AARP Tax-Aide Counselor Reference Manual
This contains all changes to be applied to the 9/23/2009 version. This will then be version
3
Cover- Cross out CA2 in the title. Add “Tax Year 2009”. This manual is now being
used by all sub-states in California. Because of this change, we have reviewed this
manual’s conformity with the National and Sub-State “out-of-scope” items and were
required to make most of the following changes to conform.
Page ii Table of Contents
Line 29- Self Employment Heath Insurance. Add “out-of-scope”
Line 53- Alternative Vehicle Credits. Add “out-of scope”
Line 67 Cross out “First Time”
Page 1 The TaxWise (UTS) phone number has been changed for us,
It is now 1-800-411-6391
Page 2 Tax documents which may be brought in by clients.
1099-LTC Long Term care Benefits. Add “out-of-scope”
Foreign Pension Income/social Security. Add “out-of-scope”
IRA contribution/conversions…- Cross out conversions which are “out-of-scope”
Page 3 Federal Tax Forms and Schedule We Can Prepare
Cross out the following or mark as “out-of-scope”
8396 Mortgage Interest Credit
8606 Non Deductible IRA Distributions and Contribution
8853 LTC Insurance Contracts
8891 Canadian Registered Retirement Plans
8901 Child Tax Credit for Non-Dependent Child
8910 Alternative Motor Vehicle Credit
8919 Uncollected Social Security Tax
Page 4 What is out-of-scope - Add the following
Lump Sum Social Security distribution (except when all taxed in current year)
Foreign Pensions and Social Security (except for Canadian Social Security)
Statutory Employees
IRA distributions and Contributions requiring a Form 8606
Canadian Registered Retirement Plans
Mortgage Interest Credit Form 8396
Child Tax Credit for non-dependent child
Alternative Motor Vehicle Credit
LTC Insurance contract Distributions
Uncollected Social Security Tax
After “Foreclosure, Cancellation of debt, or Bankruptcy” Add:
Form 1099A, 1099C, 982
After “Distributions from Archer…..” Add:
Form 1099SA
After “AMT….” Add:
Form 6251, unless no AMT appears on return
After “Tax for Children with Investment Income” Add:
Form 8615
After “Reporting Childs Interest/Dividends on parents return” Add:
Form 8614
After “Qualified Adoption Expense” Add:
Form 8829
After “Installment Sale Income” Add:
Form 9465
Page 5 Under Delete all Returns
Change “TaxWise Explorer” to “Return Explorer”
Page 7 Under Pull down Menus, just below the third solid bullet
“View” should have been a solid bullet
Page 8 Under Screen Layout, Left Side, forms Tree
The check mark is missing from the parenthesis before Blue check mark
Page 12 organizing your work
The shortcut for Main Info is now “Main”
Page 15 under Filing Status second bullet – change first sentence to read
A married taxpayer, whose spouse and dependents reside outside of the US and who
do not have social security numbers or ITIN’s, is married and must file as MFS or MFJ.
Write ‘NRA’ (Non-Resident Alien) in the SSN field and paper file as MFS. MFJ requires
ITIN’s and election to be treated as resident- out of scope)
Page 16 Under State Information, third bullet
Change “CA2 policy is to” to read “We should”
Page 16 Preparer’s use fields, second bullet
While Box 2 is no longer used for data retention, it may be used for local purposes or
for Quality Reviewers initials.
Page 17 W2-Employers ID, Name and Address
Second indented bullet under The Employers identification number
Chan E”IN to EIN
Employee SSN when filing under ITIN second sentence, change to read
“The SSN on the TaxWise input form W2 “line d”…….”
Employee SSN correct second sentence, change to read
“ …., do not change the SSN on the TaxWise W-2 input form to mathc the
paper W-2
Page 17 Under W2-Dollar Value Boxes Add:
For 2009,
TaxWise calculates the correct amounts for line 3, 4, 5, and 6 if entries are made on line
12 or line 7. The procedure shown in the second bullet is not required.
