4491XVolunteer Income Tax Assistance (VITA) / Tax Counseling for the Elderly (TCE)VITA/TCE Training Supplement 2013 RETURNS

Publication 4491X (Rev. 12-2013) Catalog Number 52568R Department of the Treasury Internal Revenue Service www.irs.gov

Take your VITA/TCE training online at www.irs.gov (keyword: Link & Learn Taxes). Link to the Practice Lab to gain experience using tax software and take the certification test online, with immediate scoring and feedback.

Publication 4491X • 2013 Supplement • 1

Publication 4491X – 2011 SupplementPublication 4491X – 2013 Supplement

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Pen and Ink Changes to the Printed Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Publication 4012, Volunteer Resource Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Publication 4491-W, VITA/TCE Problems and Exercises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Publication 4491X • 2013 Supplement • 2

Introduction

This supplement contains pen and ink changes to the:

• TrainingGuide(Publication4491)

• ProblemsandExercises(Publication4491W)

• VolunteerResourceGuide(Publication4012)

• Privacy,ConfidentialityandStandardsofConduct–APublicTrust(Publication4299)

• VolunteerAssistor’sTest/Retest(Form6744)

• Link&LearnTaxes(L&LT)

• VITA/TCEOnlineSpecialtyCourses–CancellationofDebt(COD)andHealthSavingsAccounts(HSAs)(Publication4942)

These changes impact all of the VITA/TCE courses. VITA/TCE tax preparersmustreviewthissupplementbeforeassistingtaxpayerswithtaxlawquestionsorpreparingtheirreturns.Qualityreviewersmustalsoreviewthisdocumentbeforeperformingqualityreviews.

Pen and Ink Changes to the Printed Publications

Product Page Pen and Ink Changes

Technical Changes

P4012 L-3 Infirstsentenceof#2,changepages1-4and1-5toC-16andC-17

P4012 C-3

Replacethesecondbulletatthetopofthepagewith: •Youcannotclaimamarriedpersonwhofilesajointreturnasadependentunlessthatjointreturnisfiledonlytoclaimarefundofwithheldincometaxor estimated tax paid .

UnderQualifyingChildstep5,replacetheinformationinparentheseswith:unlessthatjointreturnisfiledonlytoclaimarefundofwithheldincometaxorestimated tax paid .

P4012 D-17 Codecolumn(columnF),changetheLtoH.

P4012 D-18OntheOUTOFSCOPE(CONT)chart,addthefollowingstatementaftercodesJandT:iftaxableorpartiallytaxable

P4012 H-2Inchartattopofpage,ExceptionCode05,change(2)to: 10%(7.5%iftaxpayerorspouseisover65)ofyouradjustedgrossincomefortheyear.

P4491 296NewuserfeeratesforInstallmentAgreementswilltakeeffectJanuary1,2014.Theoriginationfeewillincreasefrom$105to$120.Therestructuringorrein-statementfeewillincreasefrom$45to$50.

Theanswerstothecompre-hensiveproblemsandexer-cises in Publication 4491W canbeaccessedunderOtherTechnical Resources and Training Products on the Volunteer Training Resources pageonwww.irs.gov.

Blankformsarenolongerprinted in the training publica-tions.Blankformscanbeaccessed at www.irs.gov/Forms-&-Pubs .

Publication 4491X • 2013 Supplement • 3

Product Page Pen and Ink ChangesP4299 2 Under“RequestingInformation,”replacethetwobulletswiththefollowing

information:

•Aphotoidentificationsuchasvaliddriver’slicense(U.S.),employerID,schoolID,stateID(U.S.),MilitaryID,nationalID,voterID,visa,orpassport.However,judgmentshouldbeusedtoacceptanyothervalidformofiden-tification.Forexample,theSiteCoordinatorcanallowproofofidentityinasituationofanelderlypersonwithadisabilitywhohasanexpireddriver’slicenseandpassportbutalsoprovidesavalidbirthcertificate.Certifiedvolunteerspreparingtaxreturnsarerequiredtoconfirmtheidentityofthetaxpayertoavoididentitytheft,taxfraud,andtovalidatethecorrectsocialsecuritynumber.Ifataxpayercannotsubstantiatetheiridentity,orifthevolunteerisuncomfortableacceptingtheitemspresentedasproofofiden-tity,thetaxpayershouldbeadvisedtoreturnwithanacceptableformofidentification.ExceptionsforrequiringPhotoIDshouldonlybemadeunderextremecircumstancesandshouldnotbethenorm.Forexample,theremaybelimitedsituationswhereanexceptionmayapplytoapersonwithadisability,theelderly,orotheruniquecircumstances.Thisexceptiontotheruledoesnotincludetaxpayersknowntothesite.

•Originalorcopiesofsocialsecuritycardsarerequiredtobereviewedaspartofthetaxreturnpreparationprocess.Othersocialsecurityverificationdocumentsinclude:AletterfromtheSocialSecurityAdministration,FormSSA-1099,ITINcardorletter,(new)Medicaidcardsthatincludetheletter“A”afterthesocialsecuritynumber,and/oranyotherverificationissuedfromtheSocialSecurityAdministrationOffice.VolunteersshouldconfirmtheSSNorITINandthecorrectspellingofnamesforallindividualslistedonthetaxreturn.IntheeventataxpayerprovidesverificationoftheITINandtheFormW-2containsaSSNthatcannotbeverified,theITINwillbethenumberusedtopreparethetaxreturn.ThemismatchofnamesandSSNinformationisoneofthetoptenreasonsfordelaysinprocessingelectronictaxreturns.

P4491-W 107Statetaxablerefundof$487omittedchangingbottomlineanswers–AGIis$53,303;itemizeddeduction$14,018;taxableincome–$31,685;tax–$3,881;refundamount$1,342

P4491-W 122 Taxexemptinterestof$418omittedonline8b

P4491-W 161TherentalincomelossforBrooