1. Basic A volunteer training Tax year 2014
Welcome and thank you for volunteering.
Let volunteers know there will be time for breaks and/or lunch.
Please do not text or use your phone during training. If you must take a call or text step outside the classroom.
If volunteers have questions about their training and/or tax site registration; they should contact Jason or Laura at Tri-CAP
FIRST YEAR VOLUNTEERS: Sometime during Basic A training, please stop by the assistant’s desk to show him/her a copy of your picture ID. This is a VITA program requirement.

2. Basic training overview
Tri-CAP scope of services
VITA certification Link and Learn
VITA volunteer standards of conduct
Tri-CAP and VITA intake and screening
Who must file and who should file a tax return
Exemptions and filing status
Form 1040, income and adjustments
Form 1040, standard deduction or itemized deductions

3. P+p Volunteer tax manual
Table of contents
Acronyms
Index
TaxWise instructions
Briefly point out these sections in the manual
Federal and state tax information is described in the order of the 1040, M1 and M1PR line items.
During this training, you will not be instructing volunteers on TaxWise. This will be done in Basic D – TaxWise.

4. income guidelines $30,000 or less for single taxpayer
$53,000 or less for families
$53,000 for taxpayer with self-employment income
Pages 6

5. Self-employment (se) income
SE income of $5,000 or below can be prepared at the site EXCEPT daycare, inventory, business use of the home
Tri-CAP is an IRS-approved Schedule C EZ program Schedule C sent To Prepare and Prosper.
Out-of-scope returns – cab drivers, clergy members, corporation, partnership, rental income or businesses with employees
Pages 6
The next two slides highlight some of the more important items listed on pages 6 & 7. Encourage volunteers to refer to these two pages when they encounter something unique at the tax clinic.
Tri-Cap has IRS approval to prepare Schedule C EZ returns.
Prepare and Prosper Schedule C out of scope /

6. Refer to Tri-CAP main office
Taxpayer needing to apply for an individual taxpayer identification number (ITIN)
Amendment of a tax return
Property tax return when federal and state return already prepared at tax site
Pages 6 & 7
Note that if a taxpayer needs a property tax return prepared and his/her federal and state returns were prepared by another tax preparer (non Tri- CAP tax site) then prepare at the tax site using their copy of the federal return for information.

7. Out-of-scope returns
Cancellation of debt – business cards, student loan or repossessed vehicle (manual should read out-of-scope, not refer to P+P or Tri-CAP)
Auto donation, moving expenses, bankruptcy, adoption credit, casualty/theft losses
Military income
Nonresident aliens
Non-cash donations over $500
Page 7
Make note of change in IRS scope to include cancellation of debt for nonbusiness credit card this year – more info available later in the training. (line 2)
Ask volunteers to make the change in their manual about cancellation of debt for business cards, etc. see bullet 1. DO NOT REFER TO P+P or Tri- CAP. (line 3)

8. certification levels for tax prep
Basic
Advanced
Military (out-of-scope for Tri-CAP)
Health savings account (HSA)
Pages 8, 9 and 10
Example: a taxpayer with income that can be reported on lines 7 through can be certified either in Basic or Advanced levels.
Example: a taxpayer with SE income must be certified at the Advanced level, with a reference to page 6 of the tax manual identifying specific information for P+P volunteers.
Example: line 17 is rental income requiring Military certification, however it is out-of-scope for Tri-CAP.
Example: line 25 requires HSA certification.
Page 10 shows page 2 of the IRS Form C, intake and interview form. Volunteers can also use this to identify whether they are certified at the correct level before preparing the return. If they are preparing a return and notice that the taxpayer has marked yes to #7 (SE income) and they are certified at the Basic level then they should inform the tax site manager.

