Familiarization Training

NJ TAX-AIDE2014 – 2015

SOMERSET COUNTY

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Purpose of this Training Understand policy & procedures of AARP Tax-

Aide Program Understand what is expected of volunteers Understand typical tax documents Understand how to access & use TaxWise Online

(TWO) Understand how to prepare a simple tax return

using TWO

AARP Tax-Aide

Charitable, non-profit program administered by AARP Foundation

Free, nationwide confidential service Help low- to mid-income taxpayers with special

attention to age 60+ Answer tax questions & prepare returns Funded 1/3 AARP, 2/3 IRS Tax Counseling for

the Elderly (TCE)

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Mission of AARP Tax-Aide

To provide high-quality, free income tax assistance & tax form preparation to the greatest number of low- & moderate-income taxpayers which will produce the most beneficial result for the taxpayers we serve No income or age limits Only limits are on complexity of return

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National, Volunteer-Run ProgramTY 2013 National StatisticsTax-Aide started in 1968 and is now the

largest nationwide, volunteer-run free tax service

Taxpayers served: 2.6 million Federal Tax Returns prepared: 1.65 M Volunteers: 35,000

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Somerset County Tax-Aide Program

In Somerset County:For 2013 tax season, we completed over 1,823 returns at 6 sites

Hillsborough, Manville, Raritan, Franklin, Bridgewater, Green Brook

100% e-filed on the computerApproximately 60 volunteers

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AARP Tax-Aide Counselors

Are trained Become certified Are assigned to a site Provide free tax counseling Report their service Promote the program

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AARP Tax-Aide Counselors Are Trained In Federal & NJ tax law In computer tax preparation software

(TaxWise) Use personal or loaner computers

In administrative requirements In use of appropriate reference materials

Publications, forms, schedules provided

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Publications & Tools Volunteer Resource Guide (spiral bound) (Pub

4012) Process-Based Training (Pub 4491) Your Federal Income Tax (Pub 17) NJ What’s In, What’s Out lists Site Sign-In Sheet & Activity Report Interview & Intake Sheets (Form 13614-C) IRS 1040 Instruction Book NJ 1040 Instruction Book & GIT Books

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Important Reference Websites

http://www.njtaxaide.org/tavolunteers/somerset Somerset County website

http://taxprep4free.org Training resources Proficiency problem scenarios & refund monitors

http://www.AARP.org/tavolunteers/ Volunteer portal includes news, cybertax notifications, links for

administration for AARP Tax-Aide volunteers

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Confidentiality, Privacy & Security

Keep taxpayer info strictly confidential Do not retain taxpayer documents Do not leave computer unattended if it has

taxpayer data All sites use TaxWise Online where data is

stored on secure servers

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Insurance Coverage & Liability

Travel accident insurance coverage if on Tax-Aide business

Insurance is supplemental to Medicare or its equivalent & covers medical expenses &/or death only. Does not cover personal property such as cars, computers, etc.

Notify district coordinator ASAP By congressional law, counselors are not

liable if they follow the rules12

Types Of Returns YouCan/Can’t Prepare Prepare only those returns for which you have been

trained & certified & which do not appear on the NJ “Cannot Do” List

Refer taxpayer to experienced counselor if tax subject is in Training Module “Topics for Experienced Counselors “ or if you are not comfortable with a particular tax situation

Refer taxpayer to paid tax preparer if anything on return is Out Of Scope

Do not prepare a tax return when you suspect information is untruthful

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Counselor Certification Requirements Pass IRS tests with grade of 80%+ (Volunteer

Standards of Conduct – Ethics & Advanced level tests) Open book test

Demonstrate proficiency in preparing tax returns Complete 3 problems (using 2013 tax law &

software) + 1 problem focusing on 2014 changes (using 2014 software)

