don priebe

Don Priebe - Dec 2010 In-Scope 1

AARP/TCE Program and Scope

What is the mission of AARP/TCE? * Why are we concerned about scope? * What returns are in scope? Special Notes for Tax Year 2010

• * Material in handouts• These slides on www.w2in.com/aarp

(edited 12/22/10 for changes due to PL 111-312)


References Tax-Aide Training Guide 2010-

2011 Scope Poster C2467 (1010) IRS Pub 4491 (TCE Textbook) IRS Pub 4012 (TCE Resource

Guide)


Scope Poster C2467


Policy of the AARP Program

Counselors must only deal with tax-related topics on which they have received IRS or AARP Tax-Aide training and certification.

Counselors must refer taxpayers with complicated or complex tax returns, which involve matters outside the scope of their training, to professional tax preparers or to the IRS. No specific paid preparer or business can be named

Counselors may deny service if they feel that the person is providing misleading tax information or refer service if the Counselor does not feel qualified on a particular tax law issue(s).


What is in scope?? The AARP/TCE training covers most

of the commonly used individual income tax forms.

It covers only simple business ventures.

It does not cover rentals. It does not cover complex

investments.


Individual Returns Only Includes 1040, 1040EZ, 1040A Does not include 1040NR Include 1040-X No non-individual returns

1041 Estates and Trust 1120 Corporate 1065 Partnership 990 Exempt Organization


Pub 4012 In-Scope Chart The format of the chart has

changed You are qualified for A, B and C Lines marked as in-scope may not

be in-scope for all cases


In Scope Income Items

Wages Dividends and Interest * Taxable refunds Alimony received Simple businesses * Simple capital gain/loss *

* details to follow


In Scope Income Items (continued)

Sale of business property (4797) out of scope

Pensions / IRA distributions * Rents and Royalties mostly out of scope * Farm Income out of scope Unemployment Social Security Some other income *

* Details to follow


Interest and Dividends Reported on 1099-INT or 1099-DIV Reported on K-1 or equivalent Taxable, tax-exempt, Fed/NY split Foreign taxes paid (but no 1116)


Business Income Only simple businesses that could be

reported on a Schedule C-EZ if the expense limit on a C-EZ were $10,000 Shows a net profit Less than $10,000 in expenses No inventory No depreciation No office in home No employees


Capital Gains and Losses

Mutual fund CG distributions Investment trades with basis information Capital gains and losses from K-1s Sale of principle residence Cancellation of debt on principle

residence (only with special certification) No straddles, mark-to-market,

installment sales, etc. No sale of assets inherited in 2010


IRA and Pension Normal IRA and pension distributions,

including partially taxable distributions

IRA rollovers Premature distributions with and

without penalty Charitable donation of IRA funds Form 8606 (Part I only) Form 5329 (Part I only)


Rents and Royalties

The only thing in scope is rents and royalties received and documented on a 1099-Misc or a K-1, with no expenses.

The more common real property rentals with depreciation and/or other expenses are still out of scope.


In Scope Other Income

Gambling winnings (with or without withholding)

Jury duty, election pay Contests, prizes Cancellation of credit card debt

(only with special certification)


1040 In Scope Adjustment Items

Educator expense HSA deductions (only with special

certification) SE tax Penalty on early CD withdrawal Alimony paid IRA deduction (including 8606 Part I) Student loan interest Tuition and fees deduction


In Scope Standard Deduction Regular Standard Deduction Standard deduction of dependents Increase in standard deduction due

to age and/or blindness Increase in standard deduction due

to real estate taxes and/or new car purchase (Schedule L)


In Scope Itemized Deductions Medical expense including NY long

term care Taxes (including optional sales

taxes) Mortgage interest, points, PMI Charity cash Charity non-cash including Form

8283 Part I


Itemized Deductions (continued)

