1. HLS TaxHelp Training February 2, 2008 (2007 Calendar Year Returns) TaxHelp Board: Jesse Gurman, Amber Greaves, Lane Morgan PLEASE SIGN IN!

2. Overview Sign in if you haven’t already Sign in if you haven’t already Tax law Tax law Interviewing Interviewing Using TaxWise Using TaxWise Review and filing Review and filing Certification Certification

3. Tax Basics: Filing Status Who has to file? Most people if > $8,750, p. 8 Who has to file? Most people if > $8,750, p. 8 Status – use workbook chart & tips, pp. 12-13 Status – use workbook chart & tips, pp. 12-13 –Single (has no dependents) –Married filing jointly –Married filing separately –Head of household (unmarried or separated, w/deps) –Qualifying widow(er) with dependent child Married filing separately reduces credits – whenever possible file married/jointly or HoH Married filing separately reduces credits – whenever possible file married/jointly or HoH Non-US citizens – intermediate issue Non-US citizens – intermediate issue

4. Tax Basics: Dependents Use charts & tips, pp. 15-19 Use charts & tips, pp. 15-19 Children 50% expenses, tiebreakers Children 50% expenses, tiebreakers College students 19-24, >50% expenses, “primary” res College students 19-24, >50% expenses, “primary” res Qualifying relatives (or non-relative in HH), <$3400 Qualifying relatives (or non-relative in HH), <$3400 Dependent as filer (“CAN” not “WILL” someone claim) Dependent as filer (“CAN” not “WILL” someone claim) Child credits automatic in TW, except child/dep care Child credits automatic in TW, except child/dep care EIC – reqs mostly the same, but check (esp SSN) EIC – reqs mostly the same, but check (esp SSN) Divorce – no EIC or HoH for noncustodial, even w/perm Divorce – no EIC or HoH for noncustodial, even w/perm Dependency and HoH not always same (student, parent) Dependency and HoH not always same (student, parent)

5. Tax Basics: Income Types Earned v. unearned (definition) Earned v. unearned (definition) Wages (form W-2) Wages (form W-2) –both federal and state info, match address –check for part-year state residency issues –some government jobs/pensions not taxed by state Bank interest (form 1099-INT), dividends (1099-DIV) Bank interest (form 1099-INT), dividends (1099-DIV) IRA, 401(k), other pensions (form 1099-R) IRA, 401(k), other pensions (form 1099-R) –taxes are only owed if disbursed, or Roth IRA Social security, unemployment, worker’s comp, gambling Social security, unemployment, worker’s comp, gambling Self-employment – intermediate only Self-employment – intermediate only

6. Tax Basics: Earned Income Credit Primary focus of VITA/TaxHelp Primary focus of VITA/TaxHelp Credit targeted to low-income taxpayers Credit targeted to low-income taxpayers Higher for taxpayers with dependents Higher for taxpayers with dependents –must file married/jointly or head of household Use flow chart/checklist to ensure all requirements met (pp. 35-38) Use flow chart/checklist to ensure all requirements met (pp. 35-38) EIC worksheet will pop up in Taxwise automatically if income cutoff is met EIC worksheet will pop up in Taxwise automatically if income cutoff is met Cutoffs: ~$38k (>1qc), ~34k (1qc), ~13k (0qc) Cutoffs: ~$38k (>1qc), ~34k (1qc), ~13k (0qc)

7. Tax Basics: Tuition Credits/Deductions 3 different ways, all non-refundable 3 different ways, all non-refundable –Hope Credit: first 2 years of undergrad, 100% credit of up to $1650 paid –Lifetime Learning Credit: any undergrad, grad or vocational, 20% credit of up to $10k paid –Straight deduction: @ tax rate, up to $4k paid Unless you are sure, try all 3 Unless you are sure, try all 3 Make sure to follow charts carefully Make sure to follow charts carefully Hope and LLC form 8863, deduction 1040 p. 1 Hope and LLC form 8863, deduction 1040 p. 1

8. Tax Basics: Other Deductions/Credits Keep an eye out during the interview Keep an eye out during the interview You can ask every question until you feel comfortable, or by “group” You can ask every question until you feel comfortable, or by “group” Ones that come up the most: Ones that come up the most: –student loan interest –IRA contribution –Retirement Savings Credit (form 8880)

9. Tax Basics: State (MA) Credits/deductions Credits/deductions –Rent –Transportation –Home heating oil Proof of Health Insurance Proof of Health Insurance –new this year –taxpayer should receive MA 1099-HC in mail –if no insurance, might be MA refund penalty First time state filers can NOT e-file for MA First time state filers can NOT e-file for MA

