Tax Preparer Resource Manual
Prepared by Rochester C.A.S.H. Coalition
Filing Season 2016 for Tax Year 2015
The 2015 C.A.S.H. Volunteer Training Manual is a work product of the Greater
Rochester C.A.S.H. Coalition, and cannot be used, reproduced, or distributed without
the express written consent of the:
C.A.S.H.
Coalition
Empire
Justice
Center
1 W. Main Street, Suite 200
Rochester, NY 14614
Copyright December 2015
2
PART I: IMPORTANT C.A.S.H. INFORMATION ........................................................ 7
Volunteer Protection Act: .......................................................................................... 7
New For TY 2015, 2016 - Drop Off Service at Super Sites ...................................... 7
PART II: TAX PREPARER PROCESS ........................................................................... 8
Overview ....................................................................................................................... 8
The Client’s Experience ................................................................................................ 9
Tax Preparer Process ................................................................................................... 10
Common Definitions ................................................................................................... 11
PART III: INCOME........................................................................................................ 13
PART IV: FEDERAL ADJUSTMENTS, DEDUCTIONS & CREDITS ....................... 14
Adjustments ................................................................................................................. 14
Deductions ................................................................................................................... 14
Schedule A Deductions Chart:..................................................................................... 15
Federal Credits: Refundable And Non-Refundable ..................................................... 16
Child And Dependent Care Credit........................................................................... 16
Earned Income Tax Credit ....................................................................................... 17
Affordable Care Act................................................................................................. 17
Summary Of Rules For Qualifying Child For Various Credits................................ 17
Summary Chart of Tax Rules as They Apply to Children ........................................ 19
Education Credits ..................................................................................................... 20
PART V: NYS ADJUSTMENTS, DEDUCTIONS AND CREDITS INCOME TAX ... 21
Basics Of State Income Tax ........................................................................................ 21
Common Adjustments Required For NY State Tax Return ........................................ 21
Retirement Contributions – 414H ............................................................................ 21
State Income Tax Refunds from Prior Year ............................................................. 21
Pensions, Social Security, and Annuity Income ...................................................... 22
Government Bonds .................................................................................................. 23
Standard or Itemized Deduction .............................................................................. 24
Exemptions .............................................................................................................. 24
NYS Credits: Refundable ........................................................................................... 24
Empire State Child Credit Form IT-213 .................................................................. 24
NYS Child And Dependent Care Credit Form IT-216 ............................................ 24
NYS Real Property Tax Credit Form IT-214........................................................... 24
Filling Out Form IT-214 .......................................................................................... 25
3
NYS Earned Income Credit Form IT-215 ................................................................ 30
NYS Non-Custodial Parent Earned Income Credit Form IT-209 ............................ 30
College Tuition Credit Form IT-272 ........................................................................ 31
NYS Volunteer Firefighter /Ambulance Worker Credit Form IT-245 .................... 31
Other Considerations ................................................................................................... 31
Amended Returns ........................................................................................................ 32
Helpful Hints ............................................................................................................... 32
New York State Only Returns ..................................................................................... 32
Tax Computation, Credits And Other Taxes ............................................................... 32
PART VI: FINISHING THE RETURN.......................................................................... 33
Level I. Preparer Review ............................................................................................ 33
Refund Splitting ....................................................................................................... 34
Level II. Designated Quality Reviewer Check ............................................................ 35
Level III. Client Review .............................................................................................. 36
Final Completion Steps For Paper Filed Returns......................................................... 37
PART VII: TAX INFORMATION FOR COMPLEX RETURNS ................................. 39
Federal Form 8453: Individual Income Tax Transmittal Form: .................................. 39
Innocent Spouse .......................................................................................................... 39
Federal: Form 8857 (Request for Innocent Spouse Relief) .................................... 39
State: Form IT-280 (Non-Obligated Spouse) .......................................................... 39
Injured Spouse ............................................................................................................. 40
Federal: Form 8379 (Injured Spouse Allocation) ................................................... 40
State: Form IT-280 (Non-Obligated Spouse) .......................................................... 40
PART VIII: AMENDED AND PRIOR YEAR RETURNS ........................................... 41
Amended Tax Returns - Form 1040X and NYS IT 201 X .......................................... 41
Steps for Amended Returns ......................................................................................... 41
Prior Year Returns ....................................................................................................... 44
Highlights for 2012 .................................................................................................. 44
Highlights for 2013 .................................................................................................. 44
Highlights for 2014 .................................................................................................. 44
Estimated Tax Return - Form 1040ES ......................................................................... 44
Extensions ................................................................................................................... 44
PART IX: TOOLS AND RESOURCES......................................................................... 45
References Materials Provided During Training: ........................................................ 45
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Instructions for Link and Learn; Taxwise Training and IRS Certification Test: ......... 46
Web and Phone References ......................................................................................... 51
New York State Dept. of Taxation .......................................................................... 51
IRS ........................................................................................................................... 51
OTHER RESOURCES ............................................................................................ 51
Student Loan Interest 1098-E .................................................................................. 52
Tuition Statement 1098-T ........................................................................................ 52
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6
PART I: IMPORTANT C.A.S.H. INFORMATION
Volunteer Protection Act:
The Volunteer Protection Act generally protects unpaid volunteers from liability for acts or
omissions that occur while acting within the scope of their responsibilities at the time of the
act or omission. It provides no protection for harm caused by willful or criminal misconduct,
gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or
safety of the individual harmed by the volunteer.
C.A.S.H. Staff and Contact Information
C.A.S.H. staff is here to help you. Feel free to contact them with suggestions or concerns.
Name
Title
Email
Phone
Berta Rivera
Director
brivera@empirejustice.org
585-295-5732
Tracy Merlau
Outreach & Volunteer Mgr
tmerlau@empirejustice.org
585-295-5733
Susan Bonkowski Administrative Assistant
sbonkowski@empirejustice.org 585-295-5805
• Website: www.empirejustice.org/cash
• Training Website: www.empirejustice.org/cash/cash-training-center/
New For TY 2015, 2016 - Drop Off Service at Super Sites
This service provides clients the ability avoid long wait times by “dropping off” (scanning)
their tax information and picking up their completed return at a later date. Super Sites will be
closed to the public on Wednesdays to allow for preparation of these returns. Below is a flow
chart that explains the Drop-Off Service for clients. The Drop Off Service will be explained
in more detail during training.
Client Process for Drop Off Service
Client completes Intake Paperwork and
meets with Drop Off Coordinator
(DOC) Volunteer
YES
DOC reviews paperwork and completes CASH
Advisor checklist to assess eligibility,
certification level, and relevant tax documents.
Is client eligible for Drop
Off Service?
DOC reviews Drop Off Authorization Form and
pickup instructions with client. DOC scans all
necessary tax documents and returns originals to
client. Client picks up return at a later date.
NO
DOC makes appointment for client
to return for Tax Prep ONLY.
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PART II: TAX PREPARER PROCESS
Overview
Successful Tax Preparers are able to make people feel welcome and at ease while
engaging in conversation that includes probing questions to gather the information
required to prepare a complete and accurate tax return. They are comfortable with
people from diverse cultural and socio-economic backgrounds.
The role of the Tax Preparer includes all of the following:
•
Follow the Volunteer Standards of Conduct (Pub 4012)
•
Use the IRS and C.A.S.H intake sheets and the taxpayer’s documents to
complete a thorough, probing interview of the client to ensure all relevant
information is available.
•
Consult a site manager if the accuracy of the information provided by the client
is open to question or to verify if the tax return is within the VITA scope.
•
Use Publication 4012, Volunteer Resource Guide, and Publication 17, Your
Federal Income Tax, and the NYS TP-300 New York State Quick Reference
Desk Guide throughout the tax preparation process to assist in making the
proper tax law determination and ensuring the completion of an accurate
tax return.
•
Collect important information about C.A.S.H. clients by entering data from the
C.A.S.H. Intake Sheet into the “Preparer Use Fields”.
•
Encourage clients to engage in asset building. Explain the advantages of
opening a checking or savings account with one of our partner banks or credit
unions. “Close the deal” with the Cash Advisor and the Asset Building
Specialist by encouraging saving part of the refund in long-term savings
products such as savings bonds.
•
Follow the procedures established by C.A.S.H. to complete a quality review
for every return prepared.
•
Review all C.A.S.H. updates throughout the tax season. They contain important
tax law updates.
8
The Client’s Experience
9
Tax Preparer Process
1.
Sign into TaxWise on-line. See Pub 4012, Sec N for instructions.
2.
Pick up return from front desk and verify it is within scope of your training certification:
Basic, Advanced, etc. IF UNSURE, CONTACT SITE MANAGER
3. Meet the client, introduce yourself, and explain the process.
4. Review the C.A.S.H. and IRS Intake Sheets and all the tax documents.
a. Verify picture ID and Social Security cards for client(s) and all dependents
b. Check if tax documents are current year and complete.
c. Make sure there is a reason to file.
d. Type the information from the Intake Sheet into the TaxWise Main Info Page:
•
Make sure you have a phone number.
