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2020 IRS BASIC EXAM TIPS

HELPFUL TIPS FOR THE 2020 IRS BASIC CERTIFICATION EXAM

Some topics on the IRS VITA Volunteer Basic Certification Exam will remain out of scope for SaveFirst Basic volunteers. The certification exam is open-book and open-note. You should consult the information below to aid you in responding to questions and scenarios in the IRS

Basic Certification Exam.

(Make sure you are using 2020 Practice Lab when using TaxSlayer!!)

As a reminder, a SaveFirst Campus Fellow, Advanced Trained Volunteer, or Site Coordinator will prepare advanced level topics on a tax return.

SCENARIO #1: SHELDON AND ODESSA SANFORD

➢ View page D-38 in the Publication 4012 and note the phrase “RMD waiver for 2020.” o Determination of required minimum distributions is out of scope for SaveFirst Basic

Volunteers. You will only have to answer this question for the sake of the test. ➢ The standard deduction will require an additional chart since Sheldon is over the age of 65.

o Go through your Pub 4012 page B-8 to determine their filing status. o Reference the first chart on page F-2 in your Pub 4012 to determine the correct

standard deduction for the Sanfords given their filing status and ages. o An example of the chart for a previous year is below.

2 SAVEFIRST | HELPFUL TIPS FOR THE 2020 IRS BASIC CERTIFICATION EXAM

SCENARIO #2: MARSHA PERRY

➢ Reference pages A-1, A-3, and A-4 in the Publication 4012 to determine if Marsha must file. o Is Marsha’s gross income over the amount in Chart A for her filing status? o Based on the Interview Notes, do any of the situations in Chart C apply to Marsha? If

the Interview Notes don’t mention the forms listed in Chart C, the answer will be no. o Review Chart D. Check for income tax withholding on Marsha’s tax forms.

➢ Go through the Pub 4012 page C-3 to determine if Marsha can claim Shelby as her qualifying child dependent. Then refer to I-2 and I-4 to review Marsha’s eligibility for the EIC.

➢ Follow the resources (including web links) on page H-8 of the Pub 4012 to determine if Marsha qualified for a $500 Economic Impact Payment for Shelby.

o NOTE: Pending more legislative action, determination of EIP and Recovery Rebate Credit amounts will be OUT OF SCOPE for SaveFirst Basic Volunteers. Answer this question for the test only.

SCENARIO #3: AIDEN AND SOPHIA DUKE

➢ Use the flowchart on page B-8 of the Publication 4012 to determine the best filing status for Sophia.

➢ See the footnote at the bottom of page E-1 for information on the charitable contributions adjustment for 2020 returns.

o Note that the adjustment is dollar-for-dollar with a $300 limit. o SaveFirst Basic Volunteers will not make entries that affect this adjustment amount.

SAVEFIRST | HELPFUL TIPS FOR THE 2020 IRS BASIC CERTIFICATION EXAM 3

SCENARIO #4: BENJAMIN AND AMELIA HOPKINS

➢ The Child Tax Credit (page G-2) is 2,000 per child and it is nonrefundable. The children must meet the tests on page G-2 to be qualifying children for the child tax credit:

o Be under age 17 at the end of the year o Be a U.S. citizen, national, or resident alien o Be claimed as the taxpayer’s dependent

▪ Must be son or daughter, adopted child, stepchild, eligible foster child, or a descendant of any of them (for example, a grandchild)

▪ Or brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, a niece or nephew)

o Must have a valid social security number by the due date of the return. ➢ See the charts on pages I-2 to I-4 of the Pub 4012 to determine if the Hopkins can claim the EIC.

SCENARIO #5: LUCAS AND ABIGAIL BROWN

➢ See page G-10 in the Publication 4012 for eligibility information about the Child and Dependent Care Expenses Credit.

➢ See the charts on pages I-3 and I-4 of the Publication 4012 for eligibility information about the Earned Income Credit.

➢ See page G-2 in the Publication 4012 for the limit on the Additional Child Tax Credit.

SCENARIO #6: DANIEL AND AVERY EMORY - TAXSLAYER EXERCISE REQUIRED

Dependents and Filing Status:

➢ Use the Pub 4012 to determine the Dependents (C-3 and C-4) and filing status (B-8).