10. Intermediate-Level Issues: Itemized Deductions Almost everyone takes standard deduction Almost everyone takes standard deduction Ask taxpayer if he/she has itemized before Ask taxpayer if he/she has itemized before Biggest reasons to itemize Biggest reasons to itemize –Mortgage –Large health care costs –Other large purchases (e.g. new car) –must be > $5,350 (s), $10,700 (m), $7,850 (HoH) Itemized returns can only be completed by intermediate-certified volunteers Itemized returns can only be completed by intermediate-certified volunteers

11. Intermediate-Level Issues: Self- Employment Income Some taxpayers will have self-employment income (housekeeping, babysitting, small business, etc.) Some taxpayers will have self-employment income (housekeeping, babysitting, small business, etc.) May have 1099-misc or no documentation May have 1099-misc or no documentation Returns with self-employment income can only be completed by intermediate- certified volunteers Returns with self-employment income can only be completed by intermediate- certified volunteers

12. Advanced Issues We do not cover them We do not cover them They include: They include: –complicated investments beyond 1099-int/div –sale of any stock, property, other capital gain –business income beyond basic self-employ If you have any doubt or questions, ask a site expert – do not try to do it yourself If you have any doubt or questions, ask a site expert – do not try to do it yourself

13. Logging into TaxWise Website is https://twonline.taxwise.com, or https://twonline.taxwise.com/training Website is https://twonline.taxwise.com, or https://twonline.taxwise.com/traininghttps://twonline.taxwise.comhttps://twonline.taxwise.com/traininghttps://twonline.taxwise.comhttps://twonline.taxwise.com/training User = first initial + last name (all caps) User = first initial + last name (all caps) Initial password will be the same (you will have to change it the first time) Initial password will be the same (you will have to change it the first time) Our client number is 796235 Our client number is 796235 EFIN is 040449 (don’t need for login) EFIN is 040449 (don’t need for login)

14. Completing the Return: Interview Review intake form, introductory chat Review intake form, introductory chat Size up the bigger issues Size up the bigger issues –filing status and dependents –types of income –possible credits Start TaxWise interview, enter info Start TaxWise interview, enter info Keep in mind what is being asked and why Keep in mind what is being asked and why If any intermediate issues, refer to expert If any intermediate issues, refer to expert

15. Completing the Return: Forms USE ALL CAPS NO PUNCTUATION USE ALL CAPS NO PUNCTUATION Check for red anywhere, CTRL + space Check for red anywhere, CTRL + space Do federal and state unless reason not to Do federal and state unless reason not to Be very careful with SSNs and addresses Be very careful with SSNs and addresses Encourage e-file, but paper if taxpayer prefers Encourage e-file, but paper if taxpayer prefers Check or direct deposit; voucher or e-withdrawal Check or direct deposit; voucher or e-withdrawal Utilize 4012, Pub 17, irs.gov, and site expert Utilize 4012, Pub 17, irs.gov, and site expert See Taxwise flow chart p. 40 See Taxwise flow chart p. 40

16. Completing the Return: Review Diagnostic check Diagnostic check Every return must be quality reviewed, w/sheet Every return must be quality reviewed, w/sheet E-file whenever possible E-file whenever possible –you will not e-file yourself, just mark “ready for e-file” –if paper filing, indicate in return status Print 2 copies, 1 for taxpayer, 1 for us Print 2 copies, 1 for taxpayer, 1 for us Taxpayer signature, form 8879 Taxpayer signature, form 8879 Attach intake, 1040, W2, 1099-R, etc. Attach intake, 1040, W2, 1099-R, etc.

17. Certification For tax lessons/reference info: http://www.irs.gov/app/vita/index.jsp For tax lessons/reference info: http://www.irs.gov/app/vita/index.jsp http://www.irs.gov/app/vita/index.jsp For the test: http://linklearn.webtechteam.com/login.aspx?ReturnUrl= /default.aspx For the test: http://linklearn.webtechteam.com/login.aspx?ReturnUrl= /default.aspx http://linklearn.webtechteam.com/login.aspx?ReturnUrl= /default.aspx http://linklearn.webtechteam.com/login.aspx?ReturnUrl= /default.aspx Basic level only (unless you want to do intermediate) Basic level only (unless you want to do intermediate) 80% right, 2 tries, question types rotate 80% right, 2 tries, question types rotate Use 4012, Pub 17, and TaxWise! Use 4012, Pub 17, and TaxWise! When you are done, email the pdf to agreaves@law.harvard.edu and you will be scheduled When you are done, email the pdf to agreaves@law.harvard.edu and you will be scheduled agreaves@law.harvard.edu