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Don Priebe - Dec 2010In-Scope1 AARP/TCE Program and Scope What is the mission of AARP/TCE? * Why are we concerned about scope? * What returns are in scope?

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Presentation on theme: "Don Priebe - Dec 2010In-Scope1 AARP/TCE Program and Scope What is the mission of AARP/TCE? * Why are we concerned about scope? * What returns are in scope?"— Presentation transcript:

1 Don Priebe - Dec 2010In-Scope1 AARP/TCE Program and Scope What is the mission of AARP/TCE? * Why are we concerned about scope? * What returns are in scope? Special Notes for Tax Year 2010 * Material in handouts These slides on (edited 12/22/10 for changes due to PL )

2 Don Priebe - Dec 2010In-Scope2 References Tax-Aide Training Guide Scope Poster C2467 (1010) IRS Pub 4491 (TCE Textbook) IRS Pub 4012 (TCE Resource Guide)

3 Don Priebe - Dec 2010In-Scope3 Scope Poster C2467

4 Don Priebe - Dec 2010In-Scope4 Policy of the AARP Program Counselors must only deal with tax-related topics on which they have received IRS or AARP Tax-Aide training and certification. Counselors must refer taxpayers with complicated or complex tax returns, which involve matters outside the scope of their training, to professional tax preparers or to the IRS. No specific paid preparer or business can be named Counselors may deny service if they feel that the person is providing misleading tax information or refer service if the Counselor does not feel qualified on a particular tax law issue(s).

5 Don Priebe - Dec 2010In-Scope5 What is in scope?? The AARP/TCE training covers most of the commonly used individual income tax forms. It covers only simple business ventures. It does not cover rentals. It does not cover complex investments.

6 Don Priebe - Dec 2010In-Scope6 Individual Returns Only Includes 1040, 1040EZ, 1040A Does not include 1040NR Include 1040-X No non-individual returns 1041 Estates and Trust 1120 Corporate 1065 Partnership 990 Exempt Organization

7 Don Priebe - Dec 2010In-Scope7 Pub 4012 In-Scope Chart The format of the chart has changed You are qualified for A, B and C Lines marked as in-scope may not be in-scope for all cases

8 Don Priebe - Dec 2010In-Scope8 In Scope Income Items Wages Dividends and Interest * Taxable refunds Alimony received Simple businesses * Simple capital gain/loss * * details to follow

9 Don Priebe - Dec 2010In-Scope9 In Scope Income Items (continued) Sale of business property (4797) out of scope Pensions / IRA distributions * Rents and Royalties mostly out of scope * Farm Income out of scope Unemployment Social Security Some other income * * Details to follow

10 Don Priebe - Dec 2010In-Scope10 Interest and Dividends Reported on 1099-INT or 1099-DIV Reported on K-1 or equivalent Taxable, tax-exempt, Fed/NY split Foreign taxes paid (but no 1116)

11 Don Priebe - Dec 2010In-Scope11 Business Income Only simple businesses that could be reported on a Schedule C-EZ if the expense limit on a C-EZ were $10,000 Shows a net profit Less than $10,000 in expenses No inventory No depreciation No office in home No employees

12 Don Priebe - Dec 2010In-Scope12 Capital Gains and Losses Mutual fund CG distributions Investment trades with basis information Capital gains and losses from K-1s Sale of principle residence Cancellation of debt on principle residence (only with special certification) No straddles, mark-to-market, installment sales, etc. No sale of assets inherited in 2010

13 Don Priebe - Dec 2010In-Scope13 IRA and Pension Normal IRA and pension distributions, including partially taxable distributions IRA rollovers Premature distributions with and without penalty Charitable donation of IRA funds Form 8606 (Part I only) Form 5329 (Part I only)

14 Don Priebe - Dec 2010In-Scope14 Rents and Royalties The only thing in scope is rents and royalties received and documented on a 1099-Misc or a K-1, with no expenses. The more common real property rentals with depreciation and/or other expenses are still out of scope.

15 Don Priebe - Dec 2010In-Scope15 In Scope Other Income Gambling winnings (with or without withholding) Jury duty, election pay Contests, prizes Cancellation of credit card debt (only with special certification)

16 Don Priebe - Dec 2010In-Scope In Scope Adjustment Items Educator expense HSA deductions (only with special certification) SE tax Penalty on early CD withdrawal Alimony paid IRA deduction (including 8606 Part I) Student loan interest Tuition and fees deduction

17 Don Priebe - Dec 2010In-Scope17 In Scope Standard Deduction Regular Standard Deduction Standard deduction of dependents Increase in standard deduction due to age and/or blindness Increase in standard deduction due to real estate taxes and/or new car purchase (Schedule L)

