1 1 Day Returning Counselor Training 2013 One Day Returning Counselor Training – Dist 5 Bob Eslinger Pacific Region Training Advisor

2 1 Day Returning Counselor Training 2013 AGENDA – RETURNING COUNSELOR ONE DAY TRAINING

3 1 Day Returning Counselor Training 2013 INTRODUCTIONS Name How long have you been with AARP? What site do you serve? What one question would you like answered?

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11 AZ Returning Counselor Training 2013 MUST/SHOULD FILE QUIZ #1  Miranda, 17, is claimed on her parents’ return  W-2 shows $2,000 in wages and Federal tax withheld of $155  Grandparents gave her a $3,000 CD as a gift  She has no other income Must or should Miranda file?

12 AZ Returning Counselor Training 2013 MUST/SHOULD FILE QUIZ #1 ANSWER  Miranda, 17, is claimed on her parents’ return  W-2 shows $2,000 in wages and federal tax withheld of $155  Grandparents gave her a $3,000 CD as a gift  Must or should Miranda file? Should: to get back her withholding CD is a gift – not counted in income

13 AZ Returning Counselor Training 2013 MUST/SHOULD FILE QUIZ #2  Kathy, 22, attends college full time  Earned $850 babysitting  Plus $3,000 reported on a W-2; no tax was withheld Must or should Kathy file?

14 AZ Returning Counselor Training 2013 MUST/SHOULD FILE QUIZ #2 ANSWER  Kathy, 22, attends college full time  Earned $850 babysitting  Plus $3,000 reported on a W-2; no tax was withheld Must or should Kathy file? Must: had >$400 in self-employment If only W-2, would not have needed to file

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18 AZ Returning Counselor Training 2013 EIC QUIZ #1 Tab H  A 65-year-old gentleman, with no qualifying children, earned $5,000.  Taxwise does not give him any EIC. Is this correct?

19 AZ Returning Counselor Training 2013 EIC QUIZ #1 ANSWER Tab H  A 65-year-old gentleman, with no qualifying children, earned $5,000.  Taxwise does not give him any EIC. Is this correct?  YES. He is too old to get the EIC. He is 65 years old.

20 AZ Returning Counselor Training 2013 EIC QUIZ #2  A young father of two earns $15,000.  He sells his only stock, inherited from his mother, and makes a $3,500 capital gain.  He is expecting a sizeable EIC. Is he correct?

21 AZ Returning Counselor Training 2013 EIC QUIZ #2 ANSWER  A young father of two earns $15,000.  He sells his only stock, inherited from his mother, and makes a $3,500 capital gain.  He is expecting a sizeable EIC. Is he correct?  NO. He gets nothing because his investment income is over the limit.

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32 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #1 TAB C  John supports his wife’s Uncle George who lives in another city and has $2,400 of taxable income  John files MFJ Can John claim George as a dependent if all other tests met?

33 AZ Returning Counselor Training 2013 EXEMPTIONS #1 ANSWER TAB C  John supports his wife’s Uncle George who lives in another city and has $2,400 of taxable income  John files MFJ Can John claim George as a dependent if all other tests met?  YES

34 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #1, CONT’D  Assume John is divorced Would he still be able to claim his wife’s Uncle George?

35 AZ Returning Counselor Training 2013 EXEMPTIONS #1, CONT’D ANSWER  Assume John is divorced Would he still be able to claim his wife’s Uncle George?  NO Wife’s uncle not an official “in-law”

36 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #2  John is also supporting his own cousin who earns $3,000 and lives in another city Can John claim his cousin?

37 AZ Returning Counselor Training 2013 EXEMPTIONS #2 ANSWER  John is also supporting his own cousin who earns $3,000 and lives in another city. Can John claim his cousin?  NO Cousin is not a qualifying person

38 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #3  Ralph is 64 and lives with his son and daughter-in-law all year  Ralph earned $4,700 Can Ralph’s son claim him as a dependent?

39 AZ Returning Counselor Training 2013 EXEMPTIONS #3 ANSWER  Ralph is 64 and lives with his son and daughter-in-law all year  Ralph earned $4,700 Can Ralph’s son claim him as a dependent?  NO Income over $3,800

40 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #4  Ralph’s children are also supporting his friend, Fred, who lives with them  Fred’s only income is social security of $5,000 Can Fred be claimed?

