1. 1 DISTRICT 5 TRAINING 2011 WHAT'S NEW IN 2011? What we are going to cover:  2010 Tax Relief Act - New tax provisions in 2011  Items affecting tax preparation in 2011 and beyond  Training and Certification

2. 2 DISTRICT 5 TRAINING 2011 TAX RATES CONTINUED*  The 2010 Tax Relief Act:  Extends all individual rates at 10, 15, 25, 28, 33 and 35 percent  Continues for two years – through December 31, 2012 * Affects 2011 and 2012 tax returns

3. 3 DISTRICT 5 TRAINING 2011 PAYROLL TAX CUT  The 2010 Tax Relief Act reduces the employee-share of Social Security taxes from 6.2 % percent to 4.2 %  The change is for wages earned in calendar year 2011 up to the taxable wage base of $106,800  Self-employed individuals will pay 10.4 % (down from 12.4%)on self-employment income up to the threshold

4. 4 DISTRICT 5 TRAINING 2011 QUALIFIED CAPITAL GAINS AND DIVIDENDS*  Qualified capital gains and dividends currently are taxed at a maximum rate of 15 percent (zero percent for taxpayers in the 10 and 15 percent income tax brackets)  The 2010 Tax Relief Act continues for two years – until December 31, 2012 * Affects 2011 and 2012 tax returns

5. 5 DISTRICT 5 TRAINING 2011 Schedule D and Form 8949  Schedule D for 2011 – has new reporting lines using Form 8949 (New in 2011)  Form 8949 has three boxes that need to be completed for each taxpayer  Box A – Cost basis shown on 1099-B  Box B – Cost basis not shown on 1099-B  Box C – No 1099-B received

6. 6 DISTRICT 5 TRAINING 2011 SCH D & FORM 8949, cont’d  For each asset sold, the 1099 will have an A/B/C designator  Assets can no longer be entered on Schedule D  All assets information goes on Forms 8949  Page 1 is for short term; Page 2 is for long term

7. 7 DISTRICT 5 TRAINING 2011 SCH D & FORM 8949, cont’d Tab 2  In TaxWise, Capital Gain or Loss Transactions Worksheet (Cap Gain Wkt) will load 8949s and put assets on appropriate pages  Long Term/Short Term Capital Gains/Losses Wkts will no longer be in Forms list  A/B/C designators will be located on Cap Gain Wkt under 1099 column  Column (b) is code for adjustments to gain/loss, wash sales, exclusion of gain on main home, etc  Column (g) is the amount of the adjustment

8. 8 DISTRICT 5 TRAINING 2011 SCH D & FORM 8949, cont’d  Column (b) is for gain/loss adjustment codes; see F1 help and Form 8949 instructions  Column (g) is for amount of adjustment

9. 9 DISTRICT 5 TRAINING 2011 A B C D F M

10. 10 DISTRICT 5 TRAINING 2011 CAPITAL GAINS ENTRY - 2011 TAXWISE

11. 11 DISTRICT 5 TRAINING 2011 Capital Gains Transactions – 2011

12. 12 DISTRICT 5 TRAINING 2011

13. 13 DISTRICT 5 TRAINING 2011

14. 14 DISTRICT 5 TRAINING 2011

15. 15 DISTRICT 5 TRAINING 2011

16. 16 DISTRICT 5 TRAINING 2011 1040 – Page 1

17. 17 DISTRICT 5 TRAINING 2011 Standard Deduction/Exemptions  Standard deduction  MFJ - $11,600 (up $200)  Head of Household and $8,500 (up $100)  Single/MFS - $5,800 (up $100)  Personal/Dependency Exemption  $3,700 (up $50)

18. 18 DISTRICT 5 TRAINING 2011 CHILD TAX CREDIT  The 2010 Tax Relief Act extends the $1,000 child tax credit for two years, through December 31, 2012.  The qualifying child must be under age 17 at the close of the year and satisfy relationship, residency, support, citizenship, and dependent tests.