Sign Volunteer Standards of Conduct14

Getting StartedOverall Process & The Interview

IRS Form 13614-C Intake/Interview Sheet

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Overall Process Client calls Tax Appointment phone line requesting tax

help Client is assigned to site coordinator/volunteer via email Tax volunteer calls client to set up appointment &

reviews Initial Phone Sheet info with client Client arrives at tax site & completes Intake/Interview

Sheet AARP policy mandates use of IRS Intake/Interview Sheet

for every client Tax return prepared, quality reviewed, printed and e-

filedNOTE: Refer to Process Overview handout for more details16

Interviewing – The Key To A Good Return Focus on interviewing to be sure you gather all

appropriate data to prepare accurate return Use information from Interview/Intake Sheet as starting

point, but continue to probe for all relevant details Also review prior year return and ask about items that

have changed Entering tax documents into TaxWise software is not

sufficient to ensure accurate return Use Volunteer Reference Guide (IRS Pub 4012)

decision trees and flow charts to ensure you are asking all the necessary questions to determine the full taxpayer situation

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Effective Interviewing

Speak clearly, simply, and loud enough Build rapport Have patience Reassure the taxpayer (“I understand”) Ask effective questions (e.g. - probing and

open-ended) Allow the taxpayer time to respond Involve the taxpayer in the process

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Verification of Taxpayer Identity Identity theft is a major IRS problem – verify

every taxpayer’s identity Ask every taxpayer & spouse for photo ID Check accuracy of Social Security #s for taxpayer,

spouse & every dependent Social Security card is preferred verification method If not available, can use SSA benefit statement or SSA

letter that shows both SS # and name Inaccurate SS #s can cause return rejects & delays

If taxpayer is not eligible for a SS #, can use Individual Taxpayer ID # (ITIN) Verify original copy of ITIN card or letter

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Federal 1040 Overview

IRS Form 1040

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IRS Form 1040

Everyone files a 1040 or a version of the 1040 (1040A, 1040EZ, etc)

Split up into 4 general areas Taxpayer information Income Taxes & Credits Payments/Refunds Due and Signature

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Taxpayer Information

Includes: Personal information for taxpayer & spouse Presidential election campaign question Filing status Exemptions (including Dependents)

Input into TaxWise on the Main Information Sheet

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Form 1040 Page 1 TP Information

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Personal Information2013

Form 1040 Page 1 TP Information

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Presidential Election Campaign

Form 1040 Page 1 TP Information

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Filing Status

Form 1040 Page 1 TP Information

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Exemptions (including Dependents)

Income

All sources of income included in this section Income derived from various tax forms usually

issued by employer, financial institution, government agency, etc

Information from tax forms and client interview entered into the respective form or worksheet in TaxWise

TaxWise puts the appropriate values into the 1040

Adjustments to income included in this section Final line on page is “Adjusted Gross Income”

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1040 Page 1 Income

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Income

1040 Page 1 Adjustments to Income

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Adjustments

1040 Page 1 Income

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Adjusted Gross Income (AGI)

Taxes & Credits Page 2 Taxable Income

- Start with “Adjusted Gross Income” - Deduct Itemized or Standard Deduction - Deduct Personal Exemptions - Arrive at “Taxable Income”

Calculate Tax on “Taxable income”

Total Tax - Start with Calculated Tax on Taxable Income - Deduct non-refundable tax credits (Credits that reduce tax up to

zero dollars) - Add other taxes - Bottom line is “Total Tax”

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1040 Page 2 Taxes & Credits

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Adjusted Gross Income (AGI)

1040 Page 2 Taxes & Credits

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- Deduct Itemized or Standard Deductions

1040 Page 2 Taxes & Credits

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- Deduct Exemptions

1040 Page 2 Taxes & Credits

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= Arrive at Taxable Income

1040 Page 2 Taxes & Credits

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Calculated Tax

1040 Page 2 Taxes & Credits

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- Deduct Nonrefundable Credits

1040 Page 2 Taxes & Credits

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+ Add Other Taxes

1040 Page 2 Taxes & Credits

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= Bottom Line is “Total Tax”