9. certification requirements
Tax preparer hrs
Volunteer standards of conduct
Intake/interview and quality review training
Advanced (Skip Basic)
Health savings account (encouraged)
Pages 11 & 12
VOLUNTEERS MUST SUCCESSFULLY COMPLETE THE BASIC OR ADVANCED TEST BY THEIR FIRST VOLUNTEER SHIFT.
All volunteers will be taking their test online this year using Link & Learn
1st year volunteers year volunteers (taking this class) will complete the test at the Testing Labs (must register for the lab). Additional instructions available at the Testing Labs. They will have access to the desktop version of TaxWise. Open book test, can use all tax resources, refer volunteers to the printed copy of the Form 6744 text booklet in their volunteer totes.
2nd year volunteers (taking this class) can complete the test online at Link & Learn.
Testing must be taken in order shown on the slide. HOWEVER, point out that the Intake/Interview and Quality Review Training is not a “test” but a power point to be reviewed. The power point is on Link & Learn site.
Point out on page 12 the opportunity for “some” professionals to receive continuing education credits. TO QUALIFY, VOLUNTEERS MUST CONTACT THE VOLUNTEER RESOURCE DEPARTMENT PRIOR TO TAKING THE CERTIFICATION TEST.
Page 13 is a summary of procedures for test taking.

10. Volunteer Standards of Conduct (VSC)
I will follow the Quality Site Requirements (QSR).
I will not accept payment or solicit donations.
I will not solicit business from taxpayers or use their information for personal benefit.
I will not knowingly prepare false returns.
I will not engage in criminal, infamous, dishonest, etc. conduct deemed to have a negative effect on the VITA/TCE programs.
I will treat all taxpayers in a professional, courteous and respectful manner.
Pages 14 & 15
Review Standards of Conduct.
QSRs 6 – 10 are targeted towards VITA tax site management and not volunteers.
All staff and volunteers working at the tax site must complete the VSC test.
Consequences for non-compliance with the Standard s of Conduct is highlighted at the bottom of page 15. Mention this as it’s part of the VSC test.

11. Tax clinic process Intake Interview Prepare Quality Review
Complete tax return
Quick overview of how the tax clinic process works.
All other sites customers are served on a walk-in basis. Appointments after tax season
When volunteers first arrive at the site they will Clock in using Vic Touch on the Vic Net home page. Their name badges will be located next to the tax site assistant.
Select a station and get ready for the tax site.
Review the Error log sheet, IRS updates and MN Dept of Revenue updates on the VIC Net home page. Login information and passwords also located on the Vic Net home page.
The tax site manager is there to support you and answer any questions.
Explain to the volunteer that once they have completed the return, they will gather all the necessary documentation and forms to place inside the customer envelope and bring to the volunteer reviewer station. They will inform the tax site specialist they are ready for another customer.

12. Intake/interview & quality review
Page 16, Form C, page 1
Ask volunteers to use the copy of Form C in their tote bags as you review the following four slides shown on pages 16, 17, 18, 19 in the tax manual.
Walk through the form highlighting the various areas.
Emphasize the importance of ensuring all 4 pages are completed either by the taxpayer or the volunteer . Every return prepared a t a P+P tax site must have a completed Form C , which is also the Quality Site Requirement listed in #2. on page 14.
Using Form C and the Tri-CAP intake/screening form is the main basis for completing an accurate return.
Point out the area in the box – volunteers must complete this section for every dependent listed on the return. This is often missed by volunteers as they assume this area is completed by the taxpayer.

13. Intake/interview & quality review
Page 17, Form C, page 2
All questions must have either the yes or no box checked. If the taxpayer has marked the unsure box, then the volunteer must ask questions until he/she can confidently check a yes or no box.

14. Intake/interview & quality review
Page 18, Form C, page 3
The customer will complete questions 1 & 2 in Part VI and questions 1, 2, 3, 4, 5 in Part VII.
Highlight the gray-colored box as another area the volunteer needs to complete.
The other box is where the volunteer will enter direct deposit numbers if documentation is not available (documentation is always better than handwritten numbers. The volunteer can also enter other important information the reviewer will need to know about the return.

