Basic B volunteer training
Tax year 2014
BASIC B TRAINING OVERVIEW
• Federal nonrefundable and refundable credits
• NEW: Premium Tax Credit and related credit
“reconciliation”
• Exemptions to the ACA insurance coverage
requirement
• Other federal taxes and related tax issues
• Financial services at the tax site
Affordable Care Act (ACA)
and the 2014 tax return
ACA THE BASICS
• The ACA created the Health Insurance Marketplace
– Minnesota has it’s own marketplace, MNsure
• MNsure marketplace is where Minnesotans find
information about health insurance options,
purchase health insurance and enroll in public
health plans
• Taxpayers must report whether he/she (and family)
had insurance coverage for the year on their tax
return
THE TAX RETURN
• A new tax credit, the Premium Tax Credit (PTC), is
available to help eligible taxpayers pay for coverage
• Taxpayers could elect to claim the PTC throughout the
year to help pay monthly insurance premiums –
Advanced Premium Tax Credit (APTC)
• The ACA also includes the individual shared
responsibility provision, which requires individuals to
have health insurance coverage for their family
• Form 8962, Premium Tax Credit (PTC), Form 8965,
Health Coverage Exemptions, and Form 1095-A,
Health Insurance Marketplace Statement
LINE 46: EXCESS ADVANCE
PREMIUM TAX CREDIT
• Must have purchased health insurance through MNsure
marketplace
• Advanced payments of the Premium Tax Credit to help
taxpayer pay their 2014 monthly insurance premiums
• Advanced payments were based on the estimated income
the taxpayer entered on their MNsure application
• Complete Form 8962 to “reconcile” their payment –
comparing what they estimated their income would be and
what their actual income was for 2014 – did they receive
too much advanced payment
• Must have Form 1095-A to complete the return
LINE 61: HEALTH CARE,
INDIVIDUAL RESPONSIBILITY
Taxpayer and each family member must have –
A. Health coverage,
B. Qualify for a health coverage exemption, or
C. Make a shared responsibility payment
(SRP) on their tax return
WHAT YOU NEED TO DETERMINE
• Did everyone listed on the return have insurance
coverage?
– Yes, is the insurance coverage considered MEC
and what months was the taxpayer (family)
insurance in 2014
– No, is the taxpayer (family member) required
to file a return or eligible for an exemption
from insurance coverage
YES, THE TAXPAYER (FAMILY) HAS
HEALTH INSURANCE
• Is the health insurance considered minimum
essential coverage (MEC)?
• If the taxpayer (family) had MEC insurance
coverage all year, check the “full coverage” box
on line 61, click your heels and shout hooray!
• If the coverage was not all year, complete
Worksheet 8 in TaxWise
NO, THE TAXPAYER (FAMILY) DID NOT
HAVE HEALTH INSURANCE
• Check the federal filing requirement threshold to
determine whether the taxpayer is required to file
a return
• Determine whether the taxpayer (family) may
qualify for an exemption from the penalty
MINIMUM ESSENTIAL COVERAGE
• Insurance through employer
• Insurance purchased through private company
• Insurance purchased through MNsure
marketplace – must have Form 1095-A to
complete the return
• Student health plans
• Government-sponsored
EXEMPTIONS TO THE PENALTY
• Taxpayer (family) may be eligible for more than
one exemption
• Find the exemption that is least complicated
• Undocumented taxpayers are exempt from the
penalty (exemption code C)
• Some exemptions require approval from the
federal marketplace
• Taxpayer can elect to take the penalty without
claiming an exemption
LINE 69: NET PREMIUM TAX CREDIT
• Credit based on MAGI and family size
• To be eligible must have purchased insurance
through MNsure marketplace
• Must have Form 1095-A from MNsure
• If taxpayer elected to receive the APTC, then the
portion used during the year will be deducted
from the calculated PTC amount
10 MINUTE BREAK
Topic 7: Nonrefundable
Credits
LINE 48: FOREIGN TAX CREDIT
• Enter the amount shown in box 6 of