•
Verify Filing Status and Dependent Information:
o Ask about dependent care expenses (Day Care).
o Always check EIC box in TaxWise.
•
Make sure to input bank information if appropriate; if no Bank Info, ask client
about setting up account or getting a pre-paid card.
5. Review income tax documents against Part III of the IRS Intake Sheet.
6. Review adjustments, expenses and/or deductions against Part IV of the IRS Intake Sheet.
7. Review return for possible credits such as: EIC, Child Care, Education, Retirement.
8. Review Part V of the IRS Intake Sheet for other related tax events.
9. Review Part VI for ACA information for Premium Tax Credit and Minimum Essential
Coverage.
10. Check p. 2 of 1040 to see if it makes sense.
11. Open NYS Return (IT-201). Double check page 3 of C.A.S.H. Intake Sheet to make sure
there are no additional credits to input.
a. Input County and School Code (Use Desktop Icon).
b.
Check for any NY additions or subtractions. Pay special attention to 414HSUB
contributions.
c. Check for NY credits:
•
Education (NYS Form IT-272 if client has education credits on Fed Return)
•
Child Care (NYS Form IT-216)
•
Property Tax Credit (NYS Form IT-214)
•
Non-Custodial (NYS Form IT-209)
•
Empire State Child Care Credit (NYS Form IT-213)
12. Verify the NYS withholding amount has been inputted correctly. Complete the return and get
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the red out.
13. Enter the answers from C.A.S.H. Intake Sheet into Preparer Use Fields in TaxWise
14. Complete three levels of review by following the detailed instructions listed in PART IV:
FINISHING THE RETURN section of this manual.
Common Definitions
Term
Definition
Adjustments
Items that may be subtracted from income to arrive at the
taxpayer’s Adjusted Gross Income.
AGI
Adjusted Gross Income
Credits (Non-Refundable)
Items which can be used to reduce one’s tax liability to zero.
Credits (Refundable)
Items which can be used to reduce one’s tax liability, and will
result in a refund if they are greater than the tax liability.
Deductions
Either a standard amount based on one’s filing status or an itemized
list of qualified items which may be subtracted from the AGI
before calculating taxes.
Dependent
Person (other than spouse) who is supported by the taxpayer and
meets the specific criteria to be a “qualifying child” or a
“qualifying relative.” A person who is a dependent can also have
his or her own tax return and be the taxpayer on that return. If that
is the case, this person will need to file as a “dependent” and will
NOT be able to claim the personal exemption.
Exemption
Income
Amount of money per qualifying person (taxpayer, spouse,
dependents) that may be subtracted from income before figuring
taxes
Money received by the taxpayer. Chart on Taxable vs. Nontaxable income can be found in reference book 4012 on Tab D.
Non-Resident Aliens
Individuals in the U.S. on a temporary basis (students and others
without visas or green cards.) They need to have an ITIN to be
included on an income tax return. Citizens who are married to nonresident aliens typically file Married Filing Separately to avoid
complications. See your site manager for help with all non- resident
alien returns as these require Advanced Certification.
Resident Aliens
Individuals who are not U.S citizens but who are lawful, permanent
residents of the U.S. They have an alien registration card (green
card) and generally a Social Security card and follow the same tax
laws as U.S. citizens including reporting worldwide income on
their tax returns.
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Social Security And Social
Security Disability (SSD)
Income
The taxpayer will receive a pink edged SSA 1099 form and the
income must be reported. Both SSD and Social Security income of
the taxpayer and the spouse can be taxable depending on how much
additional income they have. Social Security benefits received by
children are NOT reported on the parents’ tax return, and normally
the child does not have enough income to have to file his or her
own return. Children receive benefits because a parent has died, a
parent is disabled, or the child is disabled.
Spouse
Husband or wife of the taxpayer
Supplemental
Income (SSI)
Federal government program that provides stipends to very lowincome people who are either aged (65 or older), blind, or disabled.
Although run by the Social Security Administration, SSI is funded
Security from the U.S. Treasury general funds. SSI is NOT TAXABLE and
taxpayers will not get a pink SSA1099 form. SSI is considered
income when determining eligibility for the New York Real
Property Tax Credit. You must ask about it when you prepare NYS
Form IT 214.
Taxpayer
Totally And Permanently
Disabled
Person whose name appears first on the tax form (1040)
Person cannot engage in substantial gainful activity because of a
physical or mental condition. A doctor has certified the condition
has lasted or will last continuously for at least a year or will lead to
death.
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PART III: INCOME
PUB 4012 TAB -D
Income is considered taxable or non-taxable.
NOTE TO VOLUNTEERS CERTIFIED AT BASIC LEVEL
If you see anything on the IRS Intake Sheet marked with an (A), the return should only be done by
someone with Advanced Certification.
Special Notes About Other Income On Line 21 On Form 1040.
•
Common types of Income on Line 21:
o Gambling winnings from Form W-2G
o Form 1099-MISC—Volunteers certified at basic level MUST consult Site
Manager before inputting any information from this form.
•
Line 1 (if from Monroe County DSS)
•
Line 3
•
Line 7 for self-employment income (Advanced Preparers ONLY: see below)
Self-Employment Income-Advanced Preparers Only
•
Most income that is reported in BOX 7 of 1099-MISC must be reported as selfemployment income:
•
Reminders of VITA Scope for Self Employment Income:
o Businesses can’t have employees.
o Businesses can’t show a loss.
o Businesses can’t have inventory.
•
Use Schedule C-EZ for businesses with expenses less than $5,000.
•
Use Schedule C for business with expenses between $5,000 & $10,000.
CALL A MANAGER IF THERE ARE SITUATIONS THAT ARE QUESTIONABLE OR
DON’T MEET ABOVE CRITERIA
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PART IV: FEDERAL ADJUSTMENTS, DEDUCTIONS &
CREDITS
Refunds Are Increased And/Or Taxes Are Lowered In Three Main Ways:
•
Exclude money that is normally taxed (exemptions, adjustments, and/or deductions)
•
Non-refundable credits
•
Refundable credits
Adjustments
PUB 4012 TAB - E
Adjustments to income are entered after all income has been entered. They are special items that
are subtracted from total reportable income to arrive at Adjusted Gross Income (AGI) which is
used to compute various deductions and credits on the tax return
The most common adjustments are Student Loan Interest (limited to $2,500) and the deductible
part of self-employment tax.
Deductions
PUB 4012 TAB - F
PUB 17, CHAPTER 20
Deductions are other items that reduce the taxpayer’s taxable income. Taxpayers can either use the
standard deduction or claim itemized deductions (see Schedule A Deduction Chart on next
page). Most C.A.S.H. clients take the standard deduction because it is more than the total of their
itemized deductions. However, always check the possible total of itemized deductions if a client
owns a home
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Schedule A Deductions Chart:
PUB 4012, P F-7
Deductible
Not Deductible
Medical Insurance Premiums (including long term care
insurance premiums and Medicare premiums)
Doctor Co-Pays
Amounts reimbursed by insurance or paid with
pre-tax dollars (cafeteria plans)
Prescription Drugs And Insulin
Non-prescription drugs (over the counter drugs)
Medical Devices such as wheel chairs and crutches
Payments to Dentists & Nurses
Eyeglasses
Mileage driven for medical purposes
Charity Contributions whether cash or non-cash. Charity
must qualify and you must have documentation.
If non-cash donations are over $500, return is OUT OF
SCOPE.
Money given directly to individuals; Political
Donations are NOT deductible
State and local income taxes paid OR sales taxes paid
including those on automobiles, RV's, boats, and airplanes
Real estate taxes on the home
Interest paid on home mortgages or home equity loans,
including "points"
Other interest such as credit card or personal loan
interest
Casualty or theft losses - return is OUT OF SCOPE
Those covered by insurance payments
Gambling losses only to the extent of the winnings
Losses without winnings
Safe deposit box rent Other investment costs such as IRA
account fees
Union dues, job travel, tools, safety glasses
Commuting; items reimbursed by employer
Clothes purchased for the job if they would not ordinarily be
worn "on the street"
15
Federal Credits: Refundable And Non-Refundable
PUB 4012 TAB – G and I
Credits directly reduce the amount of taxes owed (as opposed to deductions which reduce the amount of
income taxed.) There are two types of tax credits: non-refundable and refundable.
Refundable credits are treated in a manner similar to tax payments. The credit is used to reduce the
client’s tax liability and any amount in excess of the tax liability is fully refunded.
Non-refundable credits are credits that are only available to decrease income taxes paid to zero. If the
non-refundable credits are greater than the amount of tax owed, this excess is not refunded to the client.
Because many C.A.S.H. clients have income low enough to avoid any income tax, these credits
sometimes are not used.
Below are the types of credits that commonly appear on C.A.S.H. returns:
Non-Refundable
Child and Dependent Care Credit*
Refundable
Earned Income Tax Credit
Child Tax Credit*
Lifelong Learning Education Credit*
American Opportunity Education Credit
(40% refundable)*
Retirement Savings Credit
Energy Credits
*Refundable in New York
Additional Child Tax Credit
American Opportunity (40%)
ACA Advanced Premium Tax Credit
Child And Dependent Care Credit
Note: ALWAYS complete this form even if the taxpayer gets no federal credit, because he/she WILL get a
New York refundable credit.
