Entering Basic Taxpayer Information into TaxWise Pub

Sample Intake/Interview Sheet 2

Sample Intake/Interview Sheet (cont’d) 3

TaxWise Main Information Screen 4 Basic taxpayer & Spouse info

Main Information Screen Basic Information – TaxWise Tips  Enter names  Without punctuation marks (except for hyphen)  Use field help (?) to determine what is allowed  Last name of spouse is only needed if different from taxpayer  Primary SS # is automatically populated from info entered to start return  Spouse’s SS # must be entered  Enter zip code - TW populates city and state 5

TaxWise Main Information Screen cont’d 6 Blind & disabled questions Age & occupation info

Main Information Screen Filing Status – TaxWise Tips 7 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 exemptions Enter date of death (if taxpayer died in 2014 or 2015 only - since using 2014 software) TW will check box to indicate who is filing return for deceased taxpayer

TaxWise Main Information Screen cont’d 8 Presidential Election Campaign question Filing Status

Main Information Screen Filing Status – TaxWise Tips 9  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 (2012 or 2013, since we are using 2014 software)

TaxWise Main Information Screen cont’d 10 Personal Exemptions Dependent Info Check if taxpayer can be claimed on another person’s return

Main Information Screen Exemptions – TaxWise Tips 11  TaxWise calculates first line of Exemptions based on previous data  Check box on lines 6A, B or C only if appropriate  Check line 6A if taxpayer can be claimed on another person’s return (e.g. – college student claimed on parents’ return)

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 menu to select relationship code 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 12

TaxWise Main Information Screen cont’d 13 State Info NJ state return automatically e-filed after Federal return is accepted NJ forms populated in Forms Tree

TaxWise Main Information Screen cont’d 14 Bank Account Info for Direct Deposit & Direct Debit* Enter after return is finished so taxpayer can decide if wanted

Main Information Screen – TaxWise Tips 15 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 or handwritten information Will also have to enter information a second time at bottom of Form 1040 Page 2 for verification purposes

TaxWise Main Information Screen cont’d 16 Taxpayer & Spouse PINs – any 5 digits Identity Theft PINs – 6 digits provided by IRS

TaxWise NJ 1040 Page 1 17 Municipality Code Name &/or Address Change

TaxWise Gubernatorial Elections Fund - NJ 1040 Page 2 18 Gubernatorial Elections Fund questions – different format than Presidential Election Campaign question

Preparer Use Form 19 Foreign Language Question Counselor initials Quality Reviewer Initials; Enter after QR complete Disability Question Use drop-down menus or type in answers

Preparer Use Form – TaxWise Tips 20 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

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 22

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 entered in TaxWise as shown on W-2 form 23

W-2 Wage & Tax Statement cont’d Each W-2 must be entered on a separate TaxWise screen Click on + next to W-2 in Forms Tree to add extra W-2 screens TaxWise transfers info onto appropriate 1040 lines 24

W-2 Wages & Tax Statement 25 NJ Specific Taxes State Wage & Tax Info Federal Wage &Tax Info Employer Info Check BoxesEmployee Info

TaxWise W-2 Screen 26 Verify address on W-2 against Main Info address If red, verify Boxes 2, 4, 6 Indicate whose W-2 Check to override TWO calcu- lations In Boxes 3-6 or 16

TaxWise W-2 Screen 27 Verify address on W-2 If red, verify Boxes 2, 4, 6 TWO recalculates Boxes 3-6 if entry in Box 7 Enter Boxes 1 & 2; TWO calculates Boxes 3-6 Use field help (?) to see what special characters are allowed Enter zip code; TWO populates city & state Enter EIN; TWO may populate employer’s name & address

TaxWise W-2 Screen 28 Verify address on W-2 If red, verify Boxes 2, 4, 6 TWO recalculates Boxes 3-6 if Entries in Boxes 7 or 14 Be sure amounts are next to proper label Be sure amounts in Box 14 are next to proper label TWO recalculates Boxes 3-6 if necessary based on Box 12 Check box at top of W-2 screen if state wages need to be overridden

Interest & Dividends Statements 1099-INT & 1099-DIV Issued by financial institutions for interest &/or dividends received Enter info from these forms in TaxWise on Interest Stmt or Dividend Stmt screens (under Sch B in tree) All 1099-INTs can be entered together on 1 TaxWise Interest Stmt; all 1099-DIVs can be entered on 1 TaxWise Dividend Stmt TaxWise transfers info to Sch B Interest & Ordinary Dividends & then to appropriate lines on 1040 p

