1. Exploring Filing Status and More
Example Immersion Lesson Filing Status and More
9/18/2018
Exploring Filing Status and More
Instructor Note
The purpose of this presentation is to review how Filing Status can affect the return. Additionally, some elements of the Form W-2 are explored including deferred income and the Retirement Savings Credit. Volunteers will be able to practice entering basic information in TaxSlayer. Sample discussion questions are included to help reinforce the tax law associated with retirement income and the volunteers will be directed to review key pages in publication 4012.
The Instructor does not need to prepare the return in parallel with the volunteers because the results have already been determined and entered into the presentation.
This presentation can be used as a refresher for returning volunteers in the classroom setting.
For new volunteers, this presentation can reinforce tax law information and software data entry after the volunteers have had lessons on Filing Status, Dependents, Wages, and EIC. The lesson will introduce new volunteers to refundable and non-refundable credits including the Retirement Savings Credit, the Child Tax Credit, and EIC.
October 28, 2016 LC & Instructor Training

2. Immersion Exercise Log onto your TaxSlayer Account
Begin a new return for David Smith

3. Begin a new return for David Smith
Manager at Walmart
Single

4. Make a Table On a sheet of paper create the following table:
Filing Status
AGI
Refund
EIC
Note

5. Example Immersion Lesson Filing Status and More
9/18/2018
David’s W-2 (EIN ) shows the following:
Box 1 = $31,200
Box 2 = $4100
Box 3 = $31,200
Box 4 = $1934
Box 5 = $31,200
Box 6 = $452
Box 12a = Code DD and $2600
Box 13 = Retirement Plan checked
Instructor Note
Direct the volunteers to enter the W-2 in TaxSlayer.
October 28, 2016 LC & Instructor Training

6. Example Immersion Lesson Filing Status and More
9/18/2018
Instructor Note
Direct volunteers to enter the 1099-INT in TaxSlayer
October 28, 2016 LC & Instructor Training

7. Example Immersion Lesson Filing Status and More
9/18/2018
Single
What is David’s AGI? Refund? EIC?
Filing Status
AGI
Refund
EIC
Note
Single
$31,209
$1,432 $0
Instructor Note
After each data entry, have the volunteers record their results in their table before showing the results.
October 28, 2016 LC & Instructor Training

8. Earned Income Credit (EIC)
Example Immersion Lesson Filing Status and More
9/18/2018
Earned Income Credit (EIC)
Why is David’s EIC zero?
Where are the rules?
Open Pub 4012 to Tab I and let’s review
Instructor Note
Hear is an opportunity to generate discussion by asking questions and having the volunteers find the answer in Pub Examples:
Which of the following are considered earned income: Tips, Workers Compensation, Alimony, Union Strike benefits?
At what income was David’s EIC phased out?
How much interest can person earn and still be eligible for EIC?
What if David had an ITIN?
October 28, 2016 LC & Instructor Training

9. Example Immersion Lesson Filing Status and More
9/18/2018
David’s W-2 (EIN ) shows the following:
Box 1 = $31,200
Box 2 = $4100
Box 3 = $31,200
Box 4 = $1934
Box 5 = $31,200
Box 6 = $452
Box 12a = Code DD and $2600
Box 13 = Retirement Plan checked
Answer: Cost of employer sponsored health coverage.
What do the letters “DD” indicate?
How does this affect David?
October 28, 2016 LC & Instructor Training

10. Example Immersion Lesson Filing Status and More
9/18/2018
W-2 Box 12 Codes
Where can you find the codes?
Pub 4012 Tab D
Back of the Form W-2
Look up Code DD
Cost of employer sponsored health coverage
Does that mean David has MEC?
Instructor Notes
Give volunteers time to find answers before displaying.
What probing questions should be asked about the entry for code DD? It may not be MEC.
October 28, 2016 LC & Instructor Training

11. Example Immersion Lesson Filing Status and More
9/18/2018
$30,2000
David’s W-2 (EIN ) shows the following:
Box 1 = $31,200
Box 2 = $4100
Box 3 = $31,200
Box 4 = $1934
Box 5 = $31,200
Box 6 = $452
Box 12a = Code DD and $2600
Box 13 = Retirement Plan checked
D $1,000.00
Code D is voluntary contribution to a 401K
What if there was a code D with $1000? What is Code D? How would that change his W-2?
What other Box 12 Codes show deferred income?
October 28, 2016 LC & Instructor Training

12. Update
Make those changes to David’s W-2

13. David’s W-2 (EIN 45-6000000) shows the following: Box 1 = $31,200
$30,200.00
David’s W-2 (EIN ) shows the following:
Box 1 = $31,200
Box 2 = $4100
Box 3 = $31,200
Box 4 = $1934
Box 5 = $31,200
Box 6 = $452
Box 12a = Code DD and $2600
Box 13 = Retirement Plan checked
D $1,000.00