1099-DIV or 1099-INT directly on line 48
• If required to use Form 1116 then it is outof-scope
LINE 49: CHILD AND DEPENDENT CARE CREDIT
• Max credit: $3,000 for 1 qualifying person,
$6,000 for 2+qualifying persons
• Cannot be married filing separately
• Must have earned income
• Expenses must be paid by the taxpayer to work
or look for work
• Form 2441
QUALIFYING PERSON
• Child under age 13 and claimed as an
exemption
• Person who is physically/mentally incapable of
self-care and couldn’t be claimed as
exemption because income was $3,950+
• Spouse who is physically/mentally incapable of
self-care
QUALIFYING EXPENSES
• Paid by the taxpayer (spouse) to work or
look for work
• Child in nursery school or pre-school for
children below level of KG qualify for the
credit
• Overnight camp does not qualify
• Day camp may qualify if the camp
specializes in a particular activity such as
computers or soccer
QUALIFYING PROVIDER
• Payments cannot be made to the
taxpayer’s (spouse) dependent
• If payments are made to a taxpayer’s
(spouse) child, he/she cannot be a
dependent and must be age 19 or older by
the end of the year
• If the provider refuses to give EIN/TIN, the
taxpayer can still claim the credit, see Pub
17, “provider refusal”
LINE 50: EDUCATION CREDITS
• American opportunity credit, max credit
$2,500 per student
• Lifetime learning credit, max credit $2,000
per return
• Cannot use both credits for the same
student
• Form 8863
CANNOT CLAIM THE CREDIT
• Claimed as a dependent on another person’s
tax return, such as the taxpayer’s parent
• Filing status is married filing separately
• Was a nonresident alien for any part of 2014
(nonresidents are out-of-scope for Tri-CAP)
EDUCATION DOCUMENTATION
• Can be shown on Form 1098-T or annual
statement from the institution or receipts for
books and equipment
• Reduce expenses by amounts received from
scholarships and grants shown in box 5 of
Form 1098-T
AMERICAN OPPORTUNITY CREDIT
• 40% of the credit may be refundable
• Available for the first 4 years of post secondary
education
• Pursuing a degree or recognized educational
credential
• Enrolled at least half time
• No felony drug convictions
NOT ELIGIBLE FOR THE REFUNDABLE
AMERICAN OPPORTUNITY CREDIT
1. Taxpayer is (a) under age 18; or (b) age 18 and
their earned income was less than ½ of their
support; or (c) FT student over age 18 and
under 24 and earned income was less than ½ of
their support; AND
2. At least one of his/her parents was alive at the
end of the year; AND
3. Taxpayer is not filing a joint return
LIFETIME LEARNING CREDIT
• Nonrefundable
• Available for an unlimited number of years
• Do not to be pursuing a degree
• Can take one or more courses
• Felony drug convictions are permitted 
EXPENSES
• Qualifies: tuition, required enrollment fees and
course-related materials such as books, supplies and
equipment
• American opportunity credit: books, supplies and
equipment do not have to be purchased from the
school
• Lifetime learning credit: books, supplies and
equipment must be purchased from the school
• Does not qualify: computer tech fees, student
activity or athletic fees, insurance, room and board,
transportation
CALCULATING EXPENSES
Scenario 1
Tuition
$12,500
Course-related materials
$650
Scholarships and Grants
($5,000)
Eligible expenses for credit
$8,150
LINE 51: RETIREMENT SAVINGS CREDIT
• Taxpayers qualify if they made contributions to
an eligible plan
• Contributions to employer-sponsored plan are
shown in box 12, Form W-2
• Contributions to a traditional IRA or Roth IRA
• Must be age 18 or older and cannot be a FT
student
• Form 8880
LINE 52: CHILD TAX CREDIT
•
Nonrefundable credit up to $1,000 per child
•
Taxpayers not claiming the full amount may
be eligible for the refundable Additional
Child Tax Credit
•
Must have a Qualifying Child, determined by
info entered on TaxWise Main Information
Sheet
•
Form 8812
LINE 53: RESIDENTIAL ENERGY CREDITS
• Expired provision
Topic 8: Other taxes
• Line 57: self-employment tax
