Campus Fellow Refresher Training
Training Outline
1) Basic Level Updates
2) State Tax Refund
3) Business Income
4) Retirement Income
5) Adjustments to Income
6) Itemized Deductions
Training Outline
7) Miscellaneous Nonrefundable Credits
8) Affordable Care Act Tax Provisions
9) Out of Scope Topics
10) Additional Duties
11) Practice Quality Reviews
Training Outline
12) Campus Fellow Handbook
13) Volunteer Standards of Conduct & Test
14) Volunteer Paperwork & Certification
Basic Level Updates
Due Date of the Return
April 18, 2016
Standard Deduction
Married Filing Jointly / Qualifying Widow(er) $12,600
Head of Household
$9,250
Single / Married Filing Separately
$6,300
Additional Amounts for Taxpayers who are 65+ or Blind
Single or Head of Household
Married Taxpayers
$1,550
$1,250
Exemptions
The amount a taxpayer can deduct for each
exemption increased to $4,000 for 2015
Retirement Savings Contribution Credit
Maximum income limits to claim the Retirement
Savings Contribution Credit have increased
To claim this credit, your MAGI must not be more
than:
• $30,500
• $61,000 (if Married Filing Jointly)
• $45,750 (if Head of Household)
Earned Income Credit
For 2015, the amount of the credit has increased
The maximum credit is:
• $6,242 with three or more qualifying children
• $5,548 with two qualifying children
• $3,359 with one qualifying child
• $503 with no qualifying child
Earned Income Credit
For 2015, the amount of earned income required has increased
To be eligible for a full or partial credit, the taxpayer must have
earned income of at least $1 but less than:
• $47,747 ($53,267 if
qualifying children
• $44,454 ($49,974 if
children
• $39,131 ($44,651 if
• $14,820 ($20,330 if
Married Filing Jointly) with three or more
Married Filing Jointly) with two qualifying
Married Filing Jointly) with one qualifying child
Married Filing Jointly) with no qualifying child
Earned Income Credit
Taxpayers whose investment income is more than
$3,400 cannot claim the Earned Income Credit
W-2 Verification Codes
For filing season 2016, the IRS plans to test a
capability to verify the authenticity of Form W-2
data. This test is one in a series of steps to combat
tax-related identity theft and refund fraud.
W-2 Verification Codes
TaxWise Exercise – Walter White
twonline.taxwise.com
Client ID: 778068
• USERNAME: Last name, first initial, all caps (e.g.,
NELSONS)
We will be using this exercise to review material
covered in the fall!
Enter Basic level information now
State Tax Refund
PTY State Tax Refund
Answer question in the box on the Form 1040:
• If NO: the state tax refund does not need to be
reported
• If YES: additional steps will be required to report the
state tax refund
Info Needed from PTY Return
To correctly report a state tax refund amount, the
following info from the PTY return is needed:
•
•
•
•
•
•
State tax refund amount
Sch A, line 5a, state income taxes
Sch A, line 5b, general sales tax
Total itemized deductions amount
Filing status
Taxable income amount
State Tax Refund
Open up Walter White in TaxWise
• Enter State Tax Refund on Line 10
Other Income, Business/SelfEmployment Income
Form 1099-MISC
Form 1099-MISC: Other Income
Reported in box 3
Other income reported in this box is generally:
•
•
•
•
Prizes
Awards
Taxable damages (from a lawsuit settlement)
Other taxable income
Other income in box 3 is classified as unearned
income
Form 1099-MISC:
Nonemployee Compensation
Reported in box 7
Nonemployee compensation is paid to an
independent contractor
Independent contractors work for a company or
organization without being considered an
“employee”
• Freelancers, part-time workers, contractors, interns
Form 1099-MISC:
Nonemployee Compensation
If payment for services from a company or
organization is reported in box 7, the taxpayer is
being treated as a self-employed worker
Self-employment income, also known as business
income, is taxed differently than wages/salary
Business/Self-Employment Income
Business/self-employment income can be reported
to taxpayers in a variety of ways
Form 1099-MISC
Form W-2: Wage and Tax Statement
See Your Site
Coordinator
Form 1099-K
See Your Site
Coordinator
Cash Payments
Business/Self-Employment Income
VITA Filing Conditions
 Less than $25,000 (*new* as of 2016) of business
expenses
 Cash method of accounting
 No inventory
 Does not want to depreciate assets
 Must report a profit— no net loss!
 No employees
Business/Self-Employment Income:
Schedule C or C-EZ
Schedule C-EZ is just the simplified version of the
Schedule C
• Use the Schedule C-EZ if there are few business
expenses and only one business
Less than $5,000
• Use the Schedule C if there are a lot of business
expenses and/or more than one business
$5,000 to $25,000
Deductible Business Expenses:
Advertising
Business Miles (at federal mileage rate)
Commission and fees
Insurance (property, malpractice)
Interest on operating loans
Legal and professional fees
Deductible Business Expenses:
Office supplies
Rental fees for cars, trucks, vans, machinery (leases
less than 30 days only)
Repairs and maintenance
Costs for general operating supplies (NOT
associated with cost of goods sold – inventory is
out of scope)
Deductible Business Expenses:
Taxes and licenses
Travel/meals & entertainment
Utilities (for business use only, no personal
expenses)
Business/Self-Employment Income
Open up Walter White in TaxWise
• Enter Business/Self-Employment on Line 12 using Sch C
or Sch C-EZ
Retirement Income
Employer
Funded
Defined Benefit
Retirement Plans
Pensions
Civil
Service
Defined Contribution
Retirement Plans
Employer
Sponsored
Annuities
401(k)
403(b)
Annuities
Retirement
Income
Taxpayer
Funded
Individual
Retirement Plans
IRA
Roth IRA
Defined Benefit
Retirement Plans
 Funded by the employer
 Monthly set amount based on salary history, years of service
 Employee pays taxes on payments received
Defined
Contribution
Retirement Plans
 Employer-sponsored, employee contributes portion of gross
salary pre-tax
 Offers benefits by allowing employee to defer taxes
Individual
Retirement Plans
 Funded by individual taxpayers
 Like DC plans, offers benefits by allowing employee to defer
taxes
Common Types of Retirement Plans
Pension: series of payments for past work (based on
salary history and years of service)
Defined Benefit Plan
401(k) Plan: part of employee’s gross salary is placed
in a retirement plan on a pre-tax basis (not subject to
income tax until employee receives it as a distribution
from retirement account)
Defined Contribution Plan
Common Types of Retirement Plans
Individual Retirement Arrangements: A personal
savings plan that offers tax advantages to set aside
money for retirement
• Earnings generally accumulate tax free until withdrawn
• Types:
Traditional
Roth: Usually Out of Scope (in scope under certain conditions)
SIMPLE: Out of Scope!
