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CAP RIVERSIDE Volunteer Income Tax Assistance Program (VITA)

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Presentation on theme: "CAP RIVERSIDE Volunteer Income Tax Assistance Program (VITA)"— Presentation transcript:

1 CAP RIVERSIDE Volunteer Income Tax Assistance Program (VITA)

2 Quick Icebreaker Turn to the person to the right Introduce yourself Tell them one thing you want to gain out of this volunteer experience

3 CAP Staff Kareem Gongora, Program Manager – Judith Farnham, CSA (Administrative) – Linda Romano, CSA (Tax Prep) – Linda Clophia CSA (Site) –

4 Community Action? CAP Riverside? Community Action Agencies signed into effect via Lyndon B. Johnson –1964 Economic Opportunity Act “War on Poverty” –“..provides services, assistance, and other activities of sufficient scope and size to give promise of progress toward elimination of poverty or a causes of poverty through developing employment opportunities, improving human performance, motivation, and productivity, or bettering the conditions under which people live, learn, and work”. CAP Riverside –Founded in 1980 –Community Needs Assessment identifies agency target programs –CAP Riverside provides Utility Assistance, Weatherization, Disaster relief, Notary, Free Tax Preparation, Dispute/Conflict Resolution, Individual Development Accounts, and Youth Programs/Pre Apprenticeship.

5 What is VITA? EITC? Volunteer Income Tax Assistance Program, is a free alternative to tax preparation, which is operated by volunteers. Earned Income Tax Credit (EITC), a refundable tax credit for working families. –“The best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.” – Ronald Reagan

6 VITA/EITC History VITA Founded in 1971 by Gark Iskowitz at Cal State Northridge –Free tax preparation for basic returns by certified volunteers Earned Income Tax Credit incepted in 1975 –Largest federal funded means-tested cash assistance program in the United States. –CAP Riverside has been operating VITA program for 10 years.

7 How does VITA help? Santa Barbara HS Students East Bay

8 CAP Riverside VITA CAP Riverside has completed over 17,000 returns since 2005 to Riverside County taxpayers. Last year, 158 certified volunteers completed 3,230 returns, returning 4.2 million federal dollars to taxpayers, in which $1.9 million were EITC dollars. – $76.6 million EITC dollars went unclaimed EITC increases family wages up to 40%

9 Where Can YOU Help? Joining VITA or referring others who would be interested to the program – Committing to volunteer minimum 25 hours at one of our 19 locations throughout Riverside County from January-April – Training takes place in November, December, and January Must complete 1 General Training Session and 1 software class Educating family and friends on the EITC

10 What Do YOU Get? Why It Matters…? You will gain first hand knowledge of our tax code and learn how to prepare a tax return You will have a direct impact in the community you are volunteering in and with each household you help You are one of thousands of volunteers across the country doing this work You are helping bring back thousands of dollars into our local economy! CAP Riverside provides Certificates, References, and Letter of Recommendation.

11 What Kind of Support Will You Have? Materials that can be found at each volunteer station: o 4012 – Resource Guide (Spiral Bound) bring with you to the site every week!! o Pub. 17 – Reference Material o Form C – Intake/Interview Sheet Other resources: For VITA Volunteers: –VITA Hotline – (800) –TaxWise Hotline – (800) »Can find them on the back of 4012 »Do not give these numbers to taxpayers! For taxpayers’ use: –General IRS Tax Information – (800) –Where’s My Refund? – (800) or online at

12 What Returns Can You Prepare? In-Scope Chart in 4012 You can only prepare returns that are in scope for your certification level –To save time, screen all returns before getting to the tax preparation stage Use your Site Coordinator as a resource Can refer taxpayers to other sites AARP sites are certified at the advanced level DO NOT TRY TO PREPARE A RETURN THAT YOU ARE NOT CERTIFIED TO PREPARE – YOU ARE NOT DOING THE TAXPAYER ANY FAVORS IF YOU PREPARE A RETURN INCORRECTLY!