• Line 59: additional tax on IRAs, other
qualified retirement plans – early
distributions subject to 10% penalty
• Line 60b: 1st time homebuyer credit
repayment
• Line 61: health care, individual
responsibility
10 MINUTE BREAK
Topic 9: Payments
• Line 64: federal income tax withheld
reported on W-2s and other income
statements
• Line 65: 2014 estimated tax payments and
amount applied from 2013 return to 2014
taxes
Topic 10: Refundable
credits
LINE 66A: EARNED INCOME CREDIT
Part A – Rules for everyone
• Must have valid social security number
• Cannot file married filing separately
• U.S. citizen or resident alien all year
• Cannot file Form 2555 or 2555-EZ
• No investment income $3,350+
• Cannot be a qualifying person of another person
LINE 66A: EARNED INCOME CREDIT
Part B – Rules with a qualifying child
• Meet rules for everyone in Part A
• Have a qualifying child
• Cannot be the qualifying child of another
person
• Qualifying child cannot be used by more
than one person
LINE 66A: EARNED INCOME CREDIT
Part C – Rules with no qualifying child
• Meet rules for everyone in Part A
• At least age 25 but under age 65 as of
December 31
• Cannot be the dependent of another person
• Lived in the U.S. more than ½ the year
• Cannot be the qualifying child of another
person
Age
Qualifying
child tests
Residence
Relationship
EARNINGS NOT ELIGIBLE FOR EIC
• Income received for work while an inmate
• Income received from work experience and
community service programs for welfare
recipients, generally reported in box 3 of Form
1099-MISC
• Disability insurance payments reported in box
12 of Form W-2 with code J
• Any nontaxable income received from
someone for services performed
• Unemployment compensation
EIC AND ITIN
Taxpayer with an SSN is claiming a child Taxpayer qualifies for EIC, but no
with an ITIN
EIC for child
Taxpayer with an ITIN is claiming a child
No EIC for taxpayer or child
with an SSN
Taxpayer with an SSN and spouse with
an ITIN is claiming a child with an SSN
No EIC for taxpayers or child
The child with the SSN qualifies
Taxpayer with an SSN is claiming a child
the taxpayer for EIC, but the child
with an SSN and a child with an ITIN
with an ITIN does not
LINE 67: ADDITIONAL CHILD TAX CREDIT
• A refundable credit is the unused portion of
the child tax credit
• Taxpayer with more than $3,000 of taxable
earned income may be eligible regardless of
the number of qualifying children
• Taxpayer with 3+ children may be eligible
regardless of income
• FORM 8812
• Line 68: American Opportunity Credit
• Line 69: Net Premium Tax Credit
Topic 11: Refund or tax
owed
LINE 76: REFUND AMOUNT
There are 4 options…
1.
2.
3.
4.
Apply it to 2014 taxes
Direct deposit
Receive a paper check
Purchase U.S. savings bonds
Refer taxpayers without direct deposit to the
Financial Services staff to learn about prepaid
debit cards and savings accounts.
YOUR ROLE
• You spend the most amount of time with each
customer
• You are the customer’s most trusted advisor
THUS, YOU….
 Refer customers without direct deposit to financial
services staff
 Reveal the expected refund amount
 Make the savings pitch
 Alert financial services staff of potential savers
WHY A SAVINGS CAMPAIGN?
• Tax time can be the most savable moment
• Saving is a priority for the majority of
customers yet few do save at tax time
• Want something that customers and
volunteers can rally behind
CLOSING THE GAP:
FROM INTENTION TO ACTION
6566
5,022
4,189
675
293
2012
2013
Intent
1,012
2014
# Who actually saved
1. Customers save at least $50 of their
federal refund
2. Tri-CAP staff enters savers into promotion to
have 100 chances to win $100 weekly
prizes during tax season
3. Optional: customer can submit a photo on
their own to be eligible for a contest to win
$25,000 grand prize.
HAVE FUN!
• Help customers
reach their savings
goals
• Site competitions
• Pizza or bagel
parties
• Bragging rights
• Recognition on P+P
social media
“I believe in the power of savings.
