SaveFirst Basic Tax Training 2011. SaveFirst Basic Training ● 2011 © Training Outline 1.Tax Terminology 2.Exemptions 3.Filing Status 4.Income 5.Standard

SaveFirst Basic Tax Training

2011

SaveFirst Basic Training ● 2011 ©

Training Outline1.1. Tax TerminologyTax Terminology

2.2. ExemptionsExemptions

3.3. Filing StatusFiling Status

4.4. IncomeIncome

5.5. Standard DeductionStandard Deduction

6.6. Earned Income CreditEarned Income Credit


Training Outline7.7. Child Tax CreditChild Tax Credit

8.8. Child and Dependent Care CreditChild and Dependent Care Credit

9.9. Miscellaneous CreditsMiscellaneous Credits

10.10. Form 8888Form 8888

11.11. Alabama ReturnAlabama Return

12.12. Finishing the Return & Volunteer Finishing the Return & Volunteer RequirementsRequirements


Volunteer Resources

This is A LOT of material!

Use your resources!

• Use your books.Use your books. Pub 4012 (spiral notebook)Pub 4012 (spiral notebook) Pub 17 (Your Federal Income Tax)Pub 17 (Your Federal Income Tax) Pub 4491 (Student Training Guide)Pub 4491 (Student Training Guide)

• Refer to your Tax Prep Process HandoutRefer to your Tax Prep Process Handout

• Ask questions.Ask questions.

• Visit www.irs.govVisit www.irs.gov


Intake & Interview Form1.1. Taxpayers complete pages 1, 2, and 3Taxpayers complete pages 1, 2, and 3

2.2. You review pages 1 and 2 (BEFORE You review pages 1 and 2 (BEFORE logging into TaxWise!)logging into TaxWise!)

Collect all necessary forms during the interview.Collect all necessary forms during the interview. Make sure nothing it outside your scope or the Make sure nothing it outside your scope or the

scope of VITAscope of VITA

3.3. You complete Section B on page 4.You complete Section B on page 4.

REMEMBER: Always involve the taxpayer!


Identification: Social Security #• Verify social security numbers for each Verify social security numbers for each

person on the return. person on the return. Children too!Children too!

• Obtain a social security card (original or Obtain a social security card (original or copy) OR statement of social security copy) OR statement of social security benefits displaying both name and social benefits displaying both name and social security number.security number.

• Enter name Enter name EXACTLYEXACTLY as it appears. as it appears.


Identification: ITIN• Taxpayers with an Individual Taxpayer Taxpayers with an Individual Taxpayer

Identification Number (ITIN) Identification Number (ITIN) Are ineligible for a social security number.Are ineligible for a social security number. CAN file taxes and receive a refund.CAN file taxes and receive a refund. CANNOT receive the Earned Income Credit.CANNOT receive the Earned Income Credit.

• We can help a taxpayer file for an ITIN, BUT call your supervisor.


Training Outline

1.1. Tax TerminologyTax Terminology2.2. ExemptionsExemptions


4.4. IncomeIncome




Form 1040

Tax Terminology


Earned Income

Income received through work Income received through work

(i.e. wages, salary, tips)(i.e. wages, salary, tips)

Tax Terminology


Unearned Income

Income other than for pay for work Income other than for pay for work

(i.e., interest income)(i.e., interest income)

Tax Terminology


Adjustment

Decreases the amount of income on which Decreases the amount of income on which the taxpayer will be taxed.the taxpayer will be taxed.

Tax Terminology


Adjusted Gross Income (AGI)

Amount of taxable income after adjustments Amount of taxable income after adjustments are madeare made

Tax Terminology


Deduction

Amount subtracted from the AGI to further Amount subtracted from the AGI to further decrease taxable income.decrease taxable income.

Tax Terminology


Exemption

Amount that a taxpayer can claim for Amount that a taxpayer can claim for himself, his spouse, and his dependents in himself, his spouse, and his dependents in

order to decrease taxable income even order to decrease taxable income even moremore

Tax Terminology


Dependent

An individual whom the taxpayer supports or An individual whom the taxpayer supports or who lives with the taxpayer (i.e. a who lives with the taxpayer (i.e. a

qualifying child or qualifying relative)qualifying child or qualifying relative)

Tax Terminology


Taxable Income

Any income subject to federal income tax. Any income subject to federal income tax. Can include both earned and unearned Can include both earned and unearned

income.income.

Tax Terminology


Tax Liability

The amount of tax that must be paidThe amount of tax that must be paid

Tax Terminology


Tax Credit

A direct reduction of the taxpayer’s liabilityA direct reduction of the taxpayer’s liability

Tax Terminology


Nonrefundable Tax Credit

A credit that allows taxpayers to reduce their A credit that allows taxpayers to reduce their tax liability to zero, but not receive the tax liability to zero, but not receive the

excess credit as a refundexcess credit as a refund

Tax Terminology


Refundable Tax Credit

A credit that allows the taxpayer to reduce A credit that allows the taxpayer to reduce his tax liability to zero and receive a refund his tax liability to zero and receive a refund

of any credit that is leftof any credit that is left

Tax Terminology


Withholding

The amount of money that is taken from a The amount of money that is taken from a taxpayer’s paycheck and received by the taxpayer’s paycheck and received by the

government each pay periodgovernment each pay period

Tax Terminology


TOTAL INCOME

Earned Income


TOTAL INCOME

Earned Income

Unearned Income


TAXABLE INCOME

after adjustments,

deductions, and exemptions

TOTAL INCOME

Earned Income

Unearned Income


Unearned Income

TOTAL INCOME

Earned Income

TAXABLE INCOME

after adjustments,


TAX LIABILITY


Unearned Income

TOTAL INCOME

Earned Income

TAXABLE INCOME

after adjustments,


TAX LIABILITY

TAX CREDITS

AMOUNT OWED OR REFUNDED



2.2. ExemptionsExemptions3.3. Filing StatusFiling Status

4.4. IncomeIncome




Personal Exemptions• A taxpayer can claim one personal A taxpayer can claim one personal

exemption for exemption for Himself/Herself UNLESS the taxpayer can be Himself/Herself UNLESS the taxpayer can be

claimed as a dependent by someone else.claimed as a dependent by someone else. Spouse UNLESS the spouse can be claimed Spouse UNLESS the spouse can be claimed

as a dependent by someone else.as a dependent by someone else.

• Each exemption decreases taxable Each exemption decreases taxable income by $3,700.income by $3,700.

Exemptions


Personal Exemptions• Remember: It’s not whether the taxpayer Remember: It’s not whether the taxpayer

IS claimed as a dependent, but whether IS claimed as a dependent, but whether the taxpayer the taxpayer CAN BECAN BE claimed as a claimed as a dependent that determines whether the dependent that determines whether the taxpayer can claim an exemption.taxpayer can claim an exemption.

Exemptions


Dependency Exemptions• Each exemption decreases taxable Each exemption decreases taxable

income by $3,700.income by $3,700.

• A taxpayer can claim exemptions for A taxpayer can claim exemptions for qualifying childrenqualifying children qualifying relativesqualifying relatives

• These qualifying individuals typically live in These qualifying individuals typically live in the taxpayer’s home and generally the taxpayer’s home and generally receive significant support from him/her.receive significant support from him/her.

Exemptions


Dependency Exemption for a Qualifying Child

Use Spiral Resource guide page C-4

Exemptions


Qualifying Child: The Taxpayer Eligibility Test

Exemptions

Step 1Step 1

Can you or your spouse (if filing Can you or your spouse (if filing jointly) be claimed as a dependent jointly) be claimed as a dependent on someone else’s tax return this on someone else’s tax return this

year?year?

If NO, go to If NO, go to Step 2Step 2


Qualifying Child: The Marital Status Test

Exemptions

Step 2Step 2Was this “child” considered Was this “child” considered

married on December 31, 2011married on December 31, 2011


If YES, If YES,

go to Step 3go to Step 3


Qualifying Child: The Joint Return Test

Exemptions

Step 3Step 3

Is the “child” filing a joint return Is the “child” filing a joint return

for this tax year?for this tax year?

OROR

Does the person have tax liability Does the person have tax liability (or is filing a joint return for any (or is filing a joint return for any

reason other than to claim a reason other than to claim a refund)?refund)?



Qualifying Child: The Citizenship Test

Exemptions

Step 4Step 4Was the “child” a U.S. citizen, U.S. Was the “child” a U.S. citizen, U.S. national, or a resident of the U.S., national, or a resident of the U.S.,

Canada, or Mexico?Canada, or Mexico?

If YES, If YES,



Qualifying Child: The Relationship Test

Exemptions

Step 5Step 5

Was the “child” your son, daughter, Was the “child” your son, daughter, stepchild, eligible foster child, stepchild, eligible foster child,

brother, sister, half brother, half brother, sister, half brother, half sister, stepbrother, stepsister, or a sister, stepbrother, stepsister, or a

descendant of any of them (i.e. your descendant of any of them (i.e. your grandchild, niece, or nephew)?grandchild, niece, or nephew)?

If YES, If YES,



Qualifying Child: The Age Test

Exemptions

Step 6Step 6

Was the “child” under age 19 at the end of the Was the “child” under age 19 at the end of the year and younger than you?year and younger than you?

OROR

Was the “child” a full-time student under age 24 Was the “child” a full-time student under age 24 at the end of the year and younger than you?at the end of the year and younger than you?

OROR

Was the “child” any age and permanently and Was the “child” any age and permanently and totally disabled at any time during the year?totally disabled at any time during the year?

If YES, If YES,



Qualifying Child: The Residency Test

Exemptions

Step 7Step 7Did the person live with you as a Did the person live with you as a member of your household for member of your household for

more than half of the year?more than half of the year?

