1. TAX-AIDE Federal Tax Law Changes—2014 Instructor Workshop - 20141

2. TAX-AIDE Expired Provisions (at least for now) ● Discharge of indebtedness on principle residence excluded from gross income ● Qualified Charitable Distribution ● Adjustment up to $250 for teacher classroom expenses ● Deduction for qualified tuition and related expenses Instructor Workshop - 20142

3. TAX-AIDE Expired Provisions Continued ● Deduction for state and local general sales taxes ● Deduction for mortgage insurance premiums ● Nonbusiness energy property credit Instructor Workshop - 20143

4. TAX-AIDE Tax Rates ● Current tax rates retained plus a new tax rate of 39.6% for taxable income over $400,000 (single) & $450,000 (MFJ) ● 2% reduction in Social Security payroll tax rates expire. Withholding amounts adjusted accordingly Instructor Workshop - 20144

5. TAX-AIDE Capital Gains Taxes ● 0% LTCG rate for those in 10% and 15% tax brackets ● 15% LTCG rate for those in 25% to 35% tax brackets ● 20% LTCG rate for those in 39.6% tax bracket Instructor Workshop - 20145

6. TAX-AIDE Dividend Taxes ● 0% for those in 10% and 15% brackets ● 15% for those in 25% through 35% brackets ● 20% for those in 39.6% bracket ● Nonqualified dividends will continue to be taxed at ordinary income tax rates Instructor Workshop - 20146

7. TAX-AIDE Alternate Minimum Tax ● Raised to $50,600 (single) ● $78,750 (MFJ) Instructor Workshop - 20147

8. TAX-AIDE Standard Deduction/Exemption Increases ● $12,400 (from $12,200) – MFJ or QW ● $9,100 (from $8,950) – HH ● $6,200 (from $6,100) – Single or MFS ● Exemptions increased to $3,950 (from $3,900) Instructor Workshop - 20148

9. TAX-AIDE EIC Maximum Credits/Range Change ● $6,143 (was $6,044) – three or more qualifying children ● $5,460 (was $5,372)– two qualifying children ● $3,305 (was $3,250)– one qualifying child ● $497 – (was $487) no qualifying child ● $46,997 ($52,427 MFJ) 3 qualifying children ● $43,756 ($49,186 MFJ) 2 qualifying children ● $38,511 ($43,941 MFJ) 1 qualifying child ● $14,590 ($20,020 MFJ) no qualifying child Instructor Workshop - 20149

10. TAX-AIDE Standard Mileage Rate ● 56 cents (was 56.6) per mile – business miles ● 23.5 (was 24) cents per mile – medical miles ● 14 cents per mile (no change) – charitable miles Instructor Workshop - 201410

11. TAX-AIDE Deductible Long-Term Care Premium Limits ● Qualified long-term care premiums includible as medical expense on Sch A $370 (was $360) – Age 40 or under $680 (was $680) – Age 41 to 50 $1,400 (was $1,360) – Age 51 to 60 $3,720 (was $3,640)– Age 61 to 70 $4,660 (was $4,550) – Age 71 and over Instructor Workshop - 201411

12. TAX-AIDE Unreimbursed Medical and Dental Expense Limitation ● NEW LAST YEAR – Taxpayers can deduct only the amount of unreimbursed medical and dental expenses that exceeds 10% of AGI. ● If 65 or older the threshold is 7.5% Instructor Workshop - 201412

13. TAX-AIDE Defense of Marriage Act (DOMA) ● AARP Tax-Aide will be required to prepare MFJ Federal tax returns for same sex married couples married in a state that recognizes same sex marriage. ● Ask in what state they were married Instructor Workshop - 201413

14. TAX-AIDE States that recognize Same Sex Marriage ● Thirty-five states and the District of Columbia have legalized gay marriage: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming. Instructor Workshop - 201414

15. TAX-AIDE Indian Nations that recognize Same Sex Marriage Instructor Workshop - 201415 1 Blackfeet Tribe 2 Cheyenne and Arapaho Tribes 3 Confederated Tribes of the Colville Reservation 4 Coquille Tribe 5 Fort McDermitt Paiute and Shoshone Tribes of the Fort McDermitt Indian Reservation 6 Fort McDowell Yavapai Nation 7 Iipay Nation of Santa Ysabel 8 Leech Lake Band of Ojibwe 9 Little Traverse Bay Bands of Odawa Indians 10 Mashantucket Pequot 11 Pokagon Band of Potawatomi Indians 12 The Puyallup Tribe of Indians 13 Salt River Pima-Maricopa Indian Community 14 Suquamish Tribe 15 Wind River Indian Reservation

16. TAX-AIDE Defense Of Marriage Act - AZ ● AZ will recognize same sex marriages beginning in 2014. ● Prior year same sex marriage returns will not be prepared. Instructor Workshop - 201416

17. TAX-AIDE Identity Theft ● Someone uses another's information, such as name, identifying number, or credit card number, without permission, to commit fraud or other crimes. ● Victims of identity theft are victimized mostly through no fault of their own NTTC Training – TY 201417

18. TAX-AIDE Identity Theft ● IRS sends notices to taxpayers identified as victims (or potential victims) ● Notice provides Identity Protection PIN victim needs when filing his or her 2014 tax return NTTC Training – TY 201418 Pub 4491, pg 8

19. TAX-AIDE Identity Theft ● Ask taxpayer if s/he contacted IRS regarding identity theft or if IRS sent notice of potential identity theft NTTC Training – TY 201419

20. TAX-AIDE Identity Theft (cont) ● Enter IP PIN on TaxWise Main Information Sheet in Identity Protection PIN section near bottom Note: e-file return will be rejected if IRS issued PIN not included NTTC Training – TY 201420

21. TAX-AIDE Identity Theft (cont) ● If taxpayer received IP PIN but lost it, have taxpayer call ID Theft Toll-free Hotline: 800-908-4490 ● If hotline provides new IP PIN – e-file ● If not – create paper return and advise taxpayer to follow hotline instructions NTTC Training – TY 201421

22. TAX-AIDE Identity Theft ● If e-file rejected with indication that tax return for primary or secondary social security numbers has already been filed, give taxpayer: 1. Paper copy of return to mail 2. Letter with instructions 3. Form 14039 – Identity Theft Affidavit NTTC Training – TY 201422

23. TAX-AIDE NTTC Training – TY 201423

24. TAX-AIDE Form 14039 NTTC Training – TY 201424

25. TAX-AIDE Recommendation… E-file everyone for whom return is prepared ● From taxpayer’s perspective Identify identity theft Potentially prevent identity theft Provide documentation of tax status ● From IRS perspective Incremental “cost” of e-file is low Cost of dealing with identity theft is high ● From AARP perspective Better tracks activity Creates IRS record of return if questions arise later NTTC Training – TY 201425

26. TAX-AIDE QUESTIONS/COMMENTS? Instructor Workshop - 201426