Payments/Refund/Owe

Payments Apply tax withheld and estimated payments Add refundable credits (these credits can exceed

the amount of the tax you owe and increase your refund)

Total is your total payments Subtract total payments from total tax

If payments are greater than total tax, you are entitled to a refund

If payments are less than total tax, you owe taxes

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Payments/Refund/Owe

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- Apply tax withheld & estimated payments

Payments/Refund/Owe

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- Apply refundable credits

Payments/Refund/Owe

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- Total of all payments

Payments/Refund/Owe

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= Bottom Line (A refund / You owe)

Direct Deposit/ Sign

In the box below the refund is a spot for direct deposit information

Bottom of the form is the signature box

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Direct Deposit/Sign

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Direct Deposit information

Payments/Refund/Owe/Sign

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Signature Line

NJ-1040 Overview

NJ 1040

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NJ 1040 Paper Page 1

Page I of the NJ 1040Tax Form includes: Taxpayer personal information County/Municipality Code NJ Filing Status Exemptions Dependent information Gubernatorial Election Fund Check Boxes Signature Box

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NJ 1040 Page 1Personal Information, Municipality Code, Filing Status, Exemptions

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NJ 1040 Page 1Dependents, Gubernatorial Election Question, Signature Line

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NJ 1040 Paper Page 2

Page 2 of the NJ Tax Form includes Income Exclusions Exemptions Deductions NJ Taxable income NJ Tax

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NJ 1040 Page 2Income

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NJ 1040 Page 2Exclusions, Exemptions, Deductions, Taxable Income, Tax

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NJ 1040 Paper Page 3

Page 3 of the NJ Tax Form includes Credits Use tax on out-of-state purchases Payments Penalties Amount owed Contributions Amount to be refunded

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NJ 1040 Page 3Tax, Credits & Penalties

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NJ 1040 Page 3More Credits, Payments, Contributions, Refund/Owed

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NJ1040 Page 4

NJ Page 4 is the NJ 1040H – Property Tax Credit Application Not in TaxWise – Paper file only Used for certain taxpayers that do not file a NJ

return but are entitled to a property tax credit Details to follow in Tax Law training modules

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NJ 1040H

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TaxWise NJ 1040

Most of the information is carried forward from the TaxWise Federal 1040 to the TaxWise NJ 1040

Page numbers in TaxWise do not match page numbers of the paper return

NJ 1040 entries can be tricky

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TaxWise NJ 1040 Entries The following items are the minimum required manually

input entries: County/Municipality Code must be entered in the TaxWise NJ

1040 on page 1 Gubernatorial Election Fund Question must be answered in

the TaxWise NJ 1040 on page 3 Retirement Income line 19b Homeowner on Oct 1 question must be answered on the

TaxWise NJ 1040 on page 3 Use tax due on out-of-state purchases must be entered in

TaxWise NJ 1040 on page3 Worksheet F Property Tax Deduction/Credit in the TaxWise NJ

1040 on page 4 NJ DD Worksheet NJ IRA Worksheet (Taxpayers with IRA withdrawals)

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NJ 1040 for Familiarization

For Familiarization we are entering just basic NJ items

Resource for NJ 1040 is “New Jersey Special Handling” document found on the TaxPrep4Free.org web site

More detail on NJ coming later

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Intake/Interview & Quality Review Sheet

Form 13614-C Intake/Interview & Quality Review Sheet

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Intake/Interview & Quality Review Sheet Completed by client – Parts I - VI

Page 1 – General information about taxpayer, spouse & dependents

Page 2 – Summary of income, expenses & life events, & additional information/questions related to preparation of return

Completed by preparer Page 1 - Shaded section about dependents Page 4 - Notes

Used by quality reviewer Page 3, Part VII 64

Intake/Interview Sheet - Personal Info,Marital Status & Household Info (P. 1)

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Intake/Interview Sheet – Income, Expenses & Life Events (P. 2)

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Intake/Interview Sheet –Life Events, Additional Info (P. 2)

