D45 LOCAL PROCEDURES TY The Preparer and QR must explicitly explain to the clients that they are responsible for everything on their return.

Transcription

1 D45 LOCAL PROCEDURES TY 2017 EXPECTATIONS OF PREPARERS AND QUALITY REVIEW Highlighted items = new for TY 2017 The Preparer and QR must explicitly explain to the clients that they are responsible for everything on their return. Expectations of Preparers Complete the return for in-scope items through the Summary Page, with the following exceptions o The preparer has to be certified for HSA, if applicable for that return. o Under Payments and Estimates, Quality Review will handle the items entitled Apply Overpayment to Next Year s Taxes, and Vouchers for Next Year s Estimated Payments In the E-File section, o Select the Return Type o Enter TP Bank Info, if the Return Type is Direct Deposit or Direct Debit o Complete the Questions section In the Submission section o Under Review/Retransmit select Ready to Review, if applicable o Under Set Return Tags, select tags as appropriate Expectations of Quality Review Review everything the preparer did, and make corrections if needed Address special situations and complete the return Prepare amended and prior year returns. Answer client questions and assist with helpful information BEFORE STARTING A RETURN Before starting a return in TaxSlayer Pro Online (TS for the remainder of this guide) you must verify the identity of the TP, SP and any dependents, determine if all documents are present, and verify that the return will be within the scope that Tax-Aide counselors are permitted to handle.

2 Valid Identification Documents for Clients Before we can start a return, one of the clients must show you a current and valid photo ID to prove who they are. The preferred document is a U.S. driver s license or state-issued ID card. Also acceptable is a United States Passport or a United States Military ID. If someone other than the TP/SP will be signing the return for a living TP/SP, they must provide you with a Power of Attorney specifying their right to file for the person. The identity of the TP and SP will be considered verified if all of their source tax documents have a matching name and SSN and last year s tax return is provided with matching information. The last four digits of the SS number must match if that is all that is on the forms. If not, federal government-issued documents that show the 9-digit Social Security number for each person to be included on the return are required.. Options are: Social Security card or a transcript issued by an SSA office Railroad Retirement Board Benefit Statement (Form RRB-1099-R) Office of Personnel Management Form CSA 1099R or Form CSF 1099R Medicare Card, ONLY if there is an A or T at the end of the SSN For a dependent, the TP must show an actual or copy of the Social Security card. The counselor must answer the dependency questions on the I&I sheet, and ask probing questions to determine that the person actually qualifies as a dependent. If valid documents are not present and the return is in scope, the counselor should check with the LC/SC. Since the client already has the appointment, the decision may be to prepare the return to the extent possible, and then finish the return when the TP returns with the missing documents. Not acceptable: Medicare card (if there is a letter other than A or T at the end of the SSN) Letter showing next year s Social Security benefit (the 9-digit SSN is not shown) Social Security Benefit Statement (Form SSA-1099) (the 9-digit SSN is not shown) Tax forms such as W-2 and 1099-R, unless they are allowed as described above. NOTE: Some employers do not participate in the Social Security system. Their employees/retirees still need to show a Social Security card or satisfy the alternative requirements listed above. If there is an issue with identification documents, talk to the LC/SC. Do not send the client(s) away without talking with the LC/SC. Review of Client Documents

3 BEFORE ENTERING ANYTHING IN THE COMPUTER, sit with the clients and examine all of their papers. If an item is questionable, or there is something you are not comfortable with, see the Site Coordinator. If you feel uncomfortable doing ANY return, for ANY reason, talk to the Site Coordinator. Let the Site Coordinator make the decision. Review the Intake/Interview (I&I) Sheet for anything that needs to be discussed with the clients (Taxpayer and Spouse have different last names, death of spouse, etc.) Make any notations on the I&I in red ink. Do a quick review of last year s return, looking for any differences with this year. If there was a capital loss of -$3,000, check for any Capital Loss Carryforward. If a client selected Divorced on the Intake/Interview Sheet, determine if alimony is involved. If it is, be sure the proper boxes are checked on I&I Page 2 and the client brought the necessary information. Carefully review the Health Care Coverage questions on Page 3 of the I&I form. The client(s) may not have understood correctly the meaning of some of the questions. See the subsection Review of Health Care Coverage on I&I Page 3 in the Affordable Care Act section later in this guide for more details. Examine the client's papers to see if name(s) are consistent throughout. Ensure that all their documents are for the current tax year. Make sure the Social Security number(s) on the papers they brought are for people on the return. Ask the clients if they have received all of the W-2s, interest statements, IRA and pension forms, brokerage statements, etc., that they expect. Electronic documents (on smartphones or other media) can be used to prepare returns if the document can be clearly read from the electronic device. If not, then a paper copy must be provided. If they have ANY brokerage statements, go over those closely. Make sure they have brought all the pages of every brokerage statement they received. Look for sales and make sure the cost basis for each sale is available. If the clients are receiving income from a seller-financed mortgage, they must have the buyer's name, address, Social Security Number, and the amount of interest received. If the client has brought a check or stub that shows a payment from an insurance company (medical or otherwise), and does not have an IRS form from that company showing the same amount, that income is possibly not taxable. Ask probing questions to determine the reason for the payment, and consult the Site Coordinator. If any of those items are NOT available and ready to process, check with the Site Coordinator to see if he/she wants you to start the return. If it looks like the TP may be able to itemize deductions, use the Expense Summary Sheet (on our web site under Appointments) and ask the following: o Was a vehicle (car, golf cart, motorcycle, mobile home) purchased in 2017? If YES, did they bring a Bill of Sale? o Do they have any non-taxable income (such as veteran s benefits, worker s compensation or public assistance payment) that can be added to other income to determine the sales tax deduction? o Do they have a city- or county-issued real estate tax bill for each property owned? o Do they have a mortgage interest statement for each home mortgage?