If YES, If YES,




Divorced or Separated ParentsSee Table 3 on page C-7 in spiral notebook.See Table 3 on page C-7 in spiral notebook.

• The The custodialcustodial parent generally claims the parent generally claims the dependency exemption for his/her child.dependency exemption for his/her child.

• The The noncustodialnoncustodial parent can claim the parent can claim the exemption if the parents have signed an exemption if the parents have signed an agreement.agreement. Form 8332 (REQUIRED for post-2008 divorce)Form 8332 (REQUIRED for post-2008 divorce) Other legally binding document (if divorce went into Other legally binding document (if divorce went into

effect BEFORE 2009)effect BEFORE 2009)

Exemptions



Division of Benefits: Form 8332

• Custodial parent gives noncustodial parent right Custodial parent gives noncustodial parent right to claim dependency exemption forto claim dependency exemption for Current Tax Year ORCurrent Tax Year OR Group of YearsGroup of Years

• Noncustodial parent must send physical copy Noncustodial parent must send physical copy every yearevery year

• Custodial parent can revoke noncustodial Custodial parent can revoke noncustodial parent’s right—revocation takes effect the tax parent’s right—revocation takes effect the tax year year after after signedsigned

Exemptions



Division of Benefits: Form 8332Only ONE TAXPAYER can claim a particular child for Only ONE TAXPAYER can claim a particular child for

ALL of these benefits:ALL of these benefits:

Exemptions

Dependency Exemption

Child Tax Credit

Head of Household

Child & Dependent Care Credit

Earned Income Credit



Division of Benefits: Form 8332When parents sign a Form 8332:When parents sign a Form 8332:

Exemptions


Child Tax Credit

Head of Household



The noncustodial parent

gets

The custodial parent

gets


Qualifying Child: The Support Test

Exemptions

Step 8Step 8Did the “child” provide more than half Did the “child” provide more than half

of his or her own of his or her own

support for the year?support for the year?

If NO, If NO,



Qualifying Child: The Other Adults Test

Exemptions

Step 9Step 9Is the “child” a qualifying child of Is the “child” a qualifying child of

any other person?any other person?

If NO, you If NO, you can claim can claim

this child as this child as a dependent.a dependent.



Exemptions

Write these questions into

your spiral notebook!

Qualifying Child of more than One Qualifying Child of more than One PersonPerson

• Did any other adult live in your home?Did any other adult live in your home?• What was that other adult’s relationship to the What was that other adult’s relationship to the

child?child?• Could the other adult be Could the other adult be

claimed as a dependent claimed as a dependent

by someone else?by someone else?




• Sometimes, a child meets all of the tests to be Sometimes, a child meets all of the tests to be claimed by more than one taxpayer.claimed by more than one taxpayer. Example: A mother and a grandmotherExample: A mother and a grandmother

• NEW: The AGI of these taxpayers is now taken NEW: The AGI of these taxpayers is now taken into consideration in determining who gets to into consideration in determining who gets to claim the child.claim the child.

Exemptions



Qualifying Child of more than One PersonQualifying Child of more than One Person• If only one taxpayer is the child’s parent, the child If only one taxpayer is the child’s parent, the child

is the qualifying person of the parent.is the qualifying person of the parent. Parenthood trumps all.Parenthood trumps all.

• Another taxpayer may claim the child if the parent Another taxpayer may claim the child if the parent agrees and ONLY IF agrees and ONLY IF the other taxpayer’s AGI is the other taxpayer’s AGI is higher than the parent’s AGIhigher than the parent’s AGI and the AGIs of all and the AGIs of all other taxpayers who are eligible to claim the child.other taxpayers who are eligible to claim the child. If both claim the child, the exemption goes to the If both claim the child, the exemption goes to the

parent.parent.

See Spiral Notebook C-3

Exemptions




• If two parents claim the same child on If two parents claim the same child on separate returns, the exemption goes to separate returns, the exemption goes to the custodial parent.the custodial parent.

• If the parents are equal custodial parents, If the parents are equal custodial parents, the exemption goes to the parent with the the exemption goes to the parent with the highest AGI.highest AGI.

Exemptions




• If no parent is eligible to claim the child, If no parent is eligible to claim the child, the only person allowed to claim the child the only person allowed to claim the child is the taxpayer with the highest AGI who is the taxpayer with the highest AGI who meets all of the tests.meets all of the tests.

Exemptions



Example Situation:Example Situation:

Janet has a 2-year-old son Jacob and both Janet has a 2-year-old son Jacob and both live with Janet’s sister Lisa. Janet’s AGI is live with Janet’s sister Lisa. Janet’s AGI is $25,000 and Lisa’s AGI is $16,000. Both $25,000 and Lisa’s AGI is $16,000. Both

Janet and Lisa meet all of the tests to Janet and Lisa meet all of the tests to claim Jacob. If Janet agrees not to claim claim Jacob. If Janet agrees not to claim Jacob, is Lisa allowed to claim him on her Jacob, is Lisa allowed to claim him on her

tax return?tax return?

Exemptions



Example Situation:Example Situation:Janet has a 2-year-old son Jacob and both live with Janet’s Janet has a 2-year-old son Jacob and both live with Janet’s

sister Lisa. Janet’s AGI is $25,000 and Lisa’s AGI is sister Lisa. Janet’s AGI is $25,000 and Lisa’s AGI is $16,000. Both Janet and Lisa meet all of the tests to $16,000. Both Janet and Lisa meet all of the tests to

claim Jacob. If Janet agrees not to claim Jacob, is Lisa claim Jacob. If Janet agrees not to claim Jacob, is Lisa allowed to claim him on her tax return?allowed to claim him on her tax return?

No.No.

Lisa is not allowed to claim Jacob, even if Janet agrees, Lisa is not allowed to claim Jacob, even if Janet agrees, because her AGI is less than Janet’s AGI.because her AGI is less than Janet’s AGI.

Exemptions


Practice

TRUE or FALSE: TRUE or FALSE:

Every taxpayer can claim a personal Every taxpayer can claim a personal exemption for himself.exemption for himself.

Exemptions


Practice

TRUE or FALSE: TRUE or FALSE: Every taxpayer can claim a personal Every taxpayer can claim a personal

exemption for himself.exemption for himself.

FALSEFALSE A taxpayer who can be claimed as a dependent by A taxpayer who can be claimed as a dependent by

someone else CANNOT claim an exemption for someone else CANNOT claim an exemption for himself.himself.

Exemptions


PracticeRebecca is unmarried with one child, Colin. Rebecca is unmarried with one child, Colin.

Colin is 8 years old and lives full time with Colin is 8 years old and lives full time with his mother, who provides all of his support. his mother, who provides all of his support.

He is a U.S. citizen, and no other adults He is a U.S. citizen, and no other adults live in their household. Can Rebecca live in their household. Can Rebecca

claim Colin as a dependent?claim Colin as a dependent?

Exemptions


PracticeRebecca is unmarried with one child, Colin. Rebecca is unmarried with one child, Colin.

Colin is 8 years old and lives full time with Colin is 8 years old and lives full time with his mother, who provides all of his support. his mother, who provides all of his support.

He is a U.S. citizen, and no other adults He is a U.S. citizen, and no other adults live in their household. Can Rebecca live in their household. Can Rebecca

claim Colin as a dependent?claim Colin as a dependent?

YESYES. . Colin meets all the requirements to be claimed as Colin meets all the requirements to be claimed as

a qualifying child.a qualifying child.

Exemptions


Dependency Exemption for a Qualifying Relative

Use Spiral Resource guide page C-5

Exemptions


Qualifying Relative: The Qualifying Child Test

Exemptions

Step 1Step 1Is the person your qualifying Is the person your qualifying child or the qualifying child of child or the qualifying child of

anyone else?anyone else?

If NO, If NO,



Qualifying Relative: The Relationship Test

Exemptions

Step 2Step 2

Was the person your son, daughter, foster child, or Was the person your son, daughter, foster child, or a descendant of any of them? a descendant of any of them?

OROR

Was the person your brother, sister, or a son or Was the person your brother, sister, or a son or daughter of either of them?daughter of either of them?

OROR

Was the person your father, mother, or an ancestor Was the person your father, mother, or an ancestor or sibling of either of them? or sibling of either of them?

OROR

Was the person your stepbrother, stepsister, Was the person your stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, stepfather, stepmother, son-in-law, daughter-in-law,

father-in-law, mother-in-law, brother-in-law, or father-in-law, mother-in-law, brother-in-law, or sister-in-law?sister-in-law?

If NO, If NO,

go to Step 3.go to Step 3.

If YES, If YES,



Qualifying Relative: The Residency Test

Exemptions

Step 3Step 3

Was the person any other Was the person any other person (other than your spouse) person (other than your spouse) who lived with you ALL YEAR who lived with you ALL YEAR

as a member of your as a member of your

household?household?

If YES, If YES,



Qualifying Relative: The Gross Income Test

Exemptions

Step 4Step 4Did the person have a gross Did the person have a gross taxable income of less than taxable income of less than

$3,700 in 2011?$3,700 in 2011?

If YES, If YES,



Qualifying Relative: The Support Test

Exemptions

Step 5Step 5

Did YOU provide more than Did YOU provide more than

half of the person’s half of the person’s

total support for the year?total support for the year?

If YES, you If YES, you can claim this can claim this

person as person as your your

dependentdependent

If NO, If NO,



Qualifying Relative: Multiple Support Tests

Exemptions

Step 6Step 6 Did another person provide more than half of the Did another person provide more than half of the person’s total support?person’s total support?

If NO, If NO,


Step 7Step 7 Did two or more people together provide more Did two or more people together provide more than half the person’s total support?than half the person’s total support?