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Intake/Interview Sheet – Quality Review Section (P. 3)

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Intake/Interview Sheet – Comments & Notes Sections (P. 4)

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Introduction To TaxWise

Pub 4012, Section N

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TaxWise Online (TWO)

Forms-based software used for tax return preparation (not interview style) Only software approved by IRS for free tax

preparation sites Developed & maintained by firm called Commerce

Clearing House (CCH) Calculations done & returns stored on TWO server

Can work on same return from multiple computers (but not simultaneously)

No taxpayer data stored on individual computers

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TaxWise Online (TWO) Most of our training will use 2013 TWO training software

Can be accessed on the web at twonline.taxwise.com/training13

2014 training environment is also available, but will not include NJ software until late January (twonline.taxwise.com/training)

You will be given info on production TWO software and IDs at a later time Multiple years are available

Returns are separate by training vs production and by tax year

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cont’d

TaxWise Online (TWO)

Returns are kept in separate environments by training vs. production and by tax year Always make sure you are in proper environment

before you start a return Can differentiate environment by background

color once you are logged in Login screens are exactly the same for all

environments Once logged in, 2013 training environment background

is green 2013 production environment background is blue

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cont’d

Logging in to TaxWise Online (TWO) Training Use this URL to access 2013 TWO training

website for familiarization training: https://twonline.taxwise.com/training13

Use client ID 2276756 First time logging in, use your assigned ID as

both User ID and Password All IDs start with SOMERSET Last 2 digits are your student #

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TWO Initial Sign-In

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User Name set up by administrator

Initially password is same as User Name

TWO Password Change Request

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TWO Password Change

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TWO Main Screen & Starting a New Return

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Start a new return

TWO Start New Return

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Enter SS # twice

SS# in XXX-YY-ZZZZ format XXX=First 3 #s from problem YY=Student ID ZZZZ=4139 (EFIN)

TWO Open Existing Return(Select SS #)

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Open an existing return byclicking on SS #

TWO Open Existing Return (Enter SS #)

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Open existing return by:• Click on Open return icon• Enter SS#

Always click on Go to Tax Forms; never use Go to Interview

TaxWise Refund Monitor & Navigation Tree

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Incomplete or Incorrect Form: All Red and Red Exclamation Point

Complete & Correct Form: Check Mark

State Forms Loaded when State is Selected

Refund Monitor Adjusted Gross Income (AGI) amount & Refund Amount provide running totals

TaxWise Forms Menu

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Forms Menu:

List of all Forms & Worksheets in TaxWise

Includes State Forms

Calculated entry

Non-Calculated orDirect Entry

Required entry

Overridden field

Green

Black

Red

Blue

TWO Field Color Coding

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Underline Color in TWO

Entering Basic Taxpayer Information into TaxWise

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Sample Intake/Interview Sheet

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Sample Intake/Interview Sheet (cont’d)

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TaxWise Main Information Screen

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Basic taxpayer &Spouse info

Main Information ScreenBasic Information – TaxWise Tips Enter names

Without punctuation marks (. , -) Last name of spouse is only needed if different

from taxpayer

Primary SS # is automatically populated Spouse’s SS # must be entered

Enter zip code - TW populates city and state

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TaxWise Main Information Screen cont’d

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Blind & disabled questions

Age & occupation info

Main Information ScreenFiling Status – TaxWise Tips

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• Enter birth date as mmddyyyy (TW inserts slashes). Age is calculated

• Check box for blind or disabled, if applicable. This is used to calculate Federal standard deduction & NJ exemption

• Enter date of death (if taxpayer died in 2013 or 2014 only - since using 2013 software)

• Check box to indicate who is filing return for deceased taxpayer

TaxWise Main Information Screen cont’d

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Presidential Election Campaign question

Filing Status

Main Information ScreenFiling Status – TaxWise Tips

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Donation for Presidential Election Campaign does not impact client’s refund/balance due Click on box to choose filing status