SEP: Out of Scope!
Retirement Forms
Retirement income can be reported on:
• Form 1099-R  Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,
etc.
• Form CSA 1099-R  Statement of Annuity Paid (civil service
retirement payments)
• Form CSF 1099-R  Statement of Survivor Annuity Paid
• Form RRB1099R  Annuities or Pensions by the Retirement
Railroad Board (out of scope for Campus Fellows)
Form 1099-R: Distribution Code(s) &
IRA/SEP/SIMPLE
Reported in box 7
Distribution Code(s) identify the type of distribution
received
Only certain distribution types are in scope for
VITA
Form 1099-R: Distribution Code(s) &
IRA/SEP/SIMPLE
 1: Early distribution, no known exception (in most cases, under age 59 ½)
 2: Early distribution, exception applies (under age 59 ½)
 3: Disability
 4: Death
 7: Normal distribution
 B: Designated Roth account distribution
 G: Direct rollover and rollover distribution
See the Publication 4012, Income Tab for a full list of box 7 distribution
codes (and which are in scope)
Form 1099-R: Distribution Code(s) &
IRA/SEP/SIMPLE
❒IRA/SEP/SIMPLE indicates that the distribution
was from a traditional IRA, SEP, or SIMPLE
retirement account
ONLY traditional IRAs are in scope for Campus
Fellows!
Verify with the taxpayer that the amount
distributed was from a traditional IRA
Form 1099-R: Total Employee
Contributions
Reported in box 9b
For certain plans, an amount may be listed here
showing the taxpayer’s contributions to the plan
This amount is used to help determine the taxable
amount if box 2a is blank (however, this is out of
scope for Campus Fellows)
Why is it Important…?
Some retirement plans are not
taxable on the state level
It is extremely important to determine what
type of retirement plan a taxpayer has
because it will change how the form is
entered into TaxWise
Rollover
Refers to transferring the holdings in one retirement
account to another
Specifically, the retirement account is emptied and
distributed to the owner, who then deposits them into a
new account for reinvestment
This is a TAX-FREE DISTRIBUTION
• But still must be reported on the federal tax return
• Code G will be in Box 7 of the 1099-R
Disability Pension Income
Why would a taxpayer have disability pension
income?
• Perhaps they had an accident that rendered them
totally and permanently disabled
Disability payments may be coming from a
qualified retirement pension plan
Disability Pension Income
Why is it important to determine if a taxpayer’s
1099-R is for disability pension payments?
…because until a taxpayer reaches the
retirement age FOR THAT SPECIFIC PLAN, the
income will be treated like wages, which might
make the taxpayer eligible for the...
EARNED INCOME TAX CREDIT
Disability Pension Income
Code 3 will be in box 7 on a 1099-R, HOWEVER,
you must…
• Check to see if taxpayer has reached retirement age
for that specific plan
 If taxpayer isn’t sure, may need to consult retirement
paperwork or contact plan manager
 Don’t just rely on a previous year return—previous tax
preparer might not have entered in correctly
Disability Pension Income
If taxpayer has not reached retirement age,
choose Check if disability and taxpayer is disabled
and verify that amount appears on the Form 1040
as wages
If taxpayer has reached retirement age, do NOT
check that box and verify that the amount appears
on the Form 1040 as retirement income
Retirement Income
Open up Walter White in TaxWise
• Enter Retirement on Line 15/16
Adjustments to Income
Total Income
(Earned + Unearned)
Adjusted Gross
Income
Adjustments
Adjustments to Income
Adjustments are basic life expenses that help decrease the
amount of taxable income:
•
•
•
•
•
•
•
•
Educator expenses
Half of self-employment tax
Early withdrawal penalty
Alimony paid
IRA contributions (traditional)
Student loan interest
College tuition payments
Jury duty pay turned over to employer
Itemized Deductions
Adjusted Gross
Income
Exemptions
Deductions
(Standard or Itemized)
Taxable
Income
Itemized Deductions
Every taxpayer can take a specific amount for a
“standard” deduction
• Reduces taxable income
There are certain designated expenses that a taxpayer
can choose to list out separately, and, if they total more
than the standard deduction, the taxpayer will
“itemize” his deductions
• Reduces taxable income by a greater amount
When to Itemize Deductions
A taxpayer can receive a larger deduction by
itemizing if he/she has:
• At the Federal Level (higher standard deduction):
 Home mortgage payment
 Large number of medical bills
• At the State Level (lower standard deduction):
 Expenses that may/may not have been sufficient to justify
itemization on the federal level
Note: If a taxpayer is MFS and his/her spouse itemizes, the taxpayer must also itemize,
