National Tax Training Committee

National Tax Training Committee
Steve Conary, Chair Updates on NTTC activities and products as we prepare for next tax season NTTC – October 2018 Regional Meeting

NTTC – October 2018 Regional Meeting
Topics Training Resources Scope and Tax Law State Tax Assistance Program … NTTC and IRS Scope changes, tax law issues Changes to State Tax Assistance Program Other topics NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Training Resources… NTTC – October 2018 Regional Meeting

Training Over the Years
Pub 678 Pub 4491 Overhead projectors PowerPoint slides Enhanced PowerPoint slides (include all in-scope tax law topics; extensive notes) Immersion Lecture → Do → Lecture → Do → Lecture → …. Process based training with Pub 4491 Immersion Nominal reliance on lecture – homework and classroom discussion instead Reinforce use of Resource Materials Mentors Adult Learning Principles Focus on hands-on with TaxSlayer Some lecture and homework, more discussion → much more Do → …. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Workbook – TY 2018 New for 2018 Training Exercises – designed for Instructor use in classroom to teach core tax law and software entry Andrews – Single Working Taxpayer Baker – Single Working Parent Caldwell – Young Married Couple Davenport – Senior Married Couple Evans – Inclusive Core Exercise Affordable Care Act Supplement Extensively revised for TY2018 to help Instructors with an even more interactive training approach These exercises require students to Interview “taxpayer” and update Intake Sheet PowerPoint files for each lesson NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Workbook – TY 2018 New for 2018 Focused Exercises – five short exercises that focus on specific tax topics for practice and to reinforce concepts following classroom lessons Adams – Basic Income Baldwin – Self-employment Chambers – Retirement Income Davis – Investment Income Elliott – Itemized Deductions and Education Benefit A series of five exercises that are focused on specific tax topics: Basic income, self-employment, retirement income, investment income, itemized deductions and education credit. These short, straightforward exercises can be assigned as homework or in the classroom to reinforce the knowledge and skills learned in the Training Exercises NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Workbook – TY 2018 Core Exercises (8) – tax topics typically seen at sites Comprehensive Exercises (7) More complex topics Aimed at experienced volunteers Specialty Exercises (2) – Health Savings Accounts (HSA) and options for Education Credits using unrestricted scholarships Revised for 2018 Proficiency exercises NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Workbook – TY 2018 Quizzes ACA Filing Status and Dependency General Revised for 2018 NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Workbook – TY 2018 New for 2018 Workbook Instructor Guide – separate document with information and suggestions for using Workbook to support training programs Interview notes Examples of probing questions What if’s Volunteer Resource Guide queries Sample training schedules … This guide provides Instructors with information and suggestions for using the Workbook in a more interactive way when teaching volunteers in a classroom setting. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Workbook – TY 2018 Electronic version in Portal Library Print version available to order from Fulfillment mid- October Answers using 2017 Practice Lab and Instructor Guide sent to TRSs on September 8 Answers using 2018 Practice Lab: ~December Tax-Aide use only – do not post on publicly accessible websites or provide to non-Tax-Aide personnel TRSs decide how/who receives answers and Guide Do not post answers anywhere Do not give Workbook to SPEC NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Qualifying Child/Qualifying Relative Tri-fold
Available to order from fulfillment in October For new volunteers (minor clip and tape changes for returning volunteers) Terminology related to exemptions and other clarifications associated with tax law changes Tax-Aide use only – do not post on publicly accessible websites or provide to non-Tax-Aide personnel NTTC – October 2018 Regional Meeting

Training Guide Revised and in Portal Library Updated typical Activities Schedule for TRS Added appendix on Lesson Planning Section on developing and conducting Instructor Workshop NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Other Materials NTTC Training Slides First release mid-October Second release mid-December Updated Scope Manual – October (or after Form finalized) NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Must order each – not bundled
IRS Products CAPS opened Oct 1. Orders in system by Oct 10 start shipping week of Nov 5 Must order each – not bundled Electronic versions available in October Print version in January Print version in November (new evergreen version) Pub 4012 shipping just ahead of tax season – IRS goal is to incorporate tax law, tax form TaxSlayer changes CAPS opened Oct 1. Orders in system by Oct 10 start shipping week of Nov 5 Pub 4480 kit only Print version in November NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

