Publication 4012

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<p>Table of Contents - Tax Law</p> <p>Table of Contents TaxWise</p> <p>VITA/TCE Volunteer Resource Guide 2012 2 RETURNS VITA/TCE Volunteer Resource Guide 201 RETURNSVolunteer Income Tax Tax Assistance (VITA) / Tax Counseling the Elderly (TCE) Volunteer Income Assistance (VITA) / Tax Counseling for for the Elderly (TCE)</p> <p>4012Take your VITA/TCE training online at www.irs.gov (keyword: Link &amp; Learn Taxes). Link to the Practice Lab to gain experience using tax software and take the certification test online, with immediate scoring and feedback.</p> <p>Publication 40124012 (Rev. 10-2012) Catalog Number 34183E Department of the Treasury Internal Revenue Service www.irs.gov Publication (Rev. 10-2012) Catalog Number 34183E Department of the Treasury Internal Revenue Service www.irs.gov</p> <p>How to Get Technical Updates? Updates to the volunteer training materials will be contained in Publication 4491X, VITA/ TCE Training Supplement mid-December. To access this publication, in the upper right hand corner of www.irs.gov, type in Pub 4491X in the search field. During the tax season Volunteer Tax Alerts will be issued periodically. Type volunteer alerts, in the search field to access all tax alerts.</p> <p>Volunteer Standards of Conduct VITA/TCE ProgramsThe mission of the VITA/TCE return preparation programs is to assist eligible taxpayers in satisfying their tax responsibilities by providing free tax return preparation. To establish the greatest degree of public trust, volunteers are required to maintain the highest standards of ethical conduct and provide quality service. All VITA/TCE volunteers must complete the Volunteer Standards of Conduct Training and sign Form 13615, Volunteer Standards of Conduct Agreement prior to working at a VITA/TCE site. In addition, return preparers, quality reviewers, and VITA/TCE tax law instructors must certify in tax law prior to signing this form. This form is not valid until the site coordinator, sponsoring partner, instructor, or IRS contact confirms the volunteers identity and signs the form. As a volunteer participant in the VITA/TCE Programs, I will: 1) Follow the Quality Site Requirements (QSR). 2) Not accept payment or solicit donations for federal or state tax return preparation. 3) Not solicit business from taxpayers I assist or use the knowledge I gained (their information) about them for any direct or indirect personal benefit for me or any other specific individual. 4) Not knowingly prepare false returns. 5) 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) Treat all taxpayers in a professional, courteous, and respectful manner.</p> <p>Failure to comply with these standards could result in, but is not limited to, the following: Removal from the VITA/TCE Programs and inclusion on volunteer registry; Deactivation of your Partners VITA/TCE EFIN (electronic ID number); Removal of all IRS products, supplies, loaned equipment, and taxpayer information; Termination of the sponsoring organizations partnership with IRS; Termination of sponsoring organization grant funds; and Subjection to criminal investigations.</p> <p>Tax Wise is a copyrighted software program owned by CCH Small Firm Services (CCH). All screen shots that appear throughout the official Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) training materials are used with the permission of CCH. The screen shots used in this publicationor any other screen shots from Tax Wise or its affiliated programsmay not be extracted, copied, or distributed without written approval from the IRS SPEC Office of Products, Systems, &amp; Analysis. Confidentiality Statement: All tax information you receive from taxpayers in your VOLUNTEER capacity is strictly confidential and should not, under any circumstances, be disclosed to unauthorized individuals.</p> <p>Table of Contents Tax LawVolunteer Standards of Conduct............. Inside Front Cover Volunteer Agreement .............................. Inside Front Cover How to Use This Guide.......................................................3 Are You Ready to Get Started? ..........................................3 Scope of Service Chart.......................................................4 Identity Theft .......................................................................7 The Five-Step Interview Process........................................8 You The Taxpayer &amp; The IRS ..........................................9 Form 13614-C Job Aid for Volunteers ..............................10 Quality Site Requirements ................................................14</p> <p>Tab F:</p> <p>Deductions</p> <p>Tab A: Who Must FileChart A For Most People Who Must File ................ A-1 Chart B For Children and Other Dependents .......... A-2 Chart C Other Situations When You Must File ........ A-3 Chart D Who Should File ........................................ A-3 Decision Tree Determining Residency Status ......... A-4</p> <p>Travel Expenses......................................................... F-1 Entertainment Expenses ............................................ F-2 50% Limit ................................................................... F-3 Transportation Expenses ........................................... F-4 Recordingkeeping ...................................................... F-5 Interview Tips Standard Deduction ......................... F-6 Tip Standard Deduction Most People................... F-6 Tip Standard Deduction Chart for People Born Before January 2, 1948 or Who Are Blind................ F-7 Interview Tips Itemized Deductions......................... F-8</p> <p>Tab G:</p> <p>Credits</p> <p>Tab B: Filing StatusDecision Tree Determination of Filing Status .......... B-1 Interview Tips Filing Status ..................................... B-2 Tip Head of Household-Qualifying Person .............. B-3 Cost of Keeping Up a Home ...................................... B-4</p> <p>Tip Child and Dependent Care Expenses ...............G-1 Decision Tree Child and Dependent Care...............G-2 Interview Tips Education Credits .............................G-3 Decision Tree Credit for the Elderly or Disabled .....G-5 Decision Tree Retirement Savings Credit ...............G-6 Tip Child Tax Credit and Additional Child Tax Credit .......................................................................G-7 Interview Tips Child Tax Credit ................................G-8</p> <p>Tab H:</p> <p>Earned Income Credit</p> <p>Tab C: Exemptions/DependencyTip Exemptions........................................................ C-1 Tip Exemption Chart................................................ C-1 Interview Tips Personal Exemptions ....................... C-2 Tip Claiming an Exemption for a Dependent........... C-3 Tip Qualifying Child of More Than One Person ...... C-3 Interview Tips Exemption for Qualifying Child ......... C-4 Interview Tips Exemption for Qualifying Relative .... C-5 Interview Tips Divorced/Separated Parents ............ C-7 Worksheet Determining Support ............................. C-8</p> <p>Tip Earned Income for the EIC ................................ H-1 Tip EIC Common Errors .......................................... H-1 Tip Summary of EIC &amp; Disallowance ...................... H-2 Interview Tips EIC General Eligibility ...................... H-3 Interview Tips EIC with Qualifying Child (QC) ......... H-4 Interview Tips EIC without QC ................................ H-5 Tip Qualifying Child of More than One Person ....... H-5</p> <p>Finishing the ReturnPIN Guidelines ..........................................................12-1 Return Signature .......................................................12-3 Power of Attorney ......................................................12-4 Direct Deposit............................................................12-5 Balance Due Returns ................................................12-6 Distributing Copies of the Return ..............................12-7 Check Your Work The Quality Review ..................12-8 Amended Returns .....................................................12-9 Prior Year Returns ...................................................12-10</p> <p>Tab D: IncomeTip Income Quick Reference Guide ........................ D-1 Tip Examples of Non-Taxable Income..................... D-1 Tip Armed Forces Gross Income............................. D-2 Tip Scholarship and Fellowship Payments.............. D-3 Publication 4731 Cancellation of Debt Screening Sheet ..................... D-4</p> <p>References</p> <p>Tab E: AdjustmentsHealth Saving Account Helpful Hints.......................... E-1 Screening for Health Savings Account ....................... E-2 Tip Alimony Requirements (after 1984) ................... E-3 Tip MAGI on IRA with Retirement Plan ................ E-4 Tip MAGI on IRA No Retirement Plan .................. E-4 Tip Overview Student Loan Interest ........................ E-5 Tip MAGI Student Loan Interest ........................... E-5</p> <p>Highlights of Education Tax Benefits .........................13-1 Useful Publications and Forms .................................13-2 Frequent Taxpayer Inquiries .....................................13-3 Index .........................................................................13-5 Taxpayer Civil Rights.................................................13-7</p> <p>Contact Information for Volunteers .............Back Cover</p> <p>1</p> <p>Table of Contents TaxWise (Using Form 1040 Only)TaxWise Tab 1. Starting TaxWise TaxWise Online (TWO) Tab 7. Starting TaxWise OnlineSetting up TWO ...........................................................7-1 Logging on to TWO the First Time ..............................7-1 The TWO Homepage ..................................................7-2 TWO Shortcuts............................................................7-2 TaxWise Form Based Flow Chart ...........................1-1 Electronic Filing of