13 Site Roles Interview/Intake –Verifies taxpayer qualifies for VITA services. Tax preparer –Processes tax documents provided by taxpayer. Quality Reviewer –Assesses prepared return for errors and accuracy. Exit Interview –Final process, in which taxpayer receives prepared turn. Site Coordinator –Responsible for coordination of site level policies and procedures.

14 Volunteer Process Submit registration via website Complete Training and Certify to Advanced level by 1/24/13 Complete Live scan application and Schedule appointment –Perform prior to 1/24/13 Maintain communication, hours, and scheduling commitments To receive Presidential Volunteer Service Award –Group completes minimum 200 hours, each individual must complete 25 hours minimum –Community volunteers must complete 100 hours minimum VITA Recognition Ceremony (Early May)

15 Certification Classroom Instruction (November-December) – 1 General Training Session – 1 Software Training Session Practice Lab (Internet Explorer) – – PASS: learntwo Link & Learn (Internet Explorer) – – Create Account and Store Information

16 Certification For Link & Learn, YOU register and maintain your password. Click Practice Lab link, and enter password: learntwo Register account and store information.


18 Volunteer Standards of Conduct 1.I will follow the Quality Site Requirements (QSR). a.Certification, Intake/Interview Process, Quality Review Process, Reference Materials, Volunteer Agreement, Timely Filing, Title VI “Civil Rights”, Site Identification Number, EFIN, Security Privacy and Confidentiality 2.I will not accept payment or solicit donations for federal or state tax return preparation. 3.I will not solicit business from taxpayers I assist or use the knowledge I gained about them (their information) for any direct or indirect personal benefit for me or any other specific individual. 4.I will not knowingly prepare false returns. 5.I will not engage in criminal, infamous, dishonest, notoriously disgraceful conduct, or any other conduct deemed to have a negative effect on the VITA/TCE Programs. 6.I will treat all taxpayers in a professional, courteous, and respectful manner.

19 Interview/Intake Form 13614C (Handout) – /SCOs/DOCs/ObjectFil es/13614c.pdf /SCOs/DOCs/ObjectFil es/13614c.pdf Interview – Disability Awareness – Remember: – Screen for eligibility and ensure filing status – Check identity – Check completed intake sheet for errors – Review supporting documents – Use probing questions – “Unsure” responses must be changed to “Yes” or “No” – Confirm the return is within program scope and your training – Conduct a quality review after return is prepared

20 Interview/Intake Best Practices –Make small talk –Ask how referred or taxes completed previous years –State qualification (certification) –Forewarn of personal questions Questions necessary to complete tax return and ensure accuracy –Ex: Are you married? Do your dependents reside with you 6 months out of the year? –Scan Intake Sheet Focus on potential disqualifications –Go over in detail and make corrections (RED)

21 Interview/Intake Out of Scope: –Over $52K income total, add W2’s They can use MyFreeTaxes up to $57k –Married Filing Separately –K1 or any Complex Business –Rental Income/Depreciation –Foreclosure of Home

22 Interview/Intake If we are unable to help (out of scope) or did not bring materials: –Explain why we are unable to help Keep in mind, to be compassionate and express regret for the situation. –Return all papers –Taxpayers may return once they have all documents (keep spot in line) –Use Due Diligence –Defer to Site Coordinator

23 Interview/Intake Identity Issues –Must prove who you are Need SSN or previous year return ITIN Driver License with birth date –No SS Card? Last year completed will suffice Go home and get it A letter from SSA with number on it Apply for ITIN Apply to SSA for a new card and return

24 Interview/Intake - Personal Exemptions Correct number of exemptions –Exemptions allows $3,900 exclusion of income from taxation for each one entitled –Personal and dependent exemptions Cannot claim an exemption for dependent if they have already been claimed!

25 Interview/Intake - Qualifications for Dependents Qualified Child Dependency Test 1.Ed & Sue have 2 children, ages 14 and 20. The older is at UCR full time, but lives at home during the summer and makes $4k. Which children are dependents? 2.Mary’s daughter is unemployed so she lives at home. She was a student taking 15 units for the first 5 months in 2009 and then dropped out. Can Mary claim Betty as a dependent?

