HLS TaxHelp Training

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HLS TaxHelp Training
PLEASE SIGN IN!
February 7, 2009
(2008 Calendar Year Returns)
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Overview

• Sign forms if you havent already
• Schedule and volunteering opportunities
• Tax law
• Interviewing
• Using TaxWise
• Review and filing
• Certification

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Schedule and Opportunities

• Community Learning Center, Central Sq
• 19 Brookline St. 2 (computer lab, thru lot),
  Fridays 1-5, Saturdays 10-2
• start Friday Feb 27, off for break (Mar 27-28)
• extra days April 13 and 15
• North Cambridge Senior Center, Porter Sq
• 2050 Massachusetts Ave
• days/times TBD
• HLS staff Thursdays Feb 12 and Mar 12
• 12-5, Holmes
• Extra opportunities, need 1-2 volunteers Feb 14

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Tax Basics Filing Status

• Who has to file? Most people if 8,950, p. A-1
• Status use workbook chart tips, pp. B-1-3
• 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
• Non-residents intermediate issue

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Tax Basics Dependents (1)

• Qualifying Child, pp. C-3-4 (own child, or
  relatives child)
• age test
• household test, with exceptions (e.g. student)
• support test child didnt pay 50 of own
  expenses
• Qualifying Relative, gross income C-5-6
• support test (slightly diff than QC), household
  test (non-rel only)
• child of non-rel can QR if parent not filing or
  refund-only
• 1 global exemption per person no
  double-claiming
• sometimes more than one possible QC claimer
  tiebreakers
• but not supposed to be discretionary b/w claimer
  and dependent

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Tax Basics Dependents (2)

• Child credits automatic in TW, except child/dep
  care
• EIC reqs mostly the same, but check (esp. SSNs)
• Divorce usually custodial gets
  deductions/credits, but
• can sign away dep exemption and child tax credit
• cant sign away HoH status or EIC qualifying
  child
• Dependency and HoH not always same, e.g. divorce,
  or
• child-of-girlfriend
• student (non-primary res, unusual)
• Taxpayers parent as dep or HoHdont need
  live-in, just 50 cost (but non-parent rel need
  live-in for HoH)

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Tax Basics Income Types, p. D-1

• Earned v. unearned (definition)
• Wages (form W-2)
• both federal and state info, match address
• check for part-year state residency issues
• Bank interest (form 1099-INT), dividends
  (1099-DIV)
• IRA, 401(k), other pensions (form 1099-R)
• taxes are only owed if disbursed, or Roth IRA
• some government pensions not taxed by MA
• Social security, unemployment, workers comp,
  gambling
• Self-employment intermediate only

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Tax Basics Earned Income Credit

• Primary focus of VITA/TaxHelp
• Credit targeted to low-income taxpayers
• Higher for taxpayers with dependents
• must file married/jointly or head of household
• EIC worksheet will pop up in Taxwise
  automatically if income cutoff is met
• Cutoffs 39k (1qc), 34k (1qc), 13k (0qc)
• Use flow chart/checklist to ensure all
  requirements met (pp. H-2-5), also TaxWise

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Tax Basics Tuition Credits/Deductions

• 3 different ways, all non-refundable
• Hope Credit first 2 years of undergrad, 100
  credit of up to 1650 paid, p. G-3
• Lifetime Learning Credit any undergrad, grad or
  vocational, 20 credit of up to 10k paid, p. G-3
• Tuition/fees deduction _at_ tax rate, up to 4k
  paid
• Usually credits better, but try all that apply
• Make sure to follow charts carefully
• Hope and LLC form 8863, deduction 1040 p. 1

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Tax Basics Other Deductions/Credits

• Keep an eye out during TaxWise interview
• You can ask every question, or by group
• Ones that come up the most (non-itemized)
• Student loan interest, up to 2500
• IRA contribution (traditional yes, Roth no)
• Retirement Savings Credit (form 8880)
• Teacher classroom supplies
• (NEW) real estate tax deduction for everyone
• (NEW) stimulus rebate from 2008

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Tax Basics State (MA)

• Credits/deductions
• Rent
• T pass to/from work (weekly/monthly)
• Home heating oilno credit in 2007 (2008?)
• Proof of Health Insurance
• taxpayer should receive MA 1099-HC in mail
• if no insurance, might be MA refund penalty
• First time state filers cant e-file for MA (?)

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Intermediate-Level Issues Itemized Deductions

• Almost everyone takes standard deduction
• Ask taxpayer if he/she has itemized before
• Biggest reasons to itemize
• Mortgage
• Large health care costs
• Other large purchases (e.g. new car)
• must be 5,450 (s), 10,900 (m), 8,000 (HoH)
• Itemized returns can only be completed by
  intermediate-certified volunteers

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Intermediate-Level Issues Self-Employment Income

• Some taxpayers will have self-employment income
  (housekeeping, babysitting, small business, etc.)
• May have 1099-misc or no documentation
• Returns with self-employment income can only be
  completed by intermediate-certified volunteers

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Miscellaneous Issues

• Multiple states (part-year or non-resident)
• Amended returns, 1040X
• NEW can now do in TaxWise
• Applying for ITIN
• NEW can now do in TaxWise
• Past year returns, in TaxWise
• Ask for help with these if you need it

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Advanced Issues

• We do not cover them
• 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

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Logging into TaxWise

• Website is https//twonline.taxwise.com, or
  https//twonline.taxwise.com/training
• User first initial last name (all caps)
• Initial password will be the same (you will have
  to change it the first time)
• Our client number is 796235
• EFIN is 040449 (dont need for login)

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Completing the Return Interview

• Review intake form, introductory chat
• Size up the bigger issues
• filing status and dependents
• types of income
• possible deductions/credits
• Start TaxWise interview, enter info
• Keep in mind what is being asked and why
• If any intermediate issues, refer to expert

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Completing the Return Forms

• USE ALL CAPS NO PUNCTUATION
• Check for red anywhere, CTRL space
• Do federal and state unless reason not to
• Be very careful with SSNs and addresses
• Encourage e-file, but paper if taxpayer prefers
• Check or direct deposit voucher or e-withdrawal
• Utilize 4012, Pub 17, irs.gov, and site expert
• See TaxWise flow chart p. 1-1

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Completing the Return Review

• Diagnostic check
• Every return must be quality reviewed, w/sheet
• E-file whenever possible
• you will not e-file yourself, just mark ready
  for e-file
• Print 2 copies if e-file, 3 if paper
• Taxpayer signature, form 8879 (if e-file)
• Attach intake, 1040, W-2, 1099-R, etc. (if
  e-file)
• NEW status sheet (e-file/paper, finished/not)

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Certification

• For tax lessons/reference info
  http//www.irs.gov/app/vita/index.jsp
• For the test http//linklearn.webtechteam.com/log
  in.aspx?ReturnUrl/default.aspx
• Basic level only (unless you want to do
  intermediate)
• 80 right, 2 tries, question types rotate
• Use 4012, Pub 17, and TaxWise!
• When done, go home, print certificate, get
  the pdf, email to ebell_at_law.harvard.edu to be
  scheduled