1. Basic B volunteer training Tax year 2014

2. Basic B training overview  Federal nonrefundable and refundable credits  NEW: Premium Tax Credit and related credit “reconciliation”  Exemptions to the ACA insurance coverage requirement  Other federal taxes and related tax issues  Financial services at the tax site

3. Affordable Care Act (ACA) and the 2014 tax return

4. ACA the Basics  The ACA created the Health Insurance Marketplace – Minnesota has it’s own marketplace, MNsure  MNsure marketplace is where Minnesotans find information about health insurance options, purchase health insurance and enroll in public health plans  Taxpayers must report whether he/she (and family) had insurance coverage for the year on their tax return

5. The tax return  A new tax credit, the Premium Tax Credit (PTC), is available to help eligible taxpayers pay for coverage  Taxpayers could elect to claim the PTC throughout the year to help pay monthly insurance premiums – Advanced Premium Tax Credit (APTC)  The ACA also includes the individual shared responsibility provision, which requires individuals to have health insurance coverage for their family  Form 8962, Premium Tax Credit (PTC), Form 8965, Health Coverage Exemptions, and Form 1095-A, Health Insurance Marketplace Statement

6. Line 46: excess advance premium tax credit  Must have purchased health insurance through MNsure marketplace  Advanced payments of the Premium Tax Credit to help taxpayer pay their 2014 monthly insurance premiums  Advanced payments were based on the estimated income the taxpayer entered on their MNsure application  Complete Form 8962 to “reconcile” their payment – comparing what they estimated their income would be and what their actual income was for 2014 – did they receive too much advanced payment  Must have Form 1095-A to complete the return

7. Line 61: health care, individual responsibility Taxpayer and each family member must have – A.Health coverage, B.Qualify for a health coverage exemption, or C.Make a shared responsibility payment (SRP) on their tax return

8. What you need to determine  Did everyone listed on the return have insurance coverage?  Yes, is the insurance coverage considered MEC and what months was the taxpayer (family) insurance in 2014  No, is the taxpayer (family member) required to file a return or eligible for an exemption from insurance coverage

9. Yes, the taxpayer (family) has health insurance  Is the health insurance considered minimum essential coverage (MEC)?  If the taxpayer (family) had MEC insurance coverage all year, check the “full coverage” box on line 61, click your heels and shout hooray!  If the coverage was not all year, complete Worksheet 8 in TaxWise

10. no, the taxpayer (family) did not have health insurance  Check the federal filing requirement threshold to determine whether the taxpayer is required to file a return  Determine whether the taxpayer (family) may qualify for an exemption from the penalty

11. Minimum essential coverage  Insurance through employer  Insurance purchased through private company  Insurance purchased through MNsure marketplace – must have Form 1095-A to complete the return  Student health plans  Government-sponsored

12. Exemptions to the penalty  Taxpayer (family) may be eligible for more than one exemption  Find the exemption that is least complicated  Undocumented taxpayers are exempt from the penalty (exemption code C)  Some exemptions require approval from the federal marketplace  Taxpayer can elect to take the penalty without claiming an exemption

13. Line 69: Net premium tax credit  Credit based on MAGI and family size  To be eligible must have purchased insurance through MNsure marketplace  Must have Form 1095-A from MNsure  If taxpayer elected to receive the APTC, then the portion used during the year will be deducted from the calculated PTC amount

14. 10 minute break

15. Topic 7: Nonrefundable Credits

16. Line 48: Foreign Tax Credit  Enter the amount shown in box 6 of 1099-DIV or 1099-INT directly on line 48  If required to use Form 1116 then it is out-of-scope

17. Line 49: child and dependent care credit  Max credit: $3,000 for 1 qualifying person, $6,000 for 2+qualifying persons  Cannot be married filing separately  Must have earned income  Expenses must be paid by the taxpayer to work or look for work  Form 2441

18. Qualifying person  Child under age 13 and claimed as an exemption  Person who is physically/mentally incapable of self-care and couldn’t be claimed as exemption because income was $3,950+  Spouse who is physically/mentally incapable of self-care

