BASIC WORKSHOP 1

VOLUNTEER INCOME TAX ASSISTANCE (VITA) TRAINING

11/17/14 REV

ICEBREAKER

Turn to the person to right

Introduce yourself

Tell them one thing you want to gain out of this volunteer experience

AGENDA

We will have (2) 15 minute breaks, 45 minute lunch.

We will cover topics:

• CAP Riverside/VITA History

• Volunteer Process

• Standards of Conduct

• Interview/Intake Process

• Exemptions, Standard, or Itemized deductions

• Tax Preparation, inputting income

WHAT IS CAP RIVERSIDE?Community Action Agencies signed into effect 1964 Economic Opportunity Act by Lyndon B. Johnson, in an effort to end poverty.

Community Action Partnership of Riverside County (CAP Riverside) was founded in 1980.

We perform community needs assessment to identify agency target programs, we offer utility assistance, weatherization, disaster relief, notaries, free tax preparation, dispute/conflict resolution, individual development accounts, and youth programs.

WHAT IS VITA? EITC?

Found in 1971, by Gary Iskowitz at Cal State Northridge, Volunteer Income Tax Assistance (VITA) Program is a free alternative to tax preparation, which is operated by volunteers.

Earned Income Tax Credit (EITC) is a refundable tax credit for working families. Enacted in 1975 under the Gerald Ford Administration.

CAP RIVERSIDE VITA

CAP Riverside has completed 20,000 returns since 2005, last year 162 volunteers completed 3,405 returns, bringing $4.3 million federal dollars to taxpayers.

VOLUNTEER EXPECTATIONS?

Commit to attending workshops to desired certification level (Basic, Advanced, Site Coordinator)

Training takes place in November, December and January

• Basic requires 2 workshops (plus 1 Software Training)

• Advanced (Returners) requires 2 workshops

• Site Coordinator requires 1 workshop

Minimum hours required is 30 hours at 23 locations throughout Riverside County, January-April 15

Educate friends and family on the EITC

WHAT DO YOU GET?

FREE Training and first hand knowledge of the tax code and learn how to prepare a tax return

Direct impact in the community, you are 1 of the 1000’s across the country doing this work

Help bring missed dollars back into the local economy

CAP Riverside provides certificates, references, and letters of recommendation (individuals who surpass minimum hours)

WHAT KIND OF SUPPORT WILL YOU HAVE?FREE workshops

Pub 4012 – Resource Guide

• In-scope chart in Pub 4012

• Do not prepare a return that you are not certified to prepare, this will void the coverage under the Volunteer Protection Act 1997

Pub. 17 – Reference Manual

Site Coordinator

VITA Hotline 1-800-829-8482

Taxwise Hotline 1-800-411-6391

SITE ROLES

Interview/Intake• Verifies taxpayer qualifies for VITA services.

Tax preparer• Processes tax documents provided by taxpayer.

Quality Reviewer• Assesses prepared return for errors and accuracy.

Exit Interview• Final process, in which taxpayer receives prepared turn.

Site Coordinator• Responsible for coordination of site level policies and

procedures.

VOLUNTEER PROCESS

Visit capriverside.org and go to Volunteer Income Tax Assistance

Complete Training and Certify by January 24th

Complete Live Scan application and schedule appointment prior to January 24th

Maintain communication, hours, and scheduling commitments

• To receive Presidential Volunteer Service Award

• Group must complete 200 hours• Community volunteers must complete 100 hours

CERTIFICATIONWorkshops (November-December)

• Basic Workshops (2)

• Software Training (1)• Advanced Workshops (2)

• Site Coordinator Workshops (1)

Access

www.linklearncertification.com

Create your own account

• Group: “VITA Volunteer”, “Quality Reviewer”, “Site Coordinator

• Training Source: “Link & Learn Taxes”

Quick Links: Practice Lab password is “learntwo”

QUESTIONS

STANDARDS OF CONDUCT1. I will follow the Quality Site Requirements (QSR).

a. Certification, Intake/Interview Process, Quality Review Process, Reference Materials, Volunteer Agreement, Timely Filing, Title VI “Civil Rights”, Site Identification Number, EFIN, Security Privacy and Confidentiality

2. I will not accept payment or solicit donations for federal or state tax return preparation.

3. I will not solicit business from taxpayers I assist or use the knowledge I gained about them (their information) for any direct or indirect personal benefit for me or any other specific individual.

4. I will not knowingly prepare false returns.5. I will not engage in criminal, infamous, dishonest, notoriously disgraceful

conduct, or any other conduct deemed to have a negative effect on the VITA/TCE Programs.