For Married Filing Single (MFS)Enter spouse’s name, SS #, & answer questions

For Head of Household (HOH)Only enter child’s name and SS # if child is not being claimed as a dependent

For QW, must enter year of death (2011 or 2012, since we are using 2013 software)

TaxWise Main Information Screen cont’d

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Personal Exemptions

Dependent Info

Main Information ScreenExemptions – TaxWise Tips

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TaxWise calculates first line of Exemptions based on previous data

Check box on lines 6A, B or C only if appropriate

Main Information ScreenDependents – TaxWise Tips

List dependents from youngest to oldest Enter 1-12 in M in HM (Months in Home) box Use Code box drop down to select relationship code

Only way to indicate non-dependent Check DC box (Child & Dependent Care) if there are

eligible expenses Always check EIC box for children CTC box is automatically checked by TaxWise if child

is eligible

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TaxWise Main Information Screen cont’d

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State Info

Main Information Screen – TaxWise Tips

State Information Section State Return defaults to “NJ”

NJ state return automatically e-filed after Federal return is accepted.

If TaxPayer does not have to file NJ return, click NO on box “Do You Want to Electronically File This Return” on Page 3 of NJ return

Leaves NJ return as part of file, but does not e-file it. If NJ taken out on Main Info screen, NJ return deleted

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TaxWise Main Information Screen cont’d

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Bank Account Info for Direct Deposit & Direct Debit

Main Information Screen – TaxWise Tips

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Bank Information Section If Direct Deposit of refund or Direct Debit

of amount due is desired, enter 9-digit routing number and account number as per client’s sample check

Do not use deposit slip info Will also have to enter information a

second time at bottom of Form 1040 for verification purposes

TaxWise Main Information Screen cont’d

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Taxpayer & Spouse PINs

Identity Theft PINs

TaxWise NJ 1040 Page 1

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Municipality Code

Name & Address Changes

Additional NJ Exemption for Full-Time College Student NJ allows an additional exemption for a college

student if: Student is under 22 years of age (at year end) for

entire tax year Student attends college full-time Student spends at least some part of each of 5

calendar months of tax year in school Educational institution is accredited Taxpayer paid ½ or more of tuition &

maintenance costs (not including financial aid)103

TW Additional NJ Exemption for Full-Time College Student – NJ 1040 Page 2

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Dependents Attending College

TaxWise Dependents’ Health Insurance & Gubernatorial Elections Fund - NJ 1040 Page 2

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Dependents’ Health Insurance Info

Gubernatorial Elections FundQuestions

TaxWise NJ Dependents Information Worksheet

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Link to Dependents Worksheet from NJ 1040 Page 3 Line 13

Dependent Health Insurance

Preparer Use Form

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Foreign Language Question

Counselor initials

Quality Reviewer Initials

DisabilityQuestion

Preparer Use Form – TaxWise Tips

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Must answer language/disability questions on Lines 11/12 from info on Interview/Intake Sheet, Page 3

Answers are used for grant and statistical purposes only

Enter preparer’s/quality reviewer’s initials on Lines 13/14 Qualify reviewer’s initials should be entered after

quality review is complete Taxpayer reminders can be entered at bottom of

screen

Entering Data into TaxWise for 1040 Page1

Pub 4012

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Entering Data into TaxWise for 1040 Page 1 Income:

W-2 Wage & Tax Statement 1099-INT Interest Statement 1099-DIV Dividend Statement 1099-R Distributions from Pensions, IRAs, etc. 1099-G Unemployment Statement SSA-1099 Social Security Statement

Adjustments: Student loan interest deduction

All entries are made on appropriate forms & TaxWise transfers to 1040 Page 1

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W-2 Wage & Tax Statement

Employer issues to employee for tax year Includes:

Employer identification info Employee identification info Wages earned Taxes withheld