19. Qualifying expenses  Paid by the taxpayer (spouse) to work or look for work  Child in nursery school or pre-school for children below level of KG qualify for the credit  Overnight camp does not qualify  Day camp may qualify if the camp specializes in a particular activity such as computers or soccer

20. Qualifying provider  Payments cannot be made to the taxpayer’s (spouse) dependent  If payments are made to a taxpayer’s (spouse) child, he/she cannot be a dependent and must be age 19 or older by the end of the year  If the provider refuses to give EIN/TIN, the taxpayer can still claim the credit, see Pub 17, “provider refusal”

21. Line 50: Education credits  American opportunity credit, max credit $2,500 per student  Lifetime learning credit, max credit $2,000 per return  Cannot use both credits for the same student  Form 8863  These same rules apply to the tuition and fees deduction on line 34

22. Cannot claim the credit  Claimed as a dependent on another person’s tax return, such as the taxpayer’s parent  Filing status is married filing separately  Was a nonresident alien for any part of 2014 (nonresidents are out-of-scope)

23. Education documentation  Can be shown on Form 1098-T or annual statement from the institution or receipts for books and equipment  Reduce expenses by amounts received from scholarships and grants shown in box 5 of Form 1098-T  Use 1098-T Worksheet with every education credit determination, this must be sent to reviewer completed. It is located on the Document Center

24. American Opportunity Credit  40% of the credit may be refundable  Available for the first 4 years of post secondary education  Pursuing a degree or recognized educational credential  Enrolled at least half time  No felony drug convictions

25. Not eligible for the refundable American Opportunity credit 1.Taxpayer is (a) under age 18; or (b) age 18 and their earned income was less than ½ of their support; or (c) FT student over age 18 and under 24 and earned income was less than ½ of their support; AND 2.At least one of his/her parents was alive at the end of the year; AND 3.Taxpayer is not filing a joint return

26. Lifetime Learning Credit  Nonrefundable  Available for an unlimited number of years  Do not to be pursuing a degree  Can take one or more courses  Felony drug convictions are permitted

27. Expenses  Qualifies: tuition, required enrollment fees and course-related materials such as books, supplies and equipment  American opportunity credit: books, supplies and equipment do not have to be purchased from the school  Lifetime learning credit: books, supplies and equipment must be purchased from the school  Does not qualify: computer tech fees, student activity or athletic fees, insurance, room and board, transportation

28. Calculating expenses Use 1098-T worksheet on Document Center Scenario 1 Tuition $12,500 Course-related materials $650 Scholarships and Grants ($5,000) Eligible expenses for credit $8,150

29. Line 51: retirement savings credit  Taxpayers qualify if they made contributions to an eligible plan  Contributions to employer-sponsored plan are shown in box 12, Form W-2  Contributions to a traditional IRA or Roth IRA  Must be age 18 or older and cannot be a FT student  Form 8880

30. Line 52: Child Tax Credit Nonrefundable credit up to $1,000 per child Taxpayers not claiming the full amount may be eligible for the refundable Additional Child Tax Credit Must have a Qualifying Child, determined by info entered on TaxWise Main Information Sheet Form 8812

31. Line 53: Residential Energy Credits  Congress has extended this provision for tax year 2014 only  $500 lifetime limit for all years after 2005  Credit for homeowners who made energy saving improvements to their home  Cost of installation may qualify depending on the type of improvement  Expenses paid for with subsidized energy financing are not eligible for the credit

32. Topic 8: Other taxes

33.  Line 57: self-employment tax  Line 59: additional tax on IRAs, other qualified retirement plans – early distributions subject to 10% penalty  Line 60b: 1 st time homebuyer credit repayment  Line 61: health care, individual responsibility

34. 10 minute break

35. Topic 9: Payments

36.  Line 64: federal income tax withheld reported on W-2s and other income statements  Line 65: 2014 estimated tax payments and amount applied from 2013 return to 2014 taxes

37. Topic 10: Refundable credits

38. Line 66a: Earned Income Credit Part A – Rules for everyone  Must have valid social security number  Cannot file married filing separately  U.S. citizen or resident alien all year  Cannot file Form 2555 or 2555-EZ  No investment income $3,350+  Cannot be a qualifying person of another person