Returns with Valid ITIN .................1-1 Starting a Return for a Primary Taxpayer who Does NOT Have an ITIN ....................................................1-2 Creating a Temporary ITIN ..........................................1-2 Completing a Return in TaxWise. ................................1-3 Taxpayer Identification Numbers &amp; Last Name ...........1-4 TaxWise Log in Screen ..............................................1-6 Starting a New Return .................................................1-6 Quick Reference .........................................................1-7 Toolbars.......................................................................1-7 Main Information Screen .............................................1-8</p> <p>Tab 8.</p> <p>Creating Returns</p> <p>Tab 2.</p> <p>TaxWise Income</p> <p>Income ........................................................................2-1 How/Where to Enter Income .......................................2-2 Form W-2 Instructions .................................................2-3 How to Enter Tips ........................................................2-4 Schedule B Interest ..................................................2-4 Schedule B Ordinary Dividends ...............................2-6 Dividend Statement ....................................................2-6 Schedule C-EZ Business Income ...............................2-7 Schedule C Business Income .....................................2-8 Schedule D Capital Gains/Losses..........................2-10 1099-R Pension and Annuity Income ........................2-16 1099-R Exclusion Worksheet ....................................2-17 RRB, CSA, &amp; SSA Benefit.........................................2-18 1099-R Entry Variations ............................................2-19 Schedule ERental Income and Loss (Military Only) .2-20</p> <p>Creating a New Return................................................8-1 The TaxWise Online Interview ...................................8-2 Navigating The Tax Return ..........................................8-5 Linking to a Form ........................................................8-5 The TaxWise Online Forms .......................................8-6 TaxWise Online Tool Bar............................................8-7 Basic Steps in Preparing a Tax Return Using TaxWise Online........................................................8-8</p> <p>Tab 9. Adding FormsAdding Forms to a Return ...........................................9-1 Additional Dependent Worksheet ................................9-2</p> <p>Tab 10.</p> <p>Diagnostics</p> <p>Running Diagnostics ................................................10-1 Setting the Return Stage ...........................................10-2</p> <p>Tab 11.</p> <p>Printing the Return</p> <p>Printing the Active Tax Return ...................................11-1 Printing from the User Homepage.............................11-3</p> <p>Tab 12.</p> <p>Finishing the Return</p> <p>Tab 3. Tab 4.</p> <p>TaxWise Adjustments to Income TaxWise Deductions</p> <p>Form 1040 Adjustments to Income ..........................3-1 Form 1040, Page 2 Deductions ...............................4-1 Schedule A Itemized Deductions..............................4-2 Schedule A Detail (Medical &amp; Contributions)...............4-4</p> <p>PIN Guidelines ..........................................................12-1 Return Signature .......................................................12-3 Power of Attorney ......................................................12-4 Direct Deposit............................................................12-5 Balance Due Returns ................................................12-6 Distributing Copies of the Return ..............................12-7 Check Your Work The Quality Review ..................12-8 Amended Returns .....................................................12-9 Prior Year Returns ...................................................12-10</p> <p>Tab 5.</p> <p>TaxWise Nonrefundable Credits Tab 13.Highlights of Education Tax Benefits .........................13-1 Useful Publications and Forms .................................13-2 Frequent Taxpayer Inquiries .....................................13-3 Index .........................................................................13-7 Contact Information for Volunteers ............Back Cover</p> <p>Nonrefundable Credits ................................................5-1 Form 1116 Foreign Tax Credit ................................5-2 Form 2441 Child and Dependent Care Credit ........5-3 Form 8863 Education Credits .................................5-4 Retirement Savings Contribution Credit ......................5-5</p> <p>References</p> <p>Tab 6.</p> <p>Other Taxes and Payments</p> <p>Form 1040, Page 2 Other Taxes and Payments ......6-1 Electronic Funds Withdrawal.......................................6-3 Direct Debit .................................................................6-3 For...</p>