regardless of whether the Standard Deduction would be higher
Qualifying Expenses
Unreimbursed Medical Expenses
Charitable Contributions
Taxes
Home Mortgage Interest
Miscellaneous Deductions
Unreimbursed Medical Expenses
Deductible Medical Expenses
• Co-pays to doctor, dentist, eye doctor
• Prescription drugs
• Cost of glasses or hearing aids
• Cost of medical equipment
Unreimbursed Medical Expenses
Deductible Medical Expenses
• Health insurance premiums
• Long-term care insurance premiums
• Cost of surgery, operations
• Miles to and from doctor
NOTE: For a complete listing of deductible and
nondeductible expenses see Site Coordinator Handbook
Unreimbursed Medical Expenses
Nondeductible Medical Expenses
• Life insurance policy premiums
• Funeral, burial, cremation costs
• Unnecessary cosmetic surgery
• Nonprescription drugs
NOTE: For a complete listing of deductible and
nondeductible expenses see Site Coordinator Handbook
Charitable Contributions
Qualifying Organizations: Non-qualifying
Organizations:
• Religious
•
•
•
•
Charitable
Educational
Scientific
Literary
•
•
•
•
•
Business
Civic/Political
Social
Foreign
Homeowners’ Associations
Charitable Contributions
Deductible Expenses:
• Monetary donations
• Dues, fees, and assessments
• Fair market value (FMV) of clothing, furniture
• Uniforms required to be worn during service
• Unreimbursed transportation expenses
 Tolls, bus fare, parking fees, charitable miles
IMPORTANT: The taxpayer must keep receipts!
Charitable Contributions
FMV of Donated Goods
• If a taxpayer has made non-cash contributions to
charity and does not have receipts, use the following
resources to determine the FMV of donated items:
• Salvation Army Valuation Guide
Charitable Contributions
Nondeductible Expenses:
• Raffle, bingo, lottery tickets
• Tuition
• Value of time of service
• Blood
• Contributions to individuals
• The FMV of any good received in exchange for a
donation (i.e. t-shirts, cds, tote bags, etc.)
Charitable Contributions
Limits to Charitable Contributions
• Contributions that total more than 20% of their AGI may be
able to deduct only a percentage of their contributions, and
must carry over the remainder to a later tax year
• If taxpayers have >$500 of noncash contributions, they
need to be referred to a professional preparer if they want
to deduct the full amount.
• Form 8283 (OUT OF SCOPE)
Taxes
Deductible
•
•
•
•
State and local taxes
Real estate taxes
Personal property taxes
State and local taxes on a
new car purchase
• Ad valorem tax on car tags
Nondeductible
•
•
•
•
Federal taxes
Hunting licenses
Water/sewer
Taxes on alcohol, tobacco,
or gas
• Utilities
State and Local Taxes
Taxpayers can choose one of the following, but not
both:
• Income taxes
• Sales taxes
 County sales tax amounts differ
 AL state sales tax is 4%
 TaxWise will make an estimate of sales tax paid based on
income
Home Mortgage Interest
Only taxpayers who are legally liable for the debt
can deduct the interest
Taxpayers may have more than one mortgage or
may have refinanced and have multiple statements
Points: only points paid as a form of interest (for
the use of money) can be deducted
Form 1098: Mortgage Interest Statement
Form 1098: Mortgage Interest Statement
Boxes 4 or 5 MAY also report real estate taxes
These amounts can be included as an itemized
deduction
Nondeductible Interest
Personal interest
• personal loans
• car loans
• credit cards
• etc.
Miscellaneous Deductions
Union dues
Uniforms (that cannot be worn in any other
circumstance)
Professional books, journals
Small tools and supplies, used for business
Miscellaneous Deductions
Employment-related educational expenses
• Includes educator expenses > $250 (after the
adjustment)
Expenses for looking for a new job
Tax preparation fee from last year
Safe deposit box
Gambling losses up to amount of winnings
Nondeductible Expenses
Burial or funeral expenses
Wedding expenses
Fees and licenses
Fines, penalties, traffic tickets
Home repairs and insurance
Rent
Insurance premiums (except health and mortgage)
Losses from sale of home
Miscellaneous Nonrefundable Credits
Nonrefundable Credits
Remember: Nonrefundable credits directly reduce
the tax liability, but only to zero (no refund of
additional credit is available)
Foreign tax credit
Residential energy credit
Foreign Tax Credit
Taken if a taxpayer paid income tax to a foreign
country; U.S. possession; or political subdivision,
agency, or instrumentality of a foreign country
Foreign tax paid > $300 is out of our scope!
We may see some foreign tax reported on a
1099-DIV or 1099-INT in Box 6
Form 1099-DIV: Dividends and
Distributions
Residential Energy Credit
Two Types of Residential Energy Credits
• Residential energy-efficient property credit – OUT OF
SCOPE!