39. Line 66a: earned income credit Part B – Rules with a qualifying child  Meet rules for everyone in Part A  Have a qualifying child  Cannot be the qualifying child of another person  Qualifying child cannot be used by more than one person

40. Line 66a: Earned Income Credit Part C – Rules with no qualifying child  Meet rules for everyone in Part A  At least age 25 but under age 65 as of December 31  Cannot be the dependent of another person  Lived in the U.S. more than ½ the year  Cannot be the qualifying child of another person

41. Qualifying child tests AgeRelationshipResidence

42. Earnings not eligible for EIC  Income received for work while an inmate  Income received from work experience and community service programs for welfare recipients, generally reported in box 3 of Form 1099-MISC  Disability insurance payments reported in box 12 of Form W-2 with code J  Any nontaxable income received from someone for services performed  Unemployment compensation

43. EIC and ITIN Taxpayer with an SSN is claiming a child with an ITIN Taxpayer qualifies for EIC, but no EIC for child Taxpayer with an ITIN is claiming a child with an SSN No EIC for taxpayer or child Taxpayer with an SSN and spouse with an ITIN is claiming a child with an SSN No EIC for taxpayers or child Taxpayer with an SSN is claiming a child with an SSN and a child with an ITIN The child with the SSN qualifies the taxpayer for EIC, but the child with an ITIN does not

44. LINE 67: ADDITIONAL CHILD TAX CREDIT  A refundable credit is the unused portion of the child tax credit  Taxpayer with more than $3,000 of taxable earned income may be eligible regardless of the number of qualifying children  Taxpayer with 3+ children may be eligible regardless of income  FORM 8812

45.  Line 68: American Opportunity Credit  Line 69: Net Premium Tax Credit

46. Topic 11: Refund or tax owed

47. Line 76: refund amount There are 4 options… 1.Apply it to 2014 taxes 2.Direct deposit 3.Receive a paper check 4.Purchase U.S. savings bonds Taxpayers without direct deposit option should be offered prepaid debit card (CFR Card)

48. WE’RE MORE THAN TAXES. WE’RE ABOUT FINANCIAL CAPABILITY! PLEASE REFER TO THE SAVE SOME, SPEND SOME AND FIX SOME HANDOUT IN THE TRAINING MATERIAL.

49. Tri-CAP services offers Products you work with most closely:  Prepaid debit cards  Savings bonds  Credit Reports  Chex Systems  Financial Fitness

50. Your Role  You spend the most amount of time with each customer  You are the customer’s most trusted advisor THUS, YOU…. Open a CFR card for customers without direct deposit Reveal the expected refund amount Make the savings pitch with savings account or savings bonds Have customers fill out Credit Report and Chex Systems Sign up for a Financial Fitness Class at Tri-CAP Fill out savings pigs and enter to win CASH!!

51. Prepaid Card  Our goal is 100% direct deposit  Faster than a paper check (2-3 weeks) Safer and more secure—no missing checks Avoids high check cashing fees

52. Notice of Account Information To open a CFR Card refer to the Vic Net home page under CFR Debit Card select the site and follow the instructions. After a CFR Card has been accepted print the “customer copy form” on the VIC Net homepage under CFR Debit Card. Place customer account number and information in the fields, print and send to the review process. Customer will get this document back for their records. No Credit check is required to open this almost FREE account. See fee schedule for applicable fees in the document center under CFR Card.

54. Why a savings campaign?  Tax time can be the most savable moment  Saving is a priority for the majority of customers yet few do save at tax time  Want something that customers and volunteers can rally behind

55. 1.Customers save at least $50 of their federal refund –Enter into Tri-Cap drawing and… 2.Tri-CAP staff enters savers into promotion to have 100 chances to win $100 weekly prizes during tax season 3.Optional: customer can submit a photo on their own to be eligible for a contest to win $25,000 grand prize.