15. Intake/interview & quality review
Pretend you’re the customer, complete pages 1, 2, and 3!
Page 19, Form C, page 4
Top box shows an area where the volunteer preparer and reviewer can enter their names. This is not required at a Tri-CAP tax site. Volunteers will enter their First name last Initial into the Preparer Use Form in TaxWise.
Lower box is where the volunteers will use the original TIN documentation (SSN card or ITIN letter) to enter the full name and TIN of each person listed on the return.

16. P+P intake sheet Page 20, P+P intake sheet, page 1
Ask volunteers to pull out the pink P+P intake sheet found in their tote bags as you review the following 4 slides.
If the taxpayer has not entered any amounts in the top section on the page, volunteers should ask whether the taxpayer had of these types of income.
Like Form C, each question under “Additional situations” should have the yes or no box checked. If an insure box is checked, interview the taxpayer in order to confidently check either the yes or no box.

17. P+P intake sheet Page 21, P+P intake sheet, page 2
Taxpayer is not required to answer questions, however the information gleaned from this survey is very important to the agency, its funders and other stakeholders.
Highlight the box “For Volunteers”. These are reminders to the volunteer to enter the information on the Preparer Use Form shown on page 22. More information provided in Basic D training.

18. P+P intake sheet Page 23, P+P intake sheet, page 3
NEW: The consent form and process are new this year for P+P. The taxpayer’s response (agree or decline) must be entered into TaxWise (see page 24) on 3 separate forms. More on this during Basic D training.
There are two Consent to Disclose and one Consent to Use sections. Wording of the taxpayer data requests have changed to make the requests easier to understand.
3 basic requests – can we use their data to (1) share with others, (2) keep a copy of their return for 3 years, and (3) use the dollar amounts from their return. All of the P+P shares is aggregate and no personal information is every shared with others outside of our organization.

19. P+P intake sheet Page 25, P+P intake sheet, page 4
If a volunteer is screening their first customer of the tax clinic they must complete the Tax Site Specialist “screening” and Preparer checklists.
Plainly print your first and last name on top of the checklist.
Do a quick run through of the Tax Site Specialist screening checklist and the Preparer checklist using the pink copy in their volunteer tote bag.
Volunteers can use the P+P screening tool checklist on pages 26 and 27 when they perform the screening process.

20. True or false
If the site is really busy, don’t worry about completing IRS Form C intake/interview sheet.
I have until February 6, 2015, to pass the IRS certification test.
All returns with daycare income must be completed at the P+P main office.
If I certify at the Advanced level, my returns do not have to go through the review process.
False. The VITA program requires that volunteer complete Form C for every return prepared. P+P requires you complete the P+P intake sheet for every return prepared!
False. Volunteers must complete their test before the first volunteer shift.
True. P+P is IRS-approved to complete Schedule C, daycare returns, but the return must be completed at the main office and not at a tax site.
False – no explanation needed!

21. Question 1
As I’m reviewing the customer’s information, I notice the Tax Site Specialist (TSS) screening checklist has not been completed on the P+P intake sheet. What should I do?
Storm up to the front desk and loudly ask why this hasn’t been done.
Ignore it and move to the Preparer checklist.
Use the screening tool checklist in the P+P manual and complete the checklist.
Ask the customer to complete the checklist.

22. Question 2 What should I do before I start entering data into TaxWise?
Make sure all questions on Form C are answered.
Change “Unsure” answers to “Yes” or “No” based on a conversation with the taxpayer.
Verify the return is within my certification level.
All of the above.

23. Taxwise primer
Pages 28 through 38 will be reviewed during Basic D – TaxWise training.

24. General tax information

25. Guidelines on who must file Pub 4012
Chart A – filing status, age and gross income requirements
Chart B – children and other dependents
Chart C – other situations
Owes special taxes
Self-employment of $400+ net earnings
Received Advanced Premium Tax Credit
Page 40
Ask volunteers to pull out Pub 4012 and go to Tab A showing all the charts mentioned in the slide.