Parents may claim a non-refundable credit for child care expenses. There is a limit of $3,000 for child care
expenses per child; $6,000 for two or more children. This credit may also be taken for care of one’s spouse
or other relatives who are incapable of self-care and are the taxpayer’s dependent.
The credit is claimed by the completion of Form 2441, Child and Dependent Care Expenses. Marking
DC for the qualifying child on the Main Information Screen makes the form a required entry.
16
Earned Income Tax Credit
PUB 4012 TAB- I
The Earned Income Tax Credit (EITC) is a refundable tax credit designed for low-income working
people. This credit benefits around 40% of C.A.S.H. clients. It is particularly beneficial for families
with children. Clients may receive a refund even though they never paid any tax or had any tax
withheld. A tax filer must have earned income or self-employment to receive a benefit.
The EITC credit amount rises with earned income up to a specified income amount and remains the
same for a specified additional amount of income; then the credit is reduced until it is zero at the
maximum AGI and earned income level that qualifies for a credit.
Affordable Care Act
PUB 4012 TAB-ACA
New for 2014 Tax Year
•
2 components of Affordable Care Act:
o Premium Tax Credit
o Minimum Essential Coverage
Summary Of Rules For Qualifying Child For Various Credits
Note: Younger than 24 only applies if the child is a student.
Child Care Credit
Until the age of 13 (birthday). MUST have custody.
Child Tax Credit
Younger than 17 years old at the end of the tax year. MUST be a dependent;
Do NOT need custody.
Dependents
Younger than 19/24 years old at the end of the tax year. Do NOT need custody
but must have Form 8332.
Education Credits
Younger than 24. MUST be a dependent
EITC
Younger than 19/24 years old at the end of the tax year or permanently disabled
MUST have custody.
Head of Household
MUST have custody. Does NOT need to be a dependent.
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There Are 7 Potential Tax Breaks For Children
1.
2.
3.
4.
Exemption for dependency
Child tax credit
Education credit
Head of Household
eligibility
5. Dependent care (day care)
6. Exclusion for dependent care benefit (day
care taken out of paycheck pre-tax)
7. Earned Income Credits
Divorced or separated parents can split tax breaks child related according to these rules:
1. A parent who has physical custody AND claims the child as a dependent is eligible for all seven
tax breaks.
2. The parent who claims the child as a dependent, but does not have custody is eligible for
3. #1, 2 and 3 only.
4. The parent who has custody but has “released” the claim for dependency is eligible for #4, 5, 6,
and 7.
5. The non-custodial parent who wishes to claim a child as a dependent must attach Form 8332 or
a similar statement, signed by the custodial parent, whose only purpose is to release a claim for
exemption
Note: If the child meets the conditions to be the qualifying child of more than one person who is NOT
a parent, then only 1 person can claim the child for all the tax breaks. (For more details, see Pub.
501.)
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Summary Chart of Tax Rules as They Apply to Children
ALL THOSE KIDS—THE BASICS
* means different rules if not a child
**means different rules if divorced/separated
AGE
RELATIONSHIP
RESIDENCY
SUPPORT
Child did not provide
Child must live with
Child must be taxpayer’s
over ½ of his/her own
Child must be under age
taxpayer for more
child,
stepchild,
legal
foster
support.
CHILD CARE
13 or disabled at the
than half the tax year.
child, sibling, step sibling or
CREDIT
time of the child care
Some temporary
descendant of any of these
Special rules for
absences are allowed
divorced parents.
CHILD TAX
CREDIT
**Child must live
Child did not provide
Child must be under age Child must be taxpayer’s
with taxpayer for
over ½ of his/her own
17 at the end of the
child, stepchild, legal foster
more than half the tax support.
year. (No exception for child, sibling, step sibling or
year. Some temporary
disabled children)
descendant of any of these
absence allowed.
Must be a dependent.
Child must be under 19
at end of year; under
DEPENDENCY
age 24 if full time
EXEMPTION*
student; any age if
disabled
**Child must live
Child must be taxpayer’s
with taxpayer for
Child did not provide
child, stepchild, legal foster
more than half the tax over ½ of his/her own
child, sibling, step sibling or
year. Some temporary support.
descendant of any of these
absences allowed.
Child must be under age
24 and a half time
Child must be taxpayer’s
child, stepchild, legal foster
EDUCATION student.
child, sibling, step sibling or
CREDITS*
(Except Lifetime
descendant of any of these
Learning Credits)
EITC
Child did not provide
over ½ of his/her own
support.
Must be a dependent
Child must live with
taxpayer for more
Under 19 at end of year; Child must be taxpayer’s
No support test.
than half the tax year.
under 24 if a full time child, stepchild, legal foster
(Married child cannot
Newborns still qualify
student; any age if
child, sibling, step sibling or
provide over ½ of
if less than 6 months
disabled
descendant of any of these
his/her own support)
old. Some temporary
absences allowed.
Child must be under 19
at end of year; under
HEAD OF
age 24 if full time
HOUSEHOLD*
student; any age if
disabled
Child must live with
Child must be taxpayer’s
taxpayer for more
child, stepchild, legal foster
than half the tax year.
child, sibling, step sibling or
Some temporary
descendant of any of these
absences allowed.
19
Child did not provide
over ½ of his/her own
support. Taxpayer
must provide over half
the cost of maintaining
household.
Education Credits
PUB 4012 TAB J
You must go to the following Education Credit forms in the tax tree:
• Federal - Form 8863
• NYS - Form IT-272
Below is a useful chart to compare the credits and how NYS relates to the Fed Return.
AMERICAN
OPPORTUNITY
LIFETIME LEARNING
Any college, university,
vocational school or other
Qualifying Institution post-secondary educational
institution eligible to
participate in student aid
Any college, university,
vocational school or other
post- secondary educational
institution eligible to
participate in student aid
NYS EDUCATION
CREDIT
Any institution recognized
by Regents of Univ. of NY
or nationally accrediting
agency recognized by the
Regents.
Enrollment
Requirement
At least half-time in a
program leading to a degree
or certificate; available for
first 4 years post-secondary
education
Need not be in a degree
Need not be attending full
program nor attending half- or half- time: available
time or more; can be used for
under- graduate or graduate for undergraduate courses
only
work
Other conditions
No felony drug conviction
Courses to acquire or
improve job skills
Qualifying expenses
Tuition, fees and course
materials (includes necessary
books, supplies and
equipment)
Tuition, fees and course
materials if required and paid
Tuition only
to the institution (school
bookstore, not on-line)
Non-qualifying
expenses
Room & Board, medical,
transportation, personal living
Room & Board, medical,
expenses
transportation, personal
Courses involving sports,
living expenses
games, hobbies unless part of
the degree program
Room & Board, medical,
transportation, personal
living expenses, necessary
books, supplies &
equipment
Excluded expenses
Expenses paid by Pell, TAP,
employer, veteran's
assistance, tax-free
scholarship or fellowship;
refund of qualified
Expenses paid by Pell, TAP,
employer, veteran's
assistance, tax-free
scholarship or fellowship;
refund of qualified expenses
Expenses paid by Pell,
TAP, employer, veteran's
assistance, tax-free
scholarship or fellowship;
refund of qualified
expenses
For whom
Taxpayer, spouse,
dependent. Student; cannot
be a dependent on another
return.
SAME
SAME
20
Must be full year NY resident
PART V: NYS ADJUSTMENTS, DEDUCTIONS AND
CREDITS INCOME TAX
Basics Of State Income Tax
NYS PUB TP-300
•
•
•
TaxWise does most of the work in preparing the state income tax returns.
Most entries on Form IT-201 and other state income tax forms come from the Federal
1040.
Information that needs to be entered:
o School district information (Form IT-201 page 1)
o Refund/balance due information (Form IT-201 page 4)
Residency: TaxWise will enter NY as the state of residency. If the client lived in another state
for part of the tax year, we can complete the federal return and a partial year for New York.
See your site manager for help on NY partial year returns. C.A.S.H. does not prepare returns
for any other state.
School District Information: The school district name and code must be entered in the top
information area of Form IT-201. Be sure that the client tells you the name of the district. Do
not assume that the address is the name of the district, e.g. clients with a Greece address can be
in any of three different school districts, each with its own 3 digit code. The list of school
districts is available as an icon on the tax preparer’s desktop.
Common Adjustments Required For NY State Tax Return
Retirement Contributions – 414H
In New York, state and federal pensions are tax-exempt when paid out (except for early
withdrawals.) New York collects the taxes when the contributions are made. Therefore taxpayer
contributions to NY state pension funds must be entered properly to change them from taxexempt (federal) to taxable (NYS). When inputting the information from the W-2, be sure to
look at Box 14 and enter 414HSUB and the amount. TaxWise will then make this amount
taxable on the New York return. These contributions do not qualify for the federal Retirement
Savings Credit.
