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THE 2012 VOLUNTEER ANSWER GUIDE
You Can Do It!
www.economicprogress.org
C HIC AGO (MAIN OF F IC E)
29 E. Madison, Suite 900
Chicago, IL 60602
(312) 252-0280
S PR INGF IEL D
687 E. Linton
Springfield, IL 62703
(217) 753-3272
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CONTENTS
General Information 3
2012 Tax Sites Locations and Hours 4
Financial Services at CEP Sites 6
Tax Clinic Referral 6
Federal Refund Timeline 7
Financial Services Information 9
Savings Options 10
Direct Deposit Options 10
FAFSA Services 11
Savings Bond Basics 11
Tax Preparation Information 18
Seven Basic Steps of Tax Preparation 19
Common Tax Forms 20
All Those Kids 22
All Those Kids-Part 2 24
Qualifying Relatives 26
Income Chart 28
Child Tax Credit & Additional Child Tax Credit 30
Child & Dependent Care Credit 31
Benefits Related to Education 32
Printing 34
Printing the Client Letter in Spanish 35
ITIN Tax Returns 35
Notes & Additional Information 36
You Can Do It! is a work product of the Center for Economic Progress and
cannot be used, reproduced or distributed without the written consent of the
Center for Economic Progress, 29 E. Madison, Suite 900, Chicago, IL 60602.
Contact [email protected] for more information.
2011 Center for Economic Progress
Site Assistant Information 12
Site Assistant Responsibilities
Client Intake 14
Sorting
Requesting Donations
15
17
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General InormatIon
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vOLUNTEER ANSWER GUIDE 2012 // GENERAL INFORMATION
2012 TAX SITES LOCATIONS AND HOURS
GENERAL INFORMATION // vOLUNTEER ANSWER GUIDE 2012
4 5
TBD TBD
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FEDERAL REFUND TIMELINE
Clients who fle And receive reund by Can expect their reund in
Electronically Direct deposit 2 weeks
Electronically Paper check 34 weeks
On paper (by mail) Direct deposit 56 weeks
On paper (by mail) Paper check 68 weeks
Note: This is a ery general guideline. Many actors determine when a client
receies a reund: USPS, IRS delays, time o fling and rejects due to errors on the
return.
Clients can check on their reund by going to www.irs.go and clicking on the
Wheres My Reund? link, or calling (800) 829-1954.
Prior year and amended returns are subject to longer time rames.
Clients can help by double checking ALL inormation on their returnnames, social
security numbers, birthdates, and bank inormation.
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vOLUNTEER ANSWER GUIDE 2012 // GENERAL INFORMATION
FINANCIAL SERVICES AT CEP SITES
Clients should always be encouraged to use direct deposit or their tax reund.
Direct deposit is more secure than receiing a paper check and the reund arries
aster. Clients without bank accounts should be reerred to the on-site bank partner
to open an account. I a client is interested in receiing the reund on a prepaid
debit card, the tax preparer can open a prepaid debit card rom the TaxWise main
inormation screen.
I clients are interested in additional fnancial serices, reer them to our client line:
312.630.0248. Our sta can help with FAFSA completion, as well as understanding
the fnancial aid application process and aid oers/awards.
TAX CLINIC REFERRAL
CEPs tax clinic represents clients with tax disputes beore the IRS and Illinois
Department o Reenue (IDR). The clinic assists clients with the ollowing types o
matters:
Audits
Garnishments: bank, wage and social security leies
1099-A and 1099-C cancellation o indebtedness issues
Payment arrangements/debt negotiation
Pre-2008 original returns and 1040Xs (subject to sta aailability)
The Clinic does not assist clients with the ollowing types o matters:
Property tax
IDR matters only (a ederal matter must exist as well)
Business entities, including S Corporations
Disputes with paid preparers oer rapid reunds
To reer a client to the Tax Clinic:
Complete a clinic reerral orm and gie it to your site manager. Alternatiely, the
client can leae a message on the clinic oicemail line: (312) 630-0241.
The client can expect to be contacted within fe business days o the clinics
receipt o the reerral orm. Depending on method o deliery this could be
between one and 10 days ater you complete the orm. Calls will be returned as
soon as practicable.