If YES, If YES,


Step 8Step 8 Did you provide more than 10% of the person’s Did you provide more than 10% of the person’s total support for the year?total support for the year?

If YES, If YES,


Step 9Step 9

Did the other person(s) providing more than 10% Did the other person(s) providing more than 10% of the person’s total support for the year provide of the person’s total support for the year provide

you with a signed statement (Form 2120) you with a signed statement (Form 2120) agreeing not to claim the exemption?agreeing not to claim the exemption?

If YES, If YES,

you can claim an you can claim an exemption for this exemption for this

personperson


Qualifying Relative: Multiple Support Tests

• If a relative passes all except the support test, a If a relative passes all except the support test, a taxpayer still may be able to claim the taxpayer still may be able to claim the dependency exemption for him/her IFdependency exemption for him/her IF The taxpayer, The taxpayer, togethertogether with another individual, with another individual,

provided over 50% of the total support, ANDprovided over 50% of the total support, AND The taxpayer contributed over 10% of the total The taxpayer contributed over 10% of the total

support, ANDsupport, AND Each other person who contributed over 10% signs a Each other person who contributed over 10% signs a

statement waiving his rights to claim the exemption statement waiving his rights to claim the exemption (Form 2120).(Form 2120).

Exemptions


PracticeRoderick, age 29, lives with his uncle. Last Roderick, age 29, lives with his uncle. Last

year, he worked part-time and earned year, he worked part-time and earned $2,100. His uncle provided for the rest of $2,100. His uncle provided for the rest of his support, including rent and household his support, including rent and household costs. Can his uncle claim Roderick as a costs. Can his uncle claim Roderick as a

dependent? Can Roderick claim a dependent? Can Roderick claim a personal exemption?personal exemption?

Exemptions


PracticeRoderick, age 29, lives with his uncle. Last year, Roderick, age 29, lives with his uncle. Last year,

he worked part-time and earned $2,100. His he worked part-time and earned $2,100. His uncle provided for the rest of his support, uncle provided for the rest of his support,

including rent and household costs. Can his including rent and household costs. Can his uncle claim Roderick as a dependent? Can uncle claim Roderick as a dependent? Can

Roderick claim a personal exemption?Roderick claim a personal exemption?

YES.YES.His uncle can claim Roderick as a qualifying relative. His uncle can claim Roderick as a qualifying relative.

NO.NO.Roderick cannot claim a personal exemption because he Roderick cannot claim a personal exemption because he

can be claimed as a dependent.can be claimed as a dependent.

Exemptions


PracticeRandy is divorced. He has one child, Paul Randy is divorced. He has one child, Paul

(age 5). Paul lives with his mother, but (age 5). Paul lives with his mother, but Randy provides over half of Paul’s Randy provides over half of Paul’s

support. Can Randy claim Paul as a support. Can Randy claim Paul as a dependent?dependent?

Exemptions


PracticeRandy is divorced. He has one child, Paul (age Randy is divorced. He has one child, Paul (age

5). Paul lives with his mother, but Randy 5). Paul lives with his mother, but Randy provides over half of Paul’s support. Can Randy provides over half of Paul’s support. Can Randy

claim Paul as a dependent?claim Paul as a dependent?

NO. NO. Paul is the qualifying child of his mother; therefore, he Paul is the qualifying child of his mother; therefore, he

cannot be the qualifying relative of Randy. However, cannot be the qualifying relative of Randy. However, Randy Randy cancan claim Paul if Paul’s mother has signed a claim Paul if Paul’s mother has signed a

Form 8332 OR if Paul’s mother is not required to file a Form 8332 OR if Paul’s mother is not required to file a tax return.tax return.

Exemptions


PracticeGina Brown provides all support for her Gina Brown provides all support for her uncle. Uncle Jim is unmarried, 72 years uncle. Uncle Jim is unmarried, 72 years old, and lives in another city. He has no old, and lives in another city. He has no gross income for the calendar year. Can gross income for the calendar year. Can Gina claim Uncle Jim as a dependent?Gina claim Uncle Jim as a dependent?

Exemptions


PracticeGina Brown provides all support for her Gina Brown provides all support for her uncle. Uncle Jim is unmarried, 72 years uncle. Uncle Jim is unmarried, 72 years old, and lives in another city. He has no old, and lives in another city. He has no gross income for the calendar year. Can gross income for the calendar year. Can Gina claim Uncle Jim as a dependent?Gina claim Uncle Jim as a dependent?

YES. YES. Jim meets all of the requirements to be a Jim meets all of the requirements to be a

qualifying relative of Gina.qualifying relative of Gina.

Exemptions




3.3. Filing StatusFiling Status4.4. IncomeIncome




Five Filing Statuses• Single

• Married Filing Jointly

• Married Filing Separately

• Head of Household

• Qualifying Widow(er) with Dependent Child

Filing Status


Determining Filing Status

Filing Status


Single• A taxpayer is considered single if, on A taxpayer is considered single if, on

December 31, 2011, he wasDecember 31, 2011, he was Not married ORNot married OR Legally separated/divorced ORLegally separated/divorced OR WidowedWidowed

Filing Status

IMPORTANT:Some taxpayers considered single can also file under a more

advantageous status (Head of Household or Qualifying Widow(er)). Be sure to check all options!


Married Filing Jointly• Taxpayers can be MFJ if on December 31, Taxpayers can be MFJ if on December 31,

2011, 2011, They lived together as a married couple ORThey lived together as a married couple OR They lived apart but were not legally They lived apart but were not legally

separated/divorced ORseparated/divorced OR One spouse died during the year, and the One spouse died during the year, and the

taxpayer did not remarry.taxpayer did not remarry.

Filing Status


Married Filing Separately• Married taxpayers can choose to file Married taxpayers can choose to file

separately; HOWEVER,separately; HOWEVER, If one spouse itemizes, the other spouse must If one spouse itemizes, the other spouse must

itemize.itemize. Taxpayers filing with this status are not Taxpayers filing with this status are not

eligible to claim several tax credits.eligible to claim several tax credits.

Filing Status

Be careful! This status generally results in a HIGHER overall TAX.


Head of Household• Taxpayers can file HoH if they Taxpayers can file HoH if they

Are considered unmarried* ANDAre considered unmarried* AND Live with a dependent child or relative ANDLive with a dependent child or relative AND Maintain half the costs of keeping a home.Maintain half the costs of keeping a home.

Filing Status

*A legally married taxpayer can be considered *A legally married taxpayer can be considered unmarried and file as HoH if she has not lived unmarried and file as HoH if she has not lived with her spouse at any time during the last six with her spouse at any time during the last six

months of the tax year.months of the tax year.


Head of Household: Qualifying Person

• See spiral notebook, page See spiral notebook, page B-3B-3, for a list of , for a list of qualifying persons for H of H filing status.qualifying persons for H of H filing status.

• A qualifying relative who is unrelated to A qualifying relative who is unrelated to the taxpayer is NOT a qualifying person the taxpayer is NOT a qualifying person for H of H.for H of H.

Filing Status


Head of Household: Qualifying Person

• For example, a person who is the For example, a person who is the taxpayer’s qualifying relative taxpayer’s qualifying relative onlyonly because because that person lives with the taxpayer all year that person lives with the taxpayer all year (but is unrelated to the taxpayer) is NOT a (but is unrelated to the taxpayer) is NOT a qualifying person for H of H filing status.qualifying person for H of H filing status.

Filing Status

THIS IS IMPORTANT!THIS IS IMPORTANT!


Head of Household: Separated Parents

• Even if the custodial parent has given up his/her right to claim the dependency exemption for a child (Form 8332), he/she can file HoH using that child as his/her qualifying person.

Filing Status






Child Tax Credit

Head of Household



Filing Status





Child Tax Credit

Head of Household




gets


gets

Filing Status


Qualifying Widow(er) with Dependent Child

• A taxpayer files QW ifA taxpayer files QW if His spouse died recently, ANDHis spouse died recently, AND He did not remarry, ANDHe did not remarry, AND He has a dependent child (son, daughter, He has a dependent child (son, daughter,

stepson, stepdaughter), ANDstepson, stepdaughter), AND He provides over half the costs to maintain He provides over half the costs to maintain

the main home for himself and the child.the main home for himself and the child.

Filing Status


Unmarried, Widowed Taxpayer: Unmarried, Widowed Taxpayer: MFJ, QW, or Single?MFJ, QW, or Single?

• If the spouse died during the current tax year If the spouse died during the current tax year (2011): (2011): Married Filing JointlyMarried Filing Jointly

• If the spouse died during one of the two If the spouse died during one of the two preceding tax years (2009, 2010) and taxpayer preceding tax years (2009, 2010) and taxpayer has a qualifying child: has a qualifying child: Qualifying Widow(er)Qualifying Widow(er)

• If the spouse died three or more years before If the spouse died three or more years before the current year (2008 or earlier): the current year (2008 or earlier): Single, Head Single, Head of Householdof Household

Filing Status


From Lowest to Highest Tax Burden

• Married Filing Jointly and Qualifying Married Filing Jointly and Qualifying Widow(er) with Dependent ChildWidow(er) with Dependent Child

• Head of HouseholdHead of Household

• SingleSingle

• Married Filing SeparatelyMarried Filing Separately

Filing Status


Practice

Lily left her husband in August 2011, Lily left her husband in August 2011, but they did not get divorced. She but they did not get divorced. She

took her children with her, supported took her children with her, supported them during all of 2011, and will claim them during all of 2011, and will claim them as dependents. Lily refuses to them as dependents. Lily refuses to file a joint return with her husband. file a joint return with her husband. Which filing status should she use?Which filing status should she use?