19. 19 DISTRICT 5 TRAINING 2011 EITC AND DEPENDENT CARE  Extends the enhanced EITC for two years (i.e., three or more qualifying children)  Extends the enhanced dependent care credit and eligible expenses for two years  From $2,400 to $3,000 and $4,800 to $6,000 for more than one qualifying individual  Maximum credit from 30 % to 35 % of qualifying expenses

20. 20 DISTRICT 5 TRAINING 2011 EITC  Earned Income and adjusted gross income (AGI) must each be less than:  $43,998 ($49,078 married filing jointly) with three or more qualifying children  $40,964 ($46,044 married filing jointly) with two qualifying children  $36,052 ($41,132 married filing jointly) with one qualifying child  $13,660 ($18,740 married filing jointly) with no qualifying children

21. 21 DISTRICT 5 TRAINING 2011 EITC (continued)  Tax Year 2011 maximum credit:  $5,751 - three or more qualifying children  $5,112 - two qualifying children  $3,094 - one qualifying child  $464 - no qualifying children  Investment income must be $3,150 or less for the year.  Advance EITC no longer exists.

22. 22 DISTRICT 5 TRAINING 2011

23. 23 DISTRICT 5 TRAINING 2011 AMT PATCH*  The 2010 Tax Relief Act increases the exemption amounts for 2010 and 2011:  $47,450 for individual taxpayers  $72,450 for married taxpayers filing jointly and surviving spouses  $36,225 for married couples filing separately. * Affects 2011 and 2012 tax returns

24. 24 DISTRICT 5 TRAINING 2011 Standard Mileage Rates  Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:  51 cents/mile for business miles (55.5 cents effective 07/01/2011)  19 cents/ mile driven for medical or moving purposes  14 cents per mile driven in service of charitable organizations

25. 25 DISTRICT 5 TRAINING 2011 LTC Premiums deduction  For 2011, the maximum amount of qualified long-term care premiums includible as medical expenses has increased on Schedule A (Form 1040) Itemized Deductions (per person)  $340 - Age 40 or under  $640 - Age 41 to 50  $1,270 - Age 51 to 60  $3,390 - Age 61 to 70  $4,240 - Age 71 and over

26. 26 DISTRICT 5 TRAINING 2011 EXTENDERS  Qualified Charitable Distributions from certain individual retirement plans for charitable purposes (thru 2011)  Deduction for educator expenses in figuring AGI (thru 2011)  Tuition and fees deduction in figuring AGI (thru 2011)  Itemized deduction for state and local general sales taxes (thru 2011)

27. 27 DISTRICT 5 TRAINING 2011 EXTENDERS (continued)  American Oppor Tax Credit (thru 2012)  Child tax credit of $1,000 and the earned income threshold of $3,000 for the child tax credit (thru 2012)  Private mortgage insurance deduction (through 2011)  Non-business energy property credit (with some limitations) (thru 2011)  EITC increased credit for three or more qualifying children (thru 2012)

28. 28 DISTRICT 5 TRAINING 2011 Non-business Energy Property Credit  This credit has been extended for 1 year with a reduced rate of 10%.  Amounts provided by subsidized federal, state, or local energy financing do not qualify for the credit.  The energy-efficiency standards for qualified natural gas, propane, or oil furnaces, or hot water boilers have been increased.

29. 29 DISTRICT 5 TRAINING 2011 Non-business Energy Property Credit (continued)  For 2011, the credit is limited as follows.  Total combined credit limit of $500 for all tax years after 2005 (Form 5695, Part I).  Combined credit limit of $200 for windows for all the amount of your tax years after 2005.  Maximum credit for residential energy property costs:  $50 for any advanced main air circulating fan;  $150 for any qualified natural gas, propane, or oil furnace, or hot water boiler;  $300 for any item of energy-efficient building property.

30. 30 DISTRICT 5 TRAINING 2011 Residential Energy Credits

31. 31 DISTRICT 5 TRAINING 2011 IRS CHANGES FOR VITA-TCE  Lump-sum social security payments are included as Basic competency  Last year, only current year taxability in scope, but use of numbers from previous year returns in scope this year  No second copy of Form 8879 and income attachments, i.e. W2s’, 1099s’, etc retained at the site or by the ERO  SPEC no longer requires copy for storage; taxpayer still signs single copy prior to efile submission and retains the copy with their tax records

32. 32 DISTRICT 5 TRAINING 2011 NEW PREPARER USE FORM  Dedicated to Preparer’s Use Fields  Prep Use Fields no longer on Main Info Sheet  Prep Use Fields increase from 15 to 25  Standardized to 15-character alphanumeric  Enter up to 25 questions in column A

33. 33 DISTRICT 5 TRAINING 2011  All Preparer Use Field entries will be stored for reporting purposes (not the question)  Accessible via the report server  Taxpayer Reminder Field will be added  Enter information you need to convey to preparer for following year  Will automatically display when return is started in TY 2012 (January 2013) PREPARER USE FORM, cont’d