6. I will treat all taxpayers in a professional, courteous, and respectful manner.

INTERVIEW/INTAKE TIPSScreen for eligibility and ensure filing status

• Out of Scope

• Less than $53,00• Bankruptcy, Foreclosure, Rental Property, Depreciation, K1

• Brought required items:

• Identification:• Social Security Card for ALL Persons, ITIN, or Social Security letter• License

• Income:• W-2, 1099R, 1099, 1099DIV, W2G, Unemployment, Social Security

• Education Credits:• Receipts for out-of-pocket K-12 Teach Educational Expenses• Tuition expenses for university/college (Form 1098T)

INTERVIEW/INTAKE TIPSScreen for eligibility and ensure filing status

• Brought required items:

• Child Credits:• Provider Name, address, Tax ID, or SSN• Direct deposit information

• Property Taxes:• Mortgage Interest Statement, Statement of property taxes,

renter statements (landlord details)

• Itemized Deductions:• Charitable donations• Medical Expenses

• Additional:• Previous Year Return• Direct deposit information

REVIEWING INTAKE SHEET

REVIEWING INTAKE SHEET

REVIEWING INTAKE SHEET

COMMON FORMS

COMMON FORMS

INTERVIEW TIPSBest Practices• State your name

• Make small talk (How are you? How can we help you?)

• Ask how referred or taxes completed previous years

• State your qualification (certification)

• Forewarn of personal questions

• Questions necessary to complete tax return and ensure accuracy• Ex: Are you married? Do your dependents reside with you 6 months out of the year?

• Scan Intake Sheet: Go over in detail and make corrections (RED)

• Focus on potential disqualifications such as

• More than $57,000• Cancellation of Debt• Complex Business• Depreciation• Foreclosure• Rental property

INTERVIEW TIPS

If we are unable to help (out of scope) or did not bring materials:• Explain why we are unable to help

• Keep in mind, to be compassionate and express regret for the situation.

• Return all papers• Taxpayers may return once they have all

documents (keep spot in line)• Use Due Diligence• Defer to Site Coordinator

EXEMPTIONS

Exemptions allows exclusion of income from taxation for each on entitled.• Exemptions for 2014 is $3,950 each

• Personal and dependent exemptions• Cannot claim an exemption for dependent if

they have already been claimed! (Students)

EXEMPTIONS

• Personal and Spousal Exemption– Dependent children cannot claim a personal

one for their own taxes

• Qualified Child– Students up to age 24 or disabled– Relative by blood or marriage– Must live with you over ½ year

• Qualified Relative– Real relatives do not have to live with you– Non-relatives do have to live with you all year

DEPENDENCY TEST

Qualified Child Dependency Test1. Liz & Todd have 3 children, ages 14, 18 and

20. The eldest is at UCR full time, but lives at home during the summer and makes $4k. The middle child just graduated high school. Which children are dependents?

2. Mary’s daughter is unemployed so she lives at home. She was a student taking 15 units for the first 5 months in 2009 and then dropped out. Can Mary claim Betty as a dependent?

DEPENDENCY TEST

• Qualified Relative Dependency Test1. Jude and her son (11) live with her

boyfriend Tim all year. Tim and Jude have been dating for two (2) years, she does not have income, can Tim claim the child as a dependent?

2. Can Jude also be claimed as a dependent?

3. Jude and her son moved in with Tim on May 21st, 2013, can Tim claim both?

STANDARD/ITEMIZED DEDUCTION

• Standard Deduction • Fixed dollar amount that reduces income that is taxed on.

Standard deduction varies according to filing status.• Standard deduction increases by $1,550 if you’re blind or age

65 or older.• Allows deduction if no itemized deductions.

• Itemized Deductions• Have expenses more than standard deduction cap amounts.• Type of expenses that qualify are medical/dental expenses, mortgage

interest/real estate taxes, charitable contributions, etc.

FILING STATUS

Filing Status is used to determine filing requirements, standard deduction, eligibility for certain credits, and correct tax.• Single

• Head of Household

• Married Filing Jointly

• Married Filing Separately

• Qualifying Widow(er) with Dependent Child

FILING STATUS

Single (on the last day of the year)– Not married– Legally separated or divorced, or– Widowed before first day of tax year, not

remarried within the year

FILING STATUS

Married Filing Jointly– One return is filed covering both spouses– On the last day of the year:

• Married and live together• Live apart but not legally separated or divorced• Live together in recognized common law

marriage• Separated but divorce decree not final• Widow(er) not remarried during the year

FILING STATUS

Married Filing Separately• Analysis of living situation is critical:

• Marital status as of 12/31• Others living in the home and their relationship/dependency• Who paid >50% cost of home upkeep• If widow(er): date of death of spouse and if there are any

dependents• Some credits unavailable, some reduced

FILING STATUS

Head of Household• A taxpayer may qualify if he or she:

• Is unmarried or “considered unmarried” on last day of tax year, and

• Paid >50% cost of keeping up a home for the tax year, and• Had a qualifying person living with them more than half the

year (except for temporary absences)

FILING STATUS

Important questions:– Who lives in house/apartment?– Months/years in each home?– Dependent relationship(s)?– Marital status as of December 31?

