1. EKS Training Scenario Four

2. Ground Rules o Don’t work ahead – stay on the current task o Turn off your cell phone o Question/Comments – raise your hand, stay in your seat o No side conversations - don’t even ask your neighbor for help o Returning volunteers sit next to new volunteers o Bring your materials every day o At least try to do your homework – bring your questions

3. Class Structure 4 Steps:  As a class, we will review Interview Notes, Intake & Interview Sheet (13614-C) & supporting documents for each scenario.  Instructor will teach Tax Law – referencing Publication 4012 and 13614-C  Instructor will show you how to enter information into TaxWise. WATCH!  Now DO! Students will enter information on TaxWise

4. Scenario #4

5. What you will learn in this scenario: 1.ITINs 2.Retirement Income 3.Self-employment/Business income with expenses 4.State Refund Income 5.Itemized Deductions 6.Affordable Care Act – Exemptions for ITIN and Shared Responsibility Payment What you will review in this scenario: 1.Filing Status 2.Personal and Dependency Exemptions 3.Income – W-2 4.Credits:  Child Tax Credit, Additional Child Tax Credit, Child and Dependent Care Credit, 5.Itemized Deductions versus Standard Deduction 6.ACA- 1095-C Employer Coverage 7.Form 8888

6. Scenario #4 Let’s review Mary and Kevin’s Information:  Interview Notes  Intake & Interview sheet - 13614-C  Tax Documents

7. Interview Notes Review  What did you learn about Mary and Kevin?

8. Tax Law Topic #1 ITIN  Individual Taxpayer Identification Number, issued by the IRS to taxpayers without a valid SSN (start with a 9 – taxpayer will have a letter from IRS with the number on it)  When applying for an ITIN, a taxpayer submits a W-7 with their tax return along with documentation like a passport, birth certificate and/or other identification  VITA sites can file returns for taxpayers with ITINs – just like any other return  Some VITA sites can help taxpayers apply for the number – called Certifying Acceptance Agents

9. Intake & Interview Deep Dive with the 13614-C  Did they bring all the required documents?  Everything accurate?  What’s missing/wrong/mismatched that needs to be changed?  Compare tax documents and interview notes  Make any corrections needed on 13614-C  Fill out greyed out boxes (dependency and ACA) Publication 4012, Tabs K-3 and K-4

10. Who should file? Does this taxpayer need to file their return? Or should they? Publication 4012, Tab A

11. In Scope? Is client eligible for VITA services? What certification level is needed to prepare this return? Publication 4012, pages 8-10 Scope of Services Chart

12. Tax Law Topic #2 Determine filing status for a married couple Publication 4012, Tab B-1

13. TaxWise You Got This! Enter Mary and Kevin’s:  Personal information on Main Information Sheet  Everything on page one of 13614-C goes on Main Info Publication 4012, K-6 to K-11 for Main Info

14. TaxWise You Got This! Enter Mary and Kevin’s:  Income documents:  W-2 Publication 4012, D-3 to D-9 for Income

15. Tax Law Topic #3 Retirement Income  Retirement income such as pensions, 401k’s or IRAs are reported on a 1099-R  Box 7 will let you know what kind of distribution is being reported  What codes do Mary’s two 1099-R’s have? What do they mean? Tab D-21 and D-22  Taxable amount box empty or taxable amount not determined box checked – use simplified method Publication 4012, Tab D-20 through D-24

16. TaxWise Students: WATCH instructor Enter Mary’s 1099-Rs  Remember the simplified method! Publication 4012, Tab D-20 through D-24

17. TaxWise Students: Enter Mary’s 1099-Rs  Remember the simplified method! Publication 4012, Tab D-20 through D-24

18. Tax Law Topic #4 Business Income with expenses Which one’s EZ? Publication 4012, Tab D-13 to D-15 *$25,000 for VITA Scope Schedule C-EZSchedule C Only one per return (TP and SP both have businesses won’t work) Multiple per return possible Simplified expensesMust categorize expenses (advertising, insurance, supplies, licenses, etc.) Has limit of $5,000 expensesNo expense limit*

19. TaxWise Students: WATCH instructor Enter Kevin’s cash income and expenses on Schedule C-EZ Publication 4012, Tab D-13 to D-15

20. TaxWise Students: Enter Kevin’s cash income and expenses on Schedule C-EZ Publication 4012, Tab D-13 to D-15

21. Tax Law Topic #5 State Refund as Income  When a taxpayer itemizes their deductions, they can use state income tax paid as a deduction  In turn, any refund received that year needs to be reported as income  The state refund is reported on 1099-G  You will need the taxpayer’s prior year return to fill in:  Taxable income  Itemized deductions total  State income tax paid Publication 4012, Tab D-13 to D-15

22. TaxWise Students: WATCH instructor Enter the Kents’ state refund on the State Tax Refund Worksheet from 1040, line 10 Publication 4012, Tab D-12

23. TaxWise Students: Enter the Kents’ state refund on the State Tax Refund Worksheet from 1040, line 10 Publication 4012, Tab D-12