IRS Pub 17 Last year paper version available Available in December Two per site (cannot be ordered) NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Other… NTTC additions to electronic Pubs 4491 and 4012 – end of year Self-study lesson plans – November For volunteers who do not have time for extensive classroom work or geographic challenges for classroom setting Some classroom requirements such as Tax-Aide Policies and Procedures TRS Webinars – monthly (or as needed) started late August NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Training Resources Questions… Comments… NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Scope and Tax Law NTTC – October 2018 Regional Meeting

Scope Tax-Aide scope is national Set by IRS Scope Manual is in Portal Library Includes most forms and schedules that Counselor might see as either in or out of scope If a form or schedule or part of either is not explicitly listed as in scope, it is out of scope Supersedes Pubs 4491 and 4012 – Tax-Aide has additional permissions Requests for scope change for taxpayers in our neck of the woods because they are different. Scope creep is an issue for some. 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 Scope Manual started as list of in-scope forms and schedules. Now includes most all forms and schedules counselor might see Districts/states may decide that an in scope topic doesn’t apply or is more than they want to do – that’s okay But flip side is that if not trained, then not in scope NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Scope Change Process… Perceived need at any level Request for proposed change submitted up the chain – can be vetoed at any point NTTC submits requests to VP and then to NLT once a year in January Approved changes apply in following year’s filing season Scope changes adopted in time to prepare training materials Do not change scope during tax season NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Process for Requesting Change in Scope
Change proposed State Coordinator reviews Regional Coordinator reviews NTTC reviews VP AARP Foundation Tax-Aide reviews National Leadership Team approves IRS SPEC reviews approves/denies Changes incorporated into training documentation as necessary NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Land-Only Rental Expenses
Allow taxpayer to claim property tax and mortgage interest paid on land-only rental on Schedule E in Part I Expenses. If expense statement covers larger parcel than area rented or includes improvements, taxpayer must determine portion of total bill applicable to land-only rental Balance can still be reported on Schedule A. Otherwise, expense must all be reported on Schedule A Denied by IRS – hold for next year Land only renter who is also subject to $10,000 Schedule A SALT limit will want these taxes reported on Schedule E NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Denied by IRS – hold for next year
Form 1099-PATR Taxpayer who buys farm supplies through cooperative to which s/he belongs may receive income from cooperative in form of patronage dividends (refunds) Dividends are reported to taxpayer on Form 1099-PATR which is currently out of scope If taxpayer confirms that income in box 1 is solely from items purchased for personal use, volunteer may properly ignore form when preparing the tax return. If there are any other entries on the Form 1099-PATR, return will continue to be out of scope. Denied by IRS – hold for next year If the volunteer confirms with the taxpayer that the income in box 1 is solely from items purchased for personal use, the volunteer may properly ignore the form when preparing the tax return. Since the payer is required to include a letter explaining the tax consequences of the information on the form, this will be a simple determination. If there are any other entries on the Form 1099-PATR, the return will continue to be out of scope. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Gas and Oil Royalty Expenses
Allow expense deduction on Schedule E for taxpayers with no working interest if producing company provides expense information Allow percentage depletion allowance for gas and/or oil royalty payments Optional training module (if SC approves) based on SPEC- produced training program developed by Denver SPEC office used in Wyoming, Texas, Colorado, North Dakota and South Dakota Denied by IRS – hold for next year Requested in 2016 – denied because of concerns about timber rights and mining – appealed On-hold since NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Line 29 Deduction for Self-Employed Taxpayers
Allow self-employed taxpayers with Medicare or private health insurance to claim health insurance deduction on Form 1040, Line 29 Note: applies to any open tax year Approved by IRS Includes long-term care insurance with limitations NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Kiddie Tax Child's Investment income that is more than $2,100 is taxed at tax rates for trusts (change for 2018) Form 8615 Note: applies to tax year 2018 only Approved by IRS Tax rate for trusts rather than tax rate for parents income plus income of all children subject to kiddie tax NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