State Income Tax Refunds from Prior Year
If the client itemized deductions on the prior year’s federal return and received a NYS tax
refund and used the state income tax as a deduction, the IRS considers part of the state refund to
be taxable income. NYS does not treat this as taxable income and a subtraction will be made on
the NYS return automatically by TaxWise.
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Pensions, Social Security, and Annuity Income
NYS does not tax Social Security income. NYS grants a $20,000 exclusion for all private
qualifying pension and annuity income. It grants a complete exclusion for many public (New
York State and local plus all federal) pensions. These exclusions cause NYS taxable income to
be less than federal taxable income. To be sure that 1099R income is treated appropriately for
NYS returns, the preparer must mark the appropriate $20,000+ box correctly when inputting
1099R data.
Box 1 is for private pensions; Box 2 is for public (government) pensions
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Government Bonds
Interest income on U.S. government bonds is not taxable in New York State and is subtracted from
income. On both the interest and dividend schedules there is a box called “State adjust amount.” Fill
out the Schedule B Worksheet on the tree but be sure to mark the “State adjust amount” box to
subtract (minus sign) the amount in box 3.
Schedule B
Use “-“
Sign for
Govt
Bonds
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Standard or Itemized Deduction
The NYS standard deduction is much higher than the federal standard deduction. Many clients who
benefit from federal itemized deductions may find that the NYS standard deduction is more than the
total of their itemized deductions for NYS purposes. TaxWise will automatically use the more
beneficial amount.
Exemptions
NYS does not have personal exemptions. NYS Dependent Exemptions are $1000.
NYS Credits: Refundable
Empire State Child Credit Form IT-213
This refundable NYS credit is similar to the Federal Child Tax Credit. Dependent children who are
ages 4-16 qualify for the credit. The amount will be a 33% of the federal Child Tax Credit or
$100 per qualifying child, whichever is greater. Like Form IT-214, this refundable credit is
available to people who would otherwise not need to file a tax return. Even people who receive
no taxable income ( receive Public Assistance, SSI, etc.) can receive $100 per qualifying child. The
form cannot be filed by itself and must be part of a New York State tax return. If there is income,
you will not need to do anything to make sure the credit is included in the return. TaxWise
calculates the eligibility and amount of the credit and includes it in the return.
If there is no taxable income, you will need to complete a brief tax return. Complete the Main
Information sheet. Check that an e-file is to be created even though the federal return will not be
submitted. Then go to page 1 of the 1040 and answer “No” to the itemized deductions question.
Then go to page 1 of Form IT-201. The demographic information has transferred and TaxWise will
calculate the tax credit.
NYS Child And Dependent Care Credit Form IT-216
This credit is refundable even if the Federal Child and Dependent Care credit did not result in any
money for the taxpayer. The amount will vary from 20% to 110% of the federal credit amount (or
what the federal amount would have been.) This credit can be claimed by the custodial parent, even
if the other spouse is claiming the child as a dependent. To claim the credit, complete the Federal
Form 2441. The information will carry through to Form IT-216 for the New York credit. All
taxpayers who paid child care and have the information about the provider will get this credit as
long as the forms are completed correctly.
NYS Real Property Tax Credit Form IT-214
Eligibility
To qualify for the credit, the following conditions must be met:
• Household income must be $18,000 or less
• The taxpayer must live in New York State for the entire year ( TaxWise checks this)
• The taxpayer must live in one residence for at least six months of the year and that property
must not be totally exempt from property taxes
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•
The taxpayer cannot be claimed as a dependent
What is the household?
• Household members include all who share your residence and its furnishings, facilities and
accommodations, whether they are related to you or not.
For homeowners
• The taxpayer or spouse must have paid the property taxes
• The property must be valued at less than $85,000
For renters
• You or someone in your household must have paid rent
• The adjusted average monthly rent paid must be $450 or less
• You cannot live in public housing exempted from property taxes (see list below)
Public Housing Not Eligible for Credit
Taxpayers living in one of the following Rochester Housing Authority properties may NOT claim
Form IT-214 credit because these are public housing and the properties are not on the tax rolls:
• Lake Tower 321 Lake Avenue, Rochester, NY 14608
• Lexington Court 6 Christopher Court, Rochester, NY 14606
• Glenwood Gardens 41 Kestrel Street, Rochester, NY 14613
• Danforth Tower East 140 West Avenue, Rochester, NY 14611
• Danforth Tower West 160 West Avenue, Rochester, NY 14611
• University Tower 625 University Avenue, Rochester, NY 14607
• Blackwell Estates 5 Antoinette Drive, Rochester, NY 14623
• Kennedy Tower 666 S. Plymouth Ave, Rochester, NY 14608
• Hudson/Ridge Tower 401 Seneca Manor Drive, Rochester, NY 14621
• Parliament Arms 2126 St. Paul Street, Rochester, NY 14621
• Lena Gantt Estates 86 Vienna Street, Rochester, NY 14605
There are also smaller sites within the community. Ask if rent is paid to the Rochester Housing
Authority or any other public housing authority. If it is, the person lives in public housing and is
NOT eligible for this credit.
Filling Out Form IT-214
Note: This is the only stand-alone form New York State will accept. It may be e-filed or mailed.
For a paper return, only Form IT-214 is required. For e-filing, follow the directions listed under
Form IT-213.
Open Form IT-214. (Note: There will not be a yellow exclamation point next to the NY-214 on the
tree.)
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Part 1 – This information will be auto filled by TaxWise.
Part 2 - Determine eligibility, answer questions 1-6.
If the answers to questions 1-6 are not as listed below, the client does not qualify for the Real
Property Tax Credit.
Line 7: If the client is 65 years of age or older, line 7 will be filled out by the system. If the client
has a household member 65 years or older, fill out line 7 for that person. If there are multiple
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household members 65 years or older, only one name needs to be entered on line 7. Note: if the 65
year old household member is listed as a non-dependent on the Main Info page, TaxWise will carry
the name and year of birth to line 7.
Line 8: TaxWise will complete for all dependents on the Main Info page.
Part 3—Determine household gross income
TaxWise carries over any taxable income reported in the return. The tax preparer must enter all other
household income on lines 12 – 15.
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Income
After the household composition has been determined, some income may need to be added to
Form IT-214. TaxWise will carry over the Federal AGI, the New York State adjustments and any
Social Security for the taxpayer or spouse that was entered on the 1040. It will subtract any
Medicare payment amounts if they were entered on the Social Security worksheet.
But many other types and amounts of income not otherwise reported on a tax return are listed on
Form IT-214. Lines 11 through 15 are used for this reporting.
Line 11 should list the total of Social Security benefits for other members of the household
(usually children.)
Line 12 is used to report SSI benefits received by any member of the household. Pensions or
annuities for other household members are listed on line 13.
Line 14 is used to list the yearly amount of Public Assistance benefits received by all household
members.
Any other income would go on line 15. Most common examples would be child support or
worker’s comp.
Note: This is the only stand-alone form New York will accept. It may be e-filed or mailed. For a
paper return, only Form IT-214 is required. For e-filing, follow the directions listed under Form
IT-213 above.
SSI. No 1099 is sent to the SSI recipient and no statement from Social Security is required for
CASH to prepare Form IT-214.
Public Assistance Grant is issued to low-income families with children or low-income
individuals who do not qualify for SSI. A grant is composed of a basic allowance (for food,
clothing, and basic necessities), utility and heat allowances and a shelter allowance.
Note: It may well be that the person does not receive anything twice a month – the entire grant
may be used to pay the rent. In that case, the amount sent to the landlord is both the rental amount
and the income amount.
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Part 4 - Compute real property tax
Renters: Enter the total rent paid for the year on line 19. Renters may qualify for the credit if the
adjusted monthly rental amount is $450 or less. However, if all utilities are included in the rent, a
rental amount of up to $560 per month may still qualify for the credit
Section 8 is a rental subsidy program in which the tenant pays a portion of the rent to the landlord
and Rochester Housing Authority pays the remainder. A taxpayer with this type of subsidy may
qualify for Form IT-214 credit. Only the amount of rent paid by the tenant is used to compute the
credit.
Homeowners: Enter the total amount of property tax paid during the tax year. If the person
doesn’t know how much tax was paid the amounts can be checked with the City Assessor, County
Treasury and Town Tax Assessor offices.
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Part 5 – Compute the Credit Amount
Part 5 is completed by TaxWise
Avoid the Most Common Form IT-214 Error
The most common error made in computing Form IT-214 is that the income listed is lower than
the amount of the rent paid. Usually line 12 or 14 has been left blank. Make sure the income
equals or exceeds the rent paid. If you don’t, the e-file will be accepted (TaxWise doesn’t
recognize this error) and a few weeks later, the taxpayer will receive a letter from NYS that the
credit has been disallowed. The return will then need to be amended and paper return submitted.
NYS Earned Income Credit Form IT-215
Taxpayers who claim the federal EIC are eligible to claim a NYS Earned Income Credit. This
refundable credit is calculated at 30% of the federal credit. Form IT-215 will automatically link
to the NYS return and no further action by the volunteer is needed. This form cannot be filed as a
stand-alone, but must accompany Form IT-201.