26. Guidelines on who should file Pub 4012, chart d
Federal or state income tax WH from income
Qualifies for federal and state tax credits
Made estimated tax payments during the year
Eligible for the Minnesota homeowner and renter refund
Page 40

27. Topic 1: Taxpayer Identification

28. PROOF OF IDENTITY TIN VERIFICATION
Drivers’ license
Birth certificate
Passport/visa
Employer/school ID
Military ID
State/national ID
TIN VERIFICATION
Prior year return
Original SSN card
Original ITIN card/letter
Form SSA-1099
IRS/MDOR letter
SSA benefit statement/letter
Medicare card
Page 41
TIN – taxpayer identification number can be a social security number or individual taxpayer identification number (ITIN)
Due to increase in identity theft, copies of the SSN card or ITIN card/letter must be the originals and not copies. This is a VITA rule.
Alert: if the SSN card has the “not valid for employment” imprint then the SSN does not qualify for EITC purposes.
Process: include the TIN verification documents and the proof of identity cards in the Customer Envelope for the review process. If the customer does not want to leave the SSN/ITIN cards in the Customer Envelope that is their right to do so.
Process: remind volunteers to write the full name and TIN of each person listed on the return on page 4 of Form C.

29. What is an ITIN?
IRS issues to nonresidents and others living in the U.S. who are required to file a return, but not eligible for an SSN
Nine-digit number that begins with the number 9
Reported on a letter
P+P is an approved Certifying Acceptance Agent
Page 41
ITIN = Individual Taxpayer Identification Number.
Special handout will be available at tax sites where W-7 applications are processed.
Certified Acceptance agent certify documentation and submit form W-7 along with tax return. Taxpayer can contact Anel at P+P to schedule an appointment for assistance with the application.

30. 10 minute break
10 minute break

31. Topic 2: Personal & Dependency Exemptions

32. $3,950 for each personal and dependent exemption
Reduces taxable income
To claim a personal exemption taxpayer (spouse) cannot be claimed as a dependent by another person
Dependent exemption– Qualifying Child or Qualifying Relative
Page 42

33. Young adult TAXPAYER
Young adult checks the “NO” or “UNSURE” box on Form C, Part I, #11 – ask more questions
May require the young adult to phone “home” to ask if parent will or has claimed him/her as a dependent
Parent unsure if they can claim their child as a dependent – use Worksheet for Determining Support, Pub 4012, C-9
Page 42
Describe the scenario and consequences of what can happen if preparer does not do their due-diligence to inquire further.

34. Rules for claiming an exemption for a Qualifying Child
Taxpayer (spouse) on the return cannot be claimed on another tax return
Cannot claim a married person who files MFJ unless the married person is only filing to claim a refund of tax withheld and he/she has no tax liability
Must be U.S. citizen or resident, or a resident of Canada or Mexico for some part of the year
Dependent must meet the six tests for Qualifying Child
Page 43

35. Qualifying child tests Entitled to claim child
Relationship
Age
Residency
Support
Joint
Entitled to claim child
Page 43
Carefully review A, B, C, D, E

36. Qualifying Child of more than one person
Then the child will be treated as the qualifying child of the…
Only one of the persons is the child’s parent…
Parent
Both persons are the child’s parent…
Parent with whom the child lived for the longer period of time
Both persons are the child’s parent and the child lived with each parent the same amount of time during the year…
Parent with the highest AGI
None of the persons are the child’s parent…
Person with the highest AGI
Pages 44-45
These are the “tiebreaker rules”. Identify the tax benefits, - dependency exemption, HH, child tax credit, EITC, child and dependent care credit and tax break for excluding income from employer paid dependent care benefits
Review the example at the bottom of page 44.
Page 45: special rules apply if the qualifying child is a child of divorced parents or separated parents. You can refer to the information but volunteers will likely not encounter this at the site so don’t go into detail about the rules. Just make sure volunteers know where to find the information if needed.

