from traditional IRA to Roth IRA TWO Immersion Training – 2015

Head of Household – Unmarried Provided home for qualified child Might not be a dependent Provided home for related dependent >50% cost of maintaining home for dependent parents living elsewhere Pub 4012 page B-1 Left Side TWO Immersion Training – 2015

Head of Household – Married “Considered Unmarried” Lived apart all of last 6 months of year Provided home for: Child, stepchild, or eligible foster child for over six months No other relatives qualify Pub 4012 page B-1 Right Side TWO Immersion Training – 2015

TWO Immersion Training – 2015 Head of Household Key advantages Higher standard deduction than Single or MFS Advantageous tax rate structure TWO Immersion Training – 2015

TWO Immersion Training – 2015 Qualifying Widow(er) Spouse died in one of two past years Has dependent child or stepchild in home all year Grandchild not eligible Maintained home for child >50% of cost Can file QW for two years only TWO Immersion Training – 2015

TWO Immersion Training – 2015 Use the Decision Tree Turn to Pub 4012 Page B-1 Don’t miss the footnotes Pub 4012 Page B-1 Don’t miss the footnotes TWO Immersion Training – 2015

TaxWise – Main Information Sheet Enter name and SSN only if child not also dependent TWO Immersion Training – 2015

TWO Immersion Training – 2015 Quality Review QR is more than just making sure the box is checked! Must conduct the same probing interview to make sure that it is the correct (and best) Filing Status HoH is the biggest source of errors TWO Immersion Training – 2015

TWO Immersion Training – 2015 Let’s Explore TWO Immersion Lesson on Filing Status Fred Silva TWO Immersion Training – 2015

NOW…Fire up your laptops and log into: https://twonline.taxwise.com/training Client ID: 1144583 User Name: USERxx Password: USERxx (Unless you’ve already logged in) Sep 2015 Regional Meetings

Immersion Lesson Worksheet TWO Immersion Training – 2015

Immersion Lesson Worksheet TWO Immersion Training – 2015

This Demo available online NTTC Webinar August 7th. Link available on OneSupport (or below): https://aarptaxaide.webex.com/aarptaxaide/ldr.php ?RCID=0895e16d9eb616aa7c7b7ab078f22d4b (Not compatible with Windows10) Starts at 16:42 mark, 17 minutes long Followed by “Donald Duck” demo (11 minutes) Great for new counselors, and even those with a little experience TWO Immersion Training – 2015

Demo Questions ??? Sep 2015 Regional Meetings

CA-2 State Meeting Jay Wiedwald, CA-2 TRS Training for Tax Year 2015 CA-2 State Meeting Jay Wiedwald, CA-2 TRS Sep 2015 Regional Meetings

Topics Training and Certification ACA Scope Brief update on ACA, discussion about Scope and next step on one issue, our training emphasis for this year, two programs and a wrap with an update on committee activities. Sep 2015 Regional Meetings

Training and Certification Sep 2015 Regional Meetings

AARP Training Materials NTTC Workbook for Tax Year 2015 15 practice returns – replaces Pub 4491-W Quizzes and exercises Printed – available through fulfillment One copy being mailed to each Instructor Each district must determine how to obtain/distribute copies to trainees NTTC Training Slides – first release was October 15th Workbook based on previous years’ Pub 4491W problems updated for 2015 Slides – continue to incorporate feedback – more emphasis on using resources (Pubs 4012 and 17) Sep 2015 Regional Meetings

IRS & FTB Training Materials Have been ordered for all Counselors Instructors need them early to certify before the December Workshop Some variation by district regarding: 1040 Instructions Pub. 17 540 Instructions Getting accustomed to electronic documents is wise, but paper still useful Sep 2015 Regional Meetings

Instructor Workshop Two days in December – Instructors DCs SMT members IRS (Patrick Brown) and FTB (Mark Callahan) Two “identical” workshops for flexibility and a manageable group size Train the trainers – help Instructors improve their knowledge and teaching skills Key venue to help Instructors improve their knowledge and skills Two full days – not half days All Instructors – by policy, SC must approve non-attendance All DCs – Instructors work for them – they need to know how training will occur (many are also Instructors) Most/all SMT members – they manage state activities [some SCs consider DCs as part of SMT] SPEC and State – to provide updates and show presence Sep 2015 Regional Meetings

Training Principles Retention is enhanced when multiple parts of the brain are involved Integrate tax law with TW data entry Student “contemplates” issues Adults learn differently Not fully engaged unless they see a good reason May need to accommodate diminished senses Develop good habits Use of resources Follow a process Sep 2015 Regional Meetings

New/Expanded Training Tools NTTC Workbook Eight updated and seven new practice returns Targeted ACA, Filing Status and Exemption exercises Quizzes Objective: help/enable Instructors to better do their job Note: does not include administrative topics such as remuneration options for volunteers, how to order site software or laptop inventory procedures or review of answers to tests Sep 2015 Regional Meetings

New/Expanded Training Tools NTTC Lesson Plans Series I – Updated from last year Series II – New this year, targeted at returning counselor training TWO Templates supporting these National and CA-2 Schedules for new and returning counselors NTTC Power-Point Training Slides Select as appropriate to audience Sep 2015 Regional Meetings

OneSupport/Tax Training/TWO Immersion Training “Read me first” in Series I package Schedule and direction files in Series II package Look over a typical lesson See Lesson Notes (Series II) Resources Read-aheads Templates Check Them Out! Sep 2015 Regional Meetings