GENERAL INFORMATION // vOLUNTEER ANSWER GUIDE 2012
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InancIal ServIceS InormatIon
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vOLUNTEER ANSWER GUIDE 2012 // FINANCIAL SERVICES INFORMATION
FAFSA SERVICES
At most tax sites, there will be an Illinois Student Assistance Commission (ISAC)
member or olunteer tax preparer that is trained to assist clients with fnancial
aid applications. Please reer interested clients to FAFSA olunteers. I no trained
olunteer or ISAC member is present, reer the client to our FAFSA help line:
312.630.0248 or [email protected].
I you would like to prepare fnancial aid applications in addition to preparing tax
returns, complete the FAFSA Assistance trainings online or contact
volunteer Serices at [email protected] or 312.630.0288.
FAFSA preparers: Please take a ew minutes with each FAFSA client to complete
the tracking surey at www.economicprogress.org/surey.
1. Purpose: Inorm the client about the purpose o the surey.
Script: We are asking that you complete this survey so that we can better
serve our clients. This will help us know i we are reaching out to people
who need our services and will also help us improve our services.
2. Confdentiality and Data Security: Assure your client that his/her surey
responses will be confdential and that all data will be held in a secure
database.
Script: All your answers will be completely confdential. Your name will
never be used or associated with any data. Also, the survey data will be
held in a secure database to which only the individuals managing the data
will have access.
SAVINGS BOND BASICS
1. Low-risk and backed by the U.S. Treasury
2. Does not require a bank account
3. No ees
4. Easily cashed at any bank
5. Able to purchase the bond directly rom the tax return on orm 8888
6. Bonds mailed as paper bond certifcates to the address on the tax return
7. May take up to three weeks or the tax fler to receie the bond
FINANCIAL SERVICES INFORMATION // vOLUNTEER ANSWER GUIDE 2012
SAVINGS OPTIONS
Challenge Product options Feature
Small amount to
sae
Credit history
problems
Suspicious o
fnancial institutions
No bank account
Wary o saing/not
sure i they can sae
Saings account;
saings bond
Saings account;
saings bond
Saings bond
Saings bond
Saings account
Only need $50 minimum or
bond
No credit screening (e.g. no
ChexSystem); positie usage o
saings account can build credit
Goernment backed; no ees
No bank account required
Begins a saings habit but
money can be accessed
immediately in case o
emergency
DIRECT DEPOSIT OPTIONS*
Challenge Product options Feature
Credit history
problems
Suspicious o
fnancial institutions
Needs quick access
to tax reund
Check cashing ees
Saings account;
prepaid debit card
Prepaid debit card
Saings or checking
account; prepaid
debit card
Saings or checking
account; prepaid
debit card
No credit screening (e.g. no
ChexSystem); positie usage o
saings account can build credit
No bank account required;
operates more like a credit card
than bank account
I return is electronically fled, it
only takes about 7-10 days
Allows deposits and access to
cash without ees
*First priority is to get an unbanked client oer to talk with the on-site fnancial partner to see i they hae an account
that will meet their needs.
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SITE ASSISTANT RESPONSIBILITIES
Site assistants are extremely important in keeping the site running efciently. There
are a ariety o roles that site assistants fll; please consult with your site manager
to determine the best ways to help out.
Beginning/End o Shit
Post/take down income guidelines, site signs, and IRS posters
Prepare/fle client sign-in sheet and set up/clean up intake area
Assist with site setup/cleanup, including laptops at laptop sites
Throughout Shit
Greeting
Welcome each client, notiy them o income guidelines, ask them to sign in
and give them intake sheets to complete while they wait.
Intake
As clients complete the intake sheet, screen them one by one, ensuring
that they meet income guidelines and that all tax documents and supporting
inormation are in their older. Discuss available fnancial services such as
fnancial products, savings options and FAFSA preparation.
Sorting
Sort completed returns, get client signatures on required documents and
give client their copies. Tell them when and how to expect their reund and
address any questions they may have beore leaving. Inquire about clients
interest in making a monetary donation to CEP.
Translating
I profcient in another language, assist with translation as needed.
