VITA Training Basic
Tax Year 2011
1
What Makes a Successful
Volunteer
•
Ask questions
•
Be on time
•
Call in advance if you cannot make it to your
volunteer shift
•
Be professional
•
Have fun!
2
The Intake Process
1.
Taxpayer fills out Intake Sheet (4012 p. 6
-
8)
2.
Volunteer completes Interview
3.
Check Identification
4.
Review Documents
5.
Prepare Return
6.
Quality Review
3
What’s new in 2011?
•
Retirement Savings Credit Income Levels Increased
•
Due Date: April 17
th
, 2012
•
Provisions that Expire for TY2011
o
Making Work Pay Credit
o
Computer technology and equipment used as educational expenses
o
Advance EIC
4
The Taxpayer Will Provide:
•
Tax
information
o
Forms
W
-
2, 1099, 1098
.
•
Social
security cards or ITIN
letters
•
Proof
of Identity
o
Valid
drivers license or other government issued picture
ID
5
Filing Status
6
Standard Deduction
•
Single / Married Separate
$5,800
•
Married Joint
$11,600
•
Head of Household
$8,500
7
Personal & Dependent Exemptions
•
Claim for Taxpayer and Spouse
•
If a dependent, cannot have dependents
•
A dependent who files their own return claims
zero exemptions
•
Qualifying child
•
Qualifying relative
•
$3,700 deducted per exemption
8
5 Dependency Tests
•
Household Test
•
Relationship Test
•
Gross Income Test
•
Support Test
•
Residency Test
9
10
ITINS and Dependents
•
The dependency tests for a qualifying relative or
qualifying child apply in the same way to
resident
aliens
•
A
child can be claimed as a dependent as long as
all the other rules for qualifying child or qualifying
relative are met
.
•
Parents with ITINS: Cannot claim the EIC. Can claim
dependents and Child Tax Credit
11
Qualifying Child of More than One
Taxpayer
•
Normally, one taxpayer claims all tax
benefits for the same child.
•
Tie
-
breaker p C
-
3
o
Parent
o
Parent who lived longer with child
o
Parent with higher AGI if same length of time
12
Qualifying Child or Relative?
•
Bobby lives with his mom Angela and mom’s
boyfriend Pete for the full year. Pete provides
support of the house and Angela doesn’t work.
•
Can Pete claim Bobby?
•
Is Bobby Pete’s qualifying child?
•
What if Angela worked?
13
Exercises
•
Joe, 65, lives with his son. Has a taxable
pension of $5,000. Can Joe’s son claim
him?
•
Robert, 35, is permanent disabled and
lives with his mom. He collects social
security which covers his living expenses.
Can his mom claim him?
14
Intake Sheet Page 2
15
Other Income
•
State Tax Refunds (Line 10)
–
for customers
who itemized in 2009 only!
•
Social Security Benefits (SSA
-
1099)
–
nontaxable if ½ SS + income < $25,000 Single
and $32,000 MFJ. (Line 20)
•
4491
-
W p. 280 if taking the test by hand.
•
Child support and welfare benefits (TANF)
are not taxable income.
16
Intake Sheet Page 2 Cont.
17
Adjustments to Income
•
Student Loan Interest
–
like interest income
may not be on a 1098
-
$2,500 maximum
amount (Line 33)
•
IRA Contribution
–
Up to $6,000 (Line 32)
•
Educator Adjustment ?
•
Alimony Paid (Line 31) but not Child Support
•
Jury Duty Pay Paid to Employer (Line 34)
•
If Schedule C income
–
(Line 27) deduct ½
of the self
-
employment tax
18
Itemized Deduction
•
Schedule A
•
Expenses greater than Standard Deduction.
•
Mortgage Interest and Insurance
•
Taxes
–
City State and Property
–
Paid in
2011
•
Charitable Contributions
•
Medical
Expenses
•
Gambling Losses
19
Earned Income Tax Credit
•
Must have earned income less than:
o
$
43,998 ($49,078 married filing jointly) with
3 or
more
qualifying
children
o
$
40,964 ($
46,044 married)
with
2 qualifying
children
o
$
36,052 ($41,132
married)
with
1 qualifying child
o
$
13,660 ($18,740
married)
with no
qualifying
children
?
•
Taxpayers Married Filing Separately do not
qualify
•
Taxpayers with ITINs are not eligible
–
Everyone must have SSNs.
20
EITC
•
Taxpayer with kids:
o
Kids must pass three tests (similar to QC test):
•
Relationship Test
•
Age Test
•
Residency Test
•
*No support test!
