Course Goals: 1. Completing a tax return in Taxslayer 2. Key Tax Concepts 3. Key Credits 4. Finishing a return- bank info, consents, ready for review

Transcription

1 Course Goals: 1. Completing a tax return in Taxslayer 2. Key Tax Concepts 3. Key Credits 4. Finishing a return- bank info, consents, ready for review

2 Credits Refundable and Non Refundable Now we get to the details NON REFUNDABLE Reduce your taxabable income to 0 REFUNDABLE IRS Pays You: Adoption Tax Credit Child Tax Credit (partial) Child and Dependent Care Credit Life Learning Credit Savers Credit Foreign Tax Credit Mortgage Interest Tax Credit Earned Income Tax Credit Child Tax Credit (partial) American Opportunity Credit (partial) ACA Premium Tax Credit

3 See 4012 p. I-3 for details. Taxslayer calculates. Earned Income Credit/Child Tax Credit Limit

4 Earned Income Credit: Rules RULES FOR EARNED INCOME RULES FOR QUALIFYING CHILDREN Residence, not dependency TaxWorld: Asking about EITC denied in prior years. Does not disqualify completely. AGE (if no qualifying children) MUST HAVE SSN; MUST BE US CITIZEN/ RESIDENT ALIEN CANNOT BE MARRIED FILING SEPARATE, CANNOT BE DEPENDENT

5 Earned Income Credit: Rules RULES FOR EARNED INCOME RULES FOR QUALIFYING CHILDREN Residence, not dependency TaxWorld: Asking about EITC denied in prior years. Does not disqualify completely. AGE (if no qualifying children) MUST HAVE SSN; MUST BE US CITIZEN/ RESIDENT ALIEN CANNOT BE MARRIED FILING SEPARATE, CANNOT BE DEPENDENT

6 CHILD TAX CREDIT/ ADDITIONAL CHILD TAX CREDIT $1000 for each qualifying child 17 and under Software Calculates based on birthdate (end of year) Shows in 2 places, part non-refundable for everyone Part refundable based on income

7 DEPENDENT CARE CREDIT Qualifying child under 13 when expenses were incurred. Person incapable of self-care (spouse, sibling, parent, friend) Must live with taxpayer more than1/2 the year. Expenses paid for care allowing taxpayer to work or look for work. Daycare, but not school; Daycamp, but not overnight camp See Decision Tree 4012 p. G6

8 SAVERS CREDIT For low income taxpayer who contributes to 401K or IRA Software Calculates automatically

9 EDUCATION CREDITS! Subject to legislative change SEE CHART in 4012 (J2-3): ALWAYS EVALUATE 3 CHOICES American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction -not a credit, but covered in same section of Taxslayer

10 Dear Iris, My five-year-old goes to an afterschool care program when he gets out of school, and I pick him up when I get off of work, usually around 5:30. Can I deduct these expenses on my tax return? It's kind of a lot of money, so if I can somehow claim the expense, I'd really like to know how. Dear IRIS: by Brad Martin Thanks, Mom from Mcintosh

11 Dear Iris, My husband and I separated in November, and he moved out of the house to live with "the other woman." I'm supporting our three children. Needless to say, we did not file taxes together. I filed Married Filing Separately; I don't know how he filed--there's no telling. (Married Having an Affair maybe? Is that a thing?) Dear IRIS: by Brad Martin According to my tax return, my income was only $28,800, and it was all earned income--no investments, stocks, bonds or retirement here. I thought surely I'd qualify for the Earned Income Credit, but my return doesn't show that I did. What could have disqualified me? Could I have done something differently? Should I file an amended return? Earned But Not Credited

12 Dear Iris, I'm 47, single, and working as the business manager for an orthodontist. We switched to a new accounting software system, so I took a class at the local university to learn the basics. Dear IRIS: by Brad Martin Isn't there some credit or deduction I can claim for that? I didn't have any grants or loans, and my job did not pay for my tuition, books, or that stupid parking fee I had to pay. Can I claim all of those expenses on my taxes? If so, what's the best way to do that? Always Learning, One Way Or Another