• Nonbusiness energy property credit
Available to a taxpayer:
• Who made purchases for qualified energy efficient
improvements for his/her main home
• Who owns his/her home
Nonbusiness Energy Property Credit
Non-business energy property (for home
improvement):
• Heating
• Ventilating
• Air-conditioning
• Insulation
•
•
•
•
Roofs
Water heaters (non-solar)
Windows
Doors
Eligibility Requirements
Improvements must be for taxpayer’s main home
• The home where the taxpayer lives most of the time
• Temporary absences do not change main home
Credit is only available for improvements made to
existing homes
• Cannot claim based on expenses paid during the
construction of a home
Miscellaneous Nonrefundable Credits
Open up Walter White in TaxWise
• Enter Foreign Tax Credit & Residential Energy Credits
Education Credits
Education Credits
Education credits help to offset the cost of higher
education expenses paid during the year
Two education credits available
• Nonrefundable: Lifetime learning credit
• Partially Refundable: American opportunity credit
General Eligibility
Filing status cannot be Married Filing Separately
Cannot be claimed as a dependent on someone
else’s return
Accredited institution
CAN claim on the basis of expenses paid with
student loans
American Opportunity
(Hope) Credit
Lifetime Learning Credit
Up to $2,500 per eligible student ($1,000 is
refundable)
Up to $2,000 credit per return
Available for the 1st 4 years of college
Available for all years
Student must be pursuing a degree or recognized
education credential
Student does not need to be pursuing a degree or
credential
Student must be enrolled at least half time
Available for one or more courses
No felony drug conviction on student’s record
Felony drug conviction does not apply
Expenses include tuition, fees, and course
materials
Expenses include only tuition and fees
Form 1098-T: Tuition Statement
Qualified Expenses for Credit
American Opportunity (Hope) Credit
• Qualified tuition and related expenses up to $4,000
per eligible student
• Includes expenses for course materials – books,
supplies, and equipment needed for a course of study,
whether or not they were purchased from institution
Qualified Expenses for Credit
Lifetime Learning Credit
• Expenses include only tuition and fees
• Course-related books, supplies and fees are included
ONLY if they must be paid to the institution as a
condition of enrollment
No Double Benefits
The taxpayer CANNOT claim:
• Both the American opportunity and lifetime learning
credits for the same qualified tuition expenses
• Expenses paid with a tax-free scholarship, grant, or
other assistance, including Pell grants (in other words,
the taxpayer must subtract these scholarships from the
total expenses before claiming either credit)
No Double Benefits
The taxpayer CANNOT claim:
• Both an education credit AND the tuition and fees
adjustment for the same qualified tuition expenses
• Most taxpayers benefit more from the credit, but you
should try the expenses as both an adjustment AND a
credit to determine which benefits the taxpayer more
Qualified Expenses
IMPORTANT!
Verify with the taxpayer that the amount
in Box 1 or 2 of Form 1098-T is actually
the amount paid in the current tax year for
qualified expenses!
Nonrefundable vs. Refundable
Lifetime Learning Credit
• Entirely nonrefundable
• Limit to $2,000 PER RETURN (not per eligible student)
American Opportunity Credit
• Partially refundable – up to $1,000 PER STUDENT
• Limit to $2,500 PER STUDENT (not per return)
Refundable American Opportunity Credit
for Taxpayers under the age of 24
See Your Site Coordinator if you have a taxpayer
under the age of 24 claiming an education credit –
the taxpayer may or may not be eligible to take
the refundable American Opportunity Credit, but
the process for determining eligibility is
complicated
Affordable Care Act
Who Needs MEC?
Everyone on the tax return needs MEC or a
coverage exemption
The taxpayer is responsible for the insurance,
coverage exemption, or individual shared
responsibility payment (penalty) of each person on
the return
How Many Months Do Taxpayers Need to
Have MEC?
Everyone needs MEC for every month
• A person is considered covered for the whole month if
they had coverage for at least one day
• A person who was born or died during the year is
required to have coverage for every full month alive
Types of Minimum Essential Coverage
Employer-Sponsored Coverage
• Group health insurance coverage for employees under
 A governmental plan (such as the Federal Employees Health
Benefit Program)
 A grandfathered health plan
• A self-insured health plan for employees
• COBRA coverage
• Retiree coverage
Types of Minimum Essential Coverage
Individual Health Coverage
• Health insurance purchased directly from an insurance
company
• Health insurance purchased through healthcare.gov
• Health insurance through a student health plan
Types of Minimum Essential Coverage
Government-Sponsored Programs:
• Medicare Part A coverage
• Medicare Advantage plans
• Most Medicaid coverage
• Children’s Health Insurance Program (CHIP)
 ALL Kids (Alabama)
Types of Minimum Essential Coverage
Government-Sponsored Programs:
• Most TRICARE coverage
• Veteran Affairs comprehensive health care
• Peace Corps volunteer health coverage
• Department of Defense Nonappropriated Fund Health
Benefits Program
• Refugee Medical Assistance
What is a Health Coverage Exemption?
A reason for not having health insurance that
avoids payment of the individual shared
responsibility payment
Who Needs a Health Coverage
Exemption?
Anyone without insurance coverage for any
month should be screened for exemption
eligibility
Exemptions: Where Do I Start?
Step
1
Does anyone on the tax return already have
an exemption in hand from the Marketplace
(healthcare.gov)?
Marketplace exemptions require an application. If a
person applied for an exemption, they should have
received an Exemption Certificate Number (ECN) from
healthcare.gov (it is a 6 or 7 alphanumeric code)
Exemptions: Where Do I Start?
Step
2
Is household or gross income under the
filing threshold?
If YES, everyone on the tax return is exempt from the
coverage requirement, and there is no need to consider
additional exemptions
Exemptions: Where Do I Start?
Step
3
If the family does not qualify for an
exemption under Step 2, does any
individual qualify for an exemption that can
be claimed directly on the return?
If YES, enter the exemption code on the tax return
Exemptions: Where Do I Start?
Step
4
For any uninsured individual that does not
qualify under Step 2 or 3, does any
individual on the tax return qualify for an
exemption from healthcare.gov?
