VITA Training Basic
Tax Year 2011
1
What Makes a Successful
Volunteer
• Ask questions
• Be on time
• Call in advance if you cannot make it to your
volunteer shift
• Be professional
• Have fun!
2
The Intake Process
1.
2.
3.
4.
5.
6.
Taxpayer fills out Intake Sheet (4012 p. 6-8)
Volunteer completes Interview
Check Identification
Review Documents
Prepare Return
Quality Review
3
What’s new in 2011?
• Retirement Savings Credit Income Levels Increased
• Due Date: April 17th, 2012
• Provisions that Expire for TY2011
o Making Work Pay Credit
o Computer technology and equipment used as educational expenses
o Advance EIC
4
The Taxpayer Will Provide:
• Tax information
o Forms W-2, 1099, 1098.
• Social security cards or ITIN letters
• Proof of Identity
o Valid drivers license or other government issued picture ID
5
Filing Status
6
Standard Deduction
• Single / Married Separate
• Married Joint
• Head of Household
$5,800
$11,600
$8,500
7
Personal & Dependent Exemptions
• Claim for Taxpayer and Spouse
• If a dependent, cannot have dependents
• A dependent who files their own return claims
zero exemptions
• Qualifying child
• Qualifying relative
• $3,700 deducted per exemption
8
5 Dependency Tests
•
•
•
•
•
Household Test
Relationship Test
Gross Income Test
Support Test
Residency Test
9
10
ITINS and Dependents
• The dependency tests for a qualifying relative or
qualifying child apply in the same way to resident
aliens
• A child can be claimed as a dependent as long as
all the other rules for qualifying child or qualifying
relative are met.
• Parents with ITINS: Cannot claim the EIC. Can claim
dependents and Child Tax Credit
11
Qualifying Child of More than One
Taxpayer
• Normally, one taxpayer claims all tax
benefits for the same child.
• Tie-breaker p C-3
o Parent
o Parent who lived longer with child
o Parent with higher AGI if same length of time
12
Qualifying Child or Relative?
• Bobby lives with his mom Angela and mom’s
boyfriend Pete for the full year. Pete provides
support of the house and Angela doesn’t work.
• Can Pete claim Bobby?
• Is Bobby Pete’s qualifying child?
• What if Angela worked?
13
Exercises
• Joe, 65, lives with his son. Has a taxable
pension of $5,000. Can Joe’s son claim
him?
• Robert, 35, is permanent disabled and
lives with his mom. He collects social
security which covers his living expenses.
Can his mom claim him?
14
Intake Sheet Page 2
15
Other Income
• State Tax Refunds (Line 10) – for customers
who itemized in 2009 only!
• Social Security Benefits (SSA-1099) –
nontaxable if ½ SS + income < $25,000 Single
and $32,000 MFJ. (Line 20)
• 4491-W p. 280 if taking the test by hand.
• Child support and welfare benefits (TANF)
are not taxable income.
16
Intake Sheet Page 2 Cont.
17
Adjustments to Income
• Student Loan Interest – like interest income
may not be on a 1098 - $2,500 maximum
amount (Line 33)
• IRA Contribution – Up to $6,000 (Line 32)
• Educator Adjustment ?
• Alimony Paid (Line 31) but not Child Support
• Jury Duty Pay Paid to Employer (Line 34)
• If Schedule C income – (Line 27) deduct ½
of the self-employment tax
18
Itemized Deduction
Schedule A
Expenses greater than Standard Deduction.
Mortgage Interest and Insurance
Taxes – City State and Property – Paid in
2011
• Charitable Contributions
• Medical Expenses
• Gambling Losses
•
•
•
•
19
Earned Income Tax Credit
• Must have earned income less than:
o $43,998 ($49,078 married filing jointly) with 3 or
more qualifying children
o $40,964 ($46,044 married) with 2 qualifying
children
o $36,052 ($41,132 married) with 1 qualifying child
o $13,660 ($18,740 married) with no qualifying
children?
• Taxpayers Married Filing Separately do not
qualify
• Taxpayers with ITINs are not eligible –
Everyone must have SSNs.
20
EITC
• Taxpayer with kids:
o Kids must pass three tests (similar to QC test):
• Relationship Test
• Age Test
• Residency Test
• *No support test!