37. Rules for claiming an exemption for a Qualifying Relative
Taxpayer (spouse) on the return cannot be claimed on another tax return
Cannot claim a married person who files MFJ unless the married person is only filing to claim a refund of tax withheld and he/she has no tax liability
Must be U.S. citizen or resident, or a resident of Canada or Mexico for some part of the year
Person must meet the four tests for Qualifying Relative
Page 46

38. Qualifying relative tests
Not a qualifying child
Relationship
Gross income
Support
Page 46
Carefully review relatives who do not have live with the taxpayer

39. Quiz time
Page 47
Complete the quiz together.

40. Topic 3: Filing Status

41. Marriage status Determines the Standard Deduction amount
Form C, Part II, Marital Status and Household Information
Taxpayer marked the “single” check box on Form C doesn’t mean filing status is single!
Page 51

42. marriage
IRS ruling recognizes same-sex marriages for federal tax purposes
Legally married same-sex couples can choose to amend prior year returns – 2013, 2012, 2011
For tax year 2014, legally married same-sex couples must file married filing joint or married filing separate (head of household, if applicable)
Cultural marriage ceremonies performed in certain groups and communities are not legal marriages in Minnesota without a license
Minnesota does not recognize common-law marriage unless the couple (prior to moving to Minnesota) was legally married in a state recognizing common-law marriages
Page 51

43. Filing status Single (S): unmarried or legally separated
Married filing jointly (MFJ): married. Including same-sex couples
Qualifying widower (QW): spouse died in one of two prior tax years and taxpayer did not remarry. Must be able to claim exemption for child or stepchild. Use MFJ in the year in which the spouse died.
Page 52

44. Married filing separately (MFS)
Married, but chooses to file MFS
Least desirable filing status, tax rate generally higher than joint return
Not eligible for many of the credits
Consider HH if child or relative lives in the home
If taxpayer is filing MFS because spouse owes past-due federal debts consider filing Form , Injured Spouse Claim and Allocation.
Page 52
Carefully review the bullet points for MFS.

45. Head of household (HH) Unmarried or “considered unmarried”
Must have a Qualifying Person that lived in the home for more than ½ the year
Must meet 5 tests to be “considered unmarried”
Pages

46. “Considered unmarried”
1. File separate return
2. Paid ½ cost of keeping up home
3. Spouse not in home last 6 months of year
4. Main home of child
5. Can claim exemption for child
Page 53
3. emphasize the spouse cannot live in the home any time in the last 6 months of the year
4. emphasize – a grandchild does not meet this test.
5. special rules for noncustodial parent – refer to page 45 in the manual.
Refer to cost of keeping up a home worksheet on the bottom of page 53.

47. Qualifying Person for HH
A Qualifying Child
A married child who can be claimed as a dependent
A dependent parent
A Qualifying Relative who:
lived with the taxpayer more than ½ the year;
taxpayer can claim exemption; and
is related to the taxpayer.
Page 54
Do not confuse the Qualifying Person with a Qualifying Child or Qualifying Relative.
Emphasize that cousin does not qualify taxpayer for HH nor does any Qualifying Relative NOT RELATED to the taxpayer.
Remind volunteers that a qualifying parent does not have to live with them, they only need to be able to claim an exemption for the parent. This includes parents living in Mexico or Canada.
Review examples at the bottom of page.

48. Quiz time
Page 55
Complete quiz together

49. 10 minute break
10 minute break

50. Topic 4: Income
Page 56
Shows Form 1040 – no need to review – just a reference when needed at the site.

51. Line 7: Wages, salaries, and tips
Payment for work performed as a VISTA volunteer is considered wage income
Income earned as an election official or worker is reported on Form W-2
Qualified Medicaid waiver payment reported on Form W-2
Page 57
Bullets 1 & 2 are informational and does not require in-depth overview.
2013 IRS ruling changes how we treat Qualified Medicaid Waiver Payments. Payments may be reported on a W-2 (line 7) or 1099-MISC (line 21). Do not go into detail. Alert volunteer that most taxpayers will know about the tax implication and may even have a letter from the employer describing the payment and tax issue.