24. Tax Law Topic #6 Itemized Deductions:  Deductions reduce a taxpayer’s taxable income  Taxpayer can take Standard or Itemized Deductions (should take the larger):  Standard – a fixed dollar amount based on filing status  Itemized – uses your qualified expenses like mortgage interest, medical or dental expenses, charitable contributions Publication 4012, Tab F & Schedule A

25. Tax Law Topic #6 Itemized Deductions:  Mortgage interest is the major indicator that someone does or should itemize  Use Tabs F-3 and F-4 to interview the taxpayer  More details in Publication 17 Publication 4012, Tab F-3 through F-8, Publication 17 & Schedule A

26. TaxWise Students: WATCH instructor Enter the Kents’ deductions on Schedule A:  Mortgage Interest  Real Estate Taxes  Charitable Contributions Interview notes & Publication 4012, Tab F-5

27. TaxWise Students: Enter the Kents’ deductions on Schedule A. Interview notes & Publication 4012, Tab F-5

28. TaxWise You Got This! Enter the Kents’ childcare expenses on Form 2441 for the Child and Dependent Care Credit Interview Notes & Publication 4012, Tab G-5

29. TaxWise Let’s review credits calculated on TaxWise: Did the Kents qualify for these credits?  Child Tax Credit  Additional Child Tax Credit

30. Tax Law Topic #7 Affordable Care Act Exemptions  Did the Kents have coverage all year?  If no, let’s review the exemptions before assessing the Shared Responsibility Payment Interview Notes, 13614-C, 1095-C and Publication 4012, Tab ACA

31. TaxWise You got this!  Enter exemption information for Kevin on ACA Worksheet and 8965  Enter coverage information for Mary and Melissa on the ACA worksheet Interview Notes, Publication 4012, Tab ACA

32. Completing the CA return 1.Get the red out! Most information will automatically populate from the federal return 2.State EITC Form – 3514* 3.If you have entered more than one W-2 on the 1040, you will have to manually add the additional W-2’s. The first W- 2 will carry over, but the rest won’t. 4.Make sure to complete the direct deposit or balance due portion of the return 5.Complete the CA Renters Credit Worksheet when applicable. *At the time of this ppt creation, details on what TaxWise will auto populate are not available

33. TaxWise You got this!  Complete the Kents’ CA return (540)

34. Refund  Do the Kents want to direct deposit their refund?  If so, are they requesting to split their refund?  Do they want to buy a savings bond? 13614-C and Interview Notes

35. Savings Ask Every Taxpayer (AET)!  Remind the Kents of the savings option  Answer Questions  Be enthusiastic and positive!

36. TaxWise Students: WATCH instructor  Direct Deposit into one account requires that you enter the account information in two places:  Main Info Sheet  Page 2 of the 1040  Check “same as federal” for the state return Publication 4012, Tab K-14

37. TaxWise Students:  Direct Deposit into one account requires that you enter the account information in two places:  Main Info Sheet  Page 2 of the 1040  Check “same as federal” for the state return Publication 4012, Tab K-14

38. Finishing the return THINGS YOU NEED TO KNOW ABOUT FINISHING A RETURN 1.Ask the questions in the Prep Use Fields 2.All returns must be Quality Reviewed (checklist on 13614- C) Tab, K-25 3.Run Diagnostics to check for errors 4.Print returns (Federal and State) for Taxpayer 5.Review return with taxpayer (Formula 1040 activity) 6.Have Taxpayer and Spouse sign 8879s for Federal and State and remind them they are responsible for their return and by signing, they are agreeing it is accurate:  One copy for the taxpayer  One copy for the VITA Site Publication 4012, Tab K

39. Check our work  Do we have matching AGI, refund?  Let’s review entry of: -W-2 -Schedule C-EZ -State Refund Worksheet -Schedule A -Form 2441 -Direct Deposit -ACA Exemptions and Full Year MEC

40. Look it up! What Schedule is required to report non-employee compensation from a 1099-MISC? Publication 4012, Tab D-3 Schedule C or Schedule C-EZ True or False: If a self-employed taxpayer has $11,000 in business expenses it is out of scope. Publication 4012, Tab D-14 True Which ACA exemption do taxpayers with ITINs qualify for? Publication 4012, Tab ACA Exemption Code C – citizens living abroad and certain noncitizens

41. Look it up! What must be done if box 2a on Form 1099-R is empty or box 2b is not checked? Publication 4012, Tab D-24 Use the simplified method worksheet Where do you enter bank account information if the taxpayer wants to direct deposit their refund into only one account? Publication 4012, Tab K-14 Main Info and 1040 page 2 What large deductible expense is common among taxpayers who itemize their deductions? Publication 4012, Tab F-3 Mortgage Interest

42. Before next week…  Try your Scenario 5 Homework  Let’s review the scenario now…  You’ll need to know about:  Social Security Benefits  Cancellation of Debt  Dividend Income  ACA – Marketplace Coverage and Advanced Premium Tax Credit