New Scope Change Requests…TY2019
Requested expedited consideration for TY2018 – not granted Bond premiums Boxes 11 – 13 on Form 1099-INT Credit for Repayment of Disability Pension Payment Solar Energy Credit on Form 5695 Form 8396 Mortgage Certificate Interest Credit Form 1099-R Code N (trustee-to-trustee recharacterization of IRA from one type to another in same year) Not yet submitted to NLT for approval NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Rental Reminder Rental income from land only is in scope – expenses (typically property tax) reported on Schedule A – not Schedule E Rental of main home for less than 15 days in the year considered in-scope because it is not reportable event All other rental income is out of scope unless Counselor is Military certified -AND- Taxpayer is active-duty military IRS to revise language in Pubs to agree with this policy NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Tax-Aide Policies Counselors may prepare returns that: Are in Tax-Aide scope AND Are tax topics included in their training They feel comfortable to prepare State/site can choose to opt out of a specific in-scope tax topic Not trained Not confident as seldom seen While we all agree to stay in scope when we sign the Volunteer Agreement, it is a somewhat self-policing process - is it within the scope of tax law the IRS has agreed we can handle AND have I been trained on that tax law AND am I comfortable preparing a return with that situation. Quality Reviewers are the next line and should be open and straightforward to say no when encountering an out-of-scope situation, but then will hear "This taxpayer waited two hours to be seen and an hour to have the return done, we can't say no now!" No easy answer – the black and white answer is a polite "sorry" to taxpayer but the practical, shades of gray answer might be a consensus that this one return is correct so we'll let it go - facts and circumstances and LC and taxpayer should decide. But for sure should be team discussion and agreement to not do that again. Must also be careful to not mask discrimination with “not comfortable” – same-sex marriage MFJ return for example NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Tax-Aide Policies Retention of taxpayer information or documents (other than activity/appointment log) not permitted Income limits for in-scope returns not permitted Updated Policy and Procedures Manual in October Complicated returns can be better served by professional preparer Built in limit – net investment income tax NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Refund of Previously Taxed Veterans Disability Payments
Veterans who received disability severance payment included as taxable income after January 18, 1991 and before January 1, 2017 may claim refund of tax overpayment Most eligible veterans received letter from the Department of Defense in July with payment amount and date NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Refund of Previously Taxed Veterans Disability Payments
Two options to claim refund: File complete Form 1040X to remove actual amount of disability severance payment File Form 1040X to claim standard refund amount: $1,750 for tax years $2,400 for tax years $3,200 for tax years NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Tax-Aide Policy for Veterans’ Refunds
Policy change for more than prior three years File Form 1040X for years 1991–2014 to claim only standard refund Filing complete Form 1040X for those years requires manually re-creating return to account for any AGI- dependent credits, adjustments, etc. and Counselors are generally not trained on those years Since standard refund amount ignores filing status and therefore tax on payment, assume it is not needed for amendment Refund check will include accrued interest NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Tax-Aide Policy for Veterans’ Refunds
File Form 1040X for years 2015–2016 for standard refund or, with State Coordinator approval, as complete amendment Complete amendment per procedures in Pub 4012, Tab M Veteran must provide copy of original return Counselor and Reviewer military certified Combat pay exclusions (or not), moving expenses, and other provisions covered by this separate certification as summarized in Pub 3 would still apply if filing a complete Form 1040X for NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

2018 Tax Law Changes Revised tax rates and brackets Higher standard deductions: $12,000/$18,000/$24,000 Over 65/blind: +$1,300 if married, +$1,600 otherwise Exemptions reduced to $0 Fewer/limited itemized deductions $10,000 SALT limit Suspends all miscellaneous itemized deductions subject to 2% floor Home equity loan interest only deductible if loan used to improve property NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