NYS Non-Custodial Parent Earned Income Credit Form IT-209
The client may be entitled to claim this refundable credit if they:
• did not claim the New York State earned income credit (EIC),
• were a full-year New York State resident,
• were at least 18 years of age,
• are a parent of a child (or children) who did not reside with them and under 18 yrs old,
• have an order in effect for at least one-half of the tax year requiring them to make child
support payments payable through a support collection unit, and
• have paid at least the court-ordered amount of child support during the tax year.
Form IT-209 must be completed as part of a NY tax return. Open page 1 of Form IT-209.
Questions 1, 2, and 6 are auto filled by TaxWise. Answer questions 3, 4, 5, and 7. Question #3
asks for the name, relationship, SSN and year of birth of the child who does not live with the
taxpayer and for whom support was paid. If the taxpayer does not have and cannot obtain the SSN
for the child, leave that space blank. The return may still be e-filed, but it will take longer than
usual to process without the child’s social security number.
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College Tuition Credit Form IT-272
Do NOT fill out this form for Graduate Students. This is for UNDERGRADS only.
The NY tuition credit is refundable, so always complete it even if the Federal 8863 did not result
in a credit to the taxpayer. This is another credit that can be claimed with no taxable income. It
can be easy to overlook Form IT- 272 form because it doesn’t have a red exclamation mark next
to it. If the American Opportunity Credit was claimed on the federal return, Form IT-272 will
appear on the tree and the name and Social Security number of the student will have carried over.
You will have to enter the name, address and EIN of the school plus the amount of qualified
tuition expense.
Students should have a 1098-T form from the school which will have all this information. If they
do not, to get the EIN for the school, look at the icon on desktop to get a list OR the student can
log into his/her student account with the school and get this number. The student will also have to
provide the amount paid for undergraduate tuition only. If a student attended more than one
school in the tax year, enter only the last one, but put in the total amount of tuition paid for all the
schools in that tax year in that space. Use one column only for each student. Books are not
allowed as part of the credit.
The qualified expenses for the NYS credit are different from the federal ones. For New York
State, only tuition for undergraduate courses is allowed. The person does not have to be in a
degree program. It could be for a trade or technical school that awards a certificate or licenses.
Also a person may have a degree but be taking additional undergraduate courses which qualify for
the NYS credit.
If the Lifetime Learning Credit was claimed on the 8863, you will have to get Form IT-272
and open it. Then check the top box on page 1 (see below) so you can enter the name of the
student, the SSN, the school name, address, EIN, and the amount of qualified tuition expenses.
NYS Volunteer Firefighter /Ambulance Worker Credit Form IT-245
This refundable credit is available to volunteer firefighters and volunteer ambulance workers who
were active for the entire tax year. File Form IT-245 with Form IT-201. The credit is $200 per
volunteer. If the person got a property tax exemption under the Real Property Tax Law, Article 4,
Title 2 that person cannot take this credit.
Other Considerations
IRA and Roth Conversions. Our program will not prepare returns with these situations.
NYS College Choice Tuition Savings Program:
Known as QTP or 529 Plans, contributions for future college expenses may reduce the client’s
taxable income. NY State additions and subtractions may both be necessary. Consult with your
site manager for completion of entries related to these plans.
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Amended Returns
As is the case with Federal returns, a client who wishes to amend a NYS return has three years to
do so. These must be filed as paper returns.
We will only do amended returns if:
• The original return was prepared by C.A.S.H.
• The amended return must be done at the same site as the original return.
Amended returns are done in March. Full instructions are found in the Amended Return Section
of this manual
Helpful Hints
•
•
•
Double check the 1099-R for Box 1 or Box 2 (Box 1 is Private and Box 2 is Public (NYS or
Fed Pension).
Links you must make yourself: CHILD CARE and EDUCATION CREDITS
People with no taxable income may qualify for Forms IT-213, IT-214 and IT-272.
New York State Only Returns
This occurs when the client does not have taxable income and only wants to claim the property tax
credit (Form IT-214) or the Empire State Child Credit (Form IT-213).
• Open a new return in TaxWise just as though you were going to do both Federal and State
returns.
• On the Main Information Sheet, under "State Information", be sure NY is entered in the
full year resident box. Mark it for a paper return so no Federal Return will be e-filed.
• On Page 4 of the New York State Form IT-201 where it says "Do you want to
electronically file this return?” mark the YES box.
• Prepare both the Federal and State returns
• On the outside of the C.A.S.H. envelope, mark NYS ONLY RETURN.
Tax Computation, Credits And Other Taxes
Household Credit
The household credit is a general, non-refundable credit allowed to low income NYS taxpayers.
TaxWise will automatically calculate this credit based on the Main Information Sheet information
and the federal AGI.
Long Term Care Insurance Credit. New York offers a credit of about 20% of premiums paid for
long term care insurance. If taxpayer’s itemize on the federal return and include this in medical
expenses, it will flow through to the New York return to Form IT-249. If the taxpayer is not
itemizing, just fill out Form IT-249 directly for the credit.
State Sales or Use Tax. Unpaid sales tax frequently occurs when a purchase is made over the
internet or ordered from a TV source. The volunteer should explain that NYS has the legal right to
collect sales tax (state and local) for all purchases for which the tax was not collected or was paid at a
lower rate in another state. An amount must be entered on this line. TaxWise will default this amount
to 0, but the volunteer should ask clients if they made purchases over the internet. Note: We are not
the “sales tax police”, but volunteers should explain that failure to report a truthful amount or the
guideline amount could result in a challenge from the NYS Department of Taxation.
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PART VI: FINISHING THE RETURN
Every return must go through three levels of review before the return is complete:
• Level I: Preparer Review
• Level II: Designated Quality Reviewer Check
• Level III: Client Review
Note: If the return is NOT complete (missing information), and the client is planning to come
back, click on the Return Summary icon in the tool bar at the top of the TaxWise screen and
click on Incomplete. Make sure you give the taxpayer ALL of their paperwork including the
Intake Sheet and envelopes. Help them arrange a time to return to finish the tax return.
Level I. Preparer Review
BEFORE YOU TELL THE CLIENT ABOUT THEIR REFUND OR BALANCE DUE,
WAIT UNTIL THE QUALITY REVIEW HAS BEEN COMPLETED.
1. Review IRS (13614-C) and C.A.S.H. Intake sheets. Make sure that all questions
are answered and all income, adjustments, deductions and credits are on the tax
forms.
2. Make sure C.A.S.H. Preparer Use Fields are filled out.
3. Get the Red Out. Review the tree on the left side for forms that are red. A form that is
red is not complete. Open the unfinished form and find the item that has not been
entered by scrolling down the form.
4. Run Return Diagnostics. Go to TOOL BAR and select RUN DIAGNOSTICS.
TaxWise will display errors and potential problems. Do NOT create the e-file. If an efile is needed, the Quality Reviewer will create the e-file.
•
Electronic Filing Errors
These are critical errors that will prevent the IRS from accepting the return for
electronic filing. Electronic filing errors must be resolved. Failure to correct an efile error will prevent e-filing and delay the client’s refund. They may also cause a
paper file to be rejected by the IRS. The error will be listed in red. Click on the red
words to go where it is in the return. If you do not understand the error, ask your site
manager or a quality reviewer.
Example of an error: “You have marked children for EIC on the Main Information
Sheet, but have not completed Schedule EIC, page 1. Either complete Schedule EIC,
page 1, or unmark the box(es) on the Main Information Sheet.”
•
Warnings
Diagnostics will also give you warnings for potential problems. These will not prevent
the return from being accepted. It may be something that you forgot, or something that
will cause a problem during IRS processing.
Example of a warning: “There is a refund on the tax return and no direct deposit
information has been filled-in. Is this correct?”
5. Return Summary. This function provides a helpful overview of the Federal and
New York State income, credits and refunds. You may want to let the taxpayer know
what you think the refund will be at this point, but let them know that is not final
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until it is checked by the quality reviewer.
6. Taxpayer Diary. When additional information needs to be recorded or if there is
any unusual aspect to the client’s situation, enter your notes in the client diary.
These informal notes may be needed later. Go to the TOOL BAR to open the
taxpayer diary. Click on the icon to start a new entry. When finished, click on save
button. Click on the close button to close the diary.
Here are some sample diary entries:
•
03/16/16, Wednesday, 10:26:34: Jolene says that she only paid for day care
for one son. The other son stayed with her neighbor for free.
•
02/12/16, Friday, 20:01:44: Tonya states her only income if from doing hair
extensions. She has no documentation for income or expenses. Explained this
could subject her to audit.
The taxpayer diary entries become part of the return file and are helpful if there are
questions about how the return was prepared. The diary is not part of the tax return that
is transmitted to the IRS.
7. Review both Fed and State Returns.
• Do you see all of the income, withholding, adjustments, and credits that
you anticipated?
o Page 1 of the 1040: Check that all the income and adjustments are entered.
