1. Basic B volunteer training Tax year 2014

2. Federal nonrefundable and refundable credits NEW: Premium Tax Credit and related credit “reconciliation” Exemptions to the ACA insurance coverage requirement Other federal taxes and related tax issues Financial services at the tax site BASIC B TRAINING OVERVIEW

3. Affordable Care Act (ACA) and the 2014 tax return

4. ACA THE BASICS The ACA created the Health Insurance Marketplace – Minnesota has it’s own marketplace, MNsure MNsure marketplace is where Minnesotans find information about health insurance options, purchase health insurance and enroll in public health plans Taxpayers must report whether he/she (and family) had insurance coverage for the year on their tax return

5. THE TAX RETURN A new tax credit, the Premium Tax Credit (PTC), is available to help eligible taxpayers pay for coverage Taxpayers could elect to claim the PTC throughout the year to help pay monthly insurance premiums – Advanced Premium Tax Credit (APTC) The ACA also includes the individual shared responsibility provision, which requires individuals to have health insurance coverage for their family Form 8962, Premium Tax Credit (PTC), Form 8965, Health Coverage Exemptions, and Form 1095-A, Health Insurance Marketplace Statement

6. LINE 46: EXCESS ADVANCE PREMIUM TAX CREDIT Must have purchased health insurance through MNsure marketplace Advanced payments of the Premium Tax Credit to help taxpayer pay their 2014 monthly insurance premiums Advanced payments were based on the estimated income the taxpayer entered on their MNsure application Complete Form 8962 to “reconcile” their payment – comparing what they estimated their income would be and what their actual income was for 2014 – did they receive too much advanced payment Must have Form 1095-A to complete the return

7. LINE 61: HEALTH CARE, INDIVIDUAL RESPONSIBILITY Taxpayer and each family member must have – A.Health coverage, B.Qualify for a health coverage exemption, or C.Make a shared responsibility payment (SRP) on their tax return

8. WHAT YOU NEED TO DETERMINE Did everyone listed on the return have insurance coverage? – Yes, is the insurance coverage considered MEC and what months was the taxpayer (family) insurance in 2014 – No, is the taxpayer (family member) required to file a return or eligible for an exemption from insurance coverage

9. YES, THE TAXPAYER (FAMILY) HAS HEALTH INSURANCE Is the health insurance considered minimum essential coverage (MEC)? If the taxpayer (family) had MEC insurance coverage all year, check the “full coverage” box on line 61, click your heels and shout hooray! If the coverage was not all year, complete Worksheet 8 in TaxWise

10. NO, THE TAXPAYER (FAMILY) DID NOT HAVE HEALTH INSURANCE Check the federal filing requirement threshold to determine whether the taxpayer is required to file a return Determine whether the taxpayer (family) may qualify for an exemption from the penalty

11. MINIMUM ESSENTIAL COVERAGE Insurance through employer Insurance purchased through private company Insurance purchased through MNsure marketplace – must have Form 1095-A to complete the return Student health plans Government-sponsored

12. EXEMPTIONS TO THE PENALTY Taxpayer (family) may be eligible for more than one exemption Find the exemption that is least complicated Undocumented taxpayers are exempt from the penalty (exemption code C) Some exemptions require approval from the federal marketplace Taxpayer can elect to take the penalty without claiming an exemption

13. LINE 69: NET PREMIUM TAX CREDIT Credit based on MAGI and family size To be eligible must have purchased insurance through MNsure marketplace Must have Form 1095-A from MNsure If taxpayer elected to receive the APTC, then the portion used during the year will be deducted from the calculated PTC amount

14. 10 MINUTE BREAK

15. Topic 7: Nonrefundable Credits

16. LINE 48: FOREIGN TAX CREDIT Enter the amount shown in box 6 of 1099-DIV or 1099-INT directly on line 48 If required to use Form 1116 then it is out- of-scope

