Welcome & Happy New Year Refresher Training 3-5 Jan 2017

Transcription

1 Welcome & Happy New Year Refresher Training 3-5 Jan

2 Preliminaries Sign In Sheet (check name each day) Breaks & lunch Class schedule Start: 9:30 AM Tues, 9:00 AM Wed and Thurs, adjourn approximately 3:30 PM, except Wed 3:00 PM 2

3 Overview Administrative matters Certification requirements What s new (paper handout) Discuss/demo use of TaxSlayer to prepare returns TaxSlayer reminders (paper handout) MA return requires manual carryover of data MA laws handle interest and dividends differently Describe TaxSlayer changes for 2016 production Go over IRS test and MA Instructional Problems 3

4 Volunteer Protection Volunteer Protection Act of 1997 Certified volunteers not liable provided We act within scope of program Any harm that occurs is not willful Taxpayer is responsible for return We are helping to prepare, submit return Our names do not appear anywhere on taxpayer return 4

5 Reimbursement Flat-rate of $35 for counselors Itemized expense voucher Mileage at 53.5 cents/mile for 2017 Need specific dates/locations Need purpose (e.g., prepare returns) Covers training classes (54 cents/mile for 2016) Covers counseling 2/1 4/18 Can only be submitted via AARP Portal LC s can purchase supplies/itemize on voucher Direct deposit encouraged 5

6 Training & Reference Documents IRS Pub Student Training Guide (STG) Basic training source for Federal tax laws and rules Only available electronically IRS Pub Volunteer Resource Guide (VRG) Great reference for test and for preparing returns Covers Federal tax law and how to use TaxSlayer software AARP version (28 Dec) with NTTC and anticipated IRS 4491X changes is now available electronically on both MA websites Recommend having copy available at each site IRS Pub 4961 Standards of Conduct Ethics 6

7 Training & Reference Documents IRS Pub 5101 Intake/Interview and Quality Review IRS Form Volunteer Test/Retest Test problems, test/retest answer sheet, Volunteer Agreement Everyone (including client facilitators) takes Standards of Conduct test and Intake/Interview test Preparers also must pass Advanced segment test IRS Publication 17 - Your Federal Income Tax Used for more complex issues 2016 version electronically available on both MA websites; paper will be delivered to everyone 7

8 Reference Documents & Websites MA Form 1 Instructions Covers MA tax rules and laws, line by line Get paper copy at library; available on both MA websites MA Manual (MM) Fall 2016 Covers MA unique tax laws and how to use TaxSlayer to complete MA returns on both MA websites Websites

9 Certification Tests Pub , page 6 Required, pages & Required, pages Recommended for libraries, Not required, pages

10 District 20 Certification Requirements Pass Standards of Conduct, Intake/Interview and Advanced Federal test with > 80% for each part New volunteers should submit paper test answers & Returning counselors can enter test answers on Link and Learn (see later chart) Any counselor can submit paper test answers & Can also ask for comments on returns Due date to H. Gong: Mon, 23 Jan 2017 Extensions handled on a case by case basis Federal retest available Complete MA Instruction Problems using 2015 software 10

11 Paper Test Requirements Test Answer Sheet 6744, Page 7 11

12 Volunteer Standards of Conduct Agreement (Form 13615) 6744 (pages 18-19) 12

13 Use Link and Learn To Enter Test Answers Take test as if you will submit paper answer sheet, but answer both test and retest questions Do test returns using TaxSlayer 2016 Practice Lab Create an account on Link and Learn site to enter answers Recommend using Internet Explorer browser URL: Can start test, log out and log back in On completion, save Volunteer Standards of Conduct Agreement showing passing grades make sure it is electronically signed 13

14 Submit Test Results Paper answer sheet and signed Volunteer Agreement Scan and to me, or Mail to me at 166 Pine Hill Rd, Chelmsford, MA Electronically signed Volunteer Agreement with test scores PDF to me 14

15 Chelmsford SC Wireless Network Must use Windows Operating System or Apple Safari. AARP recommended browsers for Windows: Internet Explorer or Chrome latest version TaxSlayer says Firefox and Edge also OK Some volunteers agree TaxSlayer software requires Adobe reader Connect to Chelmsford SC wireless network Password 15

16 TaxSlayer On-line (TSO) For December, new volunteer training, we used TaxSlayer 2015 Practice Lab (PL) because we needed MA software For certification we will use TaxSlayer 2016 PL (no MA available yet) Click on desktop icon, or Open Internet Explorer or Chrome and insert URL: Put URL into favorites list or create desktop icon (only if you use IE or Chrome as your default browser) Initial password: TRAINPROWEB User name and password provided previously Real returns will be done on TSO 2016 Production Available around 15 January 2017 for setup 16

17 What s New/Special Topics On separate handout Policies, practices, scope Specific tax topics and TaxSlayer reminders Affordable Care Act (ACA) Refresher Health Saving Accounts What to watch out for Handling certification/aarp policy 17

18 Affordable Care Act (ACA) Basics (4012, ACA tab) Taxpayer(s) and dependents must Have Minimum Essential Coverage (MEC) health insurance each month, or Have a coverage exemption, or Make a Shared Responsibility Payment (SRP) Insurance bought on Marketplace* Advanced payments can be sent to insurance company, or Buyer can pay premiums Buyer will get 1095-A used to fill out Federal return *Marketplace in MA is the Health Connector 18