41 AZ Returning Counselor Training 2013 EXEMPTIONS #4 ANSWER  Ralph’s children are also supporting his friend, Fred, who lives with them  Fred’s only income is social security of $5,000 Can Fred be claimed?  YES Gross income test does not count income that is exempt from tax

42 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #5  Jennifer, age 25, is a full-time student, lived at home with her parents all year, and her parents provided over half of her support  Jennifer made $3,000 Can Jennifer's parents claim her as a dependent?

43 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #5 – ANSWER A Is Jennifer a Qualifying Child?  NO She satisfies the residency and relationship tests, but not the age test If Jennifer is not a Qualifying Child, is she a Qualifying Relative Dependent?

44 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #5 – ANSWER B Is Jennifer a Qualifying Relative Dependent?  YES  She is their daughter  She earned less than $3,800  Parents provided >50% support  Not the Qualifying Child of another  Can be claimed if all other tests met

45 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #6  Stacy has a son, Ben, age 14, and they lived with Stacy's boyfriend (who is not Ben's father) all year  Stacy made $7,000 and her boyfriend made $50,000 Can Stacy’s boyfriend claim Ben as a dependent?

46 AZ Returning Counselor Training 2013 EXEMPTIONS QUIZ #6 – ANSWERS  NO, if Stacy files a return  Ben would be a Qualifying Child of Stacy  YES, if Stacy does not file a return OR files ONLY to get a refund of withholding  Ben could be a Qualifying Relative Dependent of Stacy’s boyfriend It might be more beneficial, however, for Stacy to file and claim the EIC

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49 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #1 TAB B  Mrs. Doe is divorced  Pays >50% cost of the home she shares with her 20-year-old daughter, Emily  Emily is single, works part time, and earned $4,000 that she spent on herself. She is not a student Can Mrs. Doe file as Head of Household?

50 AZ Returning Counselor Training 2013 Can Mrs. Doe file as Head of Household?  NO  Emily is not a Qualifying Child  >18 years of age  Not a student  Emily is not a Qualifying Relative Dependent  Income >$3,700 FILING STATUS QUIZ #1 ANSWERS

51 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #2  Mr. Buck provides total support for his two young children  His wife died in 2009, and he has not remarried What is the best filing status for Mr. Buck?

52 AZ Returning Counselor Training 2013 What is the best filing status for Mr. Buck?  HEAD OF HOUSEHOLD What would have been best in TY2011? FILING STATUS QUIZ #2 ANSWER 1

53 AZ Returning Counselor Training 2013 What would have been best in TY2011?  QUALIFYING WIDOW(ER) with Dependent Child FILING STATUS QUIZ #2 ANSWER 2

54 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #3  Jane, 69, whose husband died July 1, had a $20,000 pension and $15,000 in social security in the tax year  Her 10-year-old grandson lived with her and is her dependent What is the best filing status for Jane?

55 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #3 ANSWER 1 What is the best filing status for Jane?  MARRIED FILING JOINT Assuming nothing changes, what filing status is best for the following tax years?

56 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #3 ANSWER 2 Assuming nothing changes, what filing status is best for the following tax years?  HEAD OF HOUSEHOLD Grandchild is not a qualifying child dependent for Qualifying Widow(er) with Dependent Child purposes – own child or stepchild only

57 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #4  Luke and Linda are still married, but chose to live apart for most of the year  Their two children lived with Linda all year  In July, Luke was out of a job so he moved back in the house for just that month What filing status can they each choose?

58 AZ Returning Counselor Training 2013 FILING STATUS #4 ANSWER  Luke and Linda are still married, but chose to live apart for most of the year  Their two children lived with Linda all year  In July, Luke was out of a job so he moved back in the house for just that month What filing status can they each choose?  MFJ or MFS (both must use same status)

59 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #5  Dick and Jane are married, lived apart all year, and are filing separate returns  Their 25-year-old daughter Jody lived with Jane all year while attending school full- time  Jody earned $2,500 during the summer What is Jane’s best filing status?

60 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #5 ANSWER 1 What is Jane’s best filing status?  HEAD OF HOUSEHOLD What would Jane’s filing status be if Jody earned $3,900?

61 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #5 ANSWER 2 What would Jane’s filing status be if Jody earned $3,900?  MARRIED FILING SEPARATELY

62 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #6  Sarah, age 62, has a 40 year old son living with her  He earned $40,000 and put all of it in the bank Can Sarah claim Head of Household?

63 AZ Returning Counselor Training 2013 FILING STATUS QUIZ #6 ANSWER Can Sarah claim Head of Household?  NO Son must be either a Qualifying Child or a Qualifying Relative  Not a Qualifying Child: age  Not a Qualifying Relative: income >$3,700

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