52. Form w-2 alerts Don’t start the return -
Taxpayer doesn’t have all their W-2s
W-2 appears altered
Name is different than the SS card for a reason other than an obvious minor typo error
Start the return –
SSN on W-2 differs from SS card (and taxpayer isn’t filing with an ITIN)
Name on W-2 differs from SS card because taxpayer got married and did not notify their employer
Page 57
Some volunteers have prepared returns w/o all W2s and told taxpayer to amend their return when they get all of their W2s.
For each bullet, outline what volunteer should tell the taxpayer.

53. Form w-2, box 12
(D) 401(k) contribution deducted from income (E) 403(b) contribution deducted from income (J) Nontaxable sick pay (W) Employer contribution to employee’s HSA (DD) Nontaxable employer-sponsored health coverage
Page 59
Do not review all codes, but highlight the list on the slide as potential items they might see at the site. Tax implications of some of the codes will be discussed later in the training.
Highlight that TaxWise software will prompt the volunteer to complete certain forms when these codes and amounts are entered into TaxWise.

54. Scholarship/fellowship income
Form C, Part III, Income, #3
Is the scholarship/fellowship income taxable?
Determine the type of expenses paid with scholarship/fellowship income
Ask taxpayer whether he/she was a degree or non-degree student
Use worksheet to determine taxable portion, Pub , Tab J, page J-1
Page

55. Scholarship income Scenario 2 $12,500 Tuition $650
Course-related materials
$650
Scholarships and grants
($20,000)
Taxable scholarship income
$6,850
Page 61

56. LINE 8: INTEREST LINE 9: DIVIDENDS Form 1099-INT
Taxpayers at our sites, generally taxable interest from checking or savings accounts
Look for withholding in box 4
Form 1099-B
Ordinary and qualified dividends from corporate distributions
Look for withholding in box 4 and foreign tax paid in box 6
Pages 62 & 63
While more information is provided in the tax manual, highlight the basic information shown on the slide
Mention the foreign interest paid in box 6 because it’s on the certification test.

57. Line 10: taxable state tax refund
Scenario 1: Taxpayer used the Standard Deduction on their 2012 tax return. State refund, if any, not taxable.
Scenario 2: Taxpayer did not receive a state refund. Nothing to report.
Scenario 3: Taxpayer received a state tax refund and itemized deductions on Schedule A using the general sales tax deduction on 5b – state refund not taxable.
Scenario 4: Taxpayer received a state refund and itemized deductions on Schedule A using state income paid on 5A – some or all of their refund may be taxable. Complete St Tax Refund – State Tax Refund Worksheet.
Page 64
Because copies of prior year returns do not indicate what the amount of general sales tax deduction (5b) would have been on Schedule A if taxpayer used the state income tax paid (5a); volunteers can use the tables on page 64 to determine the correct amount to enter on line 2 of the State Refund Worksheet.

58. Line 11: alimony received
Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument.
Does not include any voluntary payments not outlined under a divorce or separation instrument.
Alimony does not include payments for child support, noncash property settlements, payments to keep up the payer’s property or the use of the payer’s property.
Alimony payments are not reported on a form.
Page 66
Briefly run through bullets.

59. Line 12: self-employment income
SE income is an Advanced level topic
If interested in Advanced certification, check out the online training available on P+P volunteer site
Pages

60. Line 13: capital gains Capital gains income is an Advanced level topic
If interested in Advanced certification, check out the online training available on P+P volunteer site
Pages

61. Lines 15 and 16: pension and annuities
Distribution can be reported on 4 different forms
Form 1099-R are generally the retirement distributions seen at the tax site, box 2 showing taxable portion
Form 1099-R distribution codes identify the type of distribution
Occasionally will come across a Roth IRA distribution
Page
Identify the type of forms, but only review the (1) traditional IRA and (2) Roth IRA.
Point out, but do not review, (3) SIMPLE IRA and (4) SEP IRA .
Page 82, definitions of distributions codes.
Page 82, point out what to do if distribution is a rollover – code G. Rarely seen at the site.

