TY 2014 Scope
Updates
What’s In – What’s Out
Clarify Rental Income
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Instructor Workshop - 2014
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Cancellation of Debt
● Credit Card Debt

Now part of Advanced certification
● Foreclosure of Primary Home

Out-of-scope
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Instructor Workshop - 2014
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In – Long Term Care Benefits
● LTC Insurance Contracts –

Generally reimbursements not Taxable

Per diem costs up to an aggregate limit are
non-taxable
● Reported to taxpayer on 1099-LTC
● If required, complete Form 8853, Section C
(Sections A and B remain out-of-scope)
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Instructor Workshop - 2014
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Form 1099-LTC
Source Document to Taxpayer from Insurer
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F
o
r
m
8
8
5
3
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In – Waiver Request for Failure to Take
Required Minimum Distribution (RMD)
● Taxpayer can request waiver of
additional tax for failure to take RMD
from qualified retirement plan
● Add’l Tax = 50% of amount not taken
Counselor NOT expected to review all
taxpayer plans and verify that required
distributions were taken
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Instructor Workshop - 2014
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Waiver Request – Failure to Take RMD
● Part VIII of Form 5329 in scope
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Instructor Workshop - 2014
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In – Cash Rental Income for Land
● Income from Land Rental in scope if
reported on a 1099-MISC
 Cash
income also now in scope
● Income is reported on Schedule E
● NO expenses are allowed

Property taxes may be a Schedule A
deduction
TAX-AIDE
Instructor Workshop - 2014
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In – 1099-R Codes
● Several clarifications/updates to codes that
are in scope – see Pub 4012, pg D-20.
Examples:

6 – tax-free exchanges

D – Annuity payments from nonqualified
annuities

F – Charitable gift annuity

S – Early distribution from a SIMPLE IRA in
the first 2 years no known exception
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Instructor Workshop - 2014
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Out – 15% Depletion Allowance
Expansion to all States
● Tax law states taxpayer should take greater
of cost or percentage depletion
● Cost depletion calculation is out of scope
● No way to determine which is greater,
percentage depletion is out of scope
● APPEALED to SPEC. New Position

States already doing % depletion OK.
No expansion at this time.
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Instructor Workshop - 2014
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Out – Self-Employed Health
Insurance
● Reportable as Adjustment to income on
Line 29 if self-employed and had a net
profit for the year
● Request to add to scope for those on
Medicare not approved by SPEC
● Resubmit next year once better
understand impact of ACA
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Instructor Workshop - 2014
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Out – Waiver of Underpayment
Penalty – Form 2210
● Proposed using waiver of penalty on
Form 2210, page 2 or 3 instead
● Rejected – concerned that Counselors
will not properly waive any calculated
penalty and taxpayer might overpay
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Instructor Workshop - 2014
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Out – Simplified Option for Home
Office Deduction
● Alternative to calculation, allocation, and
substantiation of actual expenses

$5 per ft² (unless daycare) on up to 300 ft²

No depreciation
● Must still meet qualified business use
requirements
● Rejected by NTTC

Significant additional training required
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Instructor Workshop - 2014
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Rental Income – NTTC Review
● Out of Scope

Considered Single room – ½ duplex

Not for Profit
● Impacts

Pub 4491 Training not Sufficient

All Not-for-Profit OOS (Pub 4491)
● Taxpayer has option to build tax prep cost
into Rental
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Instructor Workshop - 2014
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Rental Income
● Consensus of Committee

Oppose addition of Rental Income to
scope

Additional Training Requirements to
ensure volunteers sufficiently trained to
ensure an accurate return
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Instructor Workshop - 2014
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Scope Updates
Questions?
Comments…
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Instructor Workshop - 2014
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