26 Interview/Intake - Qualifications for Dependents Qualified Child Dependency Test 1.Christina is 29, permanently disabled, and lives with her parents. She gets $9k in SSD and $5k in gifts from grandpa, which covers all her support (except a bed). Can her parents claim her? 2.I had a baby in December, can I claim? 3.Victor and Maria have two girls, age 3 and 4. They came to US after first son was born in Columbia. Victor, Maria, and 4 year old have ITIN’s. 3 year had a SSN. Are any of the children dependents?

27 Interview/Intake - Qualifications for Dependents Qualified Relative Dependency Test 1.Jude and her son (11) live with her boyfriend Tim all year. He’s not the father, she does not have income, can Tim claim the child as a dependent? 2.Can Jude also be claimed as a dependent? 3.Jude and her son moved in with Tim on May 21 st, 2013, who can Tim Claim?

28 Interview/Intake - Qualifications for Dependents Personal and Spousal Exemption –Dependent children cannot claim a personal one for their own taxes Qualified Child –Students up to age 24 or disabled –Relative by blood or marriage –Must live with you over ½ year Qualified Relative –Real relatives do not have to live with you –Non-relatives do have to live with you all year

29 Interview/Intake – Standard/Itemized Deduction Standard Deduction Rates. – The applicable standard deduction rates for 2013 are $12,200 for married taxpayers filing jointly; $8,950 for head of household; $6,100 for individual taxpayers and $6,100 for married taxpayers filing separate. For purposes of the standard deduction, the amount under §63(c)(5) for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,000 OR ($350 + the individual’s earned income). The additional standard deduction amount for the aged or the blind is $1,200; that amount is increased to $1,500 if the taxpayer is single and not a surviving spouse. Itemized Deductions. – The limitations on itemized deductions (the Pease limitations) kick in at $300,000 for married taxpayers filing jointly, $275,000 for head of household, $250,000 for single taxpayers and $150,000 in the case of a married individual filing separately.

30 Interview/Intake – Filing Status Filing Status – – Head of Household – Married Filing Jointly – Married Filing Separately – Qualifying Widow(er) with Dependent Child – Single Filing Status

31 Interview/Intake – Filing Status Single On the last day of the year: – Not married – Legally separated or divorced, or – Widowed before first day of tax year, not remarried within the year Married Filing Jointly – This filing status generally the most beneficial – One return is filed covering both spouses – On the last day of the year: Married and live together Live apart but not legally separated or divorced Live together in recognized common law marriage Separated but divorce decree not final Widow(er) not remarried during the year

32 Interview/Intake – Filing Status Married Filing Separately – Analysis of living situation is critical: Marital status as of 12/31 Others living in the home and their relationship/dependency Who paid >50% cost of home upkeep If widow(er): date of death of spouse and if there are any dependents – Taxes are generally higher for this status Some credits unavailable, some reduced Head of Household – A taxpayer may qualify if he or she: Is unmarried or “considered unmarried” on last day of tax year, and Paid >50% cost of keeping up a home for the tax year, and Had a qualifying person living with them more than half the year (except for temporary absences)

33 Interview/Intake – Filing Status Important questions: – Who lives in house/apartment? – Months/years in each home? – Dependent relationship(s)? – Marital status as of December 31? Documents Needed (Place in Envelope): – License, Social Security Cards for all persons, Previous Year Return, All tax forms, and Blank Check for Direct Deposit

34 Interview/Intake – Filing Status Important questions: – Who lives in house/apartment? – Months/years in each home? – Dependent relationship(s)? – Marital status as of December 31? Documents Needed (Place in Envelope): – License, Social Security Cards for all persons, Previous Year Return, All tax forms, and Blank Check for Direct Deposit

35 Interview/Intake – Filing Status Filing Status Exercises: 1.Betty’s husband left her 3 years ago and hasn’t been heard of since. She has yet to divorce. She supports their 2 children, ages 8 and 5 in a home she rents. Her parents help with money for clothes and medical insurance for the children. Can she file as HOH? 2.Pedro is not married. He sends $10k a year to support his parents in Mexico. Pedro got them ITIN numbers from the IRS two years ago and claims them as dependent relatives. What status can Pedro use?