Page 18 Box 13
Cross out, or mark the sentences referring to Statutory Employees as “out-ofscope”
Page 22 Chart for K1
For K1 line 3 and 4a, the “Enter on Form column” should say “Sch D Pg 1”
Page 25 Completion of Schedule C-EZ
Under “For Gross receipts reported on 1099-MISC”
Cross out the third bullet referring to Statutory employees
Page 26 Under Completing the worksheet, Date acquired Third hollow bullet
Change “When “Inherit” and “Various” are…” to read “When Inherit” or “Various
“is….”
Page 30 1099R Exclusion Worksheet (for IRA’s)
Cross out, or mark “out-of scope” the last three hollow bullets on the page that
refer to form 8606
Page 34 Foreign Government Pensions
Cross out, or marks as “out of scope” this whole section except the third bullet
that refers to “Distributions from the Canada…”
Page 36 Lump Sum payments of Social Security
Cross out, or mark as “out-of-scope” everything except the first line that reads
“Enter total Social Security received in the normal manner”
Page 37 Other Income Without a supporting IRS form
In the examples, cross out “Foreign Government Pensions”
Page 38 Distributions from LTC insurance plans-Form 1099 LTC
Cross out, or mark this whole section as “out-of-scope”
Page 39 Line 29 Self Employed Health Insurance Deduction
Mark this as “out-of scope”
Page 40 Line 32 IRA Deduction
Cross out or mark as “out-of-scope” the fourth bullet regarding form 8606
Page 40 Line 34 Tuition and Fees
Third bullet – change reference to Line 50 to Line 49
Page 42 under Sch A-Line 5 Taxes Paid
Cross out 2005 in the second square bullet
Page 42 Under CA Sales Tax Rates Add
The blended tax rate for California in 2009 is 8.0034%
Page 43 Sch A – Add new: Sch A Line 7 New Motor Vehicle Taxes
This entry will come from the Sales Tax worksheet
Page 43 Sch A – Line 7- Vehicle License Fee
Change to read “Line 8”
Change first line to read:
“Vehicle License Fee (VLF) should be listed under Other taxes with DMV in the
type field
Page 44 After Line 28- add:
Sch A Page 2 New Motor Vehicle Tax Worksheet
No entries will be made on this form. Enter the new motor vehicle sales tax on the
Sales Tax worksheet Line 8 a, b, c
Page 46 Line 49 Education Credit, second bullet Hope/ AOTC Credit
At the end of the sentence, change “course materials” to “Books, supplies and
computers”
Add: do not use Hope Credit in part ll of Form 8863
Page 47 Line 52 Residential Energy Credit
Mark second bullet as out-of scope
Page 47 Line 53 Alternative Vehicle Credits
Mark as “out-of-scope”
Page 48 Line 57 Unreported social Security and Medicare Tax
Cross out the part of the sentence referring to 8919 as this is “out-of-scope”
Page 48 Line 58 Additional Tax on IRA’s….
Cross out the following : “….unless an exception to the penalty is claimed.” And
the next sentence. Form 5329 is “out-of-scope”
Page 50 Line 63 Making Work Pay - change to read as follows:
Taxpayer(s) who received Social Security, Railroad Retirement, Veterans Benefits, or
SSI in Nov-Dec 2008 or Jan 2009 will have received the Economic Recovery Payment of
$250. If their benefits started after that time they do not qualify for an ERP, however they
may qualify for the Making Work Pay credit if they have earned income. (Note: This is
not to be confused with the 2008/2009 Stimulus Payment Program.)
 For Individuals who received Social Security, Supplemental Security
Income, Railroad Retirement, or Veterans Disability or Pension Benefits,
click “Yes” on line 10 and enter $250 for each person receiving benefits.
If they did not receive benefits, click “No” on line 10.

If one or both spouses did not receive the Economic Recovery Payment
and received a pension or annuity 1099 in 2009 for services performed as
an employee of the U.S. government or any U.S. state or local
government, click “Yes” on line 11 and enter $250 for each individual
receiving a government pension but not the $250 economic recovery
payment. If they did not receive a government pension, click “no” on line
11.
An individual who can be claimed as a dependent on another’s tax return is not entitled to
a Making Work Pay Credit. Tax Wise will not allow the credit if they are not entitled to
their own exemption.
