1. TAX-AIDE Adjustments to Income Pub 4491 –Part 4 – Lesson 18 Pub 4012 – Tab E

2. TAX-AIDE Adjusted Gross Income NTTC Training – TY2015 2 Total Income minus Adjustments = Adjusted Gross Income (AGI)

3. TAX-AIDE Intake/Interview NTTC Training – TY2015 3

4. TAX-AIDE In-Scope Adjustments ● Educator Expenses* ● Health Savings Account** ● Self-employment tax ● Early withdrawal penalty ● Alimony paid ● IRA contributions ● Student loan interest ● Tuition and Fees* ● Jury duty pay given to employer NTTC Training – TY2015 4 * Extenders ** Optional certification

5. TAX-AIDE Extenders… NTTC Training – TY2015 5 Educator Expenses Tuition and Fees

6. TAX-AIDE Adjustments to Income NTTC Training – TY2015 6 Out-of-Scope

7. TAX-AIDE Educator Expense – Line 23 ● Up to $250 for classroom educational materials for taxpayer and $250 for spouse (if both educators). Ask about this if educator(s) ● Must be K–12 teacher, counselor, principal or aide ● Must work at least 900 hours during school year ● Claim entered on TaxWise 1040 Wkt 2 NTTC Training – TY2015 7

8. TAX-AIDE 1040 Wkt2 in TaxWise NTTC Training – TY2015 8

9. TAX-AIDE Health Savings Accounts ● Deduction for contributions to Health Savings Accounts (HSA) Form 8889 ● Requires special certification ● Advanced certification is pre-requisite ● Course and test are in Pub 4942 or online at Link & Learn NTTC Training – TY2015 9

10. TAX-AIDE Portion of Self Employment Tax – Line 27 OOS for TaxAide ● SE Tax = Social Security and Medicare tax for Self-Employed Adjustment from Schedule SE TaxWise processes ● Schedule SE generated from Schedule C TaxWise processes ● Details in Business Income lesson NTTC Training – TY2015 10

11. TAX-AIDE Early Withdrawal Penalty – Line 30 ● Penalty for withdrawal of funds from time deposits, such as CDs ● As reported on 1099-INT or 1099-OID ● In TaxWise, flows from Interest Statement NTTC Training – TY2015 11

12. TAX-AIDE Alimony Paid – Line 31a ● Allowed if paid under Divorce/Separation Agreement ● Must provide recipient’s Social Security No. ● Recipient must claim as income ● Link to Alimony Paid Worksheet from Line 31 if paid to more than one ex-spouse ● Child Support not deductible NTTC Training – TY2015 12

13. TAX-AIDE IRA Deduction – Line 32 ● Can contribute lesser of $5,500 ($6,500 if age 50 or over) or taxable compensation ● Taxpayer has until end of filing season to make contribution for current tax year ● Taxable compensation Wages, tips, bonuses, Sch C income, alimony Not interest, dividends, pensions, unemployment, social security ● Actual amount depends on Taxpayer/ spouse retirement plans, modified AGI, age and filing status NTTC Training – TY2015 13

14. TAX-AIDE IRA Contribution – Line 32 ● Age limits For traditional IRA – under 70½ For Roth IRA – no age limit  Note: Roth IRA contribution is not deductible and will not show on line 32 NTTC Training – TY2015 14

15. IRA Contribution – Link to IRA Worksheet NTTC Training – TY2015 15 These data entered automatically

16. TAX-AIDE IRA Contribution (cont) ● Enter Traditional IRA contributions on line 10 ● If part nondeductible, TW generates Form 8606 ● Enter Roth contributions on line 20 ● Can be a mixture so long as limit is not exceeded NTTC Training – TY2015 16

17. TAX-AIDE Non-Deductible Contributions ● If taxpayer participates in employer’s plan and AGI is too high Some or all of Traditional IRA contribution may be nondeductible ● Roth IRA contributions NTTC Training – TY2015 17

18. TAX-AIDE Non-Deductible Contributions ● TW adds Form 8606 to form tree Part I is in scope If not carried forward, input beginning of year basis on line 2 (from 2014 Form 8606 line 14) ● TaxWise carries the deductible amount, if any, to Line 32 NTTC Training – TY2015 18

19. TAX-AIDE Student Loan Interest – Line 33 ● Intake and Interview Sheet – Part IV, Q12 ● If > $600, should receive Form 1098-E NTTC Training – TY2015 19

20. TAX-AIDE Student Loan Interest – Line 33 ● Interest paid on qualified student loan for post secondary education expenses ● Qualified Loan: Expenses of taxpayer, spouse, or dependent (when loan originated) For education expenses paid within reasonable time since loan was opened For education provided when student enrolled at least ½ time in degree program NTTC Training – TY2015 20 Pub 17, Ch 19

21. TAX-AIDE Student Loan Interest – Line 33 ● Qualified Loan (cont) Loan cannot be from relative Taxpayer cannot be filing MFS Taxpayer cannot be claimed on someone else’s return Loan cannot be from qualified retirement plan Taxpayer must be liable on the loan NTTC Training – TY2015 21

22. TAX-AIDE Student Loan Interest – Line 33 ● Maximum $2,500 per year ● Phases out as AGI increases ● Link to 1040 Wkt 2 NTTC Training – TY2015 22

23. TAX-AIDE 1040 Wkt2 in TaxWise NTTC Training – TY2015 23

24. TAX-AIDE Tuition and Fees – Line 34 ● Up to $4,000 adjustment allowed ● For qualified education expenses of higher education ● One of several choices for education benefits (often not best choice) Will cover details in education benefits lesson later NTTC Training – TY2015 24

25. TAX-AIDE 1040 Wkt2 in TaxWise NTTC Training – TY2015 25 Prepopulated from Main Info Sheet data

26. TAX-AIDE Jury Duty Pay Given to Employer ● Show Jury Pay received on Line 21, Other Income ● Enter amount turned over to employer on Line 35 NTTC Training – TY2015 26

27. TAX-AIDE Quality Review – Adjustments ● Does 1040 page 1 reflect Adjustments properly ● Compare with Intake/Interview Sheet ● Compare with last year’s return ● Were other forms generated that should be addressed NTTC Training – TY2015 27

28. TAX-AIDE Adjustments to Income NTTC Training – TY2015 28 Questions? Comments…