4 o Do they have a summarized list of medical and dental expenses? o For cash charitable contributions, do they have a statement from the charity and/or receipts/cancelled checks? o For non-cash contributions, the total amount must be less than $5,000. If the total is over $500, then EVERY contribution must go on Form 8283, and the client(s) must provide names and addresses of their charities. No Need to File Even if the TP doesn t need to file a return according to IRS criteria, we should offer to prepare and e-file their return, for identity protection purposes. If this e-file is accepted, no one else could file against their SS number. If this e-file is not accepted, it could indicate an identity theft problem, which is best dealt with sooner than later. Sumter County residents over 65 are eligible for an additional homestead exemption if their income is below a certain level. Many will want a return done to take to the property tax office to establish their eligibility for this exemption. The AGI to qualify is around the $28,000. Please advise clients of this exemption if you notice their AGI is below this amount. To e-file a zero AGI return, go to Income> Other Income>Other Income Not Reported Elsewhere. In description of other income, put IN ORDER TO E-FILE. In amount box, put $1. Dec p. 11. If a TP insists on knowing whether they must file or should file, for reasons other than identity protection, refer to Pub 4012, Tab A, especially Charts C and D. In and Out of Scope The definitive document regarding scope is the Tax-Aide Scope Manual, which can be accessed at villagestaxaide.com, Resources TAB, Complete Line by Line List of In and Out of Scope. If there is a question about a document, see the LC/SC. If some document(s) are OUT OF SCOPE, excuse yourself from the TP and discuss the situation with the LC/SC. Do NOT send the TP away without getting approval from the LC/SC. Local out of scope: Pell grants and other unrestricted scholarships (i.e. don t have to be used for tuition, can be used for living expenses). Reason: TPs can include unrestricted scholarships as income in order to maximize the American Opportunity Tax Credit. This is a complicated procedure, and since we rarely see this in D45, we do not provide training on this subject.

5 Puerto Rico source income including pension income from employment in Puerto Rico. In scope: a Puerto Rico resident who moved to the U.S. mainland prior to 2017 and has no Puerto Rico source income. Order of Client s Documents The Client Facilitator should have already arranged the client's documents in the following order: If the documents are not in this order please put them in this order during your interview. This order approximates the order in which the document content will be entered into TS. Identification: Photo ID and SSN Card or other SSN Verification Income: Wages and Salaries-W2 State and Local Refunds-1099-G, Box 2 Interest and Dividend Income-1099 INT/DIV/OID IRA/Pension Benefits-1099 R/RRB-1099-R Social Security Benefits-SSA-1099/Railroad Retirement Benefits RRB-1099-R Unemployment compensation 1099-G, Box 1 Form 1099-MISC Rent and Royalty Income (Schedule E) Capital Gains and Losses (Schedule D) Alimony received Other income o Gambling winnings W-2G o Other compensation o Payment from qualified educational programs o Cancellation of debt (credit card only, all other is out of scope) o K-1 earnings 1065 K-1, 1041 K-1, 1120S K-1 Carryforward Information For TY2017, carryforward information will be available providing the client filed with any Tax- Aide site that is still open. When the SSN is entered, you will be told whether carryforward information exists, and given choices of what information to carryforward. Do not carryforward bank routing and account information.