14. Example Immersion Lesson Filing Status and More
9/18/2018
Single with 401K
What is David’s AGI? Refund? EIC?
Filing Status
AGI
Refund
Note
Single
$31,209
$1,432 $0
$30,209
$1,682
Ret. Svg. Credit
What changed on his Form 1040?
October 28, 2016 LC & Instructor Training

15. Retirement Savings Credit
Example Immersion Lesson Filing Status and More
9/18/2018
Retirement Savings Credit
What is David’s Retirement Savings Credit?
$100
What type of credit is it?
Open Pub 4012, find the tab and let’s review the rules
Instructor Note
Discussion can be prompted by asking questions. Examples:
What probing questions do you ask to determine if David is eligible for this Credit?
At what income would David’s credit be phased out?
At what age do you become eligible for the credit?
What is the maximum credit for any taxpayer?
If David withdrew funds from his 401K two years ago, how would that effect his credit?
October 28, 2016 LC & Instructor Training

16. Retirement Savings Credit
Form 8880
Note change in percentage with change in filing status

17. Add a Dependent Dependent Daughter DOB 4/5/2007 Lived w/TP 0 months
Note the changes to David’s return

18. What changed on his Form 1040?
Single with Dependent
What is David’s AGI? Refund? EIC?
Filing Status
AGI
Refund
EIC
Note
Single
$31,209
$1,432 $0
$30,209
$1,682
Ret Svg Credit
$3,290
Exemption, CTC
What changed on his Form 1040?

19. Example Immersion Lesson Filing Status and More
9/18/2018
Dependency Rules
Still no EIC – Why
Find dependency rules. What page in 4012? C-3
Find rules for child of divorced or separated parents. What page? C-8
Instructor Note
This can be an opportunity to have the volunteers explore the QC/QR Tri-Fold if desired
Discussion can be prompted by asking questions. Examples:
What probing questions do you ask David about his daughter?
What benefits are the custodial parent entitled to?
What is the difference in the “support rule” between Qualifying Child and Qualifying Relative?
October 28, 2016 LC & Instructor Training

20. Example Immersion Lesson Filing Status and More
9/18/2018
Child Tax Credit (CTC)
What is David’s CTC?
$1,000
What type of credit is it?
What are the rules? Find the Tab in Pub 4012 – Let’s review
Instructor Note
Instructors can stress that volunteers be alert to note when a child is approaching age 17 so they can advise taxpayers when they are about to lose this credit.
October 28, 2016 LC & Instructor Training

21. Example Immersion Lesson Filing Status and More
9/18/2018
Change
What if Mary lived with David for all of 2016?
What probing questions do you ask?
Open pub 4012 to Tab B-6, let’s review
Make appropriate changes to return
October 28, 2016 LC & Instructor Training

22. What changed on his Form 1040?
Head of Household
What is David’s AGI? Refund? EIC?
Filing Status
AGI
Refund
EIC
Note
Single
$31,209
$1,432 $0
$30,209
$1,682
Ret. Svg. Credit
$3,290
Exemption, CTC
HoH
$5,367
$1,450
What changed on his Form 1040?

23. Example Immersion Lesson Filing Status and More
9/18/2018
What if?
David is married? Wife ran off January 31, 2016, leaving Mary with David.
What changes would you make to the return?
NONE
Why no changes?
What if Mary was his niece?
Discuss chart on B-1. What if Mary was a niece? Right-hand side of chart includes child, step-child or foster-child only.
October 28, 2016 LC & Instructor Training

24. What if? David’s wife died January 31, 2017
How would that affect the return?

25. Make appropriate changes
Deceased:
January 31, 2017
No income

26. What changed on his Form 1040?
Married Filing Joint
What is David’s AGI? Refund? EIC?
Filing Status
AGI
Refund
EIC
Note
Single
$31,209
$1,432 $0
$30,209
$1,682
Ret Svg Credit
$3,290
Exemption, CTC
HoH
$5,367
$1,450
MFJ
$7,388
$2,336
Many Changes
What changed on his Form 1040?

27. Look at all the changes! Standard Deduction $6,300 to $12,600
Exemptions $8,100 to $12,150
Ret Svg Credit $100 to $500
CTC $1000 down to $48
But Add’l CTC $0 to $952
EIC $1,450 to $2,336

28. Child Tax Credit Revisited
Why is David’s CTC only $48?
What are the rules for Additional CTC? Find the Tab in Pub 4012 – Let’s review

29. What if? David’s wife died January 31, 2015
How would that affect the return?

30. What changed on his Form 1040?
Qualifying Widow(er)
What is David’s AGI? Refund? EIC?
Filing Status
AGI
Refund
EIC
Note
Single
$31,209
$1,432 $0
$30,209
$1,682
Ret Svg Credit
$3,290
Exemption, CTC
HoH
$5,367
$1,450
MFJ
$7,388
$2,336
Many Changes QW
$5,697
What changed on his Form 1040?

31. Example Immersion Lesson Filing Status and More
9/18/2018
Questions
Questions…
Comments…
October 28, 2016 LC & Instructor Training