62. Taxable portion not calculated
Taxable amount not shown in box 2, Form R or the distribution is reported on Forms CSA R, CSF-1099-R or Form RRB 1099-R
See Pub 4012, Tab D, page D-25 to complete the Simplified Method Worksheet in TaxWise to determine taxable amount
Page 83
While this scenario is generally not the case it is important that the volunteer know what to do if the situation arises.

63. Early distribution of a retirement plan
Form 1099-R, box 7 shows the type of distribution on box 7
If early distribution, code 1 appears in box 7 and distribution is subject to a 10% penalty
Some exceptions apply to the 10% penalty, but the early distribution income is still taxable!
Page 85
Briefly review some of the exclusions to the penalty

64. Line 19: unemployment compensation
Reported on Form 1099-G
Be sure to include any federal or state withholding on the unemployment worksheet in TaxWise
Copies of Form 1099-G can be found online
Page 86

65. Line 20: social security and railroad retirement benefits
Social Security reported on Form SSA-1099
Railroad Retirement-Tier 1 reported on Form RRB-1099 (blue form)
Do not include any benefits paid to the taxpayer’s child or other dependent
Taxpayer filing MFS up to 85% of the benefits will be taxed
Significant lump sum payments, refer to P+P for an appointment 87
Generally benefits are not taxable with taxpayers we serve; however the nontaxable portion is included in “household” income for state credits and the homeowner property and renter refund return (M1PR).
Highlight bullet for lump-sum benefit payments. On test.

66. Line 21: other income
Taxpayers with income from sheltered workshops or work training programs prepared at the P+P main office only
NEW: cancellation of nonbusiness credit card debt is now in-scope (Form 1099-C)
Gambling winnings (Form W-2G)
Tribal distributions (Form 1099-MISC)
Income received from jury duty, as a medical subject, AmeriCorps or hobby income
Page 90, sheltered workshop income is prepared at the P+P office so no need to review.
Page 90: cancellation of nonbusiness credit card debt can be prepared at the site – review the 3 bullets in the manual
Page 91, gambling winnings – review
Page 92, tribal income generally not seen at P+P sites. Make volunteer aware if they see per capita payments to refer to page 92 for further instruction.

67. Topic 5: Adjustments

68. Line 23: educator expenses
Congress extended this expired provision for tax year only
Eligible educator: K-12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hour during the school year.
Qualified expenses: ordinary & necessary expenses paid for books, supplies, equipment, and materials used for the classroom.
Home-school instructors or expenses related to home- schooling do not qualify.
Max $250 for taxpayer and $250 for spouse if MFJ.
Page 93
We rarely see this at the tax sites so briefly review.

69. Line 25: health savings account
Health Savings Account (HSA) adjustment to income is separate certification test
If interested in HSA certification, check out the online training available on P+P volunteer site
Please consider taking the HSA test!
Pages 94-96

70. Line 31a: Alimony paid by the taxpayer
Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument
Alimony does not include payments for child support, noncash property settlements, payments that are part of community income, payments to keep up the payer’s property, or the use of the payer’s property
Must have the social security number of the person to whom he/she paid the alimony to e- file the return
Page 97
Rarely seen at the site

71. Line 32: IRA deduction
Only contributions to traditional IRAs are deductible.
Must be under 70 ½ years of age at end of tax year
Must have taxable compensation
Contributions must be made by April 15, for the 2014 tax year
Page 97
2014 tax year, taxpayer must be born on, or after, July 1, 1944.
Even though Roth IRA contributions do not qualify for the deduction, complete the IRA deduction worksheet in TW to determine whether the contribution is eligible for the Savers’ credit.