If YES, see your Site Coordinator for additional help in
applying for the exemption and enter “pending” on the
tax return
Exemptions: Household/Gross Income
Below Filing Threshold
Household Income
The Modified Adjusted Gross Income (MAGI) of each individual
on the tax return with a filing requirement. Include dependent
income ONLY IF the dependent has a filing requirement
Gross Income
All the income received in the form of money, goods, property,
and services that is not exempt from tax, including taxable
portions of Social Security (do not income dependent income)
See Filing Basics tab of Pub 4012 for Filing Thresholds
Exemptions: Claimed on the Tax Return
Certain noncitizens and U.S. citizens living abroad
Federally recognized Indian tribe or eligible for
services through the Indian Health Service
Member of a health care sharing ministry
Incarceration
Lived in a state that did NOT expand Medicaid
(Alabama, Tennessee, Florida, South Carolina)
Exemptions: Claimed on the Tax Return
Unaffordable Insurance (cost of coverage exceeds
8% of household income) see Site Coordinator
Aggregate cost of employer insurance in
unaffordable see Site Coordinator
Short coverage gap (less than 3 months)
Full list of exemptions for Individuals claimed on the tax
return can be found in Pub 4012, ACA Tab
What is a Premium Tax Credit?
A premium tax credit (PTC) lowers the cost of
health insurance coverage purchased from
healthcare.gov
PTCs can be either:
Taken in advance (payment forwarded directly to the insurer
monthly to reduce premiums), OR
Taken on the tax return (payment is claimed as a lump sum
when filing the return)
Premium Tax Credits: Where Do I Start?
Step
1
Did the taxpayer or dependent purchase
coverage from healthcare.gov?
If YES, complete Form 8962 and go to Step 2.
If NO, do not complete Form 8962 and STOP.
Premium Tax Credits: Where Do I Start?
Did the taxpayer receive Form 1095-A,
Health Insurance Marketplace Statement?
Step
2
If YES, use this to complete Form 8962. All members of
a household in a single policy will be on one Form
1095-A (if family members enroll in different policies
or made mid-year changes, there will be multiple
1095-As)
If NO, call the Marketplace call center and/or check
taxpayer’s account on healthcare.gov
Form 1095-A: Health Insurance
Marketplace Statement
Form ACA Supplement
Turn to page 6 of the Walter White Exercise
• You can also view the form on impactamerica.com/taxprep
Part I: Healthcare.gov
• If taxpayer checks yes, you must complete Form 8962 in
TaxWise
Part II: Health Insurance
• Verify that each person on the return had one of the following
types of health coverage for ALL 12 months of the year
• If they did not have it for all 12 months, screen for exemption
Form ACA Supplement
Part III: Household Information
• Use this section to help you determine if a taxpayer
qualifies for a coverage exemption (see shaded box
“To be completed by a Certified Volunteer Preparer”)
Use information from Parts I, II, and III to complete
the shaded sections of Part VI – Health Care
Coverage on the Intake/Interview form
Form ACA Supplement
Part IV: IRS Certified Volunteer Quality Reviewer
Section – Federal Return
• These are additional questions for you to check yes/no
to while quality reviewing the return (use in conjunction
with I/I form)
Form ACA Supplement
Part V: IRS Certified Volunteer Quality Reviewer
Section – Alabama Return
• Not included in the Walter White exercise, but version
at tax site will include additional questions for you to
review while quality reviewing the return
Affordable Care Act
TaxWise Walkthrough
• NEW ACA Pg. 1 and Pg. 2
Open up Walter White in TaxWise
• Enter Affordable Care Act related information
Out of Scope Topics
Additional Topics – Out of Scope at Tax Site
IRS changed VITA certification levels
There are more advanced topics on your 2015 IRS
Advanced Certification test, but you will not
prepare these at the tax sites
We will briefly review now…
Additional Topics for 2015 VITA Advanced
Exam – Out of Scope at Tax Site
1) Sale of Stock
2) Capital Loss Carryover
3) Retirement Income (the Simplified Method)
4) Retirement Income (Additional Tax on IRAs)
5) Cancellation of Debt
Use Handout: “Helpful Tips for Out of Scope Topics
on 2015 IRS Advanced Certification Exam”
*********
Additional Topics – Out of Scope at Tax Site
Sale of Stock
Sale of stock is reported as a capital gain (or loss)
on a Form 1099-B or a Tax Reporting Statement
from the Broker
Additional Topics – Out of Scope at Tax Site
Sale of Stock
In order to properly report the sale of stock on the
tax return, the following information from the
1099-B or Tax Reporting Statement is needed:
• Date of Acquisition (1b)
• Date of Sale or Exchange (1a)
• Sales Price of Stocks, Bonds, etc. (2a)
• Cost or Other Basis (3)
Additional Topics – Out of Scope at Tax Site
Sale of Stock
In order to properly report the sale of stock on the
tax return, the following information from the
1099-B or Tax Reporting Statement is needed:
• The holding period of the transaction and whether or
not the basis was reported to the IRS
 Enter A as the transaction code for short-term transactions
in which the basis is NOT reported to the IRS
 Enter E as the transaction code for long-term transactions in
which the basis is NOT reported to the IRS
Additional Topics – Out of Scope at Tax Site
Sale of Stock
A capital gain occurs when the amount realized (the
gross proceeds from the sales) is GREATER than the
adjusted basis of the stock (how much the taxpayer
paid for the stock)
A capital loss occurs when the amount realized is
LOWER than the adjusted basis of the stock
Additional Topics – Out of Scope at Tax Site
Sale of Stock
Holding period starts the day after the property is
acquired and continues through the day it is sold
• Short-term: stock is held for one year or less
• Long-term: stock is held for more than one year
Additional Topics for 2015 VITA Advanced
Exam – Out of Scope at Tax Site
1) Sale of Stock
2) Capital Loss Carryover
3) Retirement Income (the Simplified Method)
4) Retirement Income (Additional Tax on IRAs)
5) Cancellation of Debt
Use Handout: “Helpful Tips for Out of Scope Topics
on 2015 IRS Advanced Certification Exam”
*********
Additional Topics – Out of Scope at Tax Site
Capital Loss Carryover
If a taxpayer had a capital loss more than the
allowable loss for the tax year, they can “carry”
that loss over to the next tax year to help reduce
taxable income
The limit is generally $3,000—any loss greater
than that should be carried over to the next tax
year
Additional Topics – Out of Scope at Tax Site
Capital Loss Carryover
If a taxpayer had a capital loss more than the
allowable loss for the tax year, they can “carry”
that loss over to the next tax year to help reduce
taxable income
The limit is generally $3,000—any loss greater
than that should be carried over to the next tax
year
Additional Topics – Out of Scope at Tax Site
Capital Loss Carryover
Carryover loss from the previous year can be
found on the Worksheet for Capital Loss
Carryovers of that tax year
Long-term capital loss is found on line 13
Additional Topics – Out of Scope at Tax Site
Capital Loss Carryover
Enter amounts from line 13 (above) onto Sch D, pg.