Casualty and Theft out of scope Employee expenses (no 2106

allowed) Tax preparation fees Investment expenses Gambling losses


Tax Calculation Tax table in scope Capital gains / qualified dividends

worksheet in scope Alternative Minimum Tax out of

scope Kiddie tax (8814/8615) out of

scope


In Scope Tax Credits Foreign Tax Credit (if no 1116 required) Child Care Credit Credit for Elderly Education Credit Retirement Savings Credit Child Tax Credit Residential Energy Credit (Part 1 only) Other Tax Credits out of scope


Other In Scope Taxes SE Tax (short form) Tax on tips (4137) Early distribution penalty including form

5329 Part I only Repayment of Advance EIC and FTHB credit Household employment taxes out of scope Unwithheld FICA/Medicare commonly done


In Scope Payments Withheld and estimated tax payments Making Work Pay Schedule M EIC Additional child tax credit Refundable education credit First time homebuyer credit Excess social security


TY 2010 Special Notes Roth conversions should be popular this

year, but are out-of-scope (form 8606 Part I only)

FTHB credit is in-scope even though the 5404 is not explicitly on the forms list

COD and HSA both require additional special on-line certification

Sale of property inherited in 2010 is out-of-scope


RememberYou are completely authorized as a volunteer preparer

to NOT prepare a return. Some individuals may attempt to defraud the government by filing false tax returns. If you have any question at all about the validity of the information provided by a taxpayer or are uncomfortable with a taxpayer situation, discuss your concern with your site coordinator or other individual in charge of the site. Together, you can make the decision to diplomatically explain the confusion or concern, if possible, or simply refer the taxpayer to a paid tax preparer


And lastly, If you don’t know how to do it ... It’s

out of scope If you have to guess ... It’s out of

scope If it’s not right, but you think you can

get away with it ... It’s out of scope And if it’s out of scope ... Don’t do it.


Additional Material Detailed information from previous

years


Why are we here? Clients Served Types of Service Types of Tax Returns Prepared

References AARP Policy Manual v4.0 (2009-2010) IRS Pub 4491/4555 (TCE Textbook) for TY 2009 IRS Pub 4012 TCE Resource Guide) for TY 2009


AARP/TCE Mission The program’s mission is to provide

high quality free income tax assistance and tax form preparation to low- and moderate-income taxpayers, with special attention to those age 60 and older.


Standard ServiceStandard Service (during the standard

1040-filing season) is provided at sites to low- and middle-income taxpayers with special attention given to those age 60 and older.

Services are provided at sites that are available to the public as well as targeted sites for selected populations such as nursing homes, retirement centers, and VA hospitals.


Shut-in Service Shut-in Visits are provided by

appointment as needed to homebound taxpayers age 60 or older.

Two persons must attend each home visit.

A maximum of 30 miles per round trip will be reimbursed for travel to provide shut-in services.


State Service Non-Federal Service may be

provided as long as priority is given to the target population, and no additional cost is incurred.

We prepare NY returns corresponding to in-scope federal returns.


Why are we concerned about

scope? Assure that accurate returns are

prepared for our clients by limiting our assistance to area in which we are properly trained

Avoid liability for mistakes in areas in which we are not trained


Volunteer Protection Act of 1997, PL 105-19

Exempts a volunteer of a nonprofit organization or governmental entity from liability for harm caused by an act or omission of the volunteer on behalf of such organization or entity if:

the volunteer was acting within the scope of his or her responsibilities at the time;

the volunteer was properly licensed or otherwise authorized for the activities or practice in the state in which the harm occurred;

the harm was not caused by willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed;

the harm was not caused by the volunteer operating a motor vehicle, vessel, aircraft, or other vehicle for which the state requires the operator or owner to possess an operator’s license or maintain insurance.

don priebe - dec 2010in-scope1 aarp/tce program and scope what is the mission of aarp/tce? * why are...

Documents

scope slide

scope chart

scope kiddie tax

scope ta

scope alternative minimum

scope employee expenses

fees deduction slide