1099-INT Interest Statement 30 Interest Income Early Withdrawal Penalty Federal Income Tax Withheld Payer Info Payee Info

TaxWise Schedule B Interest Statement Screen 31 All 1099-INTs go on one screen (unlike W-2s or 1099-Rs on multiple screens); no blank lines between entries

1099-DIV Dividend Statement 32 Payer Info Ordinary Dividends Qualified Dividend s Capital Gains Distribution Federal Taxes Withheld Payee Info

TaxWise Schedule B Dividend Statement Screen 33 All 1099-DIVs go on one screen (unlike W-2s or 1099-Rs on multiple screens;) no blank lines between entries

Retirement Income 1099-R Distribution from pension, IRA, annuities, etc. Enter info on TaxWise 1099-R screen Each 1099-R must be entered on a separate TaxWise screen Click on “+” next to 1099-R in Forms Tree to add extra 1099-R screens TaxWise transfers info onto appropriate 1040 lines 34

1099-R Retirement Income 35 Payer Info Gross Distribution Distribution Codes (on back or in Help) Taxable Amount Payee Info Checked if IRA

TaxWise 1099-R Screen 36 Verify address on W-2 against Main Info address Enter Payer ID; TWO may populate payer’s name & address

TaxWise 1099-R Screen cont’d R code Check if IRA distribution

Unemployment Compensation 1099-G Unemployment compensation received from NJ government Enter info on TaxWise 1099-G screen TaxWise transfers info entered onto appropriate 1040 lines 38

TaxWise 1099-G 39 Payer Info Payee Info Unemployment Amount Federal Tax Withheld

TaxWise 1099-G Screen 40 Unemployment benefits Federal tax withheld

Social Security SSA-1099 Enter info from SSA-1099 onto TaxWise 1040 Worksheet 1 screen Includes: 2014 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) 41

SSA Box 5 Amount Medicare Part B If more than one Medicare premium, link to scratch pad to enter all Federal Tax Withheld Medicare Part D

TaxWise 1040 Worksheet 1 Screen (for Social Security) 43 From SSA-1099 Box 5 From Medicare scratch pad

TaxWise Scratch Pad for Medical Expenses 44 Medicare Premiums for Parts B & D Description should reference where scratch pad links to

Student Loan Interest Deduction Can deduct qualified student loan interest as an adjustment to income On 1040 Line 33 Enter on 1040 Worksheet 2 in TaxWise Probably not in the Forms Tree – use Add button at top of Tree or link from 1040 Line 33 45

TaxWise 1040 Worksheet 2 Screen (for Student Loan Interest) 46 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 47

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 49

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 50

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 40 52

Schedule A Itemized Deductions Medical Expenses Taxes You Paid Interest You Paid Gifts to Charity Casualty/Theft Losses Miscellaneous Deductions Check next to Sch A in Forms Tree indicates taxpayer is taking itemized 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 54

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 55

TaxWise Schedule A Detail for Medical Expenses 56 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 NJ 1040 Lines 37b and 37c must be completed with block/lot and municipality codes TaxWise automatically determines whether deduction or credit is greater 57

TaxWise Schedule A Real Estate Taxes 58 Property Taxes on Principal Residence

TaxWise NJ Worksheet F for Property Taxes 59 Property Taxes on Main Home TW determines whether Property Tax Deduction or Credit is better

TaxWise NJ 1040 Line 37 Property Taxes 60 TW transfers from Worksheet F Block & Lot #s Municipality Code Worded incorrectly; do not check

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 Rent & property taxes can both be claimed, but not for same time period 61

TaxWise NJ Worksheet F for Rent 62 TW determines whether Property Tax Deduction or Credit is better Rent Paid – 18% can be claimed as Property Taxes Property Taxes + 18% of Rent 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 63

CTC Box on Main Info Screen 64 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 66

Finalizing the Return IRS Form C Intake/Interview & Quality Review Sheet 67

Finishing Federal & NJ Returns After all client’s tax documents are entered: Ensure all forms in red in Forms Tree are complete and accurate (GET THE RED OUT) Click on red item in Forms Tree & TaxWise will take you to correct screen Scroll down until you find item(s) underlined in red Correct or complete red item(s) Once items are all corrected or completed, form name will turn green in Forms Tree 68