1, line 14 (long-term capital loss carryover)
Additional Topics for 2015 VITA Advanced
Exam – Out of Scope at Tax Site
1) Sale of Stock
2) Capital Loss Carryover
3) Retirement Income (the Simplified Method)
4) Retirement Income (Additional Tax on IRAs)
5) Cancellation of Debt
Use Handout: “Helpful Tips for Out of Scope Topics
on 2015 IRS Advanced Certification Exam”
*********
Additional Topics – Out of Scope at Tax Site
Retirement Income – The Simplified
Method
If the taxable amount (box 2a on Form 1099-R) is
not determined, you must use the Simplified Method
to calculate the taxable portion of the retirement
distribution for the tax year
Use the Simplified Method worksheet at the
bottom of the Form 1099-R in TaxWise
Additional Topics – Out of Scope at Tax Site
Retirement Income – The Simplified
Method
To complete the Simplified Method, you’ll need to
gather some information, some from the taxpayer,
some from the Form 1099-R
Additional Topics – Out of Scope at Tax Site
Retirement Income – The Simplified
Method
Line 1: Enter
the amount
from box 9b
of the 1099-R
Additional Topics – Out of Scope at Tax Site
Retirement Income – The Simplified
Method
Line 2: Choose the
age of the recipient
at the start date of
the retirement plan
(NOT the taxpayer’s
current age) AND
check the box
stating the annuity
started after
11/18/1996
Additional Topics – Out of Scope at Tax Site
Retirement Income – The Simplified
Method
Line 4: Enter the
number of months
payments were
received during the
tax year, starting
with the first month
payments were
received (e.g., enter
8 if payments
started May 1)
Additional Topics for 2015 VITA Advanced
Exam – Out of Scope at Tax Site
1) Sale of Stock
2) Capital Loss Carryover
3) Retirement Income (the Simplified Method)
4) Retirement Income (Additional Tax on IRAs)
5) Cancellation of Debt
Use Handout: “Helpful Tips for Out of Scope Topics
on 2015 IRS Advanced Certification Exam”
*********
Additional Topics – Out of Scope at Tax Site
Retirement Income – Additional Tax on
IRAs
If a taxpayer is required to pay an additional tax
on their IRA, other qualified retirement plan, etc., it
will appear on Form 1040, Pg 2, line 59
Additional Topics – Out of Scope at Tax Site
Retirement Income – Additional Tax on
IRAs
Taxpayers who make an early withdrawal from a
a retirement account may have an additional tax
penalty that will appear on this line
Indicated by Code 1 in box 7 of Form 1099-R
Additional Topics – Out of Scope at Tax Site
Retirement Income – Additional Tax on
IRAs
HOWEVER, depending on what the taxpayer used
the funds for, they may qualify for an exception to
the 10% additional tax on the early distribution
Note: early distributions from a 401(k) to pay for
household expenses due to unemployment do NOT
qualify
Additional Topics – Out of Scope at Tax Site
Retirement Income – Additional Tax on
IRAs
Exceptions to the 10% additional tax
• IRA distributions were made for higher education
expenses
• IRA distributions were made for the purchase of a first
home, up to $10,000
• Distributions were made due to total and permanent
disability
Additional Topics for 2015 VITA Advanced
Exam – Out of Scope at Tax Site
1) Sale of Stock
2) Capital Loss Carryover
3) Retirement Income (the Simplified Method)
4) Retirement Income (Additional Tax on IRAs)
5) Cancellation of Debt
Use Handout: “Helpful Tips for Out of Scope Topics
on 2015 IRS Advanced Certification Exam”
*********
Additional Topics – Out of Scope at Tax Site
Cancellation of Debt
Cancelled debt from a nonbusiness credit card is
reported on a Form 1099-C
Additional Topics – Out of Scope at Tax Site
Cancellation of Debt
Taxpayers who have canceled debt from a Form
1099-C who were solvent (the condition in which
assets are greater than liabilities) BEFORE the debt
was canceled will report it on Form 1040, line 21,
other income
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #1: Frodo Baggins
Review practice exercise #1 in the Helpful Tips…
handout and answer the following question
1.