Filing
File completed client olders according to social security number.
Shredding
Shred all extra print jobs, unneeded copies o documents and erroneous tax
returns.
Child care
Keep the site calm by entertaining clients children. Share crayons and color-
ing pages as well as picture books. Invite children to draw a picture or the
volunteer completing their amilys return.
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SIte aSSIStant InormatIon
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SORTING
Hae the client reiew the printout o the Main Inormation Sheet and
double check names, SSN, addresses and dates o birth or all persons on
the return.
Double check direct deposit inormation or accuracy (1040, pg 2)
Ensure Use & Disclosure Form is signed by the client on ront and back
when necessary.
The exterior o the client older should be flled out completely, including
indication o a signed 8879 or e-fled tax returns.
Sorting Current Year Returns
In the older, in this order:
1 signed (ront and back) Use & Disclosure Form (all returns)
Intake Sheet (Form 13614-C) and Supplemental Intake Sheet (all returns)
1 copy o each W-2, 1099 and any other supporting documents (all returns)
Main Inormation Sheet, all W-2 summaries or other printed worksheets (all
returns)
To the client, in this order:
Client letter rom CEP
1 signed copy Form 8879, IRS e-fle Signature Authorization
1 copy Federal Tax Return1040 pgs 1-2 and all schedules or orms
1 copy Illinois Tax ReturnIL1040 pgs 1-2 and all schedules or orms
All o clients original documents
I client is mailing returns:
To IRS (ensure correct reund or payment enelope is used):
Full copy o 1040 - pgs 1-2, all schedules or orms that hae an Attachment
Sequence Number in the upper right corner, W-2s/1099s attached
To IDOR (ensure correct reund or payment enelope is used):
Full copy IL1040 pgs 1-2, all schedules or orms, W-2s/1099s attached
Note: When the client has retirement income, attach a copy o page 1 o the
Form 1040 to the Illinois tax return.
IMPORTANT:
PLEASE MAKE SURE ALL FORMS ARE COMPLETED FULLY AND SIGNED BY THE CLIENT.
PRE-ADDRESSED ENVELOPES ARE AVAILABLE AT THE SORTING TABLE.
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vOLUNTEER ANSWER GUIDE 2012 // SITE ASSISTANT INFORMATION
CLIENT INTAKE
Reiew the Intake Sheet and Supplemental Intake Sheet careully to ensure the
clients answers to the questions are clear. I anything is unclear, ask about it.
Social Security Cards To e-fle, clients must bring the actual social
& Picture ID security cards (or ITIN letter) or eeryone on the
return and IDs or all adults on the tax return.
Income Documents Clients need to bring W-2s and 1099s or all
jobs they or their spouse worked last year,
as well as 1099s or social security payment,
unemployment, interest income and any
pensions or retirement income.
Income Guidelines We sere indiiduals with income under
$25,000 and amilies (more than one person in
the household) with income under $50,000
Spouses We cannot fle a return electronically i the
spouse is not present to sign the e-fle
authorization.
Childcare Provider EIN/SSN This is necessary to claim the child care credit.
Supporting Documents These are documents that are related to
expenses they paid oer the year, such as
mortgage interest statements, property taxes,
student loan interest, expenses related to
sel-employment, tuition and ees and book
expenses or college.
Rental Income We do not prepare returns or clients who
hae rental income.
Additional Advice Notiy clients o other serices aailable on
site, such as fnancial products and FAFSA
preparation. Make sure the client reads and
understands the Use & Disclosure Form.
SITE ASSISTANT INFORMATION // vOLUNTEER ANSWER GUIDE 2012
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REQUESTING DONATIONS
Clients will be gien the opportunity to make a monetary donation to the Center or
Economic Progress by sending a text message rom a cell phone or taking a paper
enelope to mail a donation. Making a donation is completely oluntary, and clients will
be oered the opportunity to donate only ater tax preparation is complete.
Sorters are responsible or oering clients the opportunity to donate ia text message.
Donation enelopes are also aailable or clients to mail cash or check donations.
How to Ask
Ask clients only at the end o tax preparation and sorting, ater they hae
receied all their serices. Neer create the impression that giing or not
giing will aect the serice they receie.