Create the return in TaxSlayer Practice Lab:

(Make sure you are using the 2020 Practice Lab.)

➢ Choose filing status, enter personal information, and dependents.

Enter the In Scope Topics from this exercise:

➢ W-2 from Rich’s Book Store and W-2 from Salem Elementary School ➢ SSA-1099 for Daniel ➢ $2,900 Economic Impact Payment ➢ Estimated Tax Payments (see screenshot below)


1. Estimated Tax Payments ➢ Go to Federal Section → Payments and Estimates → Federal Estimated Payments for 2020.

Enter the four Estimated Tax Payments in the Estimated Federal Tax Paid boxes for 2020.

Out of Scope Topics from this exercise:

➢ Pine Corporation Form 1099-R ➢ Financial Aid Partners 1098-E ➢ Buckeye College 1098-T and bookstore receipt ➢ There are very detailed screenshots below that will guide you through entering the above

topics. **REMINDER** you will NOT be allowed to enter these during SaveFirst tax preparation, but you should follow the instructions for entering them in TaxSlayer to get the right answer for the test.

1. Pine Corporation 1099-R (out of scope for SaveFirst Basic Volunteers) ➢ Choose “IRA/Pension Distribution” from the Income Landing page and “Add or Edit a

1099-R” ➢ Make sure “Daniel Avery” is selected ➢ Enter in the ID number “40-1000000” and make sure Payer Name and Address match. ➢ Enter the following information into the 1099-R on TaxSlayer

o Box 1 Gross distribution “9,350” o Box 2a Taxable amount “9,350” o Box 4 Federal Withholding “1,935” o Box 7 distribution code “7”


➢ Remember, retirement income is OUT OF SCOPE for basic volunteers at SaveFirst tax sites.

You will only need to enter this in for the sake of this test.

2. Buckeye College Form 1098-T and bookstore receipt (out of scope for SaveFirst Basic Volunteers)

➢ Go to Federal Section → Deductions → Credits → Education Credit ➢ Select “Jackson” as the student. ➢ Select “American Opportunity Credit.” ➢ Enter qualified expenses as “2,600.” ➢ Enter institution name and information from the 1098-T. ➢ Answer the questions to match the screenshot and click “Continue” ➢ Remember, education credits are OUT OF SCOPE for Basic Volunteers during SaveFirst tax

preparation. You will only need to enter them for the sake of this test.


Helpful Tips for Exam Questions ➢ To find the standard deduction, go to Summary/Print → View/Print Return → Print your 2020

Tax Return. Look on line 12 of the Form 1040. ➢ You can find the total adjustments on line 10c of the Form 1040. ➢ Enter $860 for Question 13. Their American Opportunity Credit is on line 29 of the Form 1040.

o Education credits are out of scope for SaveFirst Basic Volunteers. SaveFirst Advanced Volunteers will enter education expenses.

➢ Determine if the Emorys are receiving the Credit for Other Dependents by checking line 19 of the 1040 for a $500 amount for each dependent who qualifies according to page G-3.

➢ You can find the total federal income tax withholding on line 25d of the Form 1040. ➢ You can find the taxable portion of SS benefits on line 6b of the Form 1040. ➢ Use the charts on pages I-2 and I-4 to determine if Jackson meets the residency test for the

Earned Income Credit.


SCENARIO #7: EMMA DAVIS - TAXSLAYER EXERCISE REQUIRED





Enter the In Scope Topics from this exercise:

➢ 1099-DIV from County Bank ➢ W-2G from Ridgetop Casino ➢ 1099-INT from County Bank ➢ $1,700 Economic Impact Payment

Out of Scope Topics from this exercise:

➢ The income documents that are OUT OF SCOPE for basic volunteers from this scenario are: o Gambling Losses o Form 1099-R from Gilmer Corporation o Form 1098-E from Financial Aid Partners o Charitable Contributions

➢ There are screenshots below that will guide you through entering the above topics. **REMINDER** you will not be allowed to enter these during SaveFirst tax preparation, but you should follow the instructions for entering them in TaxSlayer to get the right answer for the test.

1. Gambling Losses (out of scope for SaveFirst Basic Volunteers) ➢ Go to the W-2G from Ridgetop Casino and enter “700” under “Gambling Losses” in addition

to the gambling winnings you entered from the W-2G (not shown in screenshot).