•
Taxpayers without kids:
o
Taxpayer or Spouse must be 25 to 64
o
Cannot be claimed on another’s return
o
Live in the US for more than 6 months
21
Disallowed EITC & Precertification
•
If disallowed, must complete an 8862 in
future years
•
Precertification letter
–
refer client to Legal
Aid
22
Test Question
•
Interview Notes
o
Natasha
Jefferson and Daniel Newport are both single and were
never married. They have
lived
together for
two
years.
o
They have one child, Hannah, age 4.
o
In 2011, Hannah lived with Natasha the entire year. Daniel lived
alone.
o
Natasha and Daniel provided all of Hannah’s support.
o
In 2011, Natasha worked and earned $18,000. Daniel worked and
earned $33,000.
o
Daniel pays the rent and utilities for Natasha's apartment. He is
providing over half the cost of maintaining the home for Natasha and
Hannah.
o
Daniel does not pay household expenses for any other family
member.
o
Natasha, Daniel, and Hannah are U.S. citizens and have valid social
security numbers.
Who can claim the Head of Household filing status?
Is Daniel
entitled to claim Hannah as a qualifying child for
EIC?
23
Test Question
•
Interview notes:
o
Lisa
Bolivar is 36 years old.
o
Oliver, who is single, is Lisa’s 45
-
year
-
old brother. He is
permanently and totally disabled.
o
Their parents are deceased.
o
Oliver lived with Lisa in her home all of 2011.
o
In
2011, Oliver received Form SSA
-
1099 showing social security
disability benefits of $11,000, his only income.
o
Oliver provided over half of his own support.
o
Lisa worked as a clerk and earned $26,500.
o
Lisa and Oliver are U.S. citizens and have valid social security
numbers.
Lisa
cannot claim Oliver as her dependent
because?
Is Lisa eligible for EIC?
24
Finishing Up Federal
•
Advanced EITC W
-
2 box 9 (Line 59)
o
By the way, eliminated for 2011!
•
Federal Withholding from Box 2 of W
-
2 (Line 61)
•
If Withholding too low, client should complete a W
-
4
at work.
•
Remember EFIN and Site ID
•
If e
-
filing remember the PIN and 8879
•
Direct Deposit
–
Routing number and account
number
•
Client may Split Refund this year
–
Form 8888.
Please Ask!
–
May Buy a Savings Bond
25
Finishing Federal
•
If our client owes the IRS then:
o
Pay by credit card for a fee
o
Form 9645
–
Installment payments
o
Electronic withdrawal from bank account
o
1040V payment voucher
–
print and mail.
o
Request a Full Pay Within 60 to 120 Days
agreement
o
File an Online Payment Agreement request at
www.irs.gov
Ohio 1040
•
If our client owes, please check your work!!
•
Children who are dependents may claim
themselves on the Ohio return
•
Joint Filing Credit
–
each spouse must make at least
$500.
•
Qualified Tuition Deduction up to $2,500
•
Retirement Income Credit
•
Over 65 credit
•
Child Care Credit
–
25% to 100% of federal
•
Under 10,000 no tax!
27
Local Taxes
•
CCA
–
use CCA form
•
RITA
–
include w2 and they will send a bill
•
Cleveland Heights, Parma Heights, Lakewood have
own tax authority
•
You pay tax to the city where you live and to the
city where you work.
•
If you work in the same city where you live then it is
easy.
•
Hardly
ever
see a refund if form is filled out correctly.
28
Quality Review
•
Return to be reviewed by a 2
nd
volunteer.
•
Complete Form 13614
-
C
29
Closeout the Return
•
Self
-
selecting PIN
–
5 digit number from the taxpayer
•
1 paper copy for taxpayer
Includes: Cover sheet, Federal 1040, State 1040,
local return & remaining tax documents
•
Did client sign intake?
•
Did client complete survey?
30
Volunteer Sign Up
Visit http://refundohio.org
to register as a volunteer and set your schedule.
31
Practice Labs
•
Online Practice Lab through IRS website.
http://www.irs.gov/app/vita/index.jsp
o
Password is
learntwo
o
User ID will be created for you to use with
practice problems.
32
Taking the Test
•
Complete the paper copy
–
Please complete the
Form 13615 in the booklet.
•
Online web site:
http://www.irs.gov/app/vita/index.jsp
•
Please printout 13615
•
New ethics portion of test
33
Certificates
•
Please send your
certificates
to
Shannon
Crandall,
Enterprise
•
Address: 3500 Lorain, #300, Cleveland, OH
44113
•
Fax: 216
-
631
-
0450
•
Email:
scrandall@enterprisecommunity.org
34
Next Steps for Trainer
•
Have the class start the basic test.
o
Give them about a half hour to get to the first scenario.
•
Do the scenario with the group on
Taxwise
.
o
Show them how to create a log in for the
Taxwise
Practice Lab.
o
Start the scenario as a group
•
Download the PDF of scenarios
•
Read through the info in the scenario
•
The social security numbers must end in the username number
•
Enter info into
Taxwise
in all caps
•
Boxes underlined in red: required fields, green: auto fills for you, black:
not required for now.
•
Talk about dependent fields and boxes to check for credits
•
W2
o
Show the group what box to check to remove automatic
calculations.
•
Show the group how to add forms
•
Sch
B
o
Link interest statement
•
Answer the test questions as a group using the
information on
T
axwise
.
35
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-
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-
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-
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-
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-
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-
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-
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-
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-
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-
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-
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-
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