All info to be copied to TaxWise EXACTLY as shown on W-2 form

TaxWise puts info entered in proper place111

W-2 Wages & Tax Statement

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2012

NJ Specific Taxes

State Wage & Tax Info

Federal Wage &Tax InfoEmployer Info

Check BoxesEmployee Info

TaxWise W-2 Screen

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Interest & Dividends Statements1099-INT & 1099-DIV Issued by financial institutions for interest

&/or dividends received Enter info from these forms in TaxWise on

Sch B Interest/Dividend Statement screens TaxWise transfers info onto Sch B Interest &

Ordinary Dividends & then to 1040

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1099-INT Interest Statement

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Interest IncomeEarly WithdrawalPenalty

Federal IncomeTax Withheld

Payer Info

Payee Info

TaxWise Schedule B Interest Statement Screen

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1099-DIV Dividend Statement

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Payer Info

Ordinary Dividends

QualifiedDividends

Capital Gains Distribution

Federal TaxesWithheld

Payee Info

TaxWise Schedule B Dividend Statement Screen

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Retirement Income1099-R Distribution from pension, IRA, annuities, etc. Enter info on TaxWise 1099-R screen TaxWise puts the proper info on the correct

1040 lines

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1099-R Retirement Income

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Payer Info

Gross Distribution

If taxable amount notdetermined,there is more to do

Distribution Codes (on back or in Help)

Taxable Amount

Payee Info

Checked if IRA

TaxWise 1099-R Screen

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Determining NJ Taxability of IRA Distribution – NJ IRA Worksheet May be able to claim Federal tax exclusion when

income is contributed to IRA; contributions all taxable on NJ return

To determine NJ taxability of IRA distributions, complete separate NJ IRA Worksheet for each IRA 1099-R

If taxpayer does not have info needed for Worksheet, must still complete by “getting the red out;” otherwise, income will not be included in NJ income

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NJ IRA Worksheet

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Copy # of IRA being worked on

“Get the red out” if info not available

Unemployment Compensation1099-G Unemployment compensation received from

government Enter info on TaxWise 1099-G screen TaxWise puts the proper info on the correct

1040 line

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TaxWise 1099-G

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Payer Info

Payee Info

Unemployment Info

Federal tax withheld

Unemployment Amount

Federal & NJ Tax Withheld

TaxWise 1099-G Screen

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Social SecuritySSA-1099 Enter info from SSA-1099 onto TaxWise 1040

Worksheet 1 screen Includes:

2013 net benefits (from Box 5) Medicare Parts B, C & D (from Description box)

TaxWise transfers to Schedule A Detail Medical Expenses

Federal income taxes withheld (from Box 6)

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SSA-1099

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Box 5 Amount to 1040 Wkt 1

Medicare Part B to 1040 Wkt 1

If Medicare Part D, link toScratch pad for both PartsB & D

Federal Tax WithheldTo 1040 Wkt 1

TaxWise 1040 Worksheet 1 Screen(for Social Security)

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From SSA-1099 Box 5

From Medicare scratch pad

TaxWise Scratch Pad for Medical Expenses

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Medicare Premiums for Parts B & D

Student Loan Interest Deduction

Can deduct qualified student loan interest as an adjustment to income On 1040 Line 33

Link to 1040 Worksheet 2 to enter into TaxWise

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TaxWise 1040 Worksheet 2 Screen(for Student Loan Interest)

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Student Loan Interest

Other Sources of Income Not Covered in Familiarization Examples of other sources of income we

might see but not covered in familiarization: Sale of stocks and bonds Sale of home Partnership income on Schedule K-1 Gambling income Income tax and property tax refunds Alimony Business income

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Entering Data into TaxWise for 1040 Page2

Pub 4012

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Form 1040 Page 2 Taxes & Credits Start with AGI Deduct itemized or standard deductions Deduct personal exemptions Arrive at taxable income Alternative Minimum Tax (Out of Scope) Apply non-refundable tax credits Add other taxes Bottom line is Total Tax

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Standard vs. Itemized Deductions

