Tax Year 2011

mobdescriptiveSoftware and s/w Development

Oct 28, 2013 (3 years and 11 months ago)

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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