Page 2 of the 1040: See if all the deductions and credits appeared.
o Page 1 of Form IT-201: Make sure that all questions specific to
NYS are answered.
o Page 2 of Form IT-201: Make sure that all NYS adjustments
flowed correctly from the Federal Return.
o Page 3 of Form IT-201: Verify all entries
o Page 4 of Form IT-201: Verify all credits. Note especially Education
Credit if applicable.
•
Does the amount of the refund or balance due seem reasonable?
If the client’s return for the previous year is available, compare the refunds. If the
amount doesn’t look right, review the return, particularly the credits.
Encourage clients to save a portion of their tax refund. Clients can split their refund
between checking and savings accounts. Clients can also purchase US Savings Bonds with
their tax refund.
Refund Splitting
Pub 4012, Tab K-2
Complete Form 8888 if the taxpayer wants to split their federal refund or buy US Savings
Bonds.
NOTE: If Form 8888 is used on the Federal return, you must select “deposit in a different
account” for the NY State return. Enter the bank info in two places on p. 4 of Form IT-201.
US Savings Bonds Option: Taxpayers can request that their refund (or part of it) be used to
34
buy up to $5000 in paper U.S. Series I Savings Bonds. A total of three different bond holders
may be requested. Each bond amount must be a multiple of $50 and cannot exceed $5,000
(or the refund amount, whichever is smaller). Only two of the three bonds may be purchased
for someone other than the client.
If the taxpayer (or spouse) is buying a bond for him or herself, enter just the amount of the
bond on line 4 of Form 8888. The bond will be issued in the name(s) shown on the return. If
the bond is for someone else, enter that amount on line 5a or 6a. Then enter the person’s
name on 5b or 6b. Make sure bond holder names are entered First Last and spelled correctly.
There is no need to enter any account numbers for the bonds. A co-owner or beneficiary for
each one may be entered on line 5c or 6c. If the person entered is a beneficiary (gets the
money only when the bond holder dies), be sure to check the small box at the end of 5c or 6c.
Make sure the amounts are in multiples of $50.
Level II. Designated Quality Reviewer Check
Once you have checked all your work, a site manager or a quality reviewer must check every
tax return before printing and filing. The quality reviewer will review the return at the
computer, talk to the client to clarify matters, and ask the preparer questions. The following
items must always be checked:
1. Spelling of all names on the return
2. Address including zip code
3. Phone number—we can’t do a return without at least a message phone number
4. Social Security numbers and birthdates of everyone on the return
5. The correct filing status must be used.
6. All dependents must be listed.
7. The correct boxes for dependents must be checked (Child Care, EIC, months in home).
8. W2s must be entered completely and correctly including EINs, withholding, state tax,
etc.
9. Taxpayer should be asked if there is any other income.
10. All adjustments and deductions should be entered correctly.
11. All applicable credits have been claimed.
12. The refund/balance due makes sense.
13. All applicable documents provided by the taxpayer have been entered.
14. Taxpayer has been asked about direct deposit, splitting the refund, and savings bonds.
15. If any of the above were chosen, routing and account numbers must be verified and
8888 Form checked.
16. Ask the taxpayer if they have any questions.
17. Explain what will happen next, printing etc.
18. Complete the Quality Review Sheet on the reverse side of the Cover Sheet.
19. If the return will be e-filed, the Quality Reviewer will create an e-file.
NOTE: If the return is opened or edited AFTER the e-file was created, the e-file must be
35
recreated. Otherwise the e-file for this return will disappear!!
Balance Due or Refund?
Once the quality review is complete, provide the client with the amount of their refund or the
balance due.
Returns With A Balance Due
Federal Balance Due: When a client has a federal balance due, TaxWise will print a 1040-V
payment voucher. This must be sent with the client’s payment whether the payment is sent
with the return or made at a later date. Any balance due must be paid by April 15th to avoid
penalties.
State Balance Due: When a client has a NYS balance due the 201-V payment voucher will
print. Any balance due must be paid by April 15th to avoid penalties.
The client may also opt to have the balance due withdrawn from their account.
If the client cannot pay the balance due by the due date, give them the sheet “RETURNS
WITH A BALANCE DUE” that explains payment options.
Form 9465, Installment Agreement Request - Use form to request a monthly installment plan
if you cannot pay the full amount you owe shown on your tax return (or on a notice we sent you).
Returns With A Refund:
If there is a refund, review refund options with the client.
•
Direct deposit
•
Splitting their refund to save part or buy US Savings Bond
Clients without an account for direct deposit can apply for an account while at C.A.S.H. The
Assistant Site Manager can help with this step – clients can choose from savings, checking
and/or prepaid card accounts.
NYS offers taxpayers the option of a state-administered prepaid debit card for their NYS tax
only getting a New York refund. This option can be chosen on page 4 of IT-201. No new
account paperwork is necessary.
Level III. Client Review
PUB 4012, N-14, N-15
After the return is printed, ask the client to review it.
1. Instruct the client to pay close attention to the SSNs, names, spelling of last names,
birth dates, address, and bank account information.
2. Review every page of the return with the client, summarizing income, showing the
deductions and credits. Suggest what could be done to improve the financial
situation for next year.
If you uncover errors while reviewing the return, make the corrections, recreate the e-file,
and reprint the entire return.
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Final Completion Steps For E-Filed Returns
1. Have the client sign Form 8879, Form TR 579, and any pages associated with new
prepaid card accounts. Signatures must be in ink. Both husband’s and wife’s signatures
are required on a joint return.
2. Staple the signed Form 8879 to the client’s copy of Federal return. Staple the signed
TR- 579 to the client’s copy of the State return.
3. The client must receive the following (place in the client’s envelope)
a. One complete copy of their Federal return (including signed Form 8879)
b. One complete copy of their NYS return (including signed TR-579)
c. One copy of the federal Form 8453 (if required for this return).
d. All other copies of W-2s, 1099s, forms attached with Form 8453, and
ALL other documents the client brought to you.
4. Forms to be kept by C.A.S.H. Place the following items in the master envelope
retained at the site:
a. Form 13614-C and the C.A.S.H. Intake Sheet.
b. One copy of each W-2, 1099 and any other document showing withheld
taxes. (Make copies if client has only one copy.) These will be used for
reference by the site manager until the return is accepted.
c. Fill out the form stapled to the master envelope in a legible format. Make
sure both the Quality Reviewer and you have signed the form.
d. Once the return is accepted by the IRS and NYS, these documents will be
securely destroyed. DO NOT retain extra copies of W2s, 1099s, etc. – return
them all to the client. Be sure that client has copies of all these forms for
their records.
e. File the C.A.S.H. Envelope as designated by the Site Management Team.
Final Completion Steps For Paper Filed Returns
If the client is filing a paper return. Make sure the client understands it is their
responsibility to mail the tax returns to the IRS and NY State. Mention that the envelopes
may require extra postage.
Paper returns are REQUIRED in the following cases:
•
MFS if the SSN of the spouse is unknown.
•
MFJ if both spouses are not present to sign. Check with site manager to see if
taxpayer can take return home and have spouse sign and bring signed copy
back for e-filing.
•
Non-custodial dependent WITHOUT a release form.
•
All amended returns.
•
All prior year returns.
1. Complete the Preparer Review, Designated Quality Review Check, and Client Review.
37
2. Make sure that return is classified as Paper Return for both Federal and State, so that
all necessary forms will print. (If you do not, some of the pages will be missing, and
the return will not be accepted.)
a. Federal: Near the bottom of the Main Information Sheet under “Type of
Return”, click on paper return. It is a little above the banking information.
b. State: Page 4 of the NYS Form IT-201under the question “Do you want to
electronically file this return?”, check NO.
PRINTING PAPER RETURNS IS COMPLICATED and may generate errors. It is
recommended that the QR person help with printing and assembling paper returns.
3. Print 2 copies of the tax return. One copy is for the client records. The second copy
is to be mailed out to the IRS and NYS in pre-addressed envelopes provided at the
site.
a.
Federal return (Form1040 and necessary attachments.) Staple the W2s and
any 1099’s with withholding to page one of the 1040 where indicated. Staple
entire return together. Fold return and put in the pre-addressed envelope for
the client to mail.
b. State return (Form IT-201 and required attachments). W-2s and 1099s are
placed at the back of the NYS return, do not staple. Fold return and put in the
pre-addressed envelope for the client to mail.
4. Show the client where to sign and have them do so. If the client is taking the forms
home for the spouse to sign and mail, mark where the spouse signs with an X. (Where
to sign on the NY form is especially confusing.)
5. Make sure client knows they have to mail the Federal and State returns.
6. Place the client copies and all other paper work in a C.A.S.H. envelope and give to client.
Remind ALL clients to safely retain copies of their tax returns.
Note: C.A.S.H. is not required to retain any paperwork when the return is paper filed.
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PART VII: TAX INFORMATION FOR COMPLEX
RETURNS
The topics discussed in this section cover issues that occur infrequently.
DO NOT attempt to prepare a tax return that is beyond your training. Consult a site manager to
determine if the tax return is outside the scope of services offered by C.A.S.H. If necessary, the
client will be advised to see a paid preparer. Do NOT send anyone away without consulting the
site manager.
