Are You Equipped to Prepare Iowa Tax Returns?

Transcription

1 Page # Are You Equipped to Prepare Iowa Tax Returns? Use your 2016 Iowa Volunteer Training and Reference Manual to complete this quiz. In the box to the left of the question, mark the page number where you found the answer. NOTE: There is no Iowa certification. This quiz familiarizes you with the Iowa Manual and reviews some key issues True/False. The taxpayer s current address will tell which school district to enter on the Iowa return. 2. True/False. School districts and codes can change from year to year, so you must use a current-year list If a married couple filed jointly on the federal return, they can choose Iowa filing status 2 (Joint) or status 3 (Separate on this Combined Return). How will you know which one to choose? Try it both ways and use whichever is most advantageous to the taxpayers. 4. Many clients have incomes low enough that they are not required to file an Iowa Return. List two situations where they SHOULD file a return anyway. 1) to get a refund of any tax withheld; or 2) to receive refundable credits (such as EITC). This is the same as guidance for federal returns On their Federal return, Beatrice files an injured spouse form to avoid having her Federal refund taken to pay back her husband s debt. How can she avoid that same problem on the Iowa return? The only way to avoid it is for both TP and SP to use Filing Status 4 - MFS Which of the following types of income are exempt from Iowa Income tax? _X_ Social Security Scholarship income A teen s occasional babysitting income _X_ Military Pension income _X_ Railroad Retirement Income IPERS income Municipal Bond Interest _X_ Interest reported in box 3 of 1099-INT Bill and Bethany are married filing jointly for 2016 and have two children. a. What is their maximum deductible contribution to each child s Iowa 529 College Plan? $6,376 per child b. Where will they enter that figure? Line Chuck buys health insurance through the Marketplace. His premiums were $4,320/year, but he received an Advance Premium Tax Credit of $2,400, so his monthly insurance payment was $160. His 2016 Federal Return shows he will receive an additional $300 in Net Premium Tax Credit (Line 69). a. What figure should appear on Line 18 of the 2016 Iowa return? _$1,920 ($160 x 12) b. How will this information affect his 2017 Iowa tax return? _$300 will be other income on Line 14_ 9. Miguel and Susan are married and filed a joint federal return. Susan s out-of-pocket health insurance premium were $4200 for the year, while Miguel s premiums were only $2600, since he is on Medicare. What figure(s) should be reported on Line 18 a. if they file Jointly (filing status 2)? $6800 b. if they file Separately on a Combined Return (status 3)? $4200 in Susan s column; $2600 in Miguel s column 10. In reviewing Michelle's prior year return, you see that in 2015 she bought health insurance through the Marketplace and paid $1200 in out-of-pocket premiums, thanks to the advanced premium tax credit. However, her 2015 Federal Return, Line 46 shows an Excess Premium Tax Credit Repayment in the amount of $520. How will this affect her 2016 Iowa return? The $520 she paid (via reduced refund) to cover her true share of health premium should be added to Line 18.