➢ Remember, gambling losses and other itemized deductions are OUT OF SCOPE for basic volunteers at SaveFirst tax sites. You will only need to enter this for the sake of this test.


2. 1099-R from Gilmer Corp (out of scope for SaveFirst Basic Volunteers) ➢ In TaxSlayer, go to the Federal Section → Income → 1099-R → Add or Edit a 1099-R. ➢ Enter the 1099-R as shown below and click Continue. Check the box for “Report on Form

1040, Line 1” on the next screen.

➢ Remember, retirement income is OUT OF SCOPE for SaveFirst Basic Volunteers. You will only need to enter this for the sake of this test.


3. 1098-E from Financial Aid Partners ➢ Go to Federal Section → Deductions → Adjustments → Student Loan Interest Deduction and

enter the 1098-E as shown below. ➢ Remember, student loan interest is OUT OF SCOPE for basic volunteers at SaveFirst tax sites. You will only need to enter this in for the sake of this test.

4. Charitable Contributions ➢ Emma donated $100 to her daughter’s school. Go to Federal Section→ Deductions→

Itemized Deductions→ Gifts to Charity→ Cash Gifts to Charity→ click Override and enter the donation amount under Total Cash Amount Donated.

➢ Remember, itemized deductions are OUT OF SCOPE for SaveFirst Basic Volunteers. You will only need to enter this for the sake of this test.

Helpful Tips for Exam Questions ➢ See the list of codes on page D-40 and the chart on page I-1 of the Pub 4012 to determine if

the disability pension income is reported as wages and counts as earned income. o Remember, retirement income is out of scope for SaveFirst Basic Volunteers. A

SaveFirst Advanced Volunteer will enter all retirement income in tax season. ➢ Use page B-8 to help you determine the proper filing status for Emma. ➢ Use line 3 of the Form 1040 and page D-11 to determine the correct answer(s) about

qualified vs. ordinary dividends. ➢ Use pages C-3 and C-4 to determine if Poppy and Sebastian are Emma’s dependents. The

Dependents section of the Form 1040 will show the dependents you entered earlier. ➢ Use page D-52 to determine the taxability of Emma’s gambling winnings. ➢ Access the Tax Withholding Estimator on IRS.gov to determine its use. ➢ Balances due are on line 37 of the Form 1040.

SCENARIO #8: AIOKI ELLIS - TAXSLAYER EXERCISE REQUIRED






Enter the In Scope Topics from this exercise: ➢ Placeholder for spouse’s SSN: 111-00-1111 (Pub 4012 page B-16) ➢ W-2 from Presbyterian Hospital ➢ Unemployment Compensation (1099-G) ➢ Child and Dependent Care Expenses ➢ Identity Protection PIN ➢ $2,900 Economic Impact Payment ➢ Bank account information

Out of Scope Topics for this exercise: ➢ 1099-R from Kent State Bank

1. 1099-R from Kent State Bank (out of scope for SaveFirst Basic Volunteers) ➢ Remember, retirement income (1099-R) is OUT OF SCOPE for SaveFirst Basic Volunteers.

You will only need to enter this for the sake of this test. ➢ Enter the 1099-R as shown below, and check the IRA checkbox. Click Continue and select

“Retirement Plan” on the next screen.


Helpful Tips for Exam Questions:

➢ Use the chart on page G-13 to determine Aioki’s eligibility for the Retirement Savings Contribution Credit.

➢ Use page O-5 to help you on Question 26. ➢ Use page D-40 to determine the amount of the additional tax on the IRA distribution. ➢ Use page G-2, G-10, and I-2 to determine if Aioki is eligible for the credits. Check page 2

of your Form 1040 in the Summary/Print section to verify which credits appear. ○ Does Sofia meet the qualifications in the Child Tax Credit chart? ○ Does Aioki meet the qualifications in the Child & Dependent Care Expenses

Screening Sheet? ○ Is Sofia Aioki’s Qualifying Child, and does Aioki meet the EIC eligibility

requirements on I-2 based on that determination? ➢ Use pages K-10 and K-19 for information about Form 8888. ➢ Use page P-2 for information about the IP PIN.


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