6 District 45 Style Guidelines District 45 has adopted the following guidelines for consistency among our various sites and for consistency of returns going to QR for review. Use I&I Sheet, bottom of Page 3, for comments to QR, e.g., when you add multiple RE taxes together on Schedule A. For more extensive comments, or comments that should carry forward into next year return preparation, use the TS Notes function. Use all UPPER CASE letters, and no special characters. Do not type two SPACES next to each other. For resident state, choose None. If there is no state withholding on a form, do not enter any state information. Partially taxable pension if client brought printout from last year, use figure from printout, and put the printout in the 2017 envelope. If no printout, use simplified method calculator at villagestaxaide.com. Don t use TS calculator. Indicate whether income items are joint, only taxpayer s, or only spouse s Sales tax use TS sales tax calculator, 6.0 for state rate, 1.0 for local for everyone TP address enter in e-file section, second part Preparer enters Bank Routing and Account numbers in e-file section. When completed and ready to go to QR, check Ready for Review. QR only is to check the Complete box and mark the return approved after the client has signed the return. If not ready to go to QR, use the Return Template to mark the status of the return. See separate Return Template Exhibit. No information should ever be retained for any purpose. Clients leaving the site for any purpose must take all their information with them. Routing Number Alert

7 CAUTION: Some banks put two Routing numbers on their checks. The first is between the : : symbols at the bottom edge of the check, and the second is above that, but in much smaller type, preceded by the letters ACH. If the clients provide a check with this arrangement, DO NOT USE the number between the : : symbols, USE ONLY the number after ACH. Leaving Notes for QR and/or for Future Preparers Use the TS Notes function to enter a note for QR or for future preparers. Examples are The Public Safety Officer exclusion of up to $3000. TP and/or SP and/or dependents had an IP PIN. TP did not bring a check but insisted we can use the bank info from last year. TP had a late-arriving K-1, or other form, causing the need for an amended return TP did not provide normal identification, i.e., picture ID, SS card or SS benefits statement Anything on the return you found strange or questionable Reasons for a rejected return. It might happen again. o TP claimed a dependent that was already claimed by someone else. o TP forgot to mention that the TP and/or SP had an IP PIN. o TP presented a handwritten W-2 CONSIDERATIONS FOR DEATH OF THE TP OR SP The client must provide a death certificate so that the actual date of death can be verified. A wrong date will cause the return to be rejected. Determine which of the following scenarios applies to your client, and follow the instructions for that scenario. Scenario 1. The person listed as Taxpayer on the prior year return is the one who died, AND someone other than the surviving spouse is filing a Final Return for the deceased person. Select the filing status on the Basic Information- What is your filing status? screen. Most likely this will be Single and click Continue. On the resulting Personal Information Taxpayer Information screen, enter TP data, enter Deceased as the TP occupation and check the box Check here if Taxpayer is deceased Enter date of death and return filer s address. Select Continue and enter the name of the return filer.

8 Make a note to yourself, that, if there is a refund when the return is completed, you must go to Miscellaneous Forms on the top menu bar and select Claim a Refund Due to a Deceased Taxpayer (Form 1310). Fill out the 1310 input screen. Court appointed representatives requesting refunds cannot e-file K-12. Returns requiring payment can be e-filed. If an executor, administrator, or personal representative has been appointed, that person is responsible for filing the final return. If no such person has been appointed, the surviving spouse if responsible, and if none, whoever is handling the affairs of the deceased person. A Power of Attorney is not valid since it expires on the death of the person who signed it. The person filing the Final Return must provide evidence of their own name and Social Security Number Scenario 2. The return is being filed by the surviving spouse who had not remarried by 12/31/17. The surviving spouse will be the primary TP and the decedent will be the Spouse, assuming they filed MFJ for The filing status will probably be MFJ. If it was other than MFJ on 2016 return, ask probing questions and enter the appropriate status on the Filing Status screen. Select Continue and enter TP (surviving spouse) and spouse (decedent) information on the Personal Information/ Taxpayer Information screen. Mark Check here if spouse is deceased and enter date of death. Scenario 3. The return is being filed by the surviving spouse who remarried during 2017 Determine which person the new couple want entered as the Taxpayer and Spouse on their 2017 return and complete a return for the new couple. In addition, if the remarried surviving spouse also needs to file a Final Return for the deceased spouse, the Filing Status of that separate return (for the deceased spouse) must be Married Filing Separately (2016 Pub. 17, Page 21, col 1). Income received in the name of the deceased spouse in the year of death must be entered on the Final Return. If a deceased spouse received a 1099-R from an IRA or 401-K, ask the surviving spouse if she/he has contacted a financial advisor about properly retitling the IRA or 401-K. That may keep that account from instantly becoming 100% taxable. In any of the above cases, it is important to check for valuable items from the prior year return, such as capital loss carryover, and pensions for which the Simplified Method was used. If using the simplified method, and the pension is joint/survivor, the spouse assumes the decedent s nontaxable amount each year until recovered. If the pension was not joint/survivor, any unrecovered contributions are taken as a miscellaneous itemized deduction not subject to the 2% AGI limitation on the final return. Pub. 17, Deductions not subject to 2% limit.