19 Affordable Care Act (ACA) Basics For Marketplace purchased insurance, Federal return used to reconcile advanced payments or buyer premiums paid vs year s cost for insurance Taxpayer may owe , line 61 Taxpayer may be eligible for refundable Premium Tax Credit (PTC) 1040, line 69 Net may be zero 19

20 Prior Year Observations >95% of our taxpayers & dependents had full year MEC coverage through Medicare, MassHealth or employer provided insurance A few had insurance purchased on Marketplace Have to enter 1095-A into TaxSlayer Some taxpayers had no MEC or only part year If a Shared Responsibility Payment (SRP) is due, TaxSlayer will calculate amount We have to determine if exemptions apply and enter reasons into TaxSlayer to avoid some or all of SRP 20

21 ACA versus MA Health Care ACA coverage for taxpayer(s) & dependents; MA coverage for taxpayer(s); for ACA dependent income may be factor ACA requires Medicare and US military (like Veterans & Tricare) to be full year; for MA, coverage at any time in year is considered full year coverage ACA and MA handle gaps differently ACA short term gap is less than 3 months*; only one allowed in a year; 2 month gap cannot be used to offset longer gap; last year affects this year; gaps apply to newborn dependents and deceased MA short term gap is less than 4 months*; multiple gaps permissible; 3 month gap can reduce penalty for longer gap; each year handled independently 21

22 ACA versus MA Health Care * Partial months are different Fed vs MA If taxpayer owes both ACA and MA penalty: MA penalty is reduced by ACA penalty Coverage by month now filled out similarly on Federal and MA screens Bottom line: ACA and MA health insurance coverage rules are different Must fill out both Health Insurance section (just below Federal Section) and Health Insurance screen in MA section No carryover of data from Federal to MA section In MA, only fill in minimum required information (same as prior years); including more data than required will cause MA e-file reject 22

23 Health Care Forms ACA forms to be provided to taxpayers 1095-A provided for Marketplace bought insurance 1095-B provides evidence of health insurance coverage includes Medicare, MassHealth 1095-C provides evidence of health insurance coverage for employees in companies with >50 full time employees Deadline for delivery to taxpayer is 2 March 2017 MA 1099-HC still is needed for MA return For private insurance, provides FEIN and subscriber numbers and month by month coverage AARP volunteers can accept taxpayer verbal statement of MEC/MCC coverage unless taxpayer has a credibility issue 23

24 Other ACA Forms Form 8962 for people who buy Marketplace insurance, used to reconcile payments vs actual year s insurance costs Include dependent income only if dependent must file a return (see page ACA-9, 15) Form 8965 used to document reason for exemption, full year or partial year Exemption codes are listed in 4012, page ACA-7 These forms are filled out, when they are required, as we answer questions in the Health Insurance section after entering Federal data Read the questions carefully and fully Recommend doing Hudson, Meadows, & Clark for practice 24

25 Summary Thoughts About 95% of our taxpayers have full time coverage. No issue. Fill out TaxSlayer screens to show full time coverage Fed and MA Other 5% Easy situations exemption is easy Household income below filing threshold on Fed or below 150% FPL on MA TaxSlayer will grant low income exemption Short term gap (2 months for Fed, 3 months for MA) or longer gaps for newborns and deceased taxpayer or dependent We have to identify reason on TaxSlayer screen for Fed We have to mark off months covered for Fed and MA MA assumes deceased taxpayer had full time if covered 25

26 Summary Thoughts Other 5% (concluded) More difficult situation TaxSlayer calculates SRP and we have to determine if insurance is affordable Ask for help if needed With Federal, use Bogarts tool URL for tool is on MA website, or %20Calculator.html On MA, must use Schedule HC worksheets in Form 1 instruction booklet manual calculation 26

27 Health Savings Account Associated with high deductible health insurance plans Individual and family plans are available HSA s are similar to traditional IRA s Administered by a trustee/custodian Total contributions made each year are limited Contributions can be made by employer, employee $1,000 increase on limit for employees over 55 Contributions made each year directly to trustee on employee s behalf may allow an income adjustment on Federal return Funds in HSA grow tax free; do not have to use yearly 27

28 Health Savings Account Money withdrawn from HSA is tax free if used for qualified medical expenses Expenses cannot be used on Sch A 10% penalty if HSA money is used for nonqualified medical expenses If total amount contributed (employer and employee) in a year exceeds limit: 6% penalty on excess, year after year, until withdrawn 28

29 Recognizing Return with HSA Intake sheet asks if taxpayer has an HSA Taxpayer HSA documents W-2 with code W in Box 12 total contributions from employer and employee (thru employer cafeteria plan)* 1099-SA with HSA box checked - issued by trustee for withdrawals 5498-SA with HSA box checked - issued by trustee & states total contributions for tax year May not be available in time for taxes; if so, Have to ask taxpayer about non-w-2 contributions (has pitfalls) Incorrect information can trigger penalties * Not considered employee contribution 29

30 Handling HSA Returns Look for any of the documents on prior slide; ask taxpayer if he/she has HSA; look at Intake Sheet Entering a W-2 with an entry in Box 12, Code W triggers Form 8889 in TaxSlayer that may need to be completed Taxpayer with a 1099-SA or 5498-SA, but no W-2 will need to fill out TaxSlayer screen for Form 8889 If you are certified for HSA, complete return, but put return on hold pending second person review by someone who is also certified 30

31 Handling HSA Returns If you are not certified for HSA, enter all data, put return on hold and contact me We will contact taxpayer to finish return Recommendation: Certify for HSA, especially if you work at a library 31