17. LINE 49: CHILD AND DEPENDENT CARE CREDIT Max credit: $3,000 for 1 qualifying person, $6,000 for 2+qualifying persons Cannot be married filing separately Must have earned income Expenses must be paid by the taxpayer to work or look for work Form 2441

18. QUALIFYING PERSON Child under age 13 and claimed as an exemption Person who is physically/mentally incapable of self-care and couldn’t be claimed as exemption because income was $3,950+ Spouse who is physically/mentally incapable of self-care

19. QUALIFYING EXPENSES Paid by the taxpayer (spouse) to work or look for work Child in nursery school or pre-school for children below level of KG qualify for the credit Overnight camp does not qualify Day camp may qualify if the camp specializes in a particular activity such as computers or soccer

20. QUALIFYING PROVIDER Payments cannot be made to the taxpayer’s (spouse) dependent If payments are made to a taxpayer’s (spouse) child, he/she cannot be a dependent and must be age 19 or older by the end of the year If the provider refuses to give EIN/TIN, the taxpayer can still claim the credit, see Pub 17, “provider refusal”

21. LINE 50: EDUCATION CREDITS American opportunity credit, max credit $2,500 per student Lifetime learning credit, max credit $2,000 per return Cannot use both credits for the same student Form 8863

22. CANNOT CLAIM THE CREDIT Claimed as a dependent on another person’s tax return, such as the taxpayer’s parent Filing status is married filing separately Was a nonresident alien for any part of 2014 (nonresidents are out-of-scope for Tri-CAP)

23. EDUCATION DOCUMENTATION Can be shown on Form 1098-T or annual statement from the institution or receipts for books and equipment Reduce expenses by amounts received from scholarships and grants shown in box 5 of Form 1098-T

24. AMERICAN OPPORTUNITY CREDIT 40% of the credit may be refundable Available for the first 4 years of post secondary education Pursuing a degree or recognized educational credential Enrolled at least half time No felony drug convictions

25. NOT ELIGIBLE FOR THE REFUNDABLE AMERICAN OPPORTUNITY CREDIT 1.Taxpayer is (a) under age 18; or (b) age 18 and their earned income was less than ½ of their support; or (c) FT student over age 18 and under 24 and earned income was less than ½ of their support; AND 2.At least one of his/her parents was alive at the end of the year; AND 3.Taxpayer is not filing a joint return

26. LIFETIME LEARNING CREDIT Nonrefundable Available for an unlimited number of years Do not to be pursuing a degree Can take one or more courses Felony drug convictions are permitted

27. EXPENSES Qualifies: tuition, required enrollment fees and course-related materials such as books, supplies and equipment American opportunity credit: books, supplies and equipment do not have to be purchased from the school Lifetime learning credit: books, supplies and equipment must be purchased from the school Does not qualify: computer tech fees, student activity or athletic fees, insurance, room and board, transportation

28. CALCULATING EXPENSES Scenario 1 Tuition $12,500 Course-related materials $650 Scholarships and Grants ($5,000) Eligible expenses for credit $8,150

29. LINE 51: RETIREMENT SAVINGS CREDIT Taxpayers qualify if they made contributions to an eligible plan Contributions to employer-sponsored plan are shown in box 12, Form W-2 Contributions to a traditional IRA or Roth IRA Must be age 18 or older and cannot be a FT student Form 8880

30. LINE 52: CHILD TAX CREDIT Nonrefundable credit up to $1,000 per child Taxpayers not claiming the full amount may be eligible for the refundable Additional Child Tax Credit Must have a Qualifying Child, determined by info entered on TaxWise Main Information Sheet Form 8812

31. LINE 53: RESIDENTIAL ENERGY CREDITS Expired provision

32. Topic 8: Other taxes

33. Line 57: self-employment tax Line 59: additional tax on IRAs, other qualified retirement plans – early distributions subject to 10% penalty Line 60b: 1 st time homebuyer credit repayment Line 61: health care, individual responsibility

34. 10 MINUTE BREAK