18 Don Priebe - Dec 2010In-Scope18 In Scope Itemized Deductions Medical expense including NY long term care Taxes (including optional sales taxes) Mortgage interest, points, PMI Charity cash Charity non-cash including Form 8283 Part I

19 Don Priebe - Dec 2010In-Scope19 Itemized Deductions (continued) Casualty and Theft out of scope Employee expenses (no 2106 allowed) Tax preparation fees Investment expenses Gambling losses

20 Don Priebe - Dec 2010In-Scope20 Tax Calculation Tax table in scope Capital gains / qualified dividends worksheet in scope Alternative Minimum Tax out of scope Kiddie tax (8814/8615) out of scope

21 Don Priebe - Dec 2010In-Scope21 In Scope Tax Credits Foreign Tax Credit (if no 1116 required) Child Care Credit Credit for Elderly Education Credit Retirement Savings Credit Child Tax Credit Residential Energy Credit (Part 1 only) Other Tax Credits out of scope

22 Don Priebe - Dec 2010In-Scope22 Other In Scope Taxes SE Tax (short form) Tax on tips (4137) Early distribution penalty including form 5329 Part I only Repayment of Advance EIC and FTHB credit Household employment taxes out of scope Unwithheld FICA/Medicare commonly done

23 Don Priebe - Dec 2010In-Scope23 In Scope Payments Withheld and estimated tax payments Making Work Pay Schedule M EIC Additional child tax credit Refundable education credit First time homebuyer credit Excess social security

24 Don Priebe - Dec 2010In-Scope24 TY 2010 Special Notes Roth conversions should be popular this year, but are out-of-scope (form 8606 Part I only) FTHB credit is in-scope even though the 5404 is not explicitly on the forms list COD and HSA both require additional special on-line certification Sale of property inherited in 2010 is out-of- scope

25 Don Priebe - Dec 2010In-Scope25 Remember You are completely authorized as a volunteer preparer to NOT prepare a return. Some individuals may attempt to defraud the government by filing false tax returns. If you have any question at all about the validity of the information provided by a taxpayer or are uncomfortable with a taxpayer situation, discuss your concern with your site coordinator or other individual in charge of the site. Together, you can make the decision to diplomatically explain the confusion or concern, if possible, or simply refer the taxpayer to a paid tax preparer

26 Don Priebe - Dec 2010In-Scope26 And lastly, If you dont know how to do it... Its out of scope If you have to guess... Its out of scope If its not right, but you think you can get away with it... Its out of scope And if its out of scope... Dont do it.

27 Don Priebe - Dec 2010In-Scope27 Additional Material Detailed information from previous years

28 Don Priebe - Dec 2010In-Scope28 Why are we here? Clients Served Types of Service Types of Tax Returns Prepared References AARP Policy Manual v4.0 ( ) IRS Pub 4491/4555 (TCE Textbook) for TY 2009 IRS Pub 4012 TCE Resource Guide) for TY 2009

29 Don Priebe - Dec 2010In-Scope29 AARP/TCE Mission The programs mission is to provide high quality free income tax assistance and tax form preparation to low- and moderate- income taxpayers, with special attention to those age 60 and older.

30 Don Priebe - Dec 2010In-Scope30 Standard Service Standard Service (during the standard filing season) is provided at sites to low- and middle-income taxpayers with special attention given to those age 60 and older. Services are provided at sites that are available to the public as well as targeted sites for selected populations such as nursing homes, retirement centers, and VA hospitals.

31 Don Priebe - Dec 2010In-Scope31 Shut-in Service Shut-in Visits are provided by appointment as needed to homebound taxpayers age 60 or older. Two persons must attend each home visit. A maximum of 30 miles per round trip will be reimbursed for travel to provide shut-in services.

32 Don Priebe - Dec 2010In-Scope32 State Service Non-Federal Service may be provided as long as priority is given to the target population, and no additional cost is incurred. We prepare NY returns corresponding to in-scope federal returns.

33 Don Priebe - Dec 2010In-Scope33 Why are we concerned about scope? Assure that accurate returns are prepared for our clients by limiting our assistance to area in which we are properly trained Avoid liability for mistakes in areas in which we are not trained

34 Don Priebe - Dec 2010In-Scope34 Volunteer Protection Act of 1997, PL Exempts a volunteer of a nonprofit organization or governmental entity from liability for harm caused by an act or omission of the volunteer on behalf of such organization or entity if: the volunteer was acting within the scope of his or her responsibilities at the time; the volunteer was properly licensed or otherwise authorized for the activities or practice in the state in which the harm occurred; the harm was not caused by willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed; the harm was not caused by the volunteer operating a motor vehicle, vessel, aircraft, or other vehicle for which the state requires the operator or owner to possess an operators license or maintain insurance.

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