Frodo qualifies for an exception to the 10% additional tax on
the early distribution from his IRA.
a. True
b. False
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
Review practice exercise #2 in the Helpful Tips…
On your own, in TaxWise:
• Enter the taxpayer information in the interview section
• Fill out Dependents Worksheet
• Complete ACA Pg. 1
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
Gather necessary information to complete the
Simplified Method (for 1099-R from District 12
Corporation)
• You must complete the Simplified Method because the
taxable amount (box 2a) is not determined
• First, enter the 1099-R as indicated on the Form in
TaxWise
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
Information Needed
• Cost in the plan at the start date: $14,500
• Age of recipient at the start date of the retirement
plan:
 Peeta was born on February 19, 1946
 He started receiving payments on April 1, 2015
 Therefore, his age at the start date was… 69 years
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
Information Needed
• Number of months payments were received this year:
 Since Peeta started receiving payments on April 1, 2015,
he received payments for 9 months this year
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
Follow along with your trainer and enter the
following into TaxWise:
• Finish Form 1099-R with Simplified Method
• Add additional Form 1099-R
• Enter interest, dividends, and sale of stock from Tax
Reporting Statement
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
Follow along with your trainer and enter the
following into TaxWise:
• Enter capital loss carryover from previous year
• Enter canceled debt from Form 1099-C
Answer the questions on the following slides once
complete Note: the “Helpful Tips...” packet has step-by-step
instructions and TaxWise screenshots for your reference
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
1.
What is the total taxable interest income show on line 8a of
Form 1040?
a. $15
b. $85
c. $125
d. $210
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
2.
How does the Code Q on Peeta’s Form 1099-R from Essex
Bank affect the return?
a. The entire $5,500 distribution is taxable
b. Half of the $5,500 distribution is taxable
c. There is a 10% additional tax on the distribution
d. The entire $5,500 distribution is not taxable
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
3.
What is the amount shown on Form 1040, Line 13 – Capital
Gain or Loss?
a. A gain of $957
b. A gain of $1,017
c. A gain of $1,407
d. A gain of $1,467
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
4.
How much of the $19,500 gross distribution reported on
$18,879
Form 1099-R is taxable this year? _____________
Additional Topics – Out of Scope at Tax Site
Helpful Tips For Out of Scope Topics…
Practice Exercise #2: Peeta and Katniss Everdeen
5.
Where is the canceled debt on Form 1099-C reported on the
Everdeen’s tax return?
a. On Form 1040, line 7 as wages
b. It is not reported on the return
c. On Schedule A as a miscellaneous deduction
d. On Form 1040, line 21 as other income
Additional Duties
Additional Duties
Quality Review
Volunteer Organization
Crowd Control
Appointment Confirmation
Paperwork
Quality Review
We must thoroughly quality review EVERY RETURN
(E-file and Paper)
Campus Fellows may assist Site Coordinators to
conduct Quality Reviews
USE YOUR CAMPUS FELLOW MANUAL FOR ALL
QUALITY REVIEWS!
Volunteer Organization
Make sure that everyone signs in (Campus Fellows:
set a good example!)
Place volunteers in stations
Partner volunteers in such a way that they are both
comfortable and competent
Keep students busy!
Enforce “Volunteer Dos and Don'ts”
Crowd Control
Make sure each taxpayer signs in at the door
Direct taxpayers to the Intake and Interview Forms
Place taxpayers with available volunteers
Appointment Confirmation
Talk to the Site Coordinator about assisting with day-before
appointment reminder calls
Call all appointments 24 hours before
• Identify Self and Organization (you may need to say “the tax
people”)
• Confirm appointment time (make a note if the taxpayer mentions
he/she might be late)
• Remind the taxpayer to bring Social Security Cards, W2s, and other
tax forms; if filing jointly, spouses both need to come in
Appointment Confirmation
Call taxpayers who do not show up for appointments to
reschedule
See script in your Campus Fellow Manual
Paperwork Requirements
Items for TAXPAYER (AND SPOUSE) to complete
DURING the return:
• INPUT pin # for Main Information Page in TaxWise
• Confirm “I authorize” selection on Federal Form 8879
• INPUT pin # on consent to use form (“Gen Use” in
TaxWise)
• INPUT pin # on consent to disclose form (“Gen
Disclose” in TaxWise)
Paperwork Requirements
Forms to print for an E-filed return:
• 1 copy of the entire return (including state) for taxpayer’s
records
Forms for taxpayer to complete/sign:
• Federal Form 8379
• AL Form 8453
Note: these signed forms are given back to taxpayers for
their records (we only keep the Intake/Interview form)
Paperwork Requirements
Forms to retain for our records:
• Completed Intake/Interview & Quality Review Sheet
• Complete ACA Supplement Form
Assisting the Site Coordinator
Always ask the Site Coordinator if there is anything
you can do to help her/him!
Practice Quality Review
Let’s Conduct a Quality Review!
 With a partner, complete a
thorough Quality Review of each
other’s Walter White tax returns.
 Discuss any issues you come across
with your “taxpayer” (partner)
and ask any relevant questions.
Campus Fellow Handbook
Campus Fellow Handbook
Tab 1: Site Information
• Remember: Each tax site has a unique Client ID! Make
sure you use the correct Client ID!
• Important phone numbers, Local IRS and SSA Offices
Always talk to your Site Coordinator if you have questions BEFORE calling one of these
numbers with a question or referring your taxpayer to any of these numbers.
Campus Fellow Handbook
Tab 2: Site Organization and Setup
• Site Coordinator’s Daily Checklist: Ask your site
coordinator how you can assist them!
• Day-Before Call Script
Campus Fellow Handbook
Tab 3: Volunteer Information
• Volunteer FAQ
• Volunteer Etiquette Guide
• What Issues Can I Handle? (Campus Fellows are
Intermediate)
• Scope of Service Chart
• Form 13614-C Intake/Interview Job Aid for Volunteers
Read through this before coming to the tax site!