Let clients know that CEP relies on donations rom supporters. Ask clients
i they would like to make a donation. Proide text message instructions or
hand out donation enelopes.
I clients are not sure, let them know that een small donations are
welcome.
I clients say no, you can say, Thats fnemaybe some other time. There
must neer be pressure or guilt about giing or not giing.
Thank clients warmly.
Ask with ConfdenceBy working hard at your tax site, you gie all you can to CEP; you can eel
good about asking the same o clients.
Remember that you are giing clients an opportunity to eel good. Giing
een small amounts builds sel-esteem or the gier and helps clients eel
pride in supporting CEP.
You are building long-term support or CEP by building the donor base,
howeer small the donation.
Dont Assume Clients Cant Aord It
People may hae resources that are not obiousa parent, partner or riend
who can make a donation, a little extra cash in his/her pocket. I we ask any
clients, we hae to ask all clients.
Small donations make a big dierence! Many small donations add up to tens
o thousands o dollars that can be used to proide better serices or clients
in need.Een i clients cant gie today, your request may plant the seed or a
uture donation.
vOLUNTEER ANSWER GUIDE 2012 // SITE ASSISTANT INFORMATION
Sorting Amended Returns
In the older, in this order:
Same as current year returns, preious page
To the client, in this order:
Client letter rom CEP
1 copy Federal Tax Return1040X pgs 1-2, original 1040 pgs 1-2 and all
schedules or orms
1 copy Illinois Tax ReturnIL-X pgs 1-2, 1040X pg 1, original IL1040 pgs 1-2and all schedules or orms
All o clients original documents
Client to mail:
To IRS:
1040X pgs 1-2, 1040 pgs 1-2, all schedules and orms and any new
supporting documents attached
Address:
Department o Treasury
Internal Reenue Serice
Fresno, CA 93888-0422
To IDOR:
IL-X pgs 1-2, 1040X pg 1, original IL-1040 pgs 1-2, all schedules or orms andany new supporting documents attached
Address:
Located at bottom o page 2 o the IL-X
SITE ASSISTANT INFORMATION // vOLUNTEER ANSWER GUIDE 2012
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19
vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
SEVEN BASIC STEPS OF TAX PREPARATION
1. Review Client Intake Forms: Form 13614-C, Supplemental Intake Sheet and
Consent to Use/Disclose
Make sure both are complete.
Check or the client signature on the consent orms.
Get all o your questions answered!
2. Complete the TaxWise Intake Forms
Main Inormation Sheet: Pay close attention to the dependent/nondependent
section.
Preparer Use Form: Enter the answers to the questions asked on the
Supplemental Intake Sheet.
3. Enter all income
Enter W-2s and 1099s.
Complete any Schedule C-EZs or Cs.
4. Enter all adjustments, deductions and credits
Enter adjustments, such as student loan interest and/or tuition and ees
deduction.
Enter property tax paid and determine i client should itemize using
Schedule A.
Enter child care payments and proider inormation.
I client or clients dependent attended college, enter education expenses.
5. Get the red out!
Address all red exclamation points.
Use Ctrl-E to fnd problem areas on a specifc orm.
6. Review
Run TaxWise diagnostics and correct any errors.
Click the e-fle button i the client is fling electronically.
Hae a site manager/quality reiewer reiew the return.
Print the return and ask the client to look it oer.
7. Counsel
I there is a balance due, discuss preention: W-4 or estimated tax options.
I the client cant pay the balance due, discuss payment options and gie the
client a CEP tax clinic reerral card.
When the client has a reund, discuss direct deposit: back account, saings
bond and debit card options.
