campus fellow refresher training. training outline 1) basic level updates 2) state tax refund 3)...

Campus Fellow Refresher Training

Training Outline

1) Basic Level Updates2) State Tax Refund3) Business Income4) Retirement Income5) Adjustments to Income6) Itemized Deductions

Training Outline

7) Miscellaneous Nonrefundable Credits8) Affordable Care Act Tax Provisions9) Out of Scope Topics10) Additional Duties11) Practice Quality Reviews

Training Outline

12) Campus Fellow Handbook13) Volunteer Standards of Conduct &

Test14) 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 $6,300Single or Head of Household $1,550

Married Taxpayers $1,250

Additional Amounts for Taxpayers who are 65+ or Blind

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 CreditFor 2015, the amount of earned income required has

increasedTo 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 Married Filing Jointly) with three or more

qualifying children • $44,454 ($49,974 if Married Filing Jointly) with two qualifying

children • $39,131 ($44,651 if Married Filing Jointly) with one qualifying

child • $14,820 ($20,330 if 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

http://twonline.taxwise.com/

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/Self-Employment

Income

Form 1099-MISC

Form 1099-MISC: Other Income

Reported in box 3Other 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 7Nonemployee 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


VITA Filing ConditionsLess than $25,000 (*new* as of 2016) of business expenses

Cash method of accountingNo inventoryDoes not want to depreciate assetsMust report a profit— no net loss!No employees

Business/Self-Employment Income:

Schedule C or C-EZSchedule 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 businessLess 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:

AdvertisingBusiness Miles (at federal mileage rate)Commission and feesInsurance (property, malpractice)Interest on operating loansLegal and professional fees


Office suppliesRental fees for cars, trucks, vans,

machinery (leases less than 30 days only)Repairs and maintenanceCosts for general operating supplies

(NOT associated with cost of goods sold – inventory is out of scope)


Taxes and licensesTravel/meals & entertainmentUtilities (for business use only, no

personal expenses)


Open up Walter White in TaxWise• Enter Business/Self-Employment on Line 12 using Sch C or Sch C-EZ

Retirement Income

Retirement

Income

Defined Benefit

Retirement Plans

Defined Contribution Retirement

Plans

Individual Retirement

Plans

Employer Funded

Employer

Sponsored

Taxpayer Funded

Pensions

Civil Service

Annuities

401(k)

403(b)Annuiti

es

IRA

Roth IRA

Defined Contribution Retirement

PlansIndividual

Retirement Plans

Defined Benefit

Retirement Plans

Funded by the employer Monthly set amount based on salary history,

years of service Employee pays taxes on payments received Employer-sponsored, employee contributes

portion of gross salary pre-tax Offers benefits by allowing employee to defer

taxes 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:

TraditionalRoth: Usually Out of Scope (in scope under certain conditions)SIMPLE: Out of Scope!SEP: Out of Scope!

Retirement FormsRetirement 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 7Distribution Code(s) identify the type of

distribution receivedOnly certain distribution types are in

scope for VITA


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 distributionSee the Publication 4012, Income Tab for a full list of box 7 distribution codes (and which are in scope)


❒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 9bFor 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 IncomeWhy 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 IncomeCode 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)

Adjustments

Adjusted Gross

Income

Adjustments to IncomeAdjustments 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

Exemptions

Deductions(Standard or

Itemized)

Adjusted Gross

Income

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 DeductionsA 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 ExpensesCharitable ContributionsTaxesHome Mortgage InterestMiscellaneous 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


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


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:• Religious• Charitable• Educational• Scientific• Literary

Non-qualifying Organizations:• Business• Civic/Political • Social • Foreign • Homeowners’

Associations


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 milesIMPORTANT: The taxpayer must keep

receipts!


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

http://satruck.org/donation-value-guide


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.)


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 differAL state sales tax is 4%TaxWise will make an estimate of sales tax paid based on income

Home Mortgage InterestOnly taxpayers who are legally liable for

the debt can deduct the interestTaxpayers 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 duesUniforms (that cannot be worn in any

other circumstance)Professional books, journalsSmall 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 jobTax preparation fee from last yearSafe deposit boxGambling losses up to amount of winnings

Nondeductible Expenses

Burial or funeral expensesWedding expensesFees and licensesFines, penalties, traffic ticketsHome repairs and insuranceRentInsurance 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 creditResidential 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 institutionCAN 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 24See 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

underA 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


Individual Health Coverage• Health insurance purchased directly from an insurance company• Health insurance purchased through healthcare.gov • Health insurance through a student health plan

http://www.healthcare.gov/


Government-Sponsored Programs:• Medicare Part A coverage• Medicare Advantage plans• Most Medicaid coverage• Children’s Health Insurance Program (CHIP)

ALL Kids (Alabama)


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)


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


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


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 IncomeThe 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 requirementGross IncomeAll 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 ministryIncarcerationLived 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.govPTCs 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?