36 Training

37 Tax Prep - Review The Forms W Social License 1099-DIV

38 Tax Prep - Review The Forms 1099R Other Common Tax Forms: – Unemployment, Social Security 1098T W2G

39 Tax Prep - Beginning Logging into Taxwise Online –Desktop: Username/Password –Online: Site Client Number/Username/Password

40 Tax Prep - Beginning Inputting SSN –Go To Tax Forms (DO NOT USE INTERVIEW) Main Information Screen (ALL CAPITALS) –Inputting information where it is RED –No punctuation –Don’t forget S! –Biggest mistake seen on “Name Line 2. Use % for care of” (SKIP IT or Put Caretakers Name)

41 Tax Prep - Dependents Entering Dependents Who may be claimed as a dependent? Qualifying child Qualifying relative 1040 Pg. 1, link to Additional Dependents List from youngest to oldest Always mark EIC box

42 Tax Prep - Dependents Direct Deposit:

43 Tax Prep - Dependents Input accurate date Taxpayers select their own pins, that are unique from each year If Taxpayer has PIN, must be inputted or will be rejected Ensure the information is properly inputted If you look below you will see tax bracket as well as time spent in return.

44 Tax Prep - Linking To Form FOLLOWING THE BOXES – Click the field – Click the document with the link – New Forms and search for the form you need

45 Tax Prep - Income Move to 1040 Pg. 1 on Tree – Scroll to Line 7 Wages and Link to Applicable Form

46 Tax Prep - Income Taxable scholarships if 1098T shows scholarship bigger than billed amount (Room & Board) ONLY taxable if State refund exceeds state sales tax ONLY if you itemized prev. year Only if deductions reduced tax liability

47 Tax Prep - Income Must be after 1984 Must be part of divorce agreement IS NOT FOR CHILD SUPPORT Must be claimed as paid by another IRS will check with Ex

48 Tax Prep - Income Input W-2 as it is shown on the form

49 Tax Prep - Income (Interest) SCH B

50 Tax Prep - Income (Dividends)

51 Tax Prep – Income (SS, EDD) Link to Forms

52 Tax Prep – Income (SS, EDD) Social Security taxable if it exceeds $25k ($32 if MFJ), in which, overage is taxed not entire $25k. All unemployment taxed on FEDERAL – Withholding offered by state, but most taxpayers need the funds, therefore they don’t withhold! – CASDI is not taxable – Family Leave is taxable

53 Tax Prep – Income (SS, EDD)


55 Training

56 Tax Prep – Schedule A Utilizing Itemized Deductions

57 Tax Prep – Schedule A Income Tax or Sales Tax Sales Tax requires separate form

58 Tax Prep – Schedule A Medical Deduction Deductible only to extent they exceed 7.5% of AGI Medical expenses paid by you for self, spouse, and dependents Includes Insurance Premiums, Copays, Mileage Excludes Non prescription medicines

59 Tax Prep – Schedule A Utilizing Itemized Deductions Property Taxes Only Ad Velorum Automobile Registration Tax Only Ad Velorum

60 Tax Prep – Schedule A Mortgage Interest

61 Tax Prep – Schedule A Gifts to Charity: Only qualified organizations – Churches, United Way send receipts – Exclude Clubs, Politics, Candidates, Individuals or where you receive a benefit – Goodwill claims Cash or checks Property less than $250 All gifts should be documented Don’t be afraid to ask about more detail or to disallow

62 Tax Prep – Schedule A Miscellaneous Deductions: Must exceed 2% of AGI – Union dues – Uniforms – Tax preparation fees from previous year Gaming losses are not subject to 2% – Offset winnings – Must be documented – time, place, amount – No list, no inclusion

63 Tax Prep – Schedule C Business Expenses (add cash via scratchpad) Input “99999” for business code

64 Tax Prep – Schedule C Compensation not subject to SS wages Move out incentives Day Care subsidy Honorariums and Executor Fees Box 3 Always in box 7 Contract employees to avoid employment HR issues Some Stipends Remember use Schedule C 1099, and not one associated with 1040 Line 21