2018 Tax Law Changes (cont) Child tax credit increased to $2,000 with $1,400 maximum amount refundable – SSN required for each qualifying child New $500 nonrefundable credit for qualifying dependents other than qualifying children Expanded use of Act 529 plans NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

2018 Tax Law Change New deduction for Qualified Business Income (QBI) for self- employment income and Section 199A dividends* Can deduct lessor of 20% of QBI or 20% of taxable income before QBI New 1040 line Assuming at this point that TaxSlayer will handle arithmetic Schedule C net income limit of $157,500 to avoid limits applicable to specified service trades or businesses trade or business involving health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of the trade or business is the reputation or skill of one or more of its owners or employees. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

* 2018 Form 1099-DIV From To Box 5. Shows dividends eligible for the 20% qualified business income deduction under section 199A. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

2019 Tax Law Changes Alimony and separate maintenance payments are not deductible by payor spouse or included in income for recipient for any divorce or separation instrument executed or modified after Dec 31, 2018 Amount for individual shared responsibility payment reduced to zero NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

2018 Tax Law Changes Counselors must be able to explain differences between 2017 and 2018 returns to taxpayers Law changes Withholding changes Taxpayer’s situation changes TaxSlayer plans to add two-year comparison NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Tax Law Changes Many (most) states have not/may not/will not follow federal changes Impacts unknown Timing unknown Recommend close liaison with state DORs Each state team must understand and train on any state impacts from federal changes TaxSlayer plans to leave federal entry pages in place if still applicable to state returns, e.g., Form 2106 for unreimbursed business expenses NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

New Form 1040 “Postcard” 1040 created by moving many lines from “old” Form 1040 to separate schedules numbered 1–6 Schedules A, B, C, D, E, … still required if applicable Not yet final NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Practice Lab 2018 Release expected in November Likely that some federal and state changes will continue after that States in Practice Lab – unknown (Dec 4 last year) Many federal and state enhancements See Blog site for release notes NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Practice Lab Practice Lab is the training platform for TaxSlayer Do not use production sites Practice Lab is same as production when preparing a return (but cannot submit an e-file) Encourage Instructors to browse Practice Lab(s) to become familiar with changes Practice Lab 2017 available until mid-November 2019 Remember it is a production site, but cannot practice submitting returns NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

TaxSlayer POC States with income tax Continue small teams of subject matter experts with a Point of Contact (POC) lead Identify state TaxSlayer issues POC communicates with TaxSlayer support (Suggestion Box and/or NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

TaxSlayer Issues and Questions
Tax-Aide participates in conference calls with IRS, TaxSlayer and other key partners NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Scope and Tax Law Changes
Questions… Comments… NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

State Tax Assistance Program
NTTC – October 2018 Regional Meeting

State Tax Returns Situation: Taxpayer requires return from another state which the counselor has not been trained to prepare Options: Turn taxpayer away Ignore other state return Could rely on TaxSlayer to get it right (but don’t) Get help to complete other state return Could do, but should inform taxpayer early in process so doesn’t have long wait. If site only completes federal return, must provide very clear instructions to taxpayer on options and what taxpayer must do to get state return completed On-line state DOR Paper return Home state Tax-Aide site (investigate if that Counselor can get login to state where federal return was done so don’t have to recreate it) Dangerous if both states have income tax as taxpayer then not receiving credit for tax paid to other state. Could result in having to amend the one state return that is completed. See above options NO – with no training on the other state tax law and the nuances in TaxSlayer for completing that state return, this is a disservice to the taxpayer and is out of scope. What the State Tax Assistance Program offers. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Certified Counselors “assist” for their home state tax returns Does not replace bordering state district-to-district cooperation and cross-training Requires taxpayers to return Review return Signature(s) for e-filing State Counselors participate in their state developed and administered state tax return training. The state tax training should follow the AARP Policy and Procedures Manual, paragraph 2.4 State and Local Tax Training. Use TaxSlayer to connect from a remote location and actually complete the subject state return and to do the QR of that return Border state districts should continue cross-training so can deal with returns from ‘other’ state Second visit can be difficult for appointment sites with slots already filled May mean that another home state taxpayer is not being served Quality review for all federal and state returns must follow paragraph Quality Review Training in the Policy and Procedures Manual. NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