• Taxpayers without kids:
o Taxpayer or Spouse must be 25 to 64
o Cannot be claimed on another’s return
o Live in the US for more than 6 months
21
Disallowed EITC & Precertification
• If disallowed, must complete an 8862 in
future years
• Precertification letter – refer client to Legal
Aid
22
Test Question
• Interview Notes
o Natasha Jefferson and Daniel Newport are both single and were
never married. They have lived together for two years.
o They have one child, Hannah, age 4.
o In 2011, Hannah lived with Natasha the entire year. Daniel lived
alone.
o Natasha and Daniel provided all of Hannah’s support.
o In 2011, Natasha worked and earned $18,000. Daniel worked and
earned $33,000.
o Daniel pays the rent and utilities for Natasha's apartment. He is
providing over half the cost of maintaining the home for Natasha and
Hannah.
o Daniel does not pay household expenses for any other family
member.
o Natasha, Daniel, and Hannah are U.S. citizens and have valid social
security numbers.
Who can claim the Head of Household filing status?
Is Daniel entitled to claim Hannah as a qualifying child for EIC?
23
Test Question
• Interview notes:
o Lisa Bolivar is 36 years old.
o Oliver, who is single, is Lisa’s 45-year-old brother. He is
permanently and totally disabled.
o Their parents are deceased.
o Oliver lived with Lisa in her home all of 2011.
o In 2011, Oliver received Form SSA-1099 showing social security
disability benefits of $11,000, his only income.
o Oliver provided over half of his own support.
o Lisa worked as a clerk and earned $26,500.
o Lisa and Oliver are U.S. citizens and have valid social security
numbers.
Lisa cannot claim Oliver as her dependent because?
Is Lisa eligible for EIC?
24
Finishing Up Federal
• Advanced EITC W-2 box 9 (Line 59)
o By the way, eliminated for 2011!
• Federal Withholding from Box 2 of W-2 (Line 61)
• If Withholding too low, client should complete a W-4
at work.
• Remember EFIN and Site ID
• If e-filing remember the PIN and 8879
• Direct Deposit – Routing number and account
number
• Client may Split Refund this year – Form 8888.
Please Ask! – May Buy a Savings Bond
25
Finishing Federal
• If our client owes the IRS then:
Pay by credit card for a fee
Form 9645 – Installment payments
Electronic withdrawal from bank account
1040V payment voucher – print and mail.
Request a Full Pay Within 60 to 120 Days
agreement
o File an Online Payment Agreement request at
www.irs.gov
o
o
o
o
o
Ohio 1040
• If our client owes, please check your work!!
• Children who are dependents may claim
themselves on the Ohio return
• Joint Filing Credit – each spouse must make at least
$500.
• Qualified Tuition Deduction up to $2,500
• Retirement Income Credit
• Over 65 credit
• Child Care Credit – 25% to 100% of federal
• Under 10,000 no tax!
27
Local Taxes
• CCA – use CCA form
• RITA – include w2 and they will send a bill
• Cleveland Heights, Parma Heights, Lakewood have
own tax authority
• You pay tax to the city where you live and to the
city where you work.
• If you work in the same city where you live then it is
easy.
• Hardly ever see a refund if form is filled out correctly.
28
Quality Review
• Return to be reviewed by a 2nd volunteer.
• Complete Form 13614-C
29
Closeout the Return
• Self-selecting PIN – 5 digit number from the taxpayer
• 1 paper copy for taxpayer
Includes: Cover sheet, Federal 1040, State 1040,
local return & remaining tax documents
• Did client sign intake?
• Did client complete survey?
30
Volunteer Sign Up
Visit http://refundohio.org
to register as a volunteer and set your schedule.
31
Practice Labs
• Online Practice Lab through IRS website.
http://www.irs.gov/app/vita/index.jsp
o Password is learntwo
o User ID will be created for you to use with
practice problems.
32
Taking the Test
• Complete the paper copy – Please complete the
Form 13615 in the booklet.
• Online web site:
http://www.irs.gov/app/vita/index.jsp
• Please printout 13615
• New ethics portion of test
33
Certificates
• Please send your certificates to Shannon
Crandall, Enterprise
• Address: 3500 Lorain, #300, Cleveland, OH
44113
• Fax: 216-631-0450
• Email: scrandall@enterprisecommunity.org
34
Next Steps for Trainer
• Have the class start the basic test.
o Give them about a half hour to get to the first scenario.
• Do the scenario with the group on Taxwise.
o Show them how to create a log in for the Taxwise Practice Lab.
o Start the scenario as a group
• Download the PDF of scenarios
• Read through the info in the scenario
• The social security numbers must end in the username number
• Enter info into Taxwise in all caps
• Boxes underlined in red: required fields, green: auto fills for you, black:
not required for now.
• Talk about dependent fields and boxes to check for credits
• W2
o Show the group what box to check to remove automatic
calculations.
• Show the group how to add forms
• Sch B
o Link interest statement
• Answer the test questions as a group using the
information on Taxwise.
35