34. 34 DISTRICT 5 TRAINING 2011

35. 35 DISTRICT 5 TRAINING 2011 Intake/Interview & Quality Review Sheet Form 13614-C

36. 36 DISTRICT 5 TRAINING 2011

37. 37 DISTRICT 5 TRAINING 2011

38. 38 DISTRICT 5 TRAINING 2011 RECORD KEEPING  Beginning 2011 tax filing season, we no longer will retain and send to the IRS:  A signed copy of Form 8879 and income statements (W2, W2G and 1099s’)  AARP will no longer permit retaining a copy with supporting documents at the site except for use with Form 8453 mailing  This will require sites to revise their e-filing procedures

39. 39 DISTRICT 5 TRAINING 2011 Tracking of Returns for E-filing  Each site will track returns to make sure the ERO knows which returns are ready for e-filing  Returns must be transmitted and accepted in a timely manner.  Each site must adopt a method to protect TP data and privacy

40. 40 DISTRICT 5 TRAINING 2011 Taxpayer Data and Privacy Policy  The Site or ERO will not keep any forms or documents with a taxpayer identity and/or SSN that is not mandated by the IRS or a State. ie. Form 8453 if used for mailing

41. 41 DISTRICT 5 TRAINING 2011 Site sign-in/log sheet  In addition to using Return Stage in TaxWise;  The site will record on the site sign-in/log sheet the status of the return:  Ready to e-file;  Waiting for signature of Form 8879;  Return will be paper filed;  Waiting for Taxpayer documents  Question only – no return prepared

42. 42 DISTRICT 5 TRAINING 2011 Modified TaxAide Site Sign-In Sheet

43. 43 DISTRICT 5 TRAINING 2011 Activity Report for Reporting

44. 44 DISTRICT 5 TRAINING 2011 Activity Report for Tracking E-File Returns - Transmitted

45. 45 DISTRICT 5 TRAINING 2011 Activity Report for Tracking E- Files - Acknowledged

46. 46 DISTRICT 5 TRAINING 2011 Line Added on AZ140 for Unpaid Use Tax

47. 47 NTTC/NTC ERO Training 2011

48. 48 DISTRICT 5 TRAINING 2011

49. 49 DISTRICT 5 TRAINING 2011

50. 50 DISTRICT 5 TRAINING 2011 SUPPORTING DOCUMENTATION  Pub 4012 Volunteer Resource Guide  Pub 4491 (hard copy or CD) Training Guide  Pub 4491W Comprehensive Problems & Exercises  Pub 17 Your Federal Income Tax Guide  Pub 6744 Volunteer Test/Retest

51. 51 DISTRICT 5 TRAINING 2011 TRAINING & CERTIFICATION  Counselors – six (6) steps  Noncounselors – four (4) steps  All must pass IRS Standards of Conduct test with 80% accuracy  All must sign Volunteer Standards of Conduct  All Counselors must pass IRS test at 80%, Standards of Conduct, Basic, Intermediate & Advanced levels, using Pub 6744 or IRS Link & Learn test system

52. 52 DISTRICT 5 TRAINING 2011

53. 53 DISTRICT 5 TRAINING 2011 Volunteer Training Process For Volunteers Not Providing Tax Assistance

54. 54 DISTRICT 5 TRAINING 2011 Standards of Conduct Training  Training module in Pub 6744 and Link and Learn  Includes 6 Standards of Conduct  Includes 10 Quality Site Requirements  All volunteers must answer 4 of 5 questions correctly

55. 55 DISTRICT 5 TRAINING 2011 Volunteer Standards of Conduct Agreement – VITA/TCE Programs Form 13615

56. 56 DISTRICT 5 TRAINING 2011 Training on TaxWise  Train on TW11 2011 returns  TWO EROs can setup training users for both TW10 and TW11  TW11 users will carryover to TW11  Desktop EROs can setup TWO training users for both TW10 and TW11  Training TWO will be deactived 2/12  Procedure available on AZ TaxAide

57. 57 DISTRICT 5 TRAINING 2011 Take the Test On L&L  All counselor can certify on L&L  Problems can be prepared on Practice Lab, TWO or desktop  Form 13615 Volunteer Agreement can be printed when test completed  Biggest Advantage – Instructor don’t have to grade test  See document [Take the Test Using Link & Learn (11/14)

58. 58 DISTRICT 5 TRAINING 2011 Counselor Certification Process  Preferred: Take test on L&L, print out results (printed on form 13615), sign and provide to instructor or LC. Instructor or LC reviews 4 exercises completed by counselor and resolves any errors  Can take test manually using Pub 6744 and provide answer sheet to instructor or LC for grading.

