1. What’s New for 2014 Federal Tax Law Changes Scope Changes NJ Tax Law Changes TaxWise Changes 111-02-2014NJ TAX TY2013 v13.1

2. 2014 Federal Tax Law Changes Indexing has increased many of the numbers (Refer to Pub 4012, Page 11 for exact amounts) Standard deduction amounts Personal exemption amounts Earned Income credit amounts and income limits Retirement Savings Contribution credit income limits Phase-out thresholds for Education credits (AOC, LLC) Phase-out thresholds for Student Loan Interest deduction 2 11-02-2014NJ TAX TY2013 v13.1

3. 2014 Federal Tax Law Changes (cont’d) Eligible Long-Term Care Insurance premium limits Deduction amount and MAGI limits for traditional IRA contributions Phase-out thresholds for Roth IRA contributions 2014 Standard mileage rates: 56 cents per mile for business miles 23.5 cents per mile for medical or moving miles 14 cents per mile for charitable miles (no change) 3 11-02-2014NJ TAX TY2013 v13.1

4. 2014 Federal Tax Law Changes (cont’d) Provisions that expired at the end of 2013 have been extended (new pages to add to Pub 4012 about these provisions can be found in 4012 Updates on TaxPrep4Free.org Preparer page) Educator expenses deduction (1040 line 23) State sales tax deduction (Sch A line 5b) Tuition and fees deduction (1040 line 34) Mortgage insurance premiums deduction (Sch A line 13) Non-business energy property credit (1040 line 53) Qualified charitable distribution Cancellation of debt on principal residence excluded from gross income of individuals (currently out of scope) 4 11-02-2014NJ TAX TY2013 v13.1

5. 2014 Federal Tax Law Changes (cont’d) Virtual currencies, such as Bitcoin, will be treated as property and not as currency (will be out of scope for us) SSA discontinued providing SS number printouts effective 8/1/2014 Taxpayers who do not have their SS cards will need to complete application for a SS card (Form SS-5) and provide required documentation SSA stopped providing benefit verification letters in their offices on 10/1/2014 Taxpayers can get instant letter online or may call SSA to request a letter by mail ACA changes (covered in separate modules) 5 11-02-2014NJ TAX TY2013 v13.1

6. 2014 Scope Changes Specific 1099-R codes that are out of scope are listed on Pub 4012 Pages fand D-21 Cash rental income for land Was in scope if reported on 1099-MISC Now in scope if cash Reported on Schedule E No expenses allowed Property taxes may be a Schedule A deduction Calculating Federal and NJ penalties for underpayment of taxes is still out of scope 6 11-02-2014NJ TAX TY2013 v13.1

7. 2014 Scope Changes – Waiver for Failure to Take RMD Request for waiver for failure to take Required Minimum Distribution (RMD) from qualified retirement plan is now in scope Penalty is 50% if no waiver Counselor not expected to review all plans and verify that required distributions were taken Can request waiver if: Taxpayer missed taking all or part of RMD Shortfall in amount of distribution due to reasonable error Taxpayer is taking reasonable steps to remedy shortfall Use Form 5329 Part VIII to request waiver Separate 5329 form for taxpayer and spouse See specific instructions in Special Topic document on TaxPrep4Free.org Preparer page 7 11-02-2014NJ TAX TY2013 v13.1

8. Form 5329 for Waiver for Failure to Take RMD (cont’d) 8 11-02-2014NJ TAX TY2013 v13.1

9. Explanation for Request of Waiver of Tax (cont’d) 9 11-02-2014NJ TAX TY2013 v13.1

10. 2014 Scope Changes – Cancellation of Credit Card Debt Cancellation of credit card debt is now in scope for all counselors with Advanced certification Reported on 1099-C Generally considered taxable income unless taxpayer was in bankruptcy or insolvent (liabilities exceeded assets) immediately before debt was cancelled If bankrupt or insolvent, out of scope Entered on 1040 Wkt 7 Other Income Worksheet for 1040 Line 21 10 11-02-2014NJ TAX TY2013 v13.1

11. Cancellation of Credit Card Debt – 1099-C 11 11-02-2014NJ TAX TY2013 v13.1

12. Cancellation of Credit Card Debt – TW 1040 Wkt 7 Other Income Worksheet for 1040 Line 21 12 11-02-2014NJ TAX TY2013 v13.1

13. Cancellation of Credit Card Debt – TW 1040 Pg 1 13 11-02-2014NJ TAX TY2013 v13.1

14. 2014 Scope Changes – Cancellation of Credit Card Debt (cont’d) See Pub 4012 page D-32 and specific instructions in Special Topics document on TaxPrep4Free.org Preparer page 1099-C income is not taxable for NJ TaxWise automatically transfers amount from Federal 1040 line 21 to NJ 1040 line 25 Must use NJ Supplementary Schedule of Other Income Line F to enter negative amount so that cancellation of debit income is removed from NJ taxable income Cancellation of debt income included in PTR income (PTR tool does this correctly) 14 11-02-2014NJ TAX TY2013 v13.1

