1. TAX-AIDE Federal Tax Law Changes – Tax Year 2015 Pub 4012 Pub 4491 – Pages iii – vi

2. TAX-AIDE New Provisions ● In scope: 1099-R Code L used for a Loan treated as a deemed distribution Schedule C expenses now up to $25,000 1099-QA Distributions from ABLE accounts 1099-LTC Long Term Care and Accelerated Death Benefits NTTC Training – TY2015 2

3. TAX-AIDE New Provisions ● IRS is assigning IP Pins to dependents Will need to input on Main Info Sheet ● Taxpayer can designate a contribution to a myRA on Form 1040, Line 76 (tbc) ● Mandatory exclusion of qualified Medicaid waiver payments for difficulty of care services NTTC Training – TY2015 3

4. TAX-AIDE Indexing – Standard Mileage ● 57.5¢ per mile – business miles ● 23¢ per mile – medical miles ● 14¢ per mile – charitable miles NTTC Training – TY2015 4

5. TAX-AIDE Extended Provisions ● COD exclusion for principal residence – no longer separate course (see Pub 4491) ● Qualified Charitable Distribution—QCD (Tax-free distribution from IRAs to public charities for individuals age 70½ or older) ● Adjustment for educator classroom expenses up to $250 ● Adjustment for qualified tuition and fees NTTC Training – TY2015 5

6. TAX-AIDE Extended Provisions ● Deduction for state and local general sales taxes ● Premiums for mortgage insurance deductible as interest for qualified residence ● Nonbusiness energy property credit NTTC Training – TY2015 6

7. TAX-AIDE Social Security Number Printouts ● SSA does not provide Social Security number printouts ● Taxpayers who do not have their Social Security card can request a replacement Social Security card (estimated to take two weeks) ● SSA-1099 will contain only last 4 digits of SSN NTTC Training – TY2015 7

8. TAX-AIDE Social Security Number Printouts ● Alternatively, If taxpayer has picture ID and all income documents contain same name and number, carry forward data can be used as proof of name and SSN NTTC Training – TY2015 8

9. TAX-AIDE Tax Law Changes 2015 Comments? Questions? NTTC Training – TY2015 9

10. TAX-AIDE Other Income Lesson 21 Form 1040 – Line 21 Pub 4012 – Pages D 3 and 4 Pub 4491 –Part 3 – Lesson 16

11. TAX-AIDE Intake/Interview NTTC Training – TY2015 11

12. TAX-AIDE Examples: ● Gambling winnings including lotteries and raffles ● Reported on 1099-MISC, Box 3 ● Reported on 1099-MISC, Box 7 (but “not a business”) ● 1099-LTC ● Jury duty pay and Poll Worker Pay (not on W-2) ● Other: Prizes and awards Medical study subject pay Cancellation of credit card debt NTTC Training – TY2015 12 Pub 17, pg 94

13. TAX-AIDE National Mortgage Settlement ● Taxpayers may receive a settlement payment ● Relates to a home lost in foreclosure 2008 – 2012 ● No tax form (1099) issued ● Out-of-scope NTTC Training – TY2015 13

14. TAX-AIDE Other Income ● Generally does NOT include 1099-MISC non-employee compensation (Box 7) which is business income – Sch C ● Does NOT include rent or royalty income which are reported on Sch E ● Does include income not reported on other lines and schedules NTTC Training – TY2015 14

15. TAX-AIDE Line 21 in TaxWise NTTC Training – TY2015 15 Link to Wkt 7 Other Income Worksheet

16. TAX-AIDE Link to W-2G Gambling income NTTC Training – TY2015 16 If no W-2G, use L 16

17. TAX-AIDE NTTC Training – TY2015 17

18. TAX-AIDE Bottom of W-2G NTTC Training – TY2015 18 Check if not taxable by state Losses automatically transfer to Schedule A limited by amount of winnings. If no W-2G, ensure losses are entered on Schedule A, but do not exceed winnings.