State Training Preparation Requesting Counselor prepares returns in TaxSlayer: Federal Applicable local state Starts the “other state” return(s) using state intake sheet Site TaxSlayer Administrator Activates TaxSlayer User for STAP Assisting Counselor Adds “other state” forms to print package Consider creating a STAP Return Tag NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Requesting Assistance from “Other State”
New for tax year 2018 – no more tickets – now the STAP request for help sent to Replace XX with state, e.g., NY, MI, Requesting and Assisting Counselors then communicate by phone, TaxSlayer, and/or other media PA FL NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Taxpayer Security Only “Requesting” Counselor has access to taxpayer documents and only when taxpayer is present “Assisting” Counselor must rely on Requesting Counselor, i.e., no copies sent electronically NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Assisting Counselor Process
Accepts by responding to the Requesting Counselor Initiates phone or conversation to answer questions Interviews taxpayer if necessary Logs into Requesting TaxSlayer site to review/update state return NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Requesting State Role Complete the Federal and initiate the state returns Request assistance on state returns via Reviews state tax return with taxpayer once complete Obtains signature(s) to e-file NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Assisting State STAP Lead
Ensures State Intake Sheet is current if applicable Consults with SC(s) to select team of Counselors qualified to prepare and quality review their state returns Ensure requests are answered promptly NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Assisting State STAP Lead
Manages the state Assisting Counselors and choses: Automatic broadcast of new requests to the state team -OR- Manual broadcast of each new request to the state tea Individually assigns requests to individual team members NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

NTTC Role in STAP Help Assisting states set up addresses Publish list of Assisting states and any state intake sheets in Portal Library Prepare guidance for Requesting and Assisting STAP volunteers NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Summary – STAP for TY 2018 Continue to offer STAP Stop using OneSupport Ticket system … it was uneconomical with current volume Replace with process to connect Requesting and Assisting Counselors Continue to encourage more state participation RCs – explore with SCs Improve awareness by sites/volunteers NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Questions… Comments… NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Other Items NTTC – October 2018 Regional Meeting

The Approving Official for Tax Law Certification…
TRS certified by IRS Spec RM (The Approving Official) TRCs and Instructors certified by TRS (The Approving Official) Counselors, etc. certified by Instructors (The Approving Officials) This is a cascading process Starts with IRS Spec. signing off on the TRS’ Volunteer agreement. TRS then signs off on the ‘Instructors’ Volunteer agreements. Finally Instructors, TRCs & TRS certify and sign off on agreements NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Possible Certifications…
Volunteer Standards of Conduct Policies and Procedures* Intake and QR Proficiency problems Advanced Test Local Coordinator training* State Training Health Savings Account Military International Foreign Student * Not tax law - typically by DC NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Reminders… Counselors must pass the Advanced Test to be certified IRS Circular 230 Federal Tax Law Update Test (certification on new tax law and tax law updates only) for Attorneys, CPAs and Enrolled Agents does not apply A volunteer who completes Circular 230 Federal Tax Law Update Test can prepare all tax returns that fall within the scope of the VITA/TCE program – passing only Update Test “certifies” them for everything – Advanced, HSA, Military, Foreign Student, … . As well as perform all volunteer roles such as tax preparer, quality reviewer and/or instructor. NTTC – October 2018 Regional Meeting NTTC – 2017 Regional Meeting

Reporting Certifications
To be covered by NOC this week NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

Continuing Education Credits
Enrolled Agents, Certified Financial Planners, Attorneys, Certified Public Accountants may qualify for CE credits Must register, complete fields on My Account page and take exams on Link & Learn Local leader must validate and submit to local SPEC RM – not Tax-Aide national office – by April 30 More information including IRS Fact Sheet will be in Portal Library – SMT Roundup topic later this year NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

National Tax Training Committee
NTTC – October 2018 Regional Meeting NTTC – October 2018 Regional Meeting

National Tax Training Committee

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