65 Tax Prep – Other Income Jury Duty if not returned by employer Prizes Awards Incentives Honorariums Executor Fees Move out Reimbursements 1099 MISC Box 3 Educator Expense Unreimbursed expenses Books, paper, equipment, used in class Must have receipts

66 Tax Prep – Other Income

67 Tax Prep – Gambling Winnings

68 Tax Prep – Child Tax Credit (CTC) (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer for which the taxpayer is allowed a deduction under section 151 an amount equal to $1, (b) Limitations(1) Limitation based on adjusted gross incomeThe amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term “modified adjusted gross income” means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or (2) Threshold amountFor purposes of paragraph (1), the term “threshold amount” means— (A) $110,000 in the case of a joint return, (B) $75,000 in the case of an individual who is not married, and (C) $55,000 in the case of a married individual filing a separate return.

69 Tax Prep – Earned Income Tax Credit EITC Table Requirements: – Earned income SS, EDD, Retirement, Lottery Winnings Doesn’t Apply

70 Tax Prep – Earned Income Tax Credit Watch out for trick questions, information is pre-populated from Main Information Screen

71 Tax Prep – Earned Income Tax Credit Read each question slowly or with the taxpayer. If you mark anything to the left, it automatically disqualifies!

72 Tax Prep – Earned Income Tax Credit Check each box Accordingly And remember To complete This form very Slowly!

73 Tax Prep – Earned Income Tax Credit

74 Test: 1.A taxpayer has interest income of $3,500. His job pays him $7,000 annually. He is 30, single, has a valid social security number and is not the qualifying child of anyone else, does he qualify? 2.Starting in February of the tax year, Sam has cared for Lisa in his home. She is the 10 year old daughter of his stepson who also lives with him and is unemployed. Does Lisa meet the EITC requirements for a qualifying child?

75 Tax Prep (Form 8863) – American Opportunity Credit Refundable tax credit for undergraduate college education expenses. This credit provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses. The tax credit is scheduled to have a limited life span: it will be available only for the years 2009 through 2017, unless Congress decides to extend the credit to other years. Details of the new American Opportunity Credit – The credit is worth up to $2,500 on the first $4,000 of qualifying educational expenses, which include course materials as well as tuition. The American Opportunity credit applies to all four years of undergraduate college education. The credit is gradually reduced (or "phased out") for income from $80,000 to $90,000 (or $160,000 to $180,00 for joint filers). The tax credit is not available for people with incomes above the phase out range. Up to 40% of the credit is refundable, meaning that it can generate a refund larger than the amount of payments you made. Calculating the American Opportunity Tax Credit Amount – The amount of the American Opportunity tax credit is:100% of the first $2,000 in qualifying education expenses, plus – 25% of the next $2,000 in qualifying expenses. – For a maximum credit of $2,500 based on $4,000 in qualifying expenses.Up to 40% of the American Opportunity credit is refundable. That means up to $1,000 of the American Opportunity credit can be refunded to you, even if your tax liability is zero. This makes the American Opportunity credit potentially more valuable than the Lifetime Learning credit, which is non- refundable. Qualifying for the American Opportunity Credit? – Individuals can claim the American Opportunity Credit for themselves or their dependents if the student is enrolled at least half- time in a college, university or other accredited post-secondary educational institution.dependents Available for the First Four Years of Post-Secondary Education – The American Opportunity Credit is available for the first four years of a student's post-secondary education, that is for the first four years of education after high school. The American Opportunity credit is not allowed if a student has already completed four years of college education in a previous year or if the student has already claimed the American opportunity credit four times on previously filed tax returns. What's a Qualifying Education Expense? – Qualifying educational expenses for the American Opportunity Credit are tuition and related course materials. By contrast, "qualifying expenses" are restricted solely to tuition for tuition and fees deduction or the Lifetime Learning credit. For the American Opportunity credit, other course materials such as books, lab supplies, software and other class materials can qualify for the tax credit.