Federal Form 8453: Individual Income Tax Transmittal Form:
This form is used to send any required paper forms or supporting documentation to the IRS. The
IRS requires additional documentation for specific tax situations listed on the front of the form. Its
most commonly used for a C.A.S.H. client who is a non-custodial parent that claims a child as a
dependent and needs to provide the IRS with proof. Instructions for this specific tax situation are
listed below. Consult your site manager for any other tax situation that requires this form.
1. The client must have a copy of Form 8332, Release of Claim of Exemption, or a signed
statement from the custodial parent releasing the dependency. If the client does not have
one of these documents with them, the return cannot be e-filed. In that case, a paper return
can be prepared for the taxpayer to mail to the IRS with the required documentation.
2. Return to the Dependent Section of the Main Info screen. In the area labeled Noncustodial
Parent, check the appropriate box.
3. If the return will be e-filed, make a copy of the client’s document, staple it to Form 8453,
and put it in the envelope that C.A.S.H. retains. Be sure that the client has a copy of each
form.
4. Before the client leaves, ask your site manager to check that everything has been properly
completed.
Innocent Spouse
An innocent spouse is one whose name appears on a previous year’s tax return for which money is
owed, but is “innocent” of the wrongful filing. Generally, this occurs when income and expenses
were incorrectly reported. A taxpayer may file an innocent spouse claim to seek relief from an
outstanding tax obligation. This form applies to a Married Filing Jointly return. Seek advice from
your site manager before beginning this process.
Federal: Form 8857 (Request for Innocent Spouse Relief)
For instructions refer to Pub 971 available through TaxWise Help.
State: Form IT-280 (Non-Obligated Spouse)
inform the clients that it will take NYS up to 11 weeks to issue the refund if it is e-filed, and
about fourteen weeks if it is paper filed.
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Injured Spouse
An injured spouse is taxpayer whose spouse owes a past-due amount. The past-due amount is
typically related to money owed for a period before the couple was married; child support, student
loans, or past taxes. Often, married couples faced with this situation believe they would be better
off if they filed Married Filing Separate. However, in order to qualify for most tax credits (IETC,
education credits, etc.) they must file a joint return.
See below for Federal and State instructions. Remember to seek advice from your site manager
before beginning this process.
Federal: Form 8379 (Injured Spouse Allocation)
1. Open Form 8379 and answer the questions provided on the form. At the end of the
form check the box that corresponds with the name of the injured spouse.
2. Page 2 of Form 8379, make any necessary changes to allocations listed for each
spouse. See below for important tips related to child care credits.
a. Child Tax Credits - ensure the Child Tax Credit amount is included in the
column for the injured spouse. TaxWise sometimes assigns them to the noninjured taxpayer.
i. EITC - The IRS will determine the allocation.
3. Ask your site manager to review your work.
State: Form IT-280 (Non-Obligated Spouse)
inform the clients that it will take NYS up to 11 weeks to issue the refund if it is efiled, and about fourteen weeks if it is paper filed.
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PART VIII: AMENDED AND PRIOR YEAR RETURNS
Amended Tax Returns - Form 1040X and NYS IT 201 X
Taxpayers have three years from the due date to file an amended return. For example, most
taxpayers have until April 15, 2015, to file an amended return for tax year 2011. This time period
may be extended if the client had a balance due that was paid late or if the IRS made an additional
assessment to the return after it was filed. We will do returns for the oldest year that can be filed or
amended (2011 this year) through the end of tax season.
C.A.S.H. Amended Returns Eligibility Guidelines:
•
Original return was prepared at a C.A.S.H. site. Taxpayer should return to the C.A.S.H. site
where the original return was prepare.
•
Must be prepared by a volunteer certified in that specific tax year.
•
Preparation of amended returns starts March 1st.
•
IF THERE ARE ANY QUESTIONS, CALL A MANAGER.
Reasons for an Amended Returns:
Client receives additional tax information
•
New income information (extra W-2; interest form)
•
New expense form (child care receipt)
•
New credit information (education credit)
Steps for Amended Returns
1. Open the original return
2. Open the 1040X and NYS-201X
a.
Using the “Add Form” icon, find the 1040-X and click on page 1 to open it.
Click on add form and find 1040X
and NY 201 X
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Make sure to check the box that
overrides entries. This will make the
1040 X update correctly.
b. Then open Form NY201-X check the box to lock entries.
Make sure to check the boxes on the
NY 201X that sets the original
entries so that the amended entries
can be carried forward correctly.
3. BE SURE TO COMPLETE CHECK BOX TO LOCK ENTRIES BEFORE
CHANGING OR ADDING ANY INFORMATION. Warning: Everything you enter after
checking these boxes changes the return. Be sure that you have the original return entered
correctly. Check it against the paper copy the client has provided.
4. Go to the Main Info page and select Paper Return. Go to page 4 of Form IT-201 and select
paper return. This is very important, if you don’t select paper return, some of the NYS
pages will not print, and NYS will reject the amended return.
5. Go into the 1040 and/or 201 and make any changes or additions necessary including the
Main Information Screen if items such as dependents are affected. Be sure to resolve any
red indicators on the 1040X and 201X. TaxWise will make all the necessary adjustments
and re-calculate the income tax and credits.
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6. There are 3 columns on the 1040X: the original amount, the corrected amount, and the net
change. If the taxpayer owes additional money, the amount will show at the bottom of
page.
7. If there is an additional refund, that amount will be listed a couple of lines lower on page.
8. Enter the date and type in the reason for the amendment.
9. The IT 201X has 5 pages, and looks like a new Form IT-201. If there is a larger refund, the
amount will appear on page 4. If the taxpayer owes money, the amount also appears on the
page. Make sure page 5 is complete including the reason for amending and the date.
10. Amended returns must be filed as paper returns.
11. Forms that must be mailed include:
•
Federal:
o 1040X and any new or changed supporting forms.
o New W-2’s must be stapled to the 1st page. Forms should be stapled in the same
order they appear in the tree in TaxWise.
•
New York:
o An entire copy of the amended New York return, including the signed IT-201X,
and all supporting forms whether they were changed or not. DO NOT staple
NYS returns. If you print two copies of the NYS amended return, one for the
taxpayer and one to be mailed, you will have all the necessary forms for the
amendment. (It will also print out the four page Form IT-201 which you can
discard.)
12. Be sure to have the taxpayer sign and date both FEDERAL AND NYS FORMS.
13. Put the ones to be mailed into addressed mailing envelopes and remind the taxpayer to mail
them. Remind them to make sure there is enough postage. Put the taxpayer copies in their
large envelope marked with the appropriate year.
14. The taxpayer takes all paperwork with them. C.A.S.H does not keep any paperwork for
paper returns.
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Prior Year Returns
C.A.S.H. prepares returns for the last 3 tax years in March when time permits. We do the expiring
year (2011) until the end of tax season. Tax preparers should only do returns for tax years in
which they were certified as the laws and procedures change each year.
These will all be paper returns. Each year should be prepared, quality reviewed, printed and
signed before doing the next year. Please get help from your quality reviewer to assemble the
printed returns to make sure the client has all the pages needed, especially NY IT2s. If a client
needs only a New York return, we must have a copy of the federal return that was filed.
Highlights for 2012
• Not able to use computer for American Opportunity Credit unless a condition of
enrollment (not just required for course).
• NYS no longer uses IT-2 for wages. Have to attach a W-2 to tax forms.
• Change in Form 8863.
• Return to Schedule C-EZ for self-employment income.
Highlights for 2013
• Able to use Schedule C within Schedule CE-Z limitation if business expenses are between
$5,000 and $10,000.
Highlights for 2014
• First year of ACA. Have to make sure everyone has MEC Health Ins.
•
Must Reconcile form 1095-A if client got Ins through Market Place
Estimated Tax Return - Form 1040ES
We do not prepare the Form 1040ES, but the client should be advised about this form. Certain
taxpayers who expect to have income tax liability not covered by withholding must pay quarterly
estimated tax payments during the tax year. A taxpayer needs to pay estimated taxes for the next tax
year if they expect both of the following:
•
A balance due of more than $1,000 and the total of withholding and credits will be less
than the smaller of a) 90% of next year’s tax, or
•
100% of tax shown for this year on the 1040.
Extensions
Federal individual income tax returns are due April 15. If a client has a filing requirement and
cannot secure all necessary information by April 15, advise the client to file Form 4868,
Application for Automatic Extension to File. This gives the client six more months - until
October15. You should also file the corresponding NYS Form IT-370 Application for Automatic
Six- Month Extension. The extension does not give the client more time to pay a balance due. The
tax -even if it is an estimate - must still be paid by April 15 to avoid penalties and interest. Ask Site
Manager for assistance.
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PART IX: TOOLS AND RESOURCES
If you have any questions while you are working at the sites, your best resource is usually the site
manager or a volunteer quality reviewer. Don’t hesitate to look things up. No one can remember all
the details of tax preparation. Check everything, especially things you only do occasionally. Watch
for Tax Tip Updates and IRS Bulletins. These will be posted at each site. Check these each time you
volunteer.