I the client is interested in FAFSA preparation, reer the client to on-site
specialists or direct the client to call the CEP ofce at (312) 630-0248.
taX PreParatIon InormatIon
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
20
COMMON TAX FORMS
Federal 1040 U.S.IndividualIncomeTaxReturn
Federal SchA ItemizedDeductions
Federal SchB InterestandOrdinaryDividends
Federal SchC-EZ NetProftromBusiness
Federal SchEIC EarnedIncomeCredit
Federal SchSE Sel-EmploymentTax
Federal 2441 ChildandDependentCareExpenses
Federal 8812 AdditionalChildTaxCredit
Federal 8863 EducationCredits
Federal 8880 CreditorQualifedRetirementSavingsContributions
Federal 8917 TuitionandFeesDeduction
State IL-1040 IllinoisIndividualIncomeTaxReturn
State SchICR IllinoisCredits
TYPE OF FORM FORM NUMBER FORM TITLE
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
Federalincometaxreturn N/A Yes
Itemizeddeductions 40 No
Interestanddividendincome 8&9 No
Sel-employedincome&expenses(short) 12 No
EITCwithqualiyingchild 64a Yes
Sel-employmenttax 56 Yes
Childanddependentcarecredit 48 Yes
Additionalchildtaxcredit 65 Yes
Educationcredits 49 No
Retirementsavingscredit 50 Yes
Adjustmentortuitionandees 34 No
Illinoisincometaxreturn N/A N/A
EITC,propertytaxcredit,K-12educationcredit 17&28 Yes
ISSUE LINK FROM 1040, LINE OPENS AUTOMATICALLY?
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
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ALL THOSE KIDS
Attheendothetaxyear,thechild
mustbeunder19,orunderage24
iaulltimestudent,andmustbe
youngerthanthetaxpayer.The
childcanbeanyageithechildis
disabled.
Attheendothetaxyear,thechild
mustbeunder19,orunderage24
iaulltimestudent,andmustbe
youngerthanthetaxpayer.The
childcanbeanyageithechildis
disabled.
Childmustbeunderage17at
theendotheyearandmustbe
youngerthanthetaxpayer.
Note: There is no exception for
students or the disabled.
Attheendothetaxyear,thechild
mustbeunder19,orunderage24
iaulltimestudent,andmustbe
youngerthanthetaxpayer.The
childcanbeanyageithechildis
disabled.
Childmustbeunderage13or
disabledatthetimeothechild
care.
Childmustbetaxpayerschild,
stepchild,adoptedchild,oster
child,sibling,stepsibling,or
descendentoanyothese.Ithe
taxpayerisnotthechildsparent,
specialrestrictionsmayapply.
Childmustbetaxpayerschild,
stepchild,adoptedchild,oster
child,sibling,stepsibling,or
descendentoanyothese.Ithe
taxpayerisnotthechildsparent,
specialrestrictionsmayapply.
Childmustbetaxpayerschild,
stepchild,adoptedchild,oster
child,sibling,stepsibling,or
descendentoanyothese.Ithe
taxpayerisnotthechildsparent,
specialrestrictionsmayapply.
Childmustbetaxpayerschild,
stepchild,adoptedchild,oster
child,sibling,stepsibling,or
descendentoanyothese.Ithe
taxpayerisnotthechildsparent,
specialrestrictionsmayapply.
Childmustbetaxpayerschild,
stepchild,adoptedchild,oster
child,sibling,stepsibling,or
descendentoanyothese.Ithe
taxpayerisnotthechildsparent,
specialrestrictionsmayapply.
AGE RELATIONSHIP
EarnedIncomeTaxCredit
DependencyExemption
ChildTaxCredit
HeadoHousehold
ChildCareCredit
Warning! This chart is a summary. Please reer to Publication 17, vITA Resource Guide 4012 or other resource material.
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
ChildmustliveintheU.S.withthetaxpayer
ormorethanhalthetaxyear.Some
temporaryabsencescountastimelivedat
home.
Childmustlivewiththetaxpayerormore
thanhalthetaxyear.Sometemporary
absencescountastimelivedathome.
Childmustlivewiththetaxpayerormore
thanhalthetaxyear.Sometemporary
absencescountastimelivedathome.
Childmustlivewiththetaxpayerormore
thanhalthetaxyear.Sometemporary
absencescountastimelivedathome.
Childmustlivewiththetaxpayerormore
thanhalthetaxyear.Sometemporary
absencescountastimelivedathome.
Nosupporttest.
Note: There is an exception for a married
child that cannot provide over 1/2 of his/her
own support for the tax year.