Forms to be Corrected in Forms Tree 69 Click on item(s) in red in Forms Tree

1040 Page 1 Question above 1040 Line 10 must be answered: “Did you itemize deductions last year and receive state or local tax refunds, credits, or offsets?” Be sure to read question carefully This question not on actual 1040; only on TaxWise 1040 screen Info used to determine if last year’s state refund must be declared as income on federal return this year 70

1040 Page 1 71

1040 ACA Worksheet Must indicate status of health insurance coverage for every person listed on the return (Affordable Care Act - ACA) Complete 1040 ACA Wkt line for each person If person does not have health insurance coverage for every month in year, may have to pay individual responsibility payment (if not eligible for exemption) May have to reconcile health insurance subsidies received through ACA during the tax year 72

1040 ACA Worksheet 73 All family covered by health insurance for whole year

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 every dependent’s name on Main Info Screen 74

Earned Income Credit (EIC) (cont’d) Answer questions carefully on Sch EIC & Sch EIC Wkt Follow questions in order they are shown (from top to bottom & left to right) Only answer questions in red; some questions TaxWise has already answered from prior input Follow “Go to” instructions after answering each question 75

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

Sch EIC 77 Answer only questions in red. Follow “Go to” directions

Sch EIC Worksheet 78 Answer only questions in red, from top to bottom and left to right. Follow “Go to” directions

Diagnostics Run Diagnostics (icon at top of TW screen) to ensure Federal return is accurate before moving on to finalizing NJ return Click on item in Diagnostics that needs correction. TaxWise will take you to correct screen Correct error(s) or enter missing info Must re-run Diagnostics after corrections to ensure everything is now OK 79

Run Diagnostics 80 Click on Run Diagnostics icon. Review and fix identified errors

Final NJ Items 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 use 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 to explain If no use tax due, must “get the red out” 81

TaxWise NJ 1040 Line 45 - Use Tax Due on Out-of-State Purchases 82 Use Tax Due on Out-of-State Purchases. If 0, “get the red out.” If > 0, document on scratch pad

Run Diagnostics again & correct any errors Inform client if refund is due or money owed Taxpayer can have refund deposited directly into bank account or have tax due transferred electronically from bank account to IRS Confirm preference for direct deposit or direct debit for both Federal & NJ. May now be different from preferences listed on Intake/Interview sheet Handle Refund/Amount Due 83

Bank Account Information On Federal return, must enter routing number and bank account number twice on 2 different TaxWise screens Main Info screen for both direct deposit/debit 1040 Page 2 for direct deposit Form ACH 1040/ES for direct debit NJ has its own Deposit/Direct Debit Worksheet (NJ 1040 DD Wkt) 84

Finding Routing Number & Account Number on a Check 85 (include hyphens) Henry & Mary Brown 29 Diamond Road Denville, NJ 07834

Bank Account Information on TaxWise Main Information Screen 86 Bank Account Info for Direct Deposit & Direct Debit 1040 Page 2 turns red in Forms Tree after Bank Account info entered on Main Info screen

Bank Account Information on TaxWise 1040 Page 2 Screen 87 2 nd Entry of Bank Account Info for Direct Deposit Direct Debit

NJ Direct Deposit or Direct Debit Worksheet 88 Check to use same bank info as Federal; no need to re-enter bank account info Check if taxpayer desires check Check to use different bank info from Federal or if Federal balance due/ NJ refund; must then enter bank account info twice at bottom of this form Must also answer foreign bank account question at bottom of page

Concluding The Interview IRS Form C Intake/Interview & Quality Review Sheet 89

Creatinge E-file Click on “Create e-File(s)” box (at bottom of Diagnostics box) E-file creation can generate different errors than Diagnostics. Correct until E-file is successfully created If not ready to e-file, set return stage Click on Return Summary icon OR Close return & click on Stage column for appropriate client return in list Select appropriate return status from drop-down menu 90

Setting Return Stage Using Return Summary Icon 91 Click on Return Summary Icon

Return Stages in E-File Status Section of Return Summary 92

Stage Column on Client Return List 93

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 VIII of the Intake/Interview Sheet Verify all info from Intake/Interview form & source documents Re-run diagnostics Correct errors after consulting with counselor Create e-file again 94

Print Return Click on Print Return icon at top of TaxWise screen TaxWise will create a PDF file including all the necessary pages of the Federal & NJ returns Open the PDF file and print as you would normally on your computer Your ERO will help you connect to the network printers if you are using your own laptop 95

Printing Return 96 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. ERO will e-file returns & notify counselor of rejects 97

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 acknowledgements File early, delay payment until April 15 99