EKS Training
Scenario Four
Ground
Rules
o Don’t work ahead – stay on the current task
o Turn off your cell phone
o Question/Comments – raise your hand, stay in your seat
o No side conversations - don’t even ask your neighbor for help
o Returning volunteers sit next to new volunteers
o Bring your materials every day
o At least try to do your homework – bring your questions
4 Steps:
Class
Structure
1. As a class, we will review Interview Notes, Intake
& Interview Sheet (13614-C) & supporting
documents for each scenario.
2. Instructor will teach Tax Law – referencing
Publication 4012 and 13614-C
3. Instructor will show you how to enter information
into TaxWise. WATCH!
4. Now DO! Students will enter information on
TaxWise
Scenario #4
What you will learn in this scenario:
Scenario #4
1.
ITINs
2.
Retirement Income
3.
Self-employment/Business income with expenses
4.
State Refund Income
5.
Itemized Deductions
6.
Affordable Care Act – Exemptions for ITIN and Shared Responsibility Payment
What you will review in this scenario:
1.
Filing Status
2.
Personal and Dependency Exemptions
3.
Income – W-2
4.
Credits:
5.
Itemized Deductions versus Standard Deduction
6.
ACA- 1095-C Employer Coverage
7.
Form 8888
 Child Tax Credit, Additional Child Tax Credit, Child and Dependent Care Credit,
Let’s review Mary and Kevin’s
Information:
Scenario #4
 Interview Notes
 Intake & Interview sheet - 13614-C
 Tax Documents
Interview
Notes Review
 What did you learn about Mary and Kevin?
ITIN
Tax Law
Topic #1
 Individual Taxpayer Identification Number, issued by the IRS to
taxpayers without a valid SSN (start with a 9 – taxpayer will have a
letter from IRS with the number on it)
 When applying for an ITIN, a taxpayer submits a W-7 with their tax
return along with documentation like a passport, birth certificate
and/or other identification
 VITA sites can file returns for taxpayers with ITINs – just like any
other return
 Some VITA sites can help taxpayers apply for the number – called
Certifying Acceptance Agents
Deep Dive with the 13614-C
 Did they bring all the required documents?
 Everything accurate?
Intake &
Interview
 What’s missing/wrong/mismatched that needs to be
changed?
 Compare tax documents and interview notes
 Make any corrections needed on 13614-C
 Fill out greyed out boxes (dependency and ACA)
Publication 4012, Tabs K-3 and K-4
Does this taxpayer need to file their return?
Who should
Or should they?
file?
Publication 4012, Tab A
Is client eligible for VITA services?
In Scope?
What certification level is needed to prepare
this return?
Publication 4012, pages 8-10
Scope of Services Chart
Tax Law
Topic #2
Determine filing status for a married couple
Publication 4012, Tab B-1
You Got This!
TaxWise
Enter Mary and Kevin’s:
 Personal information on Main Information
Sheet
 Everything on page one of 13614-C goes on
Main Info
Publication 4012, K-6 to K-11 for Main Info
You Got This!
TaxWise
Enter Mary and Kevin’s:
 Income documents:
 W-2
Publication 4012, D-3 to D-9 for Income
Retirement Income
 Retirement income such as pensions, 401k’s or IRAs
are reported on a 1099-R
Tax Law
Topic #3
 Box 7 will let you know what kind of distribution is
being reported
 What codes do Mary’s two 1099-R’s have? What do
they mean? Tab D-21 and D-22
 Taxable amount box empty or taxable amount not
determined box checked – use simplified method
Publication 4012, Tab D-20 through D-24
Students: WATCH instructor
TaxWise
Enter Mary’s 1099-Rs
 Remember the simplified method!
Publication 4012, Tab D-20 through D-24
Students:
Enter Mary’s 1099-Rs
 Remember the simplified method!
TaxWise
Publication 4012, Tab D-20 through D-24
Business Income with expenses
Which one’s EZ?
Tax Law
Topic #4
Schedule C-EZ
Schedule C
Only one per return (TP and SP
both have businesses won’t work)
Multiple per return possible
Simplified expenses
Must categorize expenses
(advertising, insurance, supplies,
licenses, etc.)
Has limit of $5,000 expenses
No expense limit*
Publication 4012, Tab D-13 to D-15
*$25,000 for VITA Scope
Students: WATCH instructor
Enter Kevin’s cash income and expenses on
Schedule C-EZ
TaxWise
Publication 4012, Tab D-13 to D-15
Students:
Enter Kevin’s cash income and expenses on
Schedule C-EZ
TaxWise
Publication 4012, Tab D-13 to D-15
State Refund as Income
 When a taxpayer itemizes their deductions, they can use
state income tax paid as a deduction
Tax Law
Topic #5
 In turn, any refund received that year needs to be reported
as income
 The state refund is reported on 1099-G
 You will need the taxpayer’s prior year return to fill in:
 Taxable income
 Itemized deductions total
 State income tax paid
Publication 4012, Tab D-13 to D-15
Students: WATCH instructor
Enter the Kents’ state refund on the State Tax
Refund Worksheet from 1040, line 10
TaxWise
Publication 4012, Tab D-12
Students:
TaxWise
Enter the Kents’ state refund on the State Tax
Refund Worksheet from 1040, line 10
Publication 4012, Tab D-12
Itemized Deductions:
 Deductions reduce a taxpayer’s taxable income
Tax Law
Topic #6
 Taxpayer can take Standard or Itemized Deductions (should take the
larger):
 Standard – a fixed dollar amount based on filing status
 Itemized – uses your qualified expenses like mortgage interest, medical or
dental expenses, charitable contributions
Publication 4012, Tab F & Schedule A
Itemized Deductions:
Tax Law
Topic #6
 Mortgage interest is the major indicator that someone does or should
itemize
 Use Tabs F-3 and F-4 to interview the taxpayer
 More details in Publication 17
Publication 4012, Tab F-3 through F-8, Publication 17 &
Schedule A
Students: WATCH instructor
Enter the Kents’ deductions on Schedule A:
TaxWise
 Mortgage Interest
 Real Estate Taxes
 Charitable Contributions
Interview notes & Publication 4012, Tab F-5
Students:
TaxWise
Enter the Kents’ deductions on Schedule A.