Campus Fellow Handbook
Tab 4: Finishing a Return
• Process for Conducting a Thorough Quality Review
 USE THIS EVERY TIME you do a Quality Review!!
• Consent to Use and Disclose Forms (Read through this
before you come to the tax site)
• Paper Returns
• Amended Returns
• Prior Year Returns
• Federal Payment Options
Campus Fellow Handbook
Tab 5: Preparing a Return
• Form 1040
• Form AL-40
 Alabama “Pub 4012”
• Various Income Forms
 Important information re: codes on 1099-Rs, W-2s
•
•
•
•
Itemized Deductions
1098-T Tuition Statement Information
Affordable Care Act Provisions
Additional forms you may see
Campus Fellow Handbook
Tab 6: Alabama Exempt Defined Benefits Plans
• Lists defined benefits plans exempt from AL taxes
• Check this list first when trying to determine if a plan is
defined benefits
Campus Fellow Handbook
Tab 7: Campus Fellow Summary Chart
• Line by line instructions for entering taxpayer
information into TaxWise
Volunteer Standards of Conduct
Volunteer Standards of Conduct
Follow the Quality Site Requirements
Do not accept payment, solicit donations, or accept refund
payments for federal or state returns
Do not solicit business or use personal information from
taxpayers
Do not knowingly prepare a false return
Do not engage in criminal, infamous, dishonest, notoriously
disgraceful conduct
Treat all taxpayers in a professional, courteous manner
Quality Site Requirements
Do only what you are trained to do
Use the intake/interview form for every taxpayer
Ensure a quality review is conducted for every return
Use your reference materials to help prepare the
return
Undergo training and pass test to adhere to volunteer
standards of conduct
Do Not Accept Payment
Do not accept cash for services
We cannot solicit donations, or have a donation/tip
jar in the entry, waiting, or tax preparation areas
of the tax site
Refunds CANNOT be deposited into a volunteer’s
bank account on behalf of taxpayer’s who don’t
have bank accounts
Do Not Solicit Business or Use Personal
Knowledge Gained About a Taxpayer
As a volunteer, you must keep taxpayer’s personal
information confidential
This means you cannot use your knowledge about a
taxpayer to engage in financial transactions
This also means you cannot ask a taxpayer on a
date if you notice they are single
Do Not Knowingly Prepare False Return
An ethical violation is a knowing breach of any of the
volunteer standards of conduct
Correctly apply tax law to the taxpayer’s situation—
trust in the VITA program is broken when ethical
standards aren’t followed
NOTE: If you make an accidental mistake, you are
protected as a volunteer by the VITA program—and
ultimately, taxpayers are responsible for the
information entered on their return
Do Not Engage in Negative Conduct
Volunteers performing egregious activities may be
barred from the VITA program
Consequences may also include:
• Criminal investigation
• Discontinuing IRS support for tax site
• Revoking sponsoring organization’s grant funds
• Deactivating IRS EFIN (site identification number)
Treat All Taxpayers With Courtesy
All volunteers are expected to conduct themselves
professionally in a courteous, businesslike, and diplomatic
manner
Taxpayers are often under a lot of stress and may wait
extended periods for assistance, and volunteers may also
experience stress due to the volume of taxpayers needing
service
This situation can make patience run short—It is important to
remain calm and create a peaceful and friendly
atmosphere!
Taxpayer Civil Rights
Discrimination against taxpayers on the basis of
race, color, national origin, disability, sex, age, or
sexual orientation is strictly prohibited
Reporting Questionable Activity
Violations that raise substantial questions about
another volunteer’s honesty, trustworthiness, or
fitness as a tax preparer should be reported
Taxpayers and tax preparers who violate tax law
are subject to civil and criminal penalties
You can report a violation by speaking to your site
coordinator or emailing WI.Voltax@irs.gov directly
Volunteer Standards of Conduct Test
We will take the test after you have completed all
volunteer paperwork (next section)
Volunteer Paperwork & Certification
Volunteer Paperwork
Complete Volunteer Paperwork by logging into your account on
volunteers.generationforchange.org. It’s very important you
complete this BEFORE you leave today.
• Click Review Volunteer Profile and add information to your profile.
Click Submit.
• Complete Acknowledgment of Risk and Release From Liability Form
• Complete Media and Publicity Release Form
• Complete Confidentiality Form
• Complete IRS Volunteer Agreement
• Complete Availability Form
Intake/Interview & Quality Review Test &
Volunteer Standards of Conduct Test
ALL volunteers must complete and pass the 2015
Intake/Interview & Quality Review Test & the 2015
Volunteer Standards of Conduct Test with a score of 80% on
each
• Note: Most took the I/I & QR test in the fall—if you did NOT, complete
this now (you may download Fall PPT from the website to help you
complete the test)
Please login to your account on
volunteers.generationforchange.org and follow the links in
your profile to take these two tests
You may use all your training materials to complete the short
tests!
Congratulations!
This completes your SaveFirst Campus Fellow Refresher
Training
Next steps:
• Complete IRS Advanced Certification Exam (with score of
80% or higher)
• Serve families at tax sites!
• Reminder: You MUST bring your photo ID and show it to
your site coordinator when you arrive at a tax site
IRS Advanced Certification
You must complete the 2015 IRS Advanced
Certification exam with a score of 80% or higher to
complete your certification
Take the exam by logging in to your account on
volunteers.generationforchange.org and following the
link in your profile
Complete:
• On your own
• At a testing session hosted by Impact staff member
Testing Session
If you attend a testing session, please bring a
printout of the 2015 IRS Advanced Certification
Exam
Upcoming testing sessions:
• Trainer – insert upcoming sessions here