Filing Status


PracticeLily left her husband in August 2011, but they Lily left her husband in August 2011, but they

did not get divorced. She took her children did not get divorced. She took her children with her, supported them during all of 2011, with her, supported them during all of 2011,

and will claim them as dependents. Lily and will claim them as dependents. Lily refuses to file a joint return with her husband. refuses to file a joint return with her husband.

Which filing status should she use?Which filing status should she use?

MFS. MFS. Because Lily lived with her husband for Because Lily lived with her husband for some part some part

of the last six months of the year, she cannot of the last six months of the year, she cannot claim HoH.claim HoH.

Filing Status


PracticeLily left her husband in Lily left her husband in February 2011February 2011, but , but

they did not get divorced. She took her they did not get divorced. She took her children with her, supported them during children with her, supported them during

all of 2011, and will claim them as all of 2011, and will claim them as dependents. Lily refuses to file a joint dependents. Lily refuses to file a joint return with her husband. Which filing return with her husband. Which filing

status should she use?status should she use?

Filing Status


PracticeLily left her husband in Lily left her husband in February 2011February 2011, but , but

they did not get divorced. She took her they did not get divorced. She took her children with her, supported them during children with her, supported them during

all of 2010, and will claim them as all of 2010, and will claim them as dependents. Lily refuses to file a joint dependents. Lily refuses to file a joint return with her husband. Which filing return with her husband. Which filing

status should she use?status should she use?

Head of Household.Head of Household.

Filing Status


PracticeGinger, a single woman, lives alone. She Ginger, a single woman, lives alone. She

provides full support for her mother provides full support for her mother Theresa who lives in a nearby town. Theresa who lives in a nearby town.

Since Theresa had no income for the year, Since Theresa had no income for the year, Ginger paid all costs to maintain her home Ginger paid all costs to maintain her home and will claim her as a dependent. What and will claim her as a dependent. What

is Ginger's filing status?is Ginger's filing status?

Filing Status


PracticeGinger, a single woman, lives alone. She provides Ginger, a single woman, lives alone. She provides

full support for her mother Theresa who lives in full support for her mother Theresa who lives in a nearby town. Since Theresa had no income a nearby town. Since Theresa had no income

for the year, Ginger paid all costs to maintain her for the year, Ginger paid all costs to maintain her home and will claim her as a dependent. What home and will claim her as a dependent. What

is Ginger's filing status?is Ginger's filing status?

Head of Household.Head of Household.A taxpayer can claim H of H filing status on the A taxpayer can claim H of H filing status on the

basis of a dependent parent who does not live basis of a dependent parent who does not live with him/her only if the taxpayer pays ½ of the with him/her only if the taxpayer pays ½ of the

costs of keeping up the parent’s home.costs of keeping up the parent’s home.

Filing Status


Taxwise ExerciseQuincy Scott

• You will need:You will need: Tax Preparation Process handout.Tax Preparation Process handout. Resource Guide (Pub 4012).Resource Guide (Pub 4012). Workbook pages (Pub 4491-W) in Volunteer Workbook pages (Pub 4491-W) in Volunteer

Training Packet.Training Packet.

Taxwise


BEFORE You Sign In• DetermineDetermine

If the taxpayer and spouse can be claimed as If the taxpayer and spouse can be claimed as dependents. (dependents. (Age and Income Tests) Age and Income Tests)

If the taxpayer and spouse can claim If the taxpayer and spouse can claim dependents. dependents. (Tab C of Notebook)(Tab C of Notebook)

Appropriate Filing Status. Appropriate Filing Status. (Page (Page B-1B-1 of of Notebook)Notebook)

Taxwise


Signing In

Taxwise

https://twonline.taxwise.com/trainingClient ID:

Get from trainer Write in appropriate blank on volunteer packet

Username: All Caps Last name followed by first initial (SMITHJ) Write in appropriate blank on volunteer packet

Password: Same as username Must reset password before logging in the first time Write in appropriate blank on volunteer packet





4.4. IncomeIncome5.5. Standard DeductionStandard Deduction



Taxable Income• WagesWages• TipsTips• Gambling WinningsGambling Winnings• IRA DistributionsIRA Distributions• Some Social Security Some Social Security

BenefitsBenefits• Awards and PrizesAwards and Prizes

Income

• InterestInterest• AlimonyAlimony• All Unemployment All Unemployment

CompensationCompensation• Jury Duty PayJury Duty Pay• EtcEtc


Nontaxable Income

Income

• Child SupportChild Support

• Inheritances Inheritances

• Life InsuranceLife Insurance

• Supplemental Supplemental Security IncomeSecurity Income

• Insurance Insurance PaymentsPayments

• GiftsGifts

• Public Assistance Public Assistance PaymentsPayments

• Veterans’ Disability Veterans’ Disability BenefitsBenefits

• Worker’s Worker’s CompensationCompensation

For a more complete listing of income, see page D-1 of your Spiral Notebook


Wages and Salaries: Form W-2

Income

Link form from Line 7 of TWO


Tips• Tips totaling more than $20/month Tips totaling more than $20/month

Reported to employerReported to employer Already totaled in Box 1 of Form W-2.Already totaled in Box 1 of Form W-2.

• Tips totaling less than $20/monthTips totaling less than $20/month Not reported to employerNot reported to employer Must be reported to the federal government Must be reported to the federal government

on a Form 4137 (attached to 1040)on a Form 4137 (attached to 1040)

• Allocated tips of any amountAllocated tips of any amount Appear in Box 8 of W-2Appear in Box 8 of W-2

Income


ScholarshipsScholarships• Scholarship money used by a student Scholarship money used by a student

pursuing a degree to pay for tuition, fees, pursuing a degree to pay for tuition, fees, books, supplies, and equipment books, supplies, and equipment required required of all studentsof all students is nontaxable. is nontaxable.

• Amount used for room and board is Amount used for room and board is taxable.taxable.

• See p. See p. D-8D-8 in spiral notebook. in spiral notebook.

Income


InterestInterest• Money earns interest when it is:Money earns interest when it is:

Deposited in accounts.Deposited in accounts. Used to buy certificates of deposit or bonds.Used to buy certificates of deposit or bonds.

• Classified asClassified as unearned unearned income income

Income


Interest: Form 1099-INTInterest: Form 1099-INT

Income

Link from Line 8a of TWO to schedule B


Interest: Savings and Checking Interest: Savings and Checking Accounts, CDsAccounts, CDs

• Interest is taxed in the year Interest is taxed in the year credited to the taxpayer’s account credited to the taxpayer’s account available for withdrawal by the taxpayer available for withdrawal by the taxpayer

without incurring a penaltywithout incurring a penalty

• If an early withdrawal penalty is incurred, If an early withdrawal penalty is incurred, this will be reported on Form 1040 as an this will be reported on Form 1040 as an adjustment.adjustment.

Income


Dividends• Unearned IncomeUnearned Income

• Payments made by corporations to Payments made by corporations to shareholdersshareholders

• Reported to federal government annuallyReported to federal government annually

Income


Dividends: Form 1099-DIVDividends: Form 1099-DIV

Income

Link from Line 9 of TWO to schedule B


Gambling Winnings: Form W-2GGambling Winnings: Form W-2G

Income

Link from Line 21 (“Other Income”) of TWO


Unemployment Compensation: Form 1099-GUnemployment Compensation: Form 1099-G

Income

Link form from Line 19 of TWO


Social Security BenefitsSocial Security Benefits• Part of social security benefits may be Part of social security benefits may be

taxable.taxable.

• Supplemental security income (SSI) is not Supplemental security income (SSI) is not taxabletaxable SSI is aimed at helping low-income elderly,

blind, and disabled individuals pay for their basic needs.

Income


Social Security Benefits: SSA-1099

Income

Record on Worksheet 1 from Line 20a of TWO

Medicare premiums

Don’t miss withholding!

Total benefits

Lump-Sum Benefit

Payments


Reporting SS Benefits• If the taxpayer also has other forms of If the taxpayer also has other forms of

income, link to a worksheet on line 20a of income, link to a worksheet on line 20a of the 1040.the 1040.

OROR

• If the taxpayer has no other source of If the taxpayer has no other source of income (only SS benefits), consult your income (only SS benefits), consult your supervisor to see if a return should be supervisor to see if a return should be filed.filed.

Income

Lump-Sum Benefit Payments• Payment for current tax year and prior tax years• Found on Form SSA-1099 (Box 3) or Form RRB-1099

(Boxes 7-9)• 2 Options When Entering into TW:

1st: Taxpayer may report the entire payment as it was received 2nd: Separate payments based on year received and record

taxable benefits appropriately; with this option only the current year income will be adjusted

• Taxpayer can choose 2nd option if it lowers the taxable benefits

More information on lump-sum benefit payments can be found on pg. 14-4 in your Spiral Notebook



2010 State Tax Refund• May be taxable.May be taxable.• If the taxpayer If the taxpayer

itemized his deductions ANDitemized his deductions AND received a state tax refundreceived a state tax refund

If answer is YES, SEE YOUR SUPERVISOR!If answer is YES, SEE YOUR SUPERVISOR!

Income

Answer question in Box under line 9.


Out of Scope• Self-Employment/Business Income Self-Employment/Business Income

(including Form 1099-MISC)(including Form 1099-MISC)

• Sale of Stock (Form 1099-B)Sale of Stock (Form 1099-B)

• IRA/Pension Income (Form 1099-R)IRA/Pension Income (Form 1099-R)

• Any form not covered in this trainingAny form not covered in this training

Income

If you encounter ANY of these,CALL YOUR SUPERVISOR!


PracticeAre the following sources of income taxable?Are the following sources of income taxable?