56. Have fun!  Help customers reach their savings goals  Encourage savings for a rainy day “I believe in the power of savings. Also, I found the goals and measuring the goals as a good motivator.” Volunteer

57. Series I U.S. Savings Bonds Bonds make great gifts - Can purchase up to two Series I U.S. savings bonds each tax season Bonds are easy – Can split federal tax refund by buying a bond. The rest can be directly deposited or mailed as a check. Use form 8888 to split Federal refund between savings, checking and savings bonds. Refer to the 8888 training guide on the document Center

58. Series I U.S. Savings Bonds Bonds are flexible - Purchase bonds starting at $50 in $25 increments up to $5,000 (ex. $50, $75, $100, etc.). Bonds are safe - An investment backed by the U.S. Treasury Department with very low risk of default. They never lose value. Purchase savings bonds regardless of credit or banking history.

59. Revealing the Refund “We’re almost done. Your return will go through quality review to check my work and the amount may change. Right now, it looks like you’ll be getting $X in tax refunds today! How much would you like to save?” Reveal the expected refund to prompt savings decision Write refunds (or amounts due) on preparer checklist Make the savings pitch to all customers receiving a refund

60. Create your savings pitch  Ask everyone receiving a refund if they would like to save  Frame the savings pitch as the default or norm  Keep it simple. For example: “Let’s get you entered to win 100 weekly prizes of $100. How much of your refund would you like to save?” “If your refund allowed, what would you save some for?” “How much should we put in a savings account?”

61. SaveYourRefund Recap 57% Indicated they wanted to “save some” of their refund SaveYourRefund 100 weekly prizes of $100 during tax season $25,000 grand prize photo contest Tri-CAP Contest Savings pig entry 46% of customers have no emergency savings 43% have no savings account CHALLENGE OPPORTUNITY TOOLSINCENTIVE Form 8888 allows tax filers to split and save their refund into: Series I U.S. savings bond New savings account Existing savings account

62. Financial coaching program Financial Fitness Encourage customer to select yes on the client survey for the Financial Fitness Class, Chex System and Credit Report. Enter this information on the Preparer Use Form in Taxwise

63. Key takeaways  Our customers are experts in their own lives and make the best decision for their situation  The majority of customers want to save  Our role is to provide info about direct deposit and savings opportunities to all customers  Everybody at our tax sites plays a role in making financial capability possible for our customers

64. Line 78: Amount Owed Option 1: Pay in full within 60 to 120 days with no fee, interest and penalties charged on payments after April 15. Option 2: Set up an installment agreement with the IRS. Option 3: Taxpayer should file their return by the deadline and pay as much as they can. Do not complete Form 2210, IRS will calculate any penalty.

65. Topic 12: Related tax issues

66. Power of Attorney (POA)  Power of Attorney is the taxpayer’s written authorization for a representative to act on their behalf in tax matters  The representative must have Form 2848  Follow the steps outlined in the Volunteer Tax Manual – ask your tax site manager for assistance

67. Injured spouse allocation  MFJ taxpayers and one spouse owes past-due federal or state debt  The “injured spouse” is the spouse that does not owe the past-due debt  Complete Form 8379 to allow the “injured spouse” to receive their “portion” of the federal refund  Minnesota does not have an “injured spouse” program

68. Amend prior year tax returns  May need to amend return to correct errors or omissions on a return they have already filed  The IRS may file on the taxpayer’s behalf if the return is not filed. The taxpayer can amend the IRS-filed return  Amended returns cannot be e-filed  Refer customers needing an amended return to the Tri-CAP main office.

69. Resident alien or nonresident alien?  What do you do if an individual may be attending school in the U. S. on a student visa and/or an individual has checked the “No” box on Form 13614-C indicating they are not a U. S. Citizen?  Use Determining Residency Status decision tree to determine whether individual is a resident alien or nonresident alien  If you determine the individual is a resident alien, complete Form 1040. If the individual had a “green card,” they are eligible for tax credits  If you determine the individual is a nonresident alien, refer them to their college’s international student program as this is out-of-scope for Tri-CAP

70. Homework  Basic certification, use paper Form 6744 booklet to complete questions 1 – 13  Advanced certification, use paper Form 6744 booklet to complete questions 1 – 7  Consider viewing the health savings account training online at the on the training center and certifying at the HSA level