19. TAX-AIDE Long Term Care Payments 1099-LTC ● LTC Insurance Contracts – Generally reimbursements not taxable Per diem costs up to an aggregate limit of $330/day are non-taxable ● Reported to taxpayer on 1099-LTC ● Complete Form 8853, Section C (Sections A and B remain out-of-scope) NTTC Training – TY2015 19

20. TAX-AIDE Long Term Care Payments 1099-LTC ● If there are multiple payees under the insurance contract, refer the taxpayer to a paid preparer NTTC Training – TY2015 20

21. TAX-AIDE Long Term Care Payments 1099-LTC ● Complete Form 8853 Pg 2 Either add or link from Wkt 7 ● TaxWise will carry taxable amount, if any, to 1040 Wkt 7 L 11 ● Unreimbursed medical expenses can be deducted on A Detail, if itemizing NTTC Training – TY2015 21

22. Form 8853Form 8853 NTTC Training – TY2015 22

23. TAX-AIDE Cancellation of Debt ● Nonbusiness credit card debt only ● Taxpayer must be solvent immediately before debt cancelled Value of assets exceeds value of liabilities Not in bankruptcy ● Otherwise out-of-scope NTTC Training – TY2015 23 Pub 4012 – pg D-32

24. TAX-AIDE Cancellation of Debt ● Lenders must issue Form 1099-C if cancel $600 or more of debt Less than $600 must also be reported as income by taxpayer ● Cancelled debt included on Form 1040, Line 21 NTTC Training – TY2015 24

25. TAX-AIDE Form 1099-C NTTC Training – TY2015 25 OOS Nonbusiness credit card debt only OOS

26. TAX-AIDE Income – Quality Review The final question with respect to income: Did you have any other income? NTTC Training – TY2015 26

27. TAX-AIDE Other Income NTTC Training – TY2015 27 Questions? Comments…

28. TAX-AIDE Medicaid Waiver Payments Difficulty of Care Payments 4491 – Part 3 – Lesson 16 Entire Lesson

29. TAX-AIDE Medicaid Waiver Payments ● Paid by state or county ● Paid to caregiver to provide nonmedical support services to an individual in caregiver’s home ● Frequently paid to care recipients own family NTTC Training – TY2015 29

30. TAX-AIDE Difficulty of Care Payments ● IRS Notice 2014-7 Treats “qualified Medicaid waiver payments” as difficulty of care payments MUST be excluded from Income NTTC Training – TY2015 30

31. TAX-AIDE Income Documents ● Each state reports payments according to its own rules 1099-MISC Box 7 1099-MISC Box 3 W-2 Not reported Other… NTTC Training – TY2015 31

32. TAX-AIDE Tax Return ● Enter income from W-2 on Line 7 OR ● Enter income from 1099-MISC on Line 21 (Wkt7)` ● Enter same amount as a negative number on Line 21 (Wkt7) labeled “Notice 2014-7” NTTC Training – TY2015 32

33. TAX-AIDE In TaxWise ● Worksheet 7 NTTC Training – TY2015 33

34. TAX-AIDE Reported on W-2 and Excluded ● Payments entered on a W-2 and then excluded must be deducted from EIC earned income ACTC earned income Dependent care credit NTTC Training – TY2015 34

35. TAX-AIDE W-2 Income Excluded – Sch EIC Wkt NTTC Training – TY2015 35 Enter the excluded amount as if it were penal income

36. TAX-AIDE W-2 Income Excluded – Form 8812 NTTC Training – TY2015 36 Enter the excluded amount as if it were penal income Will change if TWO is modified.

37. TAX-AIDE W-2 Income Excluded – Form 2441 NTTC Training – TY2015 37 Add scratch pad to subtract the excluded amount

38. TAX-AIDE Schedule C ● Report payments on Schedule C if taxpayer is in the business of providing care ● Enter exclusion as an other expense on Schedule C ● Do not exclude income if care is for more than 5 adults or more than 10 children NTTC Training – TY2015 38

39. TAX-AIDE Excluding Payment from Return ● Taxpayer must exclude income from return. Will likely receive a notice of omission from IRS Should answer with “Notice 2014-7” NTTC Training – TY2015 39

40. TAX-AIDE Quality Review ● Verify if amount has been excluded from all applicable worksheets/forms, (EIC, ACTC, & Dependent Care Credit) ● Verify the dollar amount on Wkt7 NTTC Training – TY2015 40

41. TAX-AIDE Medicaid Waiver Payments NTTC Training – TY2015 41 Questions? Comments?