1.1. AlimonyAlimony

2.2. Child supportChild support

3.3. State and/or local refund from last yearState and/or local refund from last year

4.4. UnemploymentUnemployment

5.5. Award moneyAward money

6.6. Worker’s compensationWorker’s compensation

Income



1.1. Alimony - Alimony - YESYES

2.2. Child supportChild support





Income



1.1. Alimony - Alimony - YESYES

2.2. Child support - Child support - NONO





Income


PracticeAre the following sources of income taxable?Are the following sources of income taxable?1.1. Alimony - Alimony - YESYES2.2. Child support - Child support - NONO3.3. State and/or local refund from last year - State and/or local refund from last year -

SOMETIMESSOMETIMES4.4. UnemploymentUnemployment5.5. Award moneyAward money6.6. Worker’s compensationWorker’s compensation

Income



SOMETIMESSOMETIMES4.4. Unemployment - Unemployment - YESYES5.5. Award moneyAward money6.6. Worker’s compensationWorker’s compensation

Income



SOMETIMESSOMETIMES4.4. Unemployment - Unemployment - YESYES5.5. Award money - Award money - YESYES6.6. Worker’s compensationWorker’s compensation

Income



SOMETIMESSOMETIMES4.4. Unemployment - Unemployment - YESYES5.5. Award money - Award money - YESYES6.6. Worker’s compensation - Worker’s compensation - NONO

Income


Taxwise Exercise: Quincy Scott Continued

Taxwise

https://twonline.taxwise.com/training

Client ID: Refer to your volunteer packet

Username: All Caps Last name followed by first initial (SMITHJ)

Password: Refer to your volunteer packet Can be reset if forgotten (see your trainer if account is

locked)


Administrative NotesPlease fill out the following Please fill out the following BEFOREBEFORE leaving leaving

this session: this session: 1.1. Online Availability Form for your university Online Availability Form for your university

(http://www.impactalabama.org/taxprep.php)(http://www.impactalabama.org/taxprep.php)

2.2. Volunteer Agreement (volunteer packet)Volunteer Agreement (volunteer packet)

3.3. Media Release Form (volunteer packet)Media Release Form (volunteer packet)


BREAK





4.4. IncomeIncome

5.5. Standard DeductionStandard Deduction6.6. Earned Income CreditEarned Income Credit


Standard Deduction• Reduces the amount of income taxedReduces the amount of income taxed

• Amount of deduction based onAmount of deduction based on Filing StatusFiling Status AgeAge Whether taxpayer/spouse is blindWhether taxpayer/spouse is blind Whether taxpayer is a dependentWhether taxpayer is a dependent

• TaxWise calculates automaticallyTaxWise calculates automatically

Deductions


Standard Deduction for Most filers

Deductions

MFJ or QWMFJ or QW $11,600$11,600

HoHHoH $8,500$8,500

Single or MFSSingle or MFS $5,800$5,800

Spiral Notebook p. F-1Spiral Notebook p. F-1


Itemized DeductionsInstead of taking the standard deduction, a Instead of taking the standard deduction, a

taxpayer can choose to itemize, which is taxpayer can choose to itemize, which is to list certain deductible expenses to list certain deductible expenses

separately, in order to receive a separately, in order to receive a greatergreater deduction.deduction.

Deductions


Itemized Deductions• Itemized deductions include (but are not Itemized deductions include (but are not

limited to):limited to): Un-reimbursed medical expensesUn-reimbursed medical expenses Charitable contributionsCharitable contributions Home mortgage paymentsHome mortgage payments

• If the taxpayer has some or all of these If the taxpayer has some or all of these expenses, expenses, SEE YOUR SUPERVISOR! SEE YOUR SUPERVISOR!

Deductions





4.4. IncomeIncome




Earned Income Credit• The EIC is a refundable tax credit that applies to The EIC is a refundable tax credit that applies to

individuals who work but make low to moderate individuals who work but make low to moderate incomes.incomes.

• The EIC is the largest federal anti-poverty The EIC is the largest federal anti-poverty program and has been one of the most program and has been one of the most successful programs to lift families, especially successful programs to lift families, especially families with children, out of poverty.families with children, out of poverty.

• The EIC has been especially successful in The EIC has been especially successful in providing an incentive for single mothers with providing an incentive for single mothers with children to find work.children to find work.



Maximum Credits


Tax Year 2011:

Three+ Children = $5,751

Two Children: $5,112

One Child: $3,094

No Children: $464


Eligibility


See page H-2 of your spiral notebook


Qualifying Child of More than One Person

• Sometimes, a child meets all of the tests Sometimes, a child meets all of the tests to be claimed by more than one taxpayer.to be claimed by more than one taxpayer.

• The AGI of these taxpayers is now taken The AGI of these taxpayers is now taken into consideration in determining who gets into consideration in determining who gets to claim the child for EIC purposes.to claim the child for EIC purposes.




• If two parents claim the same child on If two parents claim the same child on separate returns, the EIC goes to the separate returns, the EIC goes to the custodial parent.custodial parent.

• If the parents are equal custodial parents, If the parents are equal custodial parents, the EIC goes to the parent with the highest the EIC goes to the parent with the highest AGI.AGI.



Separated Parents• Physical custodyPhysical custody, not legal custody, , not legal custody,

determines EIC eligibility.determines EIC eligibility.

• Custodial parents CAN claim the child for Custodial parents CAN claim the child for EIC even if they cannot claim the child’s EIC even if they cannot claim the child’s dependency exemption. dependency exemption.

• Noncustodial parents CANNOT claim the Noncustodial parents CANNOT claim the child for EIC even if they can claim the child for EIC even if they can claim the child’s dependency exemption. child’s dependency exemption.







Child Tax Credit

Head of Household








Child Tax Credit

Head of Household




gets


gets



Qualifying Child of More than One PersonSee Spiral Notebook p. H-5

• If only one taxpayer is the child’s parent, the If only one taxpayer is the child’s parent, the child is the qualifying person of the parent.child is the qualifying person of the parent.

• Another taxpayer may claim the child if the Another taxpayer may claim the child if the parent agrees ONLY IF the other taxpayer’s AGI parent agrees ONLY IF the other taxpayer’s AGI is higher than the parent’s AGI and the AGIs of is higher than the parent’s AGI and the AGIs of all other taxpayers who are eligible to claim the all other taxpayers who are eligible to claim the child.child.

• If both claim the child, the exemption and EIC go If both claim the child, the exemption and EIC go to the parent.to the parent.




• If no parent is eligible to claim the child, If no parent is eligible to claim the child, the only person allowed to claim the EIC is the only person allowed to claim the EIC is the taxpayer with the highest AGI who the taxpayer with the highest AGI who meets all of the tests.meets all of the tests.



Disallowance• EIC disallowed forEIC disallowed for

Reckless or Intentional Disregard of the Reckless or Intentional Disregard of the Rules: 2 yearsRules: 2 years

Fraudulent Claim: 10 YearsFraudulent Claim: 10 Years

• To claim EIC again, a taxpayer mustTo claim EIC again, a taxpayer must Wait full period of disallowanceWait full period of disallowance Submit a Form 8862Submit a Form 8862

IMPORTANT NOTE:Mathematical and clerical errors are NOT bases for disallowance.



Advance EIC• New in 2011New in 2011: Recipients no longer receive : Recipients no longer receive

Advance EIC payments.Advance EIC payments.

• Taxpayers used to be able receive up to Taxpayers used to be able receive up to $1,830 of the EIC in a payment each $1,830 of the EIC in a payment each month (rather than a lump sum in month (rather than a lump sum in January).January).



PracticeSharon, who has an earned income and Sharon, who has an earned income and AGI of $15,525, takes care of her sister’s AGI of $15,525, takes care of her sister’s

son, Eric. If Eric is 12 years old and son, Eric. If Eric is 12 years old and began living with Sharon in August 2011, began living with Sharon in August 2011,

can Sharon claim the EIC?can Sharon claim the EIC?



PracticeSharon, who has an earned income and Sharon, who has an earned income and AGI of $15,525, takes care of her sister’s AGI of $15,525, takes care of her sister’s

son, Eric. If Eric is 12 years old and son, Eric. If Eric is 12 years old and began living with Sharon in August 2011, began living with Sharon in August 2011,

can Sharon claim the EIC?can Sharon claim the EIC?

NO. Sharon’s AGI is too high to claim the EIC alone,

and since Eric lived with her for less than half a year, he is not her qualifying child.



PracticeDoug and Donna are married and live Doug and Donna are married and live

together with their 4-year-old son Sam. together with their 4-year-old son Sam. Their combined earned income is $25,000. Their combined earned income is $25,000.

Doug reports an AGI of $11,000 on his Doug reports an AGI of $11,000 on his return, and Donna reports AGI of $14,000 return, and Donna reports AGI of $14,000 on her separate return. Can Doug and/or on her separate return. Can Doug and/or

Donna claim the EIC?Donna claim the EIC?



PracticeDoug and Donna are married and live Doug and Donna are married and live

together with their 4-year-old son Sam. together with their 4-year-old son Sam. Their combined earned income is $25,000. Their combined earned income is $25,000.

Doug reports an AGI of $11,000 on his Doug reports an AGI of $11,000 on his return, and Donna reports AGI of $14,000 return, and Donna reports AGI of $14,000 on her separate return. Can Doug and/or on her separate return. Can Doug and/or

Donna claim the EIC?Donna claim the EIC?

No. No. Neither can claim the EIC because both are filing Neither can claim the EIC because both are filing

Married Filing Separately.Married Filing Separately.



PracticeDoug and Donna are still married and still Doug and Donna are still married and still

live together with Sam, but now they live together with Sam, but now they decide to file a joint return. Their decide to file a joint return. Their

combined earned income and AGI are combined earned income and AGI are $25,000. Can they claim the EIC on this $25,000. Can they claim the EIC on this

return?return?



PracticeDoug and Donna are still married and still Doug and Donna are still married and still

live together with Sam, but now they live together with Sam, but now they decide to file a joint return. Their decide to file a joint return. Their

combined earned income and AGI are combined earned income and AGI are $25,000. Can they claim the EIC on this $25,000. Can they claim the EIC on this

return?return?

YesYes. . Their joint income is low enough to claim the EIC Their joint income is low enough to claim the EIC

with one qualifying child (Sam).with one qualifying child (Sam).



Training Outline

7.7. Child Tax CreditChild Tax Credit8.8. Child and Dependent Care CreditChild and Dependent Care Credit


10.10. Form 8888Form 8888




Child Tax Credit• One credit for each qualifying child One credit for each qualifying child under under

17 years of age17 years of age..

• Child Tax Credit is nonrefundable.Child Tax Credit is nonrefundable.

• Additional Child Tax Credit is refundable.Additional Child Tax Credit is refundable.

• Maximum credit = $1,000 per child.Maximum credit = $1,000 per child. TaxWise will calculate this automaticallyTaxWise will calculate this automatically

Child Tax Credit


Qualifying Child

A taxpayer can claim a Child Tax Credit for A taxpayer can claim a Child Tax Credit for their child only if they CAN AND DO claim their child only if they CAN AND DO claim

a dependency exemption for the child. a dependency exemption for the child.

Child Tax Credit






Child Tax Credit

Head of Household



Child Tax Credit





Child Tax Credit

Head of Household




gets


gets

Child Tax Credit


Additional Child Tax Credit• Refundable portion of the CTC.Refundable portion of the CTC.

• Applied if taxpayer cannot take full Child Applied if taxpayer cannot take full Child Tax Credit because tax liability is less than Tax Credit because tax liability is less than $1,000.$1,000.

• Must have at least $3,000 of earned Must have at least $3,000 of earned income.income.

Child Tax Credit



8.8. Child and Dependent Care Child and Dependent Care CreditCredit


10.10. Form 8888Form 8888





• NonrefundableNonrefundable

• Applied to offset expenses paidApplied to offset expenses paid Related to caring for a dependent child or Related to caring for a dependent child or

adult who cannot take care of him/herselfadult who cannot take care of him/herself Paid so that the taxpayer can work or look for Paid so that the taxpayer can work or look for

workwork



Eligibility


See the handout in your Volunteer Training Packet.


Divorced/Separated Parents• A custodial parent can claim the credit A custodial parent can claim the credit

even if she cannot claim the dependency even if she cannot claim the dependency exemption as long as she exemption as long as she Had custody of child for more than half the Had custody of child for more than half the

year (either joint or solo), ANDyear (either joint or solo), AND Provided over ½ child’s support (either alone Provided over ½ child’s support (either alone

or along with the noncustodial parent), ANDor along with the noncustodial parent), AND Has signed a Form 8332 (or another written Has signed a Form 8332 (or another written

agreement)agreement)







Child Tax Credit

Head of Household








Child Tax Credit

Head of Household




gets


gets



PracticeAndrea and Bill, the parents of 7-year-old Andrea and Bill, the parents of 7-year-old Charles, are divorced. For the entire year, Charles, are divorced. For the entire year,

Charles lived with his mother. She paid all the Charles lived with his mother. She paid all the expenses of keeping up the home, as well as expenses of keeping up the home, as well as

bills for before-school and after-school child care bills for before-school and after-school child care totaling $1,800. Nevertheless, as part of their totaling $1,800. Nevertheless, as part of their divorce, Andrea signed a Form 8332 allowing divorce, Andrea signed a Form 8332 allowing

Bill to claim the dependency exemption for Bill to claim the dependency exemption for Charles. Who can claim the Child and Charles. Who can claim the Child and

Dependent Care Credit?Dependent Care Credit?



PracticeAndrea and Bill, the parents of 7-year-old Charles, are Andrea and Bill, the parents of 7-year-old Charles, are

divorced. For the entire year, Charles lived with his divorced. For the entire year, Charles lived with his mother. She paid all the expenses of keeping up the mother. She paid all the expenses of keeping up the

home, as well as bills for before-school and after-school home, as well as bills for before-school and after-school child care totaling $1,800. Nevertheless, as part of their child care totaling $1,800. Nevertheless, as part of their

divorce, Andrea signed a Form 8332 allowing Bill to divorce, Andrea signed a Form 8332 allowing Bill to claim the dependency exemption for Charles. Who can claim the dependency exemption for Charles. Who can

claim the Child and Dependent Care Credit?claim the Child and Dependent Care Credit?

Andrea.Andrea. She paid the expenses, and Form 8332 does not She paid the expenses, and Form 8332 does not allow the noncustodial parent to claim this credit.allow the noncustodial parent to claim this credit.



PracticeJulie spent the following amounts on child Julie spent the following amounts on child

care for her 10-year-old daughter care for her 10-year-old daughter Melissa. Are any of these eligible costs Melissa. Are any of these eligible costs for the Child & Dependent Care Credit?for the Child & Dependent Care Credit?

1.1. $300 for overnight camp$300 for overnight camp2.2. $1500 to her mother for after-school care$1500 to her mother for after-school care3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for

babysittingbabysitting



PracticeJulie spent the following amounts on child Julie spent the following amounts on child

care for her 10-year-old daughter care for her 10-year-old daughter Melissa. Are any of these eligible costs Melissa. Are any of these eligible costs for the Child & Dependent Care Credit?for the Child & Dependent Care Credit?

1.1. $300 for overnight camp - $300 for overnight camp - NONO2.2. $1500 to her mother for after-school care$1500 to her mother for after-school care3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for

babysittingbabysitting



PracticeJulie spent the following amounts on child care for Julie spent the following amounts on child care for

her 10-year-old daughter Melissa. Are any of her 10-year-old daughter Melissa. Are any of these eligible costs for the Child & Dependent these eligible costs for the Child & Dependent

Care Credit?Care Credit?

1.1. $300 for overnight camp - $300 for overnight camp - NONO

2.2. $1500 to her mother for after-school care - $1500 to her mother for after-school care - YESYES

3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for babysittingbabysitting



PracticeJulie spent the following amounts on child care for Julie spent the following amounts on child care for

her 10-year-old daughter Melissa. Are any of her 10-year-old daughter Melissa. Are any of these eligible costs for the Child & Dependent these eligible costs for the Child & Dependent

Care Credit?Care Credit?

1.1. $300 for overnight camp - $300 for overnight camp - NONO

2.2. $1500 to her mother for after-school care - $1500 to her mother for after-school care - YESYES

3.3. $500 to her 15-year-old son for $500 to her 15-year-old son for babysitting - babysitting - NONO





9.9. Miscellaneous CreditsMiscellaneous Credits10.10. Form 8888Form 8888




Miscellaneous Credits• Making Work Pay Credit (expires in 2011)Making Work Pay Credit (expires in 2011)

• Elderly and Disabled CreditElderly and Disabled Credit

• Retirement Savings Contribution CreditRetirement Savings Contribution Credit

• First Time Homebuyers CreditFirst Time Homebuyers Credit

Miscellaneous Credits


Making Work Pay Credit (2010)• Refundable credit for low- to middle-income Refundable credit for low- to middle-income

taxpayerstaxpayers• Up to $400 ($800 if MFJ)Up to $400 ($800 if MFJ)

Reduced by $250 Econ Recovery Payment (if Reduced by $250 Econ Recovery Payment (if received)received)

• Eligible TaxpayerEligible Taxpayer Must have valid SSN (at least one SSN if MFJ)Must have valid SSN (at least one SSN if MFJ) Must have earned incomeMust have earned income Cannot be a dependentCannot be a dependent


NOTE: This NOTE: This credit has credit has expired!expired!


Elderly & Disabled Credit: Schedule R• Taxpayer is Taxpayer is

over 65 AND/ORover 65 AND/OR retired and on disability benefits before retired and on disability benefits before

the mandatory retirement agethe mandatory retirement age• Elderly are seldom eligible because of Elderly are seldom eligible because of

income limits.income limits.• TaxWise automatically calculates this.TaxWise automatically calculates this.• Schedule RSchedule R

REMEMBER: Be sure to enter Social Security benefits!REMEMBER: Be sure to enter Social Security benefits!



Retirement Savings Contribution Credit: Form 8880

Spiral Notebook p. G-6

• Taxpayers who Taxpayers who Contributed to a retirement plan or IRAContributed to a retirement plan or IRA Meet AGI and age limitationsMeet AGI and age limitations Cannot be claimed as dependentsCannot be claimed as dependents Are not full-time studentsAre not full-time students



Retirement Savings Contribution Credit: Form 8880

Spiral Notebook p. G-6



Retirement Savings Contribution Credit: Contributions Record

• Contribution information could appearContribution information could appear In Box 12 of Form W-2 (typically code D or E)In Box 12 of Form W-2 (typically code D or E) Box 14 of Form W-2Box 14 of Form W-2 Not reported on the W-2 Not reported on the W-2 (ask the taxpayer!)(ask the taxpayer!)



Retirement Saving Contribution: W-2



Retirement Saving Contribution: Testing Period

• Taxpayers must reduce their eligible Taxpayers must reduce their eligible contributions by the amount of contributions by the amount of distributions received during these years distributions received during these years

• 2008, 2009, 2010, and 2011 until April 152008, 2009, 2010, and 2011 until April 15



PracticeBob, age 48, contributed $600 to an IRA in Bob, age 48, contributed $600 to an IRA in 2011. During the year, he worked full-time 2011. During the year, he worked full-time

and had an AGI of $24,000. Is Bob and had an AGI of $24,000. Is Bob eligible to claim the Retirement Savings eligible to claim the Retirement Savings

Contribution Credit?Contribution Credit?