15. Cancellation of Credit Card Debt – TW NJ Supplementary Schedule of Other Income 15 11-02-2014NJ TAX TY2013 v13.1

16. 2014 Scope Changes – Income from Long-Term Care Insurance Contracts Income received from Long-Term Care Insurance Contracts is now in scope Generally reimbursements are not taxable Per diem costs up to an aggregate limit are not taxable Reported on 1099-LTC Form 8853 Section C is in scope; sections A and B are out of scope See specific instructions in Special Topic document on TaxPrep4Free.org Preparer page 16 11-02-2014NJ TAX TY2013 v13.1

17. Long-Term Care Insurance Contracts – 1099-LTC 17 11-02-2014NJ TAX TY2013 v13.1

18. 2014 NJ Changes New checkbox for “Federal K-1 attached” added to NJ 1040 Pg 1 (awaiting new NJ 1040 instructions) NJ1040 lines 37 – 40 have changed Line 37b – Must now enter block, lot and qualifier numbers for principal property owned and occupied on 12/31/2014 If not a homeowner on 12/31/2014, provide info on last home owned and occupied in 2014 Leave blank for renters or those not getting deduction/credit Line 37c Must now enter county/municipality code  Does not flow through from NJ 1040 Pg 1 11-02-2014 18 NJ TAX TY2013 v13.1

19. 2014 NJ Changes (cont’d) Must now manually check a box if “Worksheet F” was completed Error – should be Worksheet F-1 for Multiple Residences, Owners, Units, or Tenants (rare for us). Reported to CCH for correction TW does not automatically check Property Tax Deduction is now on line 38 Was formerly line 37c 19 11-02-2014NJ TAX TY2013 v13.1

20. 2014 NJ Changes (cont’d) NJ Taxable Income is now on line 39 and Tax is now on line 40 Were formerly lines 38 and 39 Maximum amounts for Unemployment, Disability, and Family Leave insurance contributions have increased NJ Form 2450 to claim excess contributions has been updated to reflect new maximums 20 11-02-2014NJ TAX TY2013 v13.1

21. 2014 NJ Property Tax Relief Programs No Homestead Benefit credits were issued in 2014, so no Homestead Benefit recoveries on 2014 tax returns (unless for earlier years) Expect Homestead Benefit credit for property taxes paid in 2012 to be on 5/1/2015 property tax bill Income limits for PTR and Homestead Benefit programs for 2014 will be posted on NJ Division of Taxation website when they become available 21 11-02-2014NJ TAX TY2013 v13.1

22. 2014 TaxWise Changes 1099 codes on Capital Gains Worksheet A – Short-term with cost basis reported to IRS B – Short-term with cost basis not reported to IRS C – Short-term with no 1099-B D – Long-term with cost basis reported to IRS E – Long-term with cost basis not reported to IRS F – Long-term with no 1099-B Fields on TaxWise View Return pages are now re-configurable (check with ERO/LC first) 22 11-02-2014NJ TAX TY2013 v13.1

23. 2014 TaxWise Changes (cont’d) Can access TaxWise using Chrome Only for 2014 TaxWise, not prior years Data entry on tablets may be impractical Printer configuration may be different New forms for ACA added to TaxWise (covered in separate modules) 23 11-02-2014NJ TAX TY2013 v13.1

24. 2014 Intake/Interview Sheet Changes New color is yellow All pages are now landscape Font size has increased Page 1, Part 2 has a question regarding same- sex marriage “Was your marriage recognized under the laws of the state(s) you are filing in?” Used to help file same-sex couple state returns for states that do not allow same-sex married couple joint tax returns Page 2 has Affordable Care Act questions (to be covered in later module) 24 11-02-2014NJ TAX TY2013 v13.1

25. 2014 TaxPrep4Free.org Changes Most documents on TaxPrep4Free.org Preparer page have been updated for 2014 Any document that has not been updated yet says “2013” in red. Expect all will be updated by 2/1/2015 except PTR documents Some new look-up tools added PTR look-up tool NCAIS codes for Sch C look-up tool 25 11-02-2014NJ TAX TY2013 v13.1

26. 2014 TaxPrep4Free.org Changes (Cont’d) New Special Topics documents (some still in draft) Long-Term Care Payments 1099-LTC Required Minimum Distributions (RMD) Waiver of Additional Tax Wash Sales Affordable Care Act and TaxWise Procedures Affordable Care Act – 2014 Quick Reference Guide 26 11-02-2014NJ TAX TY2013 v13.1

27. 2014 Volunteer Agreement (Form 13615) Changes New question: “Was the Intake/Interview & Quality Review PowerPoint Training completed?” Policy and Procedures presentation covered in training satisfies this requirement If not in class for this presentation, review Intake/ Interview & Quality Review training yourself on IRS Link and Learn Everyone checks box to indicate that training was completed since it is a requirement for all counselors 27 11-02-2014NJ TAX TY2013 v13.1

28. 2014 AARP Volunteer Portal Changes New look this year OneSupport Help Center now makes navigating and finding things easier Most counselors use portal for mileage reimbursement Use Expense Reimbursement Form TY2014 Non- Leader to claim mileage Under OneSupport Help Center, then General Program Management, then Forms 28 11-02-2014NJ TAX TY2013 v13.1