Step 2

Did the taxpayer receive Form 1095-A, Health Insurance Marketplace

Statement?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 SupplementTurn 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

TaxWisePart 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

http://www.impactamerica.com/taxprep

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 levelsThere 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 Site1) Sale of Stock2) Capital Loss Carryover3) 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”*********


Sale of StockSale of stock is reported as a capital

gain (or loss) on a Form 1099-B or a Tax Reporting Statement from the Broker


Sale of StockIn 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)


Sale of StockIn 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 IRSEnter 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


Sale of StockA 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


Sale of StockHolding 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


Capital Loss CarryoverIf 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


Capital Loss CarryoverCarryover 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


Capital Loss Carryover

Enter amounts from line 13 (above) onto Sch D, pg. 1, line 14 (long-term capital loss carryover)


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



To complete the Simplified Method, you’ll need to gather some information, some from the taxpayer, some from the Form 1099-R



Line 1: Enter the amount

from box 9b of the 1099-R



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



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)


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



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



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



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


Cancellation of DebtCancelled debt from a nonbusiness credit

card is reported on a Form 1099-C


Cancellation of DebtTaxpayers 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


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 question1. Frodo qualifies for an exception to the

10% additional tax on the early distribution from his IRA.

a. Trueb. False


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



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



Information Needed• Cost in the plan at the start date: • Age of recipient at the start date of the retirement plan:Peeta was born on February 19, 1946He started receiving payments on April 1, 2015Therefore, his age at the start date was…

$14,500

69 years



Information Needed• Number of months payments were received this year:Since Peeta started receiving payments on April 1, 2015, he received payments for this year

9 months



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



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



1. What is the total taxable interest income show on line 8a of Form 1040?

a. $15b. $85c. $125d. $210



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 taxableb. Half of the $5,500 distribution is

taxablec. There is a 10% additional tax on the

distributiond. The entire $5,500 distribution is not

taxable



3. What is the amount shown on Form 1040, Line 13 – Capital Gain or Loss?

a. A gain of $957b. A gain of $1,017c. A gain of $1,407d. A gain of $1,467



4. How much of the $19,500 gross distribution reported on Form 1099-R is taxable this year? _____________

$18,879



5. Where is the canceled debt on Form 1099-C reported on the Everdeen’s tax return?

a. On Form 1040, line 7 as wagesb. It is not reported on the returnc. On Schedule A as a miscellaneous

deductiond. On Form 1040, line 21 as other income

Additional Duties

Additional Duties

Quality ReviewVolunteer OrganizationCrowd ControlAppointment ConfirmationPaperwork

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 stationsPartner volunteers in such a way that they

are both comfortable and competentKeep 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)


Forms to print for an E-filed return:• 1 copy of the entire return (including state) for

taxpayer’s recordsForms 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)


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


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.


Tab 2: Site Organization and Setup• Site Coordinator’s Daily Checklist: Ask your site coordinator how you can assist them!• Day-Before Call Script


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 VolunteersRead through this before coming to the tax site!


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 HandbookTab 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


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


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 RequirementsDo not accept payment, solicit donations, or accept

refund payments for federal or state returnsDo not solicit business or use personal information

from taxpayersDo not knowingly prepare a false returnDo not engage in criminal, infamous, dishonest,

notoriously disgraceful conductTreat all taxpayers in a professional, courteous manner

Quality Site Requirements

Do only what you are trained to doUse the intake/interview form for every taxpayerEnsure a quality review is conducted for every

returnUse your reference materials to help prepare the

returnUndergo training and pass test to adhere to

volunteer standards of conduct

Do Not Accept Payment

Do not accept cash for servicesWe 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 TaxpayerAs 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 [email protected] directly

mailto:[email protected]

Volunteer Standards of Conduct Test

We will take the test after you have completed all volunteer paperwork (next section)

Volunteer Paperwork & Certification

Volunteer PaperworkComplete 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

http://volunteers.generationforchange.org/

Intake/Interview & Quality Review Test & Volunteer

Standards of Conduct TestALL 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 CertificationYou 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

campus fellow refresher training. training outline 1) basic level updates 2) state tax refund 3)...

Documents

state sales tax

state tax refund amountsch

state income taxessch

state income taxif

qualifying children

single married filing

income credittaxpayers

investment income