PracticeBob, age 48, contributed $600 to an IRA in Bob, age 48, contributed $600 to an IRA in 2011. During the year, he worked full-time 2011. During the year, he worked full-time

and had an AGI of $24,000. Is Bob and had an AGI of $24,000. Is Bob eligible to claim the Retirement Savings eligible to claim the Retirement Savings

Contribution Credit?Contribution Credit?

Yes.Yes.



2008 First Time Homebuyers Credit

• Individuals who took $7,500 credit in 2008 Individuals who took $7,500 credit in 2008 had to begin to repay in 2010had to begin to repay in 2010

• $500 (1/15 of that owed) reported in $500 (1/15 of that owed) reported in “Additional Taxes” section“Additional Taxes” section

• Use Form 5405





10.10.Form 8888Form 888811.11. Finishing the Return & Volunteer Finishing the Return & Volunteer

RequirementsRequirements


The Importance of Saving• The practice of saving:

Establishes emergency reserves Allows for “get ahead” investments (home, education,

retirement) Is an alternative to costly credit Provides sense of security and comfort Sets a positive example for kids

• AND a little bit goes a long way Buying $100 U.S. Saving Bonds every year for 20

years would leave a tax client with over $3,000 – enough to fill the gaps in a child’s college scholarship.

Form 8888


Taxpayers Want to Save

Form 8888

In one study, 49% of VITA clients agreed:

“I wish that when I had cash, I was better

disciplined & saved it rather than spent it.”


Saving is Hard To Do• Limited income – a minimum wage worker

makes $15K a year.

• Consumerism – pressure to buy is everywhere.

• Family & friends – are often in need, creating pressure to share resources.

• Few opportunities – most people save with structured help (e.g., 401(k) plans), but poor people get little or no such help.

Form 8888

Most people won’t save unless someone asks them to consider it.


Our Role

• Tax season may be the only chance when saving seems possible Earned Income Credit Refund is biggest check received all year

• A tax preparer may be the only person who asks a client to think about saving. ~50% report deciding to save at tax site 79%+ learned about bonds when coming to the site

• Saving at tax time is convenient Taxpayer does not have to take an extra step

Form 8888


SaveNow WinLater• New last year!

• Links excitement of the lottery to benefit of saving

• For every $50 bond a taxpayer buys, he/she receives a chance to win a drawing for $5000 at the end of tax season or to kick off the season next year!

Form 8888


SaveNow WinLater• Eligibility:

Legal residents of Alabama ages 18 or older. Contest participants who file as Head of Household, Married

Filing Jointly, or Qualified Widow(er) who report less than a $50,000 income for the 2011 tax year.

Contest participants who file Single or Married Filing Separately who report less than a $25,000 income for the 2010 tax year.

• How to Enter: As requested by the Contest Participant, a volunteer will fill out

Form 8888 to divert part of their refund (in $50 increments) towards the purchase of a U.S. savings bond.

If the Contest Participant is not due a refund, he/she may purchase at TreasuryDirect.gov and call 1-888-99-TAX AL to enter the contest.

Form 8888


Series I Savings Bondsan “IOU” from the US Government

• safesafe – principal protected by “full faith & credit of – principal protected by “full faith & credit of U.S. government”U.S. government”

• accessible accessible – buy for as little as $50– buy for as little as $50• smart smart – solid return (3.06%), no fees– solid return (3.06%), no fees• simplesimple – sold at “face value” ($50 buys $50 – sold at “face value” ($50 buys $50

bond), rate adjusts twice a yearbond), rate adjusts twice a year• long-termlong-term – must be held for 1 year before – must be held for 1 year before

“redemption” (cashing in)“redemption” (cashing in)• portableportable – may be redeemed at most banks & – may be redeemed at most banks &

credit unionscredit unions

Form 8888


Series I Savings Bonds• All taxpayers can buy bonds for

Themselves And/or 2 other people (kids, grandkids, spouses,

nieces / nephews, godchildren, etc)

• How it works Taxpayer needs only name of gift recipient no SSN! Client & gift recipient will be listed on bond as co-

owners Either party may redeem bond

Form 8888


Important Bond Facts• Redemption (“cashing in”)

At most banks & credit unions Requires valid ID Proceeds from Savings Bonds are exempt from

federal tax if used for secondary education• Minimum holding

Must be held for 1 year If redeemed before 5 years, lose 3 months’ interest

• Loss / theft replacement Complete Treasury Form PDF 1048 Get signature certification from bank Mail to Treasury


Sample Series I Bond

Form 8888

John Q. Saver123 Main StreetAnywhere, WA 99000-0000OR Jen Saver

123-45-6789 01 2009

FRB-MPLS

04-15-07

2

:C000090007 :04 000000000000 C000000000I

Purchaser’s Social Security Number

Owner’s Name & Address (Co-Owner Name, if any)

Authentication Stamp

Issue Date


Bonds vs. Savings Accounts, CDs

Form 8888

Savings Account*

1 Year CD*Series I U.S.

Savings Bond

Rate of Return .17% .73% 3.06%

Annual Fees $0 $0 $0

Minimum to Open $100 $1,000 $50

Rate Fixed No YesAdjusts bi-annually

Minimum Holding Period

None 1 year 1 year

Early RedemptionPenalty / Forfeiture

None

All interest earned to withdrawal

date

3 months interest (redemptions

within 5 years of purchase)

ChexSystems Review

Yes Yes No

May Buy as a Gift No No Yes


Bond Order Process• Our RoleOur Role

Explain opportunityExplain opportunity - describe savings - describe savings bonds & chance to order at tax sitebonds & chance to order at tax site

Seek decisionSeek decision – ask client to decide if, how – ask client to decide if, how much & for whom to order bondsmuch & for whom to order bonds

Process orderProcess order – complete IRS Form 8888 – complete IRS Form 8888

Form 8888

The Government will mail a physical bond to the taxpayer at the address listed on the return.


Form 8888• Once a decision

is made, Basic volunteers can complete Form 8888

Form 8888


Form 8888

Complete Part II for Complete Part II for U.S. Savings U.S. Savings BondsBonds

Complete Part I to Complete Part I to direct deposit any direct deposit any remaining refundremaining refund

Form 8888


Form 8888

If bonds are for tax If bonds are for tax filer just complete filer just complete Line 4Line 4

Form 8888


Form 8888

If bonds are for If bonds are for others, complete others, complete Lines 5 and 6Lines 5 and 6

If beneficiary, check If beneficiary, check box box

Form 8888


Talking Points• Bonds are a good fit for…

Parents / guardians – a popular gift for kids First time savers – a safe way to start saving Long-term savers –a tool to build savings over

time People on ChexSystemsSM – an alternative

for those who do not qualify for a bank account

• SNWL: A chance to win $5,000!

Form 8888


Conversation StartersOpen-ended questions:Open-ended questions:

• I see you have a SaveNow WinLater brochure. Have I see you have a SaveNow WinLater brochure. Have you had a chance to look at it? What do you think?you had a chance to look at it? What do you think?

• We have a new, exciting service this year to help you We have a new, exciting service this year to help you save. Have you heard about it? Can I answer any save. Have you heard about it? Can I answer any questions?questions?

• Have you ever heard of US savings bonds? May I tell Have you ever heard of US savings bonds? May I tell you about them?you about them?

• Do you recall how you used last year’s tax refund? Do you recall how you used last year’s tax refund? What are your plans this year? What are your plans this year?

Form 8888


Seeking a Decision• Answer any questions; tactfully correct

misinformation• Briefly re-state 2 or 3 relevant bond features:

Safe Just $50 3.06% interest Chance to win $5,000

• Ask directly, “Would you like to order a savings bond today?”

• If client declines: Politely ask them why Correct any misunderstandings, ask again

Form 8888


PracticeWhich of the following are true about Series I

U.S. Savings Bonds: They pay a competitive interest rate (3.06%

currently). They can be purchased for as little as $50. They can only be redeemed where they were

purchased. They can be purchased as gifts for anyone else; all

you need is the gift recipient's name.

Form 8888




currently). TRUE They can be purchased for as little as $50. They can only be redeemed where they were



Form 8888




currently). TRUE They can be purchased for as little as $50. TRUE They can only be redeemed where they were



Form 8888




currently). TRUE They can be purchased for as little as $50.

TRUE They can only be redeemed where they were

purchased. FALSE They can be purchased as gifts for anyone else;

all you need is the gift recipient's name.

Form 8888




currently). TRUE They can be purchased for as little as $50. TRUE They can only be redeemed where they were

purchased. FALSE They can be purchased as gifts for anyone else; all

you need is the gift recipient's name. TRUE

Form 8888


PracticeHow long must savings bonds be held before

they may be redeemed?a. 6 months

b. 12 months

c. 5 years

d. They may be redeemed any time

Form 8888


PracticeHow long must savings bonds be held before

they may be redeemed?a. 6 months

b. 12 monthsc. 5 years

d. They may be redeemed any time

Form 8888

Bond buyers should understand that they can not access funds saved in bonds for one year after purchase.


Taxwise Exercise: Quincy Scott Continued

Taxwise




Password: Refer to your volunteer packet Can be reset if forgotten (see your trainer if account is

locked)





10.10. Form 8888Form 8888

11.11. Alabama ReturnAlabama Return12.12. Finishing the Return & Volunteer Finishing the Return & Volunteer

Requirements Requirements


Who Must File

Alabama Return

You were a… And Your Marital Status was…

And Your Filing Status was…

Gross Income was at least…

Full-year Resident Single Single $4,000

Head of Family $7,700

Married Married Filing Jointly $10,500

Married Filing Separately

$5,250

Single $4,000 (while in AL)

Head of Family $7,700 (while in AL)

Married Filing Jointly $10,500 (while in AL)

Married Filing Separately

$5,250 (while in AL)

Single, Head of Family, MFJ, MFS

(income threshold for filing status) x (number of months in AL) / 12


Creating a Return On the Main Information page in TaxWise,

type AL into the appropriate blank under state information.