Childdidnotprovideover1/2ohis/herown
supportorthetaxyear.
Childdidnotprovideover1/2ohis/herown
supportorthetaxyear.
Note: Child must also be claimed as the
taxpayers dependent.
Childdidnotprovideover1/2ohis/herown
supportorthetaxyear.
Note: Taxpayer must provide over half the
cost of maintaining the home.
Childdidnotprovideover1/2ohis/herown
supportorthetaxyear.
RESIDENCY SUPPORT
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
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ALL THOSE KIDS PART 2
EITC
Dependent
ChildTaxCredit
HeadoHousehold
ChildCareCredit
Yes
No
No
No
No
No
(Chilmustlivewiththe
taxpayer)
Yes
Yes
No
(Childmustlivewith
thetaxpayer)
No
(Childmustlivewith
thetaxpayer)
No
Yes
No
Yes
(Mustbedependents
thatarerelated)
Yes
(Certaindisabled
dependents)
CHILD MUST HAVE EXCEPTION FOR QUALIFYING RELATIVE
SSN (NOT ITIN)? DIVORCED/SEPARATED RULES CAN BE USED
PARENTS CAN BE USED? TO GET OR INCREASE
THIS BENEFIT?
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
Yes
Yes
No
Yes
Yes
No
No
No
Yes
Yes
A DISABLEDCHILD CAN BEANY AGE?
CAN THE TAXPAYERBE A QUALIFYINGCHILD?
CITIZENSHIP
ChildmustbeU.S.citizenoralegalresidento
theUS.
ChildmustbeU.S.citizenoraresidentothe
U.S.,CanadaorMexico.
ChildmustbeU.S.citizenoraresidentotheU.S.
atsometimeduringthetaxyear.
ChildmustbeU.S.citizenoraresidentothe
U.S.,CanadaorMexico.
ChildmustbeU.S.citizenoraresidentothe
U.S.,CanadaorMexico.
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
26
QUALIFYING RELATIVES
EITC
DependencyExemption
ChildTaxCredit
HeadoHousehold
Child&DependentCare
Credit
QRisnotaqualiyingchildo
anothertaxpayerwhohasafling
requirementorclaimsEITC.
QRisnotaqualiyingchildo
anothertaxpayerwhohasafling
requirementorclaimsEITC.
QRisnotaqualiyingchildo
anothertaxpayerwhohasafling
requirementorclaimsEITC.
QRisadescendent,sibling,
ascendant,niece/nepheworin-law
ORliveswiththetaxpayerallyear.
QRisadescendent,sibling,
ascendant,niece/nephewor
in-law.
QRisadescendent,sibling,
ascendant,niece/nepheworin-law
ORliveswiththetaxpayerallyear.
CANNOT BE QUALIFYING CHILD RELATIONSHIP
Warning! This chart is a summary. Please reer to Publication 17, vITA Resource Guide 4012 or other resource material.
Note:QualiyingRelative
rulesdonotapply.
Note:QualiyingRelative
rulesdonotapply.
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
ItheQRisnotrelatedtothe
taxpayer,QRmustlivewiththe
taxpayerallyear.ItheQRis
relatedthereisnoresidency
requirement.
QRlivedwiththetaxpayermore
than6monthsothetaxyear.
Exception:ataxpayersparentis
notrequiredtoresidewiththe
taxpayer.
QRmustlivewiththetaxpayer
morethan6monthsothetax
year.
Thetaxpayerprovidedover1/2
otheQRsfnancialsupportor
thetaxyear.Exception:multiple
supportagreements.
Thetaxpayerprovidedover1/2o
theQRsfnancialsupportorthe
taxyear.Note:Also,thetaxpayer
mustpaymorethan1/2thecosto
maintainingthehome.
Thetaxpayerprovidedover1/2o
theQRsfnancialsupportorthe
taxyear.
RESIDENCY SUPPORT INCOME
Note:QualiyingRelative
rulesdonotapply.
Note:QualiyingRelative
rulesdonotapply.
QRhadincomelessthan
$3,700.
QRhadincomelessthan
$3,700.
Thereisnoincometest.