Everyone is allowed a standard deduction TaxWise determines amount of standard

deduction depending on: Filing status If taxpayer is age 65 and older If taxpayer is blind

For some, itemized deductions can be more beneficial than standard deduction

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Standard/Itemized Deductions on 1040

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Extra standard deduction – 65 or older

Standard deduction

Standard vs. Itemized Deductions cont’d Itemized deductions include:

Medical Taxes (e.g.-state/local taxes paid, real estate taxes) Mortgage Interest Charitable Contributions Miscellaneous deductions

Enter itemized deductions in TaxWise on Sch A & Sch A Detail TaxWise determines whether standard or itemized

is better & transfers to 1040 Line 40138

Schedule A Itemized Deductions

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2013

Medical Expenses

Taxes You Paid

Interest You Paid

Gifts to Charity

Casualty & Theft Losses

Miscellaneous Deductions

Clients frequently bring in extra documents that cannot be claimed as deductions

Counselor must determine which documents are not needed for tax return. Examples include: Household bills (water, sewer, credit cards, etc.) Funeral expenses Life insurance proceeds Ineligible charitable contributions

Items Not Eligible as Itemized Deductions

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Medical Expenses Paid

Medical expenses can be claimed on both Federal and NJ tax returns

On Federal, can claim medical expenses above 10% of AGI; 7.5% if 65 or older

On NJ, can claim medical expenses above 2% of NJ gross income

Enter expenses on Sch A Detail screen & TW will do appropriate calculations for both Federal & NJ

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TaxWise Schedule A Detail for Medical Expenses

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Medicare Premiums from 1040 Wkt 1)

Real Estate Taxes Paid

Real estate taxes paid can be claimed on both Federal and NJ tax returns

On Federal, real estate taxes claimed as an itemized deduction on Schedule A

On NJ, taxpayer can claim a property tax deduction or credit (whichever is greater) Property taxes entered on NJ Worksheet F TaxWise automatically determines whether

deduction or credit is greater

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TaxWise Schedule A Real Estate Taxes

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Property Taxes on Principal Residence

TaxWise NJ Worksheet F for Property Taxes

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Property Taxes on Main Home

TW determines whether Property Tax Deduction or Credit is better

Rent Paid

Rent paid cannot be claimed on Federal tax return

Portion of rent paid can be claimed on NJ tax return Rent paid entered on NJ Worksheet F TaxWise calculates the 18% of rent paid that

constitutes property taxes TaxWise automatically determines if property tax

deduction or credit is greater

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TaxWise NJ Worksheet F for Rent

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TW determines whether Property Tax Deduction or Credit is better

Rent Paid

18% of Rent can beClaimed as Property Taxes

Child Tax Credit (CTC)

Non-refundable credit that allows taxpayers to claim tax credit per qualifying child

TaxWise automatically populates CTC box on Main Info screen if eligible& calculates this credit

If not claimed in full, taxpayer may be eligible for refundable Additional Child Tax credit

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CTC Box on Main Info Screen

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TW automatically populates if eligible

CTC on 1040

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Child Tax Credit

Payment/Refund/Owe/Sign

Start with total tax Apply tax withheld & estimated payments Apply refundable credits Bottom line

Refund You owe

Direct deposit information Signature line

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Earned Income Credit (EIC)

Refundable tax credit for people who work but do not earn high incomes

There are requirements that must be met to get this credit (details in later Tax Training)

For this class: Check EIC box next to dependent’s name on Main

Info Screen Follow form questions on EIC Worksheet in order

they are shown

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EIC on Main Info Screen

Check EIC box for all dependents. TW determines if eligible

EIC Worksheet

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Answer only questions in red. Follow “go to” directions

Additional NJ Entries

NJ 1040 Instruction Booklet

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NJ 1040 Use Tax

Individual buys a product/service outside of NJ (or on Internet), intended for use in NJ If seller did not collect sales tax

purchaser should pay NJ sales tax If seller did collect sales tax but at a rate lower

than New Jersey's purchaser should pay the difference in sales tax

Use NJ 1040 line 45 with scratch pad

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TaxWise NJ 1040 Line 45 - Use Tax Due on Out-of-State Purchases