13 Dear Iris, My wife and I have one son, ROSS, who turned 17 in November. Ross is a senior in high school, and we are still providing all of his support. When we filed our taxes, our refund took a hit of about $1,000 compared to last year's return. Dear IRIS: by Brad Martin I looked at our old return, and we did receive the Earned Income Credit for both years. What are we missing, and why didn't we get it? Did our preparer do something wrong? Should we amend our return? $1,000 is a lot to lose if we don't have to. Still Supporting This Kid

14 Course Goals: 1. Completing a tax return in Taxslayer 2. Key Tax Concepts 3. Key Credits 4. Finishing a return- bank info, consents, ready for review

15 Finishing Alan Smith s Return in Taxslayer

16 Consents Consent 1: Allows Software company to electronically file the info with IRS. PIN Automatically entered. If no, cannot Efile return. Sign using a PIN number (keypad) Suggest: zipcode You do not have to remember PIN Consent 2/3: Consent to Use/Disclose STATISTICAL DATA: In order to support this program, evaluate how we can improve it, and promote the program to taxpayers and volunteers, we use the information about total number of tax returns, total amounts of refunds and credits, average income, age and family status of tax returns prepared We never include anybody s individual information in any of these statistics. We don t publish or share your name or any information about you. Would you give us your permission to include your information in this total? If NO- cannot efile, can paper file Consent 4: Global Carryforward NEW THIS YEAR: If yes: next year can go to any VITA/TCE site in the country to pull up your prior year return.

17 PAYMENTS/REFUNDS If receiving a refund: Taxpayer can receive a direct deposit to bank account or a check mailed home. Taxpayer can split the amount into more than one account. Taxpayers can collect their refunds for up to 3 years. If they fail to file after that, they lose the refund. If owing a payment: Taxpayer can authorize a direct debit from bank account, and can select the date he wants to pay. Taxpayer can mail a check. If this is the case, make sure to give the taxpayer 2 copies of everything, have him sign the return, and show him the voucher form. Payment will be due April 15. After that date, interest and penalties will begin to accrue. If taxpayer can t pay, there are a number of agreements, extensions and installment plans. Ask your site coordinator for details.

18 Recheck! Accuracy is Important So the return e-files promptly without a reject So the client Gets the maximum refund Pays the minimal due So the client doesn t get follow-up questions from the IRS Builds confidence in the VITA network

19 Most Common Errors EIN SSN Last Name (especially dependents and spouses with differing last names) Multiple W2s Checking Account info Who claims the kid?

20 Dear IRIS: by Brad Martin Dear Iris, I'm 51, and I live alone in Indiana. My mother is 75, and she lives alone in Florida. Although she lives in her own home, which is paid for, I have had to pay her utility bills, and I buy most of her groceries. Mom ends up sending most of her social security money to charities who solicit her through the mail, and what she doesn't give away she spends on lottery tickets. Please don't get me started, Iris. In short, I'm supporting my mother. Can I claim her as a dependent, even though we don't live together? For that matter, does she qualify me to file as Head of Household? She Ain't Heavy; She's My Mother

21 Dear Iris, My girlfriend and I are having a heated debate, and we're hoping you can settle it. Is social security taxable? I say it's not taxable, because it's your money that you've been paying in all the years you worked, and now you're getting it back. Dear IRIS: by Brad Martin My girlfriend says it is taxable, which is why you get a form SSA1099 showing your benefits, and they wouldn't bother to send you one if you didn't owe taxes on that money. Who is right? A dinner is riding on your response, Iris. Say it's not taxable, and make me a happy man. Hungry and Hopeful

22 Dear Iris, Dear IRIS: by Brad Martin I'm a confirmed bachelor. Never married; no kids. For three years, I went to a tax preparer who always let me file as head of household. After all, I live alone, so I am the head of my household. Last year, my good tax preparer was out of the business, so I tried one of those volunteer sites where they file your taxes for free. I guess you get what you pay for. They told me that I couldn't file as head of household. They filed my return as single, and my refund was less than it had ever been with my old preparer. I was not happy, but they insisted they were doing the return correctly. I have my doubts. Please settle this debate for me, Iris. Can I file as head of household or not? If I can, I want to know how to explain it to that volunteer service, because they need to learn how to do taxes the right way. If I can't, I'd like to know why I can't. Like I said, I'm the head of my household. What do you say? Thank you, Wearing The Pants Around Here

23 QUESTIONS?