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
28
INCOME CHART
FORM DESCRIPTION TYPE
W-2 Wages Earned
W-2G Gamblingwinnings Unearned
1099-DIV Dividends Unearned
1099-INT Interest Unearned
1099-DIV/1099-B Capitalgaindistributions Unearned
1099-G Unemployment Unearned
1099-G Statetaxreund Unearned
1099-MISC Nonemployeecompensation(box7) Earned
1099-MISC Otherincome(box3) Unearned
SSA-1099 Socialsecuritybenefts Unearned
RRB-1099-R Railroadretirement Unearned
1099-R Pension Unearned
None CashorworknotonW-2or1099-MISC Earned
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
1040,line7 IcantgetW-2,usesubstitute,Form4852.
1040,line21 LinktoW-2G.Mustitemizetodeductgamblingexpenses,which
cannotexceedwinnings.
1040,line9 EnteronTaxWisedividendstatement.
1040,line8 EnteronTaxWiseintereststatement.
1040,line13 EnteronTaxWisedividendstatement.
1040,line19 Linkto1099-Gworksheet.
1040,line10 Linktostatetaxreundworksheet.Reportonlyiclientitemizedor
2010&deductedstateincometax.
1040,line12 Linkrom1040toSch.C-EZ/C;thenlinkromline1oC-EZ/C.Can
deductexpenses;netincomesubjecttoSEtax.
1040,line21 Seethesitemanager.
1040,line20 Alwaysenter!Linkto1040worksheet1.
1040,lines16&20 SeeIRSPub.4012,yellowtabTaxWiseIncomeoropena1099-R,
hitF1,gotobottomothepage.
1040,line16 Seethesitemanageritaxableamountisnoton1099-R.Not
taxableorIL.
1040,line12 Linkrom1040toSch.C-EZ/C;thenlinkromline1oC-EZ/Ctoa
scratchpad.Candeductexpenses;netincomesubjecttoSEtax.
LINK FROM 1040, LINE COMMENTS
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
30
CHILD TAX CREDIT & ADDITIONAL CHILD TAX CREDIT
Both credits:
The maximum amountor both credits combinedis $1,000/child.
Credits based on the number o qualiying children, amount o income tax
and the amount and type o income on the return.
The child/children must be a qualiying child who is under age 17 at the end
o the tax year. There is no exception to the age requirement.
Specifc to Child Tax Credit:
The child tax credit is nonreundable and appears on Form 1040, page 2, line
51.
The child tax credit is applied to income tax ater other nonreundable credits
hae been used.
Specifc to Additional Child Tax Credit:
The additional child tax credit is reundable and appears on Form 1040, page
2, line 65.
When additional child tax credit is claimed, the Form 8812 must be fled with
the tax return.
A client generally receies the additional child tax credit when two tests are
met:
1. The ull child tax credit, $1,000 per child, is more than is needed to
oset income tax.
2. At least one o the ollowing is true:
The client has earned income oer $3,000.
The client has three or more qualiying children.
Note: TaxWise automatically computes both credits and prepares Form 8812.
Remember to complete the dependent section o the Main Inormation Sheet cor-
rectly. Do not oerride! TaxWise will do the rest.
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
CHILD & DEPENDENT CARE CREDIT
The credit is nonreundable. I there is zero taxable income (orm 1040, line
43) there is no reason to claim the credit.
The qualiying child must be under age 13 or disabled at the time o the child
care.
In some cases, the cost o care or a disabled spouse or other dependent
qualifes.
The child care generally must be work-related; that is, babysitting that en-
ables the client to work.
For married couples, both taxpayers generally must be working and fle a
joint return.
The credit is claimed using Form 2441, Child and Dependent Care Expenses.
The proiders name, address and identiying number must be reported on
Form 2441
TaxWise Hint: Mark the DC box next to the childs name on the Main Inormation
Sheet.