Also, I found the goals and measuring
the goals as a good motivator.”
— P+P volunteer
NOTICE OF ACCOUNT
INFORMATION
• Financial services
staff provide form
with product’s
routing and
account numbers
SERIES I U.S. SAVINGS BONDS
Bonds make great gifts - Can purchase up to two
Series I U.S. savings bonds each tax season
Bonds are easy – Can split federal tax refund by
buying a bond. The rest can be directly deposited or
mailed as a check.
SERIES I U.S. SAVINGS BONDS
Bonds are flexible - Purchase bonds starting at $50
in $25 increments up to $5,000 (ex. $50, $75, $100,
etc.).
Bonds are safe - An investment backed by the U.S.
Treasury Department with very low risk of default. They
never lose value.
Purchase savings bonds regardless of credit or
banking history.
REVEALING THE
REFUND
• Reveal the expected
refund to prompt
savings decision
• Write refunds (or
amounts due) on
preparer checklist
• Make the savings pitch
to all customers
receiving a refund
CREATE YOUR SAVINGS PITCH
• Ask everyone receiving a refund if they would
like to save
• Frame the savings pitch as the default or norm
• Keep it simple. For example:
“Let’s get you entered to win 100 weekly prizes of $100.
How much of your refund would you like to save?”
“If your refund allowed, what would you save some for?”
“How much should we put in a savings account?”
NEW: FINANCIAL COACHING PROGRAM
Money Mentors
Selected participants
work with a volunteer
financial coach 4—8
months to take steps to
reach their financial
goals.
KEY TAKEAWAYS
• Our customers are experts in their own lives
and make the best decision for their situation
• The majority of Tri-CAP customers want to
save
• Our role is to provide info about direct deposit
and savings opportunities to all customers
• Everybody at Tri-CAP plays a role in making
financial capability possible for our customers
LINE 78: AMOUNT OWED
Option 1: Pay in full within 60 to 120 days with
no fee, interest and penalties charged on
payments after April 15.
Option 2: Set up an installment agreement with
the IRS.
Option 3: Taxpayer should file their return by the
deadline and pay as much as they can.
Do not complete Form 2210,
IRS will calculate any penalty.
Topic 12: Related tax
issues
POWER OF ATTORNEY (POA)
• Power of Attorney is the taxpayer’s written
authorization for a representative to act on their
behalf in tax matters
• The representative must have Form 2848
• Follow the steps outlined in the Volunteer Tax
Manual – ask your tax site manager for
assistance
INJURED SPOUSE ALLOCATION
• MFJ taxpayers and one spouse owes past-due
federal or state debt
• The “injured spouse” is the spouse that does not
owe the past-due debt
• Complete Form 8379 to allow the “injured
spouse” to receive their “portion” of the federal
refund
• Minnesota does not have an “injured spouse”
program
AMEND PRIOR YEAR TAX RETURNS
• May need to amend return to correct errors or
omissions on a return they have already filed
• The IRS may file on the taxpayer’s behalf if the
return is not filed. The taxpayer can amend the
IRS-filed return
• Amended returns cannot be e-filed
• Refer customers needing an amended return to
Tri-CAP’s main office.
RESIDENT ALIEN OR NONRESIDENT ALIEN?
• What do you do if an individual may be attending
school in the U. S. on a student visa and/or an
individual has checked the “No” box on Form 13614-C
indicating they are not a U. S. Citizen?
• Use Determining Residency Status decision tree to
determine whether individual is a resident alien or
nonresident alien
• If you determine the individual is a resident alien,
complete Form 1040. If the individual had a “green
card,” they are eligible for tax credits
• If you determine the individual is a nonresident alien,
refer them to their college’s international student
program as this is out-of-scope for Tri-CAP
HOMEWORK
• Basic certification, use paper Form 6744
booklet to complete questions 1 – 13
• Advanced certification, use paper Form
6744 booklet to complete questions 1 – 7
• Consider viewing the health savings
account training online at Tri-CAP’s
volunteer site and certifying at the HSA
level