References Materials Provided During Training:
•
C.A.S.H Resource Manual: This manual is used to enhance training materials provided by
the IRS and NYS.
•
C.A.S.H. Review Problems: This will be used to help volunteers understand TaxWise and
forms used in Income Tax Preparation.
•
IRS Publication 17 (Pub 17): Detailed answers to federal income tax questions. (available at
sites in January).
•
Volunteer Resource Guide (Pub 4012): This guide has a number of charts which can be
very helpful. It is an essential desk reference.
•
I.R.S. Pub 4491 VITA/TCE Training Guide: This guide provides detailed explanation of IRS
guidelines.
•
I.R.S. Pub 4491-X VITA/TCE Training Guide provides updates to IRS guidelines.
•
TP-300 – NYS reference guide.
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Instructions for Link and Learn; Taxwise Training and IRS Certification Test:
Link and Learn Instructions
BEFORE using Link and Learn make sure your web browser allows pop-ups or it may not work properly.
To see link and learn, use Internet Explorer or Google Crome.
Go to https://www.linklearncertification.com/. You will see the following screen. Everything you need to
complete the training and take the test can be found on this page, specifically the Quick Links Section.
Link to
Certificatio
n
Tests
Including
VOS
And
Intake/QR
Basic and Advanced Training Courses
Note: You may do the training course if you want or need to. This will teach or review the tax law and provide
many exercises/questions to answer. You can jump to any topic in the course to review a specific topic.
1. Under the Quick Links section, click on Link & Learn Taxes Lessons.
2. A new window will open and the following screen will be displayed.
3. Click on the Certification Paths tab and answer the questions. You will need to complete only the test
for the Certification you want. Basic or Advanced. You will need to also pass Volunteer Standard of
Conduct and Intake/Interview exams.
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4. Review the necessary modules and use TaxWise Training Site to prepare a practice returns.
(Instructions for TaxWise Training on-line can be found in section labeled TaxWise Practice Returns).
Pick what certification
path you would like
and then complete the
training and test.
The test follows along
with Pub 6744 but
uses both test and retest questions.
TaxWise Training link
1. https://twonline.taxwise.com/training is the URL that takes students to TaxWise Training software.
2. This is the training version of the software that will be used at the site. It is also the same software
that is used during Classroom training at MCC.
3. When training materials are received, the following information will be available
•
•
•
ClientID : 250860
Username: zstudentxxx where xxx is a number, ex zstudent300
Password: Initial Password will be username this will need to be changed.
4.
Put in the client ID,
Username and password
as assigned/set up during
training.
5. Once logged in you can click on the New Return icon in the upper left hand corner to begin a practice
return.
6. The Social Security number to use for practice returns are in this format:
1st 3 digits are your student ID number: ex Student666, All SS numbers for this students practice
returns would start with 666. The Social Security Numbers for practice for this student would be 666XX-2981. All the SS numbers must end in 2981. XX can be whatever the student wants have to be
unique for each new return. Returns are stored in TaxWise Practice so student can return to
incomplete return.
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IRS Certification Tests
1. Go to https://www.linklearncertification.com/ and click on Create Account and fill out the required
information.
If returning sign on with
password from last year or
create a new account.
2. To Create and Account :
Group: Choose 01
Site Coordinator: No (In most
cases)
Training Source: Link and
Learn
Then complete rest of form
setting up ID and Password.
Group: 01 – Volunteer and Training Source: Link and Learn taxes (e-learning)
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3. After registering, you will be taken to the following page.
Click on which
certification path you
want.
You will have to take
VSC and Intake test
before you can complete
certification test.
You can click on
additional certifications
once you complete the
first set of tests.
4. Complete the following 3 exams: (HSA exam is optional and NOT required)
− Volunteer Standards of Conduct Exam
− Intake/Interview Exam
− Basic OR Advanced Exam
−
4. Once you’ve completed all three exams, you will need to print your Volunteer Agreement NOT your
certificate. Check the box to electronically sign your agreement. Then click the link and a new window will
open with your agreement.
5. Give your printed agreement to the Test Monitor or bring to NYS Review Class. It will have your name,
address, and all your test scores on it. C.A.S.H. has to keep this form on file for IRS audits.
Helpful hints and tips:
•
You may want to complete both the test and retest questions in the booklet before you do the online
version of the test because the questions will go back and forth online.
•
Read the questions very carefully. Questions come from the test and retest in the Test booklet and
will be worded differently. For example, a test question might be true/false, and the retest question
is fill in the blank.
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•
After entering your answers, you can review them before submitting the test and make any necessary
changes.
•
After getting your results, you will also receive a list of each question, marked correct or incorrect, so
if you have not passed, or if you wish to understand what you missed, you can note the ones to check.
•
You can leave at any time and come back to work some more on a test.
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Web and Phone References
New York State Dept. of Taxation
•
•
•
•
•
www.tax.ny.gov
Personal Income Tax Information Center - Get help with forms, filing, payments and other
questions.
o Phone: 518-457-5181
o Online: www.tax.ny.gov/pit
Dispute income tax bill or adjusted refund:
o Bill: 518-485-9791
o Refund: 518-485-6549
Check NYS Refund Status:
o Phone:: 518-457-5149
o Online: https://www8.tax.ny.gov/PRIS/prisStart
Unemployment and NYS Personal Income Tax Overpayment Information:
o Phone: 518-457-5181
o Online: http://www.labor.ny.gov/home/individuals.php
IRS
• www.irs.gov
• Help and Resources:
o Phone: 1-800-829-1040
o Online: www.irs.gov/Help-&-Resources
• Where's My Refund?
o Phone: 1-800-829-1954
o Online: www.irs.gov/Refunds
• Where's My Amended Return?
o Online: https://www.irs.gov/Filing/Individuals/Amended-Returns-(Form-1040X)/Wheres-My-Amended-Return-1
• Payment Options: www.irs.gov/Payments
• Request Transcript Information: www.irs.gov/Individuals/Get-Transcript
• Assistance with IRS Notice or Letter: www.irs.gov/Individuals/Understanding-Your-IRSNotice-or-Letter
OTHER RESOURCES
www.google.com (Google Search) type question into search engine.
Property Taxes – Make sure to print copies for the client
County Taxes: www.monroecounty.gov/apps/propertyapp.php (Link on desktop)
•
Click on ‘I Agree’,
51
•
•
•
•
Click on ‘Pay/View Taxes Online’
Enter the address, (You may need to search by just street name and pick the right address.)
Click on ‘Search for Property’
Choose ‘Payment History’
City Taxes: https://www.cityofrochester.gov/app.aspx?id=8589934610 (Link on desktop)
•
•
•
Look up property address
View ‘Payments, Schedule & History’
Click on ‘Tax’
Student Loan Interest 1098-E
If a client made student loan payments, they may be eligible to deduct the interest they paid on their
federal tax return. The student loan servicer will mail a copy of the 1098-E by the end of January if
the interest paid exceeded $600. If the interest is less than $600, the client can receive the
information over the phone or online. The 1098-E can be printed at the site if the client has online
access. The most common sites for student loans are www.nslds.ed.gov (for federal direct student
loans) and www.acs-education.com (ACS Education Services). If the client is unsure of their loan
servicer, they may call 1-800-4-FED-AID (1-800-433-3243).
Tuition Statement 1098-T
These forms are mailed out to students by the end of January. They are also available to students via
their online student account. For MCC students, go to www.monroecc.edu. Choose ‘Current
Students’ from the top menu, then ‘Student Records’, and login with the student’s User ID and
PIN. Click on the ‘My Account’ tab under Student Accounts, and choose ‘View Tax Notification’.
Enter the tax year and click Submit. Print the 1098T with all of the billing and scholarship details,
and put in the client’s envelope for the tax preparer.
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C.A.S.H. Partners and Funders
C.A.S.H. is a community coalition. Organizations from many sectors of the community – human
service agencies, foundations, banks, credit unions, colleges and universities, and more –
participate in and support C.A.S.H.
ABVI/Goodwill, 2-1-1/Lifeline
Action for a Better Community
Al Sigl Community of Agencies
Bank of America
Buckingham Properties
Canandaigua National Bank
Catholic Family Center
Citizens Bank, Citizens Bank Foundation
College at Brockport, SUNY
Consumer Credit Counseling Services
Empire Justice Center
ESL Federal Credit Union, ESL Charitable Foundation
First Niagara Bank Foundation
Genesee Co-Op Federal Credit Union
Heritage Christian Services
IRS SPEC (Stakeholder Partnerships, Education and Communication)
JP Morgan Chase Foundation
Key Bank
M&T Bank, M&T Charitable Foundation
Medical Motor Service
Merkel Donohue
Monroe Community College
Rochester Area Community Foundation
Rochester City School District, OACES
(Office of Adult and Career Education Services)
Rochester Educational Opportunity Center
SUNY Brockport
Rochester Institute of Technology
Rochester Women's Giving Circle
RochesterWorks!
SEIU, 1199
South Town Plaza Associates
SUMMIT Federal Credit Union
United Way of Greater Rochester
United Way Worldwide
Visions Federal Credit Union
Walmart Foundation
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