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
32
BENEFITS RELATED TO EDUCATION
WHOS LIKELY MAXIMUM ANNUAL EXPENSES
TO BENEFIT? ANNUAL BENEFIT NEEDED FOR
MAXIMUM BENEFIT
American
OpportunityCredit
LietimeLearning
TuitionandFees
Deduction
StudentLoan
InterestDeduction
EducatorExpense
Adjustment
IllinoisEducation
Credit
Fulltime
undergraduateina
degreeprogram
Takingjust1-2
classesoringraduateschool
Takingjust1-2
classesorin
graduateschool;zero
taxableincome
Formerstudent
payingonloans
Schoolteachers,
gradesK-12
Parentswithchildren
inprivateschool,K-12
$1,000reundable
creditplus$1,500
nonreundablecredit
$2,000nonreundable
credit
$4,000adjustmentto
income
$2,500adjustmentto
income
$250adjustmentto
income($500onjoint
returnibothtaxpayers
areteachers)
$500nonreundableIL
statecredit
$4,000
$10,000
$4,000
$2,500
$250($500onjoint
returniboth
taxpayersare
teachers)
$2,250
* Caution! a dui xps y b usd , yp x bf. S yu si
g i yu usu hw di h pppi bf i.
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
STUDENT REQUIRED YEARS EXPENSES HOW TO CLAIM?
REQUIREMENT TO ATTEND AVAILABLE ELIGIBLE
AT LEAST
HALF-TIME?
Mustbepursuing
undergraduate
degree.
Doesnotneedtobe
indegreeprogramiclassimprovesjob
skills.
Doesnotneedtobe
pursuingadegree
Loanusedor
undergraduateor
graduateschool,ina
degreeprogram.
N/A
Attendingelementary
orsecondaryschool
Yes
No
No
Yes,atthe
timewhen
theborrower
wasattending
school
N/A
N/A
Fouryears
Unlimited
Unlimited
Unlimited
Unlimited
Unlimited
Tuition,ees,
books,course
materials
Tuition&eesonly
Tuitionandees
only
Loansusedtopay
tuition,ees,books,
coursematerials,
room&board,
transportation
Books,supplies,
equipmentor
classroomuse
Tuitionand
requiredbookandlabeesinexcess
o$250
Form1040,lines
49&66,linkto
Form8863
Form1040,line49,
linktoForm8863
Form1040,line34,
linktoeducation
worksheet
Form1040,line33,
linktoeducation
worksheet
Form1040,line23,
linktoeducation
worksheet
FormIL-1040,line
17,linktoIL-ScheduleICR
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TAX PREPARATION INFORMATION // vOLUNTEER ANSWER GUIDE 2012
34
PRINTING
1. Select rom the toolbar while the tax return is open in TaxWise.
Note: You may also open the File menu and select Print Return.
2. Select the ollowing print packets:
For an e-fle return
Signature Pages
File Copy
For a paper return
File Copy
Federal Copy to be Mailed
State Copy to be Mailed
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vOLUNTEER ANSWER GUIDE 2012 // TAX PREPARATION INFORMATION
PRINTING THE CLIENT LETTER IN SPANISH
1. In the TaxWise tree, click and highlight Letter[TCP Client - ENGLISH]
2. Click Letter on the fle menu
3. Select Open Letter
4. Select TCP Client - SPANISH.CL
5. Click Open
The Spanish ersion o the client letter will replace the English letter.
ITIN TAX RETURNS
An Indiidual Taxpayer Identifcation Number (ITIN) is a 9-digit number
assigned by the IRS or taxpayers who do not qualiy or an SSN. ITIN
returns can be e-fled, just like any other return.
Start the return using the taxpayers ITIN number instead o an
SSN. I the spouse has an ITIN, enter that number on the Main
Inormation screen.
In the TaxWise W-2 screen, use the SSN as it appears on the
taxpayers W-2.
State returns with ITINs can be e-fled as well. No special
procedures are needed.
A taxpayer who needs an ITIN should be reerred to a CEP ITIN
eent, the IRS or a paid preparer to fle an ITIN application. ITIN
eent inormation can be ound on the CEP website at www.
economicprogress.org/clients/ITIN. Taxpayers should be adised to
bring all the inormation to fle their tax return to the eent. They
should also bring a birth certifcate and a alid picture ID to establish
1) their oreign status and 2) identity or any amily member
who needs an ITIN. A alid passport is sufcient to satisy both
requirements.
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NOTES & ADDITIONAL INFORMATION