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Use Tax Due on Out-of-State Purchases. If 0, “get the red out.” If > 0, document on scratch pad

TaxWise 1040 Page 2 Screen cont’d

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2nd Entry of Bank Account Info for Direct Deposit & Direct Debit

Finalizing the Return & Concluding The Interview

IRS Form 13614-C Intake/Interview & Quality Review Sheet

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Finalizing Return cont’d

After return is completed: Ensure all forms in red in Forms Tree are

corrected (GET THE RED OUT) Click on red item in Forms Tree & TaxWise will take

you to correct screen Scroll down until you find item underlined in red Correct or complete red item(s)

Enter direct deposit/direct debit info if client desires

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Forms to be Corrected in Forms Tree

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Click on item(s) in red on Forms Tree

Items to be Corrected

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Scroll down to item underlined in red & correct/complete

Bank Account Information

Taxpayer can have refund deposited directly into bank account or have tax due electronically transferred from bank account to IRS

Must enter routing number and bank account number twice on 2 different TaxWise screens Main Info screen 1040 Page 2

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Finding Routing Number & Account Number on a Check

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Robert & Mary Smith54 Main StreetBridgewater, NJ 08807

Routing Number Account Number

TaxWise Main Info Screen – Bank Account Information Section

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Routing & Bank Account Info (from check)

TaxWise 1040 Page 2 Screen cont’d

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2nd Entry of Bank Account Info for Direct Deposit & Direct Debit

NJ Direct Deposit or Direct Debit Worksheet

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Check to use same bank info as Federal

Check if taxpayer desires check

Check to use different bank info from Federal or if Federal balance due/ NJ refund

Finalizing Return cont’d

Run Diagnostics (icon at top of TW screen) Click on item in Diagnostics that needs

correction. TaxWise will take you to correct screen

Correct error(s) Verify need for any overrides Read warnings & determine if any action needs

to be taken Must re-run Diagnostics after corrections

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Run Diagnostics

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Click on Run Diagnostics icon.Review and fix identified errors

Quality Review (QR)QR is a requirement on 100% of returns

When the tax return has been completed in TaxWise, another certified counselor (second pair of eyes) performs a quality review

QR counselor continues probing while referring to Part VII C of the Intake/Interview Sheet Verify all info from Intake/Interview form &

source documents Re-run diagnostics & correct errors

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Finalizing Return cont’d

Click on “Create e-File(s)” box (at bottom of diagnostics box) OR

Set the return stage, if not ready to e-file Click on Return Summary icon or close return & go to

appropriate client return Select appropriate return status from drop down box

Print copy of return for taxpayer Do not need to keep copies of W-2s & 1099s or signed

8879s; return everything to taxpayer ERO will e-file returns & notify counselor of any

rejects171

Setting Return Stage

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Click on Return Summary Icon

Return Stages in E-File Status Section of Return Summary

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Printing Return

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Click on Print Return icon

Finalizing Return with Taxpayer

Review printed return with taxpayer Line-by-line Federal & NJ 1040s Highlight any carryovers or “issues”

Have taxpayer(s) sign Form 8879 IRS E-File Signature Authorization If joint return, BOTH taxpayers MUST sign Tell taxpayers they are responsible for return

Assemble packet for taxpayer in envelope Return all source documents, Intake/Interview

sheet, 8879, etc.175

TW IRS e-file Signature Authorization - Form 8879

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2010By signing 8879, taxpayer(s) are acknowledging they are responsible for return and are giving permission to e-file

Benefits of E-Filing Returns

File federal & state returns simultaneously Faster/more accurate processing –

Calculations done by TaxWise Faster processing for refunds

Direct deposit within 7-14 days Proof of filing – IRS/State acknowledge File early, delay payment until April 15

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