2 4 11. The Iowa ABLE Account is similar to College Savings Iowa, allowing tax-advantaged contributions to a savings trust for the benefit of an individual with a disability. The amount contributed is entered on what Line of the Iowa return? Line To be eligible for the Iowa Pension Exclusion (Line 21), a taxpayer must meet one of three criteria. What are those three possible eligibility factors? 1) be 55 or over on 12/31 of tax year; or 2) be disabled; or 3) be a qualifying survivor of pension recipient would be eligible based on age or disability Melissa is 53. Her husband died two years ago at age 58. She is not retired, but she receives a survivor s benefit from his pension plan. Can she use the Line 21 Pension Exclusion? Yes (because her husb would be eligible if he was alive) If the prior year Iowa return shows the taxpayer was Low Income Exempt, then what line (on the front page of the current-year Iowa Return) should be left blank? Line 27 42, Hannah and Rolf used filing status 2 (Joint) last year, but this year will use status 3 (Separate/Combined). Rolf is listed as Taxpayer and Hannah as Spouse. Last year they received a federal refund of $940, which included no refundable credits. Last year, Hannah s income was $2,900; Rolf s was $30,800. This year, Hannah s income was $22,200 and Rolf s was $33,000. What figures should be entered on Iowa Line 27: a. in the Taxpayer Column? $855 b. in the Spouse Column? $85 9% of income that tax year was Hannah s income, so 9% of refund is attributed to her True/False. If you choose the standard deduction on the federal return you must also choose the standard deduction on the state return True/False. If taxpayers itemize, they can fully deduct their vehicle registration fee What is the maximum K-12 Tuition and Textbook Credit that can be claimed for any one child? $ The K-12 Tuition and Textbook credit is _25_% of a family s qualifying expenses for children in grades K Which of the following expenses are qualifying expenses for the Iowa K-12 Tuition and Textbook credit? Att Registration fees for Pre-K through Grade 12 _X_ Student activity ticket - admission to school events _X_ Private school tuition (accredited) _X_ Cleated track shoes Notes: F Student Council T-shirt Tennis shoes K-12 Registration fees qualify, but Pre-K do not. School lunch fees _X_ Required supplies for woodworking class _X_ Required school supplies _X_ Rental of tux for prom _X_ Driver s Education fee paid to the school _X_ Cheerleading uniform Hank s total income was $40,600 and AGI was $39,800. He doesn t pay for day care, but pre-school tuition for his 4-yr-old was $1,350. a. On what line can he take a credit for that expense? _60 (Early Childhood Dev Credit) b. How much will that credit be? $250 c. If his income was over _$45,000, he would not be eligible for this credit What are the eligibility factors for the tax credit for volunteer fire fighters and volunteer EMS (emergency medical services) personnel and reserve peace officers? (mark all that apply) The volunteer must have served the full year to receive the credit _X The volunteer must have met the qualifications for their category: 1) firefighters meet minimum training standards; 2) EMS - be a certified first responder; or 3) Reserve peace officer - be statecertified. The volunteer must have responded to at least 60% of calls during the year. _X The volunteer must have a written statement from his/her supervisor specifying months served. 23. What line is this credit reported on? 45 Clothing items suitable for street wear do not qualify Paul has a completed federal form 8332, signed by his ex-wife, acknowledging his right to claim his daughter as a dependent on this year s tax return. Where should he send that form for the state of Iowa?

3 He should hold on to the supporting documentation, along with form IA 8453, and only send it if/when the Iowa Dept of Revenue requests it.

4 Complete lines for Hal and Mindy Samphong, based on their 2015 federal return, shown below. They married in June of In 2014, Hal did not file a tax return, so he filed his 2014 return in February of 2016 at the same time they filed their 2015 return. He received a federal tax refund of $285 for In 2016 they paid no federal tax for any prior year. Excerpt of Hal and Mindy s 2015 Federal Return: Complete Lines of Hal and Mindy s 2016 Iowa return: 26. Net Income:.$ 29, Federal income tax refund/overpayment received in 2016: 1415 (1130 for for 2014) 28. Self-employment/household employment taxes: $ _0_ 29. Addition for federal taxes. ADD lines 27 and 28:.. 1, Total. ADD lines 26 and 29:.. 30, Federal tax withheld: $ Federal estimated tax payments made in 2016:..$ Additional federal tax paid in 2016 for 2015 and prior years: Deduction for federal taxes. ADD lines 31,32 & 33: 2, Balance. SUBTRACT line 34 from line 30: 28,561

5 Complete lines for Fred Karpinski, based on his 2015 federal return, shown below. In 2016 the only Federal tax he paid was $960 withholding shown on a W-2 form. He received no federal refund because of a prior-year tax debt. Excerpt of Fred s 2015 Federal Return: Complete Lines of Fred s 2016 Iowa return: 26. Net Income:.$ 27, Federal income tax refund/overpayment received in 2016: Self-employment/household employment taxes: $ Addition for federal taxes. ADD lines 27 and 28: Total. ADD lines 26 and 29:.. 28, Federal tax withheld: $ Federal estimated tax payments made in 2016:..$ Additional federal tax paid in 2016 for 2015 and prior years: 16 ( ) 34. Deduction for federal taxes. ADD lines 31,32 & 33: Balance. SUBTRACT line 34 from line 30: 30,497