Even if the taxpayer is a part-year resident or nonresident in another state, do not input that state into TaxWise, as it may create out-of-state tax forms that we are not qualified to file.

Alabama Return


Filling Out a Return Fill out the Federal return first – most of

the information that you need for the AL return will carry over.

When you have finished the federal return, pull up the AL-40, page 1.

Scroll to the bottom and click “yes” or “no” on the line asking if you want to file this return electronically.

Alabama Return


Personal ExemptionsBased on Filing Status and Income

• TaxWise calculates automatically• Part-year and Non-residents: the exemption is

prorated depending on the length of time they lived in Alabama (i.e. if they lived here for 6 months, it will be half of the normal personal exemption).

• Dependents: Taxpayers receive a personal exemption in AL even if they CAN be claimed as a dependent by someone else.

Alabama Return


Dependents• Most federal dependents also qualify on the

state level EXCEPT Foster children Non-related individuals who lived with the

taxpayer for the entire year*

*Alabama's dependency laws state that a qualified person must be the taxpayer's son, daughter, step-son, step-daughter, legally adopted child, parent, grandparent, grandchild, brother, sister, step-brother, step-sister, step-mother, step-father, mother-in-law, father-in-law,

brother-in-law, sister-in-law, son-in-law, father-in-law, and IF RELATED BY BLOOD, uncle, aunt, nephew, niece

Alabama Return


Determining AL Filing Status• A taxpayer’s filing status is the same

on the AL return as it is on the federal return, except for certain taxpayers who file Head of Household.

• Taxpayers can only file Head of Family on their AL return if: They are unmarried or legally separated at

the end of 2011 AND Their qualifying person is NOT a fosterchild

Alabama Return


Income• TaxWise automatically pulls the income

from the Federal return to the state return EXCEPT

The program recognizes that there are several types of income that are taxable federally, but not in Alabama. It will not transfer theses amounts to the state return.

Alabama Return


Nontaxable Income• Types of non-taxable income (at the Alabama level):

Unemployment Compensation Social Security Benefits Defined Benefits retirement plans Retirement benefits from police and firefighting

agencies Up to $25,000 of severance pay received as the result of

administrative downsizing All benefits received from PACT

Though not taxable, these amounts must be reported in the appropriate blanks on the AL-40, page 2.

Alabama Return


Standard Deduction• In Alabama the standard deduction depends on

the AGI. The higher the AGI, the higher the deduction.

Alabama Return

Filing Status Deduction Range

Single $2000-$2500

Head of Family $2000-$4700

Married Filing Jointly $4000-$7500

Married Filing Separately $2000-$3750


Itemized Deductions• Because the standard deduction is so

much lower on the state level than the federal level, many individuals may itemize on the state return, even if they don’t on the federal level.

• Alabama allows taxpayers to deduct some of their federal taxes. TaxWise carries over deductible federal taxes (like

FICA) and local taxes automatically. If a red label line pops up in the tax section on the

Alabama A, label the local taxes pulled from a W-2.

Alabama Return


Adjustments• Most federal adjustments carry over

automatically

• Two additional adjustments: Adoption expenses (medical and legal only) Contributions to PACT (up to $5000)

Alabama Return


Finishing the AL Return• Questions at the bottom of the AL 40, page 2:

Did the taxpayer file an AL return during the previous tax year?

Who is the taxpayer's current employer? (If the taxpayer is currently unemployed, override the prompt and leave “0” in the blank.)

Does the taxpayer have any income on their federal return that is not on their state return (i.e. unemployment, a defined benefits plans).

Alabama Return


Paying a Balance/Receiving a Refund• Taxpayers can have their refunds directly

deposited and their liabilities directly debited, or they can send/receive a check. Input the appropriate information on the bottom of the

AL 40, page 2 Only enter bank info onto the AL-40 IF:

• The taxpayer wants the state refund deposited to a different account

• The taxpayer requests a direct debit• The taxpayer purchases savings bonds or files a

Form 8888• If a taxpayer wants to pay the Department of

Revenue, TaxWise will generate a voucher.

Alabama Return





10.10. Form 8888Form 8888


12.12.Finishing the Return & Finishing the Return & Volunteer Requirements Volunteer Requirements


Refunds• Taxpayers can choose to receive their Taxpayers can choose to receive their

refund or contribute it to their next year’s refund or contribute it to their next year’s tax return.tax return.

• Checks take 6-8 weeks to be mailed.Checks take 6-8 weeks to be mailed.

• Electronic deposits will be made in 1-2 Electronic deposits will be made in 1-2 weeks – be sure to enter routing number weeks – be sure to enter routing number and account number.and account number.

Finishing the Return


Refunds: Electronic Deposit• Taxpayers can have their refund deposited Taxpayers can have their refund deposited

in up to three different accounts.in up to three different accounts.

• Form 8888Form 8888



Tax Due• If an amount is owed, taxpayer canIf an amount is owed, taxpayer can

Pay by check or money order made payable to Pay by check or money order made payable to “United States Treasury.”“United States Treasury.”

Pay by direct debit from their bank account on a date Pay by direct debit from their bank account on a date that they choose (up to the due date)that they choose (up to the due date)

File Form 9465, Installment Agreement, to pay the tax File Form 9465, Installment Agreement, to pay the tax in monthly installments (plus interest and penalties).in monthly installments (plus interest and penalties).

File an Online Payment Agreement (OPA).File an Online Payment Agreement (OPA). Request a “full pay within 60 to 120 days.”Request a “full pay within 60 to 120 days.” Tax due can also be paid with a credit or debit card.Tax due can also be paid with a credit or debit card.



Tax Due• To avoid having tax due next year,To avoid having tax due next year,

Adjust withholding on Form W-4 (from Adjust withholding on Form W-4 (from employer)employer)

Make quarterly estimated tax payments (Form Make quarterly estimated tax payments (Form 1040-ES)1040-ES)



Quality Review



Common Errors• Claiming children who are not the Claiming children who are not the

taxpayer’s qualifying childrentaxpayer’s qualifying children

• Selecting the incorrect filing statusSelecting the incorrect filing status

• Submitting returns with incorrect Submitting returns with incorrect social security numberssocial security numbers



Run Diagnostics



Printing the Return• Provide taxpayer with one complete copy of

the return• Documents to be signed by and returned to

taxpayer: 1 copy of a signed Federal 8879 1 copy of a signed Alabama 8453

• Forms to retain for our records: Completed Intake/Interview & Quality Review Sheet Signed copies of consent to use form and consent to

disclose form ONLY IF volunteer enters pin # on consent to use/disclose forms for taxpayer

SNWL form and copy of Form 8888 if applicable


IRS Volunteer Standards of Conduct

If volunteers act unethically, consequences to the tax site may include: Removal from the program Criminal investigation Discontinuing IRS support and removing IRS

supplies Revoking or retrieving the sponsoring

organization’s grant funds Deactivating IRS EFIN (site identification #)


Volunteer Don’ts • DO NOT accept gifts (monetary or not).DO NOT accept gifts (monetary or not).

• DO NOT solicit business from those you help.DO NOT solicit business from those you help.

• DO NOT use knowledge gained about DO NOT use knowledge gained about taxpayers for personal benefit.taxpayers for personal benefit.

• DO NOT knowingly complete a false return or DO NOT knowingly complete a false return or complete a return if you feel the taxpayer is complete a return if you feel the taxpayer is lying.lying.

• DO NOT retain documents for a follow-up DO NOT retain documents for a follow-up visit.visit.

Volunteer Requirements


Volunteer Do’s• Follow the Quality Site Requirements.Follow the Quality Site Requirements.

• Learn the process.Learn the process.

• Conduct a thorough interview.Conduct a thorough interview.

• Be sensitive to the taxpayer.Be sensitive to the taxpayer.

• Keep personal information confidential.Keep personal information confidential.

• Do only what you are trained and certified Do only what you are trained and certified to do.to do.

Volunteer Requirements

IRS Certification TestsVolunteer Standards of Conduct (Ethics)

Test: All volunteers must take the Volunteer

Standards of Conduct test. Please take the 5-question IRS test in the

back of your training packet.• Write your name at the top of the test.

Turn the test in to your trainer BEFORE we move on.

IRS Certification Tests

Basic Certification Test: IRS Form 6744 (CD or handout) To submit answers and receive certification,

follow instructions in training packet to link on http://www.impactalabama.org/taxprep.php

You must pass the open book, open note test before you volunteer at the site.

• You can take this on your own time or sign up for a test session on www.eventbrite.com


Taxwise ExerciseMary Beringer

• You will need:You will need: Tax Preparation Process handout.Tax Preparation Process handout. Resource Guide (Pub 4012).Resource Guide (Pub 4012). Workbook pages (Pub 4491-W) in Volunteer Workbook pages (Pub 4491-W) in Volunteer

Training Packet.Training Packet.

Taxwise


BEFORE You Sign In• DetermineDetermine

If the taxpayer and spouse can be claimed as If the taxpayer and spouse can be claimed as dependents. (dependents. (Age and Income Tests) Age and Income Tests)

If the taxpayer and spouse can claim If the taxpayer and spouse can claim dependents. dependents. (Tab C of Notebook)(Tab C of Notebook)

Appropriate Filing Status. Appropriate Filing Status. (Page (Page B-1B-1 of of Notebook)Notebook)

Taxwise


Taxwise Exercise: Mary Beringer

Taxwise




Password: Refer to your volunteer packet