72. Line 33: student loan interest
Reported on Form 1098-E or statement from the lender
Eligible deduction up to $2,500
Taxpayer filing MFS is not eligible for deduction
Interest paid for eligible student that was the taxpayer, spouse, or person who was the taxpayer’s dependent when the loan was obtained
Interest does not qualify if the loan was from a related person, employer plan or if taxpayer not legally responsible for the loan
Page 98

73. Line 34: tuition and fees deduction
Congress extended this expired provision for tax year 2014 only
Reported on Form 1098-T or statement from the school or lender.
Can deduct up to $4,000 in qualified expenses during the year
Page 99
Generally, the American Opportunity Credit or Lifetime Learning Credit are a better tax benefit for the taxpayer than the adjustment. The credits will be discussed in greater detail in Basic B
Eligible student, expenses, etc. will be discussed later in presentation

74. 5 minute break
stretch
It is very important that volunteers can stand up and move around for a few minutes before heading into the final portion of the training.

75. Topic 6: Taxable income & tax
Page 100
Shows Form 1040 – no need to review – just a reference when needed at the site.
Line 46, Excess Advance Premium Tax Credit, will be covered in Basic B along with other Affordable Care Act (ACA) information.

76. Standard or itemized deduction?
Most taxpayers have a choice
Complete Schedule A (itemized deductions), if taxpayer has deductible expenses, and TaxWise will determine the best tax benefit
Line 39b: If married filing separately and spouse itemizes, then he/she must itemize
Line 39b is out of order in the manual and information is located on page 107

77. Line 40: standard deduction
$12,400, married filing jointly and qualifying widower
$9,100 head of household
$6,200 single and married filing separately
If taxpayer claimed as dependent on another return, TW calculates standard deduction.
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78. Line 40: itemized deductions (Schedule A)
Allows taxpayer to reduce taxable income based on specific personal expenses
Generally itemized deductions are mortgage interest, large unreimbursed medical expenses or large charitable donations
Interview questions to determine whether to itemize, Pub 4012, Tab F, pages F-3 and F-4
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For detailed information refer to 1040 instructions (A-1 to A-13).

79. Schedule A deductions Line 1: unreimbursed medical and dental expenses
Line 5a: state income tax withheld from W-2s and 1099s and other tax payments for an earlier year paid during the current year, such as state taxes owed on the Minnesota individual tax return
Line 5b: general sales tax deduction for taxpayer with little or no state income tax withholding (extended provision)
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Line 1: highlight the requirement that the portion f expenses that can be deducted have to exceed 10% of the taxpayer AGI, 7.5% for taxpayer age 65 or older.
Line 1: cannot deduct medical expenses reimbursed by insurance, flexible spending account or health savings account.
Line 5b: Congress has extended the general sales tax deduction for tax year only. A handout with the current local sales tax rates will be available at the tax site.

80. Schedule A deductions
Line 7: personal property taxes, such as car tabs
Line 10: mortgage interest (box 1) and points (box 2) on Form 1098
Line 13: qualified mortgage insurance premiums (box 4) on Form 1098 (extended provision)
Line 16: donations by cash or check to charitable organizations
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Line 7: In Minnesota must deduct the $35 plate and filing fees from car tabs. Car taxes paid can be found online.
Line 13: mortgage insurance premiums provision has been extended for tax year 2014 only.

81. Schedule A deductions
Line 17: in-kind donations to charities (donations of $500+ are out-of-scope)
Lines 21 to 23: portion that exceeds 2% of taxpayer’s AGI for expenses to work or look for work, union dues, tax prep fees or safety deposit box
Line 28: gambling losses to the extent of winnings reported on line 21, Form 1040
Casualty and theft losses are out-of-scope
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82. Homework Get a head start on your IRS certification test!
Use Form 6744 booklet to complete the Volunteer Standards of Conduct certification level
Go to P+P volunteer page and view Intake/Interview & Quality Review power point, Pub 5101
First year volunteers – did you show your picture ID to the assistant?
The questions listed in the slide do not require TaxWise software to answer.
Even though they will be completing the test online, many volunteers find it helpful to answer the questions in the paper text booklet before going online.