Page 50 Line 66 Refundable Education Credit- first sentence
Change “may be refundable” to “will be refundable”
Cross out “if tax has been reduced to zero”
Page 50 Line 67 Home Buyers Credit – revise to read:
A credit of up to $8,000 is available to first time homebuyers ($6500 for repeat
homebuyers who qualify) for a principal residence purchased in 2009 or before April 30
2010. Link to form 5405 and enter home address and acquisition date. Complete Part l
and General and Part II Credit. If there is a Form 5405, the return cannot be filed
electronically.
2008 homebuyers, who received the loan which must be repaid starting in 2010, will have
to complete Part lll of Form 5405 if there has been a disposition of the property,
including death of a joint owner or a divorce.
Page 53 Interest Income-first bullet
Direct obligations backed by the US Government include Federal Land Banks and
Federal Home Loan Banks. They do not include Fannie Mae and Freddie Mac
Page 53 Social Security, Railroad Retirement Benefits, Canada OAS
In the second bullet mark Foreign Pensions as “out-of-scope”
Page 54 IRA Basis Difference – change to read as follows:
In 1975 when no CA IRA deduction was allowed, and in 1982 through 1986
when CA IRA deductions were limited to 1500 or 1750 or not at all if the taxpayer was
an active participant in a qualified or government retirement plan or contributed to a tax
sheltered annuity, there would be a California basis if the Federal deductible contribution
exceeded the allowable California Deductible amount. The Client would have to produce
records showing amount contributed for each of these years and the amount deducted for
Federal and California (if allowed). The California basis would be applied to reduce the
amount of taxable IRA distribution on the CA CA. If the taxpayer does not have these
detailed records, there will be no adjustment of the taxable IRA distribution. See CA pub
1005.
Page 54 Under “Deductions and Credits not Allowed by CA Add:
“Making Work Pay Credit”
“Homebuyers Credit” although California has their own credit- see next page.
Page 55 Child and Dependent Care Credit-Refundable (CA 3506)
Insert second bullet: Answer question, “Was care provided in California”
Change the former third bullet to read: Part ll The telephone number and location of
the care provider is required to e-file the return
Page 57 Direct Deposit add:
SAVINGS BONDS DIRECT DEPOSIT
For Federal refunds, the client can now request a portion of their refund to buy up to
$5,000 in U.S. Series I Savings Bonds
The amount requested must be a multiple of $50 and the bonds will be issued in
the name of both taxpayers if this is a joint return
Bank account information must be available for deposit of any refund not used to
purchase bonds A check cannot be issued
If the refund is an exact multiple of $50 and the entire refund is to be used to
purchase bonds, the bond routing number can be entered on the main information sheet
and 1040 page 2.
Use Form 8888 for deposit of part of the refund to Savings Bonds.
1a Enter a multiple of $50 on line 1a, but not more than $5000
1b Enter 043736881 as the routing number
1c Check the Savings box
1d Enter “BONDS” in the account number
2b, c, d Enter the account information for the remaining refund
Client can contact Treasury Retail Securities at 1-800-245-2804 to check status of their
bonds
Page 62 Estimated CA Tax payments
First bullet- cross out See CA 540 instructions for details
Add fourth bullet-California estimates are distributed 30%-40%-0% and 30% to
the four quarters. There will be no voucher for the third quarter.
Page 64 Power of Attorney
Under Deceased person –signature requirements
Cross out the lines for “Personal representative” and “person other
than…” since these require a Form 1310 which is out-of-scope”
Page 67 OTHER RETURNS under “Before Making changes”- Federal Return
Third bullet – change “above Income and Deductions” to “at top of form”
INDEX Page 82 Forms
The list of “Out-of-Scope” items, on Page 4, originally referred to Form numbers.
These were eliminated and changed to descriptions as most are not familiar with the form
numbers. However the index was created with the form numbers, and we have Forms in
the Index referring to page 4, but you will not find those form numbers on Page 4.
Add a note as follows: “Page 4 references will find descriptions, not Form
numbers”