Interview notes & Publication 4012, Tab F-5
You Got This!
TaxWise
Enter the Kents’ childcare expenses on Form 2441 for the
Child and Dependent Care Credit
Interview Notes & Publication 4012, Tab G-5
Let’s review credits calculated on
TaxWise:
TaxWise
Did the Kents qualify for these credits?
 Child Tax Credit
 Additional Child Tax Credit
Affordable Care Act Exemptions
 Did the Kents have coverage all year?
Tax Law
Topic #7
 If no, let’s review the exemptions before assessing the
Shared Responsibility Payment
Interview Notes, 13614-C, 1095-C and Publication 4012, Tab ACA
You got this!
TaxWise
 Enter exemption information for Kevin on ACA
Worksheet and 8965
 Enter coverage information for Mary and
Melissa on the ACA worksheet
Interview Notes, Publication 4012, Tab ACA
Completing the
CA return
1.
Get the red out! Most information will automatically populate
from the federal return
2.
State EITC Form – 3514*
3.
If you have entered more than one W-2 on the 1040, you will
have to manually add the additional W-2’s. The first W-2 will
carry over, but the rest won’t.
4.
Make sure to complete the direct deposit or balance due portion
of the return
5.
Complete the CA Renters Credit Worksheet when applicable.
*At the time of this ppt creation, details on what TaxWise will auto populate are not
available
You got this!
TaxWise
 Complete the Kents’ CA return (540)
 Do the Kents want to direct deposit their refund?
 If so, are they requesting to split their refund?
 Do they want to buy a savings bond?
Refund
13614-C and Interview Notes
Ask Every Taxpayer (AET)!
 Remind the Kents of the savings option
Savings
 Answer Questions
 Be enthusiastic and positive!
Students: WATCH instructor
 Direct Deposit into one account requires that you
enter the account information in two places:
TaxWise
 Main Info Sheet
 Page 2 of the 1040
 Check “same as federal” for the state return
Publication 4012, Tab K-14
Students:
 Direct Deposit into one account requires that
you enter the account information in two places:
TaxWise
 Main Info Sheet
 Page 2 of the 1040
 Check “same as federal” for the state return
Publication 4012, Tab K-14
THINGS YOU NEED TO KNOW ABOUT FINISHING A RETURN
Finishing the
return
1.
Ask the questions in the Prep Use Fields
2.
All returns must be Quality Reviewed (checklist on 13614-C) Tab,
K-25
3.
Run Diagnostics to check for errors
4.
Print returns (Federal and State) for Taxpayer
5.
Review return with taxpayer (Formula 1040 activity)
6.
Have Taxpayer and Spouse sign 8879s for Federal and State and
remind them they are responsible for their return and by signing,
they are agreeing it is accurate:
 One copy for the taxpayer
 One copy for the VITA Site
Publication 4012, Tab K
 Do we have matching AGI, refund?
 Let’s review entry of:
Check our
work
- W-2
- Schedule C-EZ
- State Refund Worksheet
- Schedule A
- Form 2441
- Direct Deposit
- ACA Exemptions and Full Year MEC
What Schedule is required to report non-employee compensation from a
1099-MISC?
Publication 4012, Tab D-3
Schedule C or Schedule C-EZ
Look it up!
True or False: If a self-employed taxpayer has $11,000 in business expenses it
is out of scope.
Publication 4012, Tab D-14
True
Which ACA exemption do taxpayers with ITINs qualify for?
Publication 4012, Tab ACA
Exemption Code C – citizens living abroad and certain noncitizens
What must be done if box 2a on Form 1099-R is empty or box 2b is
not checked?
Publication 4012, Tab D-24
Use the simplified method worksheet
Look it up!
Where do you enter bank account information if the taxpayer wants
to direct deposit their refund into only one account?
Publication 4012, Tab K-14
Main Info and 1040 page 2
What large deductible expense is common among taxpayers who
itemize their deductions?
Publication 4012, Tab F-3
Mortgage Interest
 Try your Scenario 5 Homework
 Let’s review the scenario now…
 You’ll need to know about:
Before next
week…
 Social Security Benefits
 Cancellation of Debt
 Dividend Income
 ACA – Marketplace Coverage and Advanced Premium
Tax Credit