Certification Requirements All Volunteers – IRS Standards of Conduct test Pub 4961 is only available in electronic format Local Coordinators and Counselors Intake/Interview and Quality Review training and test –10 questions – New Link & Learn or Pub 5101 (on-line only) Counselors Advanced test 35 instead of 40 questions Increased emphasis on ACA Completing four exercises from NTTC Workbook Training materials in Pub 4961 are good to use. The revision of Form 6744 on 10/19/15 will probably result in a difference between the electronic version of Form 6744 and the hardcopy version since the hardcopy version has already gone to press. NTTC – Oct 2015

Certification Testing Recommend (URGE!!!) Link & Learn rather than paper Excellent on-line training reinforces classroom Easier for the Instructors However, Instructors don’t see test score – only that the test was passed Magnifies need for Instructor to review exercises to assess student NTTC – Oct 2015

Optional Certification Tests Optional Certifications for Counselors HSA Military International Cancellation of mortgage debt (if extended) Out-of-Scope for California NTTC – Oct 2015

Training and Certification Questions… Comments… NTTC – Oct 2015

Affordable Care Act Sep 2015 Regional Meetings

ACA ACA in scope for Tax-Aide except for: Shared Policy Allocation Marketplace coverage for a person who is not on the return Alternative Calculation for Year of Marriage Marketplace customer got married during the tax year Shared Policy – couple that divorced during year but one spouse is on other’s policy; someone who was expected to be a dependent but isn’t. There is a question on draft Intake Sheet that will help counselors quickly identify this situation Alternative Calculation – both had policies. Could be better to file MFS, could be not a big impact, could mean alternate calculation should be used. Will be working on options for these situations. Sep 2015 Regional Meetings

ACA Several first year exemptions no longer apply Shared Responsibility Payment (SRP penalty) greatly increased: $325 per person, up from $95 last year or if greater: 2% of income, up from 1% Taxpayers do not need to provide proof of insurance (unless due diligence raises questions) SRP went from $95 to $325 per person; limit from $285 to $975 Sep 2015 Regional Meetings

Expanded ACA Section of Intake Form Counselors are expected to record in detail… … and QR’s to confirm! Sep 2015 Regional Meetings

Great variability in CA-2 Sites National VITA/TCE Average There is a wide range of clients and/or counselor behavior at the 98 CA-2 sites. But virtually all have fewer ACA situations than the National volunteer program average. Sep 2015 Regional Meetings

ACA Questions… Comments… Sep 2015 Regional Meetings

Scope Sep 2015 Regional Meetings

Scope creep is a concern Several requests for local/regional scope change Training, certification, Volunteer Protection Act, etc. all become issues We’re trying to help the majority of those taxpayers who need us – not every taxpayer Sep 2015 Regional Meetings

Scope – Approved Change Only one requested change was approved by IRS: 1099-R Code L (with 1, 4 or B) now in scope Loan treated as distribution Early distribution subject to 10% penalty Cannot be rolled over Sep 2015 Regional Meetings

Scope – Requests Not Approved Request for Medicare Advantage Medical Savings Account distributions not approved this year Line 29 adjustment for self-employed health care costs not approved AARP may make any return with SE income and paid medical insurance OOS due to ACA impact Sep 2015 Regional Meetings

Other Changes Dependents can be issued an Identity Protection (IP) PIN Medicaid Waiver Income now mandatorily not taxable myRA - New savings account (like a Roth) Can claim up to $25,000 in expenses on a Sch C Sep 2015 Regional Meetings

Additional Boxes on 1099 Forms 1099-INT Box 10 Market discount (2014) Box 11 Bond premium (2014) Box 13 bond premium on tax-exempt bond (2015) 1099-OID Box 5 Market discount (2014)    Box 6 Acquisition premium (2014) 1099-INT, 1099-DIV, 1099-OID, and 1099-MISC FATCA filing requirement check box (2015) Sep 2015 Regional Meetings

Additional Boxes on 1099 Forms OOS 1099-INT Box 10 Market discount (2014) Box 11 Bond premium (2014) Box 13 bond premium on tax-exempt bond (2015) 1099-OID Box 5 Market discount (2014)    Box 6 Acquisition premium (2014) 1099-INT, 1099-DIV, 1099-OID, and 1099-MISC FATCA filing requirement check box (2015) Sep 2015 Regional Meetings

Tax-Aide – “We’re Special” Some topics not in scope for VITA are for Tax-Aide SEP/Simple IRA distributions 1099-K for self-employment income Land rental received as cash (no expenses) Non-cash donations up to $5,000 …and nine more! Sep 2015 Regional Meetings

Challenges due to Expanded Scope Topics aren’t covered in IRS Training Materials … but should be addressed during training Will suggest that these be taught as a unit Make their scope clear and provide reference resources Focus on site leadership Sep 2015 Regional Meetings

Identity Theft and $1 AGI Returns Have recommended including $1 of income on federal return so it could be e-filed Detects or prevents ID theft IRS counsel has a problem with this – it’s an “inaccurate” return. Sep 2015 Regional Meetings

TY2015 Tax-Aide Practice CONCLUSION: We will continue Tax-Aide practice of preparing $1 AGI returns and include this in training materials Sep 2015 Regional Meetings

That’s All, Folks Questions… Comments… Sep 2015 Regional Meetings