FILING STATUS

• Filing Status Exercises:1. George lives at home with his parents. He

makes $20k a year. What status can he claim?2. Tyler and Carrie have been married for 10 years

and became divorced on December 29th, 2014, what status can they claim?

FILING STATUS

• Filing Status Exercises:1. Mark and Larry are domestic partners. They are

married and have been living together for three (3) years, what status can they claim in CA?

2. Pedro is not married. He sends $10k a year to support his parents in Mexico. Pedro got them ITIN numbers from the IRS two years ago and claims them as dependent relatives. What status can Pedro use?

FILING STATUS

• Filing Status Exercises:1. Betty’s husband left her 3 years ago and hasn’t been

heard of since. She has yet to divorce. She supports their 2 children, ages 8 and 5 in a home she rents. Her parents help with money for clothes and medical insurance for the children. What status can she claim?

2. Pedro is not married. He sends $10k a year to support his parents in Mexico. Pedro got them ITIN numbers from the IRS two years ago and claims them as dependent relatives. What status can Pedro use?

QUESTIONS

LOGGING INTO PRACTICE LAB

www.linklearncertification.com

Practice Lab

• Password = learntwo• Create Username & Password and

store on your 4012.

LOGGING INTO TAXWISE ONLINE• TWOnline

• Need these items to login: Site Client Number, Username, and Password.

TAX PREPARATION TIPSBeginning Tips:

• Inputting SSN CAREFULLY

• Go To Tax Forms

• (DO NOT USE INTERVIEW)• Main Information Screen

• (ALL CAPITALS)• Inputting information where it is RED

• TSJ stands for Taxpayer, Spouse, or Joint

• No punctuation

• Don’t forget E-MAILS!

• Biggest mistake seen on “Name Line 2. Use % for care of” (SKIP IT or Put Caretakers Name)

TAX PREPARATION• Input same SSN twice, brings you to Main Info. Screen

• Fill out address, phone numbers and birthdates

TAX PREPARATION

Entering Dependents

• Who may be claimed as a dependent?

• Qualifying child• Qualifying relative

List from

youngest

to oldest

TAX PREPARATION

Direct Deposit:

Have customer verify numbers and make sure information is correct!

TAX PREPARATION

Finishing Main Information:

• Input accurate date• Have taxpayer select their

pin• If taxpayer has Identify

Protection Pin, please enter in the field or return will be rejected

• Ensure Preparer Information has been properly inputted

UNDERSTANDING 1040

After completing

the Main Information

Page

Go to the Loaded

Forms Tree,

& Click 1040 Pg 1

to begin inputting

Wages, salaries, tips

Etc. on Line 7

UNDERSTANDING 1040

Navigating the 1040

• The information on this portion of 1040 Page 1 will be transferred from the main information page. Remember to return to the 1040 if you become lost in tax preparation.

UNDERSTANDING 1040Right click here to add additional dependents.

The “Income”Section has a corresponding blank field to each line item.

Depending on type of income, you will need to highlight the blank field to pull up the required form.

UNDERSTANDING 1040The “Adjusted Gross Income” section covers areas which will operate as a “credit” for taxpayers, reducing their income.• Line items to pay close attention to are Educator Expenses, Alimony

Paid and if taxpayer wishes to take the student loan interest deduction.• Deductible part of self-employment tax is automatically filled in when

filling out a Schedule C.

UNDERSTANDING 1040

The second page of 1040 covers Tax and Credits, Other Taxes, and Refund amount.

UNDERSTANDING 1040

Other taxes shows type of taxes due, while Payments shows what has been paid towards taxes due.

TAX PREPARATION

Following The Boxes (Linking to Form):

Click the “0” field and small grey arrow

Click the document with the link

TAX PREPARATION

Follow arrows, input W-2 into Taxwise as is shown on W-2 Wage Statement

TAX PREPARATIONFinishing the W-2 Form:• Box 14 on W-2, place SDI on

Line 15, but put DD on Line 12• Place State information on Line

15 as highlighted

QUESTIONS

TAX PREPARATION

This only appliesto families that took the itemized deduction

AND

Received a state or local tax refund

If neither or not one of the two, the answer is NO.

Follow the boxes to input interest and dividends income

TAX PREPARATION

Schedule B is where preparers list interest income and dividends, by linking to the form.

List income interest in “Other Interest”

AND

Dividends in “Part II: Ordinary Dividends”.

TAX PREPARATION

T

TAX PREPARATION

T

TAX PREPARATION

Inputting Social Security benefits

Inputting unemployment

TAX PREPARATION

NEXT TRAINING

We will cover remaining basic concepts:

• Schedule A (Itemizations)

• Alimony

• Dependent Care Expenses

• Student Loan interest deduction

• American Opportunity/Lifetime Learning Credit

• Earned Income Tax Credit

• Child Tax Credit

QUESTIONS