59. 59 DISTRICT 5 TRAINING 2011 Counselor Certification Continued  Lead instructor should collect Form 13615 and inform LC of certified counselors  All Form 13615s must be signed by instructor & a copy submitted to Sandy Liska either by mail, fax or email.  8103 E Southern Ave Lot 73  Mesa AZ 85029-3508  480-380-1505  aarpsdliska@gmail.com

60. 60 DISTRICT 5 TRAINING 2011 Counselor Certification Continued  If LC grades the test and has the counselor sign Form 13615, the form should be signed by the LC, a copy sent to Sandy and the instructor should be informed.  The Form 13615s should be retained at the local level until the end of the season  Sandy will provide the list of certified counselors to the IRS

61. 61 DISTRICT 5 TRAINING 2011 Recommended Exercises  Baylor – Military retiree, wife has died, caring for grandchild, div, pension, SS, and itemized deductions  Fleming – Divorced woman, 2 kids, INT, IRA, pension, self employment, W-2, EITC  Sterling – Retired couple, INT, DIV, stock sale, pension and SS  Kent Comprehensive – Most everything except EITC. Line by Line answers

62. 62 DISTRICT 5 TRAINING 2011 Other Training  District must decide approach to train ERO’s.  Reference ERO Presentation on Extranet  As a minimum, a mentor (experience ERO) should be assigned to any new ERO  Client Facilitator and any other volunteer must pass Standards of Conduct test  Reference Client Facilitator training on the Extranet

63. 63 DISTRICT 5 TRAINING 2011 Reference Material on Extranet  2011 Training Guide  Power Point Training Slides  Client Facilitator Training  ERO Training  Volunteer Standards of Conduct  Volunteer Standards of Professionism  Volunteer Certification Process  Alternate Training Options  Taxpayer Information and Responsibilities  Volunteer Portal - Overview

64. 64 DISTRICT 5 TRAINING 2011 Reference Material on AZ Web Site  1099 SSA Lump Sum Payment  Arizona Return Requirements  Duck Book TWD & TWO  Flow Chart Dependents/Exemptions  HAS Training  Sch C Training  Test Using L&L  Use Form D19597 to Track efiles  Volunteer Certification Process  P4961 Volunteer Stds Of Conduct Training

65. 65 DISTRICT 5 TRAINING 2011 AARP Tax-Aide Volunteer Portal 65 2011 Regional Meetings – St Louis A web-based and centralized access point that provides a single and secure access to All AARP Tax-Aide Information, Applications, Databases and Reporting Accessibility based on volunteer title and other requirements Simplification and consistent presentation of the forms, tools and interfaces used for data entry, search and reporting Training Materials on the Portal and all applications can be found on the Extranet Training Tab http://assets.aarp.org/www.aarp.org_/taxaide/www.aarp.org/sk/taxaide/training.html

66. 66 DISTRICT 5 TRAINING 2011 Future Portal Application Volunteer ShareNet (Formerly Extranet) 66 2011 Regional Meetings – St Louis Move Extranet contents currently open to the public and maintained by AARP IT to secured and easy to use interface to be called “Volunteer ShareNet” Contents can be updated by Tax Aide staff at any time Access to the contents is determined by the user’s volunteer positions Systems maintained in parallel during transition Volunteer ShareNet in PORTAL EXTRAN ET

67. 67 DISTRICT 5 TRAINING 2011 Sample Volunteer ShareNet Screen 67 2011 Regional Meetings – St Louis

68. 68 DISTRICT 5 TRAINING 2011 Portal Registration Roll Out  Portal registration requires all AARP Foundation Tax-Aide Volunteers to have a unique email address.  E-mail address may not be shared with another volunteer, AARP member or AARP. org registered user.  ADS and National Office will assist in case of a conflict with E-mail addresses.

69. 69 DISTRICT 5 TRAINING 2011 Portal Pre-Registeration  Volunteers who are not already registered by the listed dates below will be pre-registered by the National Office using their existing VMIS Tax-Aide E-mail address as the Login ID.  All Leaders – 12/31/11  All Existing Non-Leaders – 1/15/12  All New & Returning Volunteer – 2/15/12  Volunteers will be provided with a Password by E-mail upon registration.

70. 70 DISTRICT 5 TRAINING 2011 That’s All Folks! Questions??