76 Tax Prep – Lifetime Learning Credit The Lifetime Learning Credit is a tax credit for any person who takes college classes. It provides a tax credit of 20% of tuition expenses, with a maximum of $2,000 in tax credits on the first $10,000 of college tuition expenses. You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependents are enrolled at an eligible educational institution and you were responsible for paying college expenses. Unlike the American Opportunity credit, you need not be in the first four years of undergraduate classes. Even if you took only one class, you may take advantage of the Lifetime Learning Credit.American Opportunity credit Eligible Educational Institutions – All accredited colleges and universities are eligible educational institutions. Additionally, vocational schools and other post-secondary institutions are also eligible. Basically, if the institution is eligible to participate in federal student aid programs through the US Department of Education, then you may use tuition paid to the school for claiming the Lifetime Learning tax credit. Qualifying Expenses – Qualifying expenses include amounts paid for tuition and any required fees (such as registration and student body fees). Qualifying expenses do not include any of the following: books, supplies, equipment, room and board, insurance, student health fees, transportation, or living expenses. – You must be responsible for paying the college tuition and fees. You also need reduce your qualifying expenses when figuring your tax credit by the amount of financial assistance received from grants, scholarships, or reimbursements from your employer. You do not need to reduce your qualifying expenses, however, if you paid for college tuition using borrowed funds, including student loans, or by using gifts from family members.

77 Tax Prep – Am/Lifetime Credit Review each field And remember to always read the instructions!

78 Tax Prep – Am/Lifetime Credit Review each field And remember to always read the instructions!

79 Tax Prep – CALIFORNIA Most common issue seen is filling in the Deceased Taxpayer or Spouse Information. Follow the form.

80 Tax Prep – CALIFORNIA (W2) a Taxpayers with multiple Federal W2, will need to have multiple CA W2 This is completed by putting the cursor over the W2 and clicking the “+” sign. You will press this sign as many times as needed. You will then verify the amounts as shown above.

81 Tax Prep – CALIFORNIA (Non Refundable RENTERS CREDIT) Customer needs landlord info. or cannot claim

82 Training

83 Quality Reviewer Quality Review Example – Retrieve Return Verify all documents and information entered Run Diagnostics Create E-File Print Return

84 Quality Reviewer 1 32


86 Exit Interview Meet with taxpayer Taxpayer should verify all information – Social Security (ALL), Name Spelling, Address, etc. Review refund or amount owed with taxpayer – Instruct on what credits they’re receiving – Instruct on why they owe Failure to pay Federal Witholding (W9) Self Employment tax if they’re self-employed Taxpayer must sign 1040 PG 2 Return ALL documents to taxpayer Taxpayer complete online survey either at site or at home – Available on CAP Riverside webpage qspoaJW2IRj8mI/viewform qspoaJW2IRj8mI/viewform

87 Exit Interview -Financial Education Now that you’ve received your return, have you thought about savings? – Bank Accounts Savings – IDA (Individual Development Account) CAP Riverside Match Savings Program Workshops – Earn, Collect, $ave Pamphlet

88 Transmit Log into Taxwise and click Submit e-files

89 Transmit Click Select All and Press Continue 1 2

90 Site Coordinator or Assistant Site Preparation Answering Tax Questions Submitting timesheets weekly (Each Site Has Online Folder) Supplies request when needed

91 Final Recap Don’t prepare returns beyond your level Due Diligence W-2’s must match SSN (not ITIN) Driver License or Matricula as ID Don’t prepare fraudulent returns – Watch for fake SSN – Last Names are important – ITIN Used in lieu of Social Security number for filing taxes Must paper file to get one Confidentiality is a MUST

92 Final Recap Personal Exemption – Unless claimed as a dependent by another – Teens and college students Head of Household – Tricky, use 4012 Widow(er) with Dependent – 2 tax years after Enjoy the rewards of volunteering!

93 Questions

94 Reminders Certify/Live Scan by January 24 th, 2014 – Once certified, print three (3) Volunteer Agreement and sign Give one to Site Coordinator, Submit one to Program Manager via , keep one for yourself Software Training – Visit for training schedule You may sign-up for as many software trainings as necessary Site Coordinator Site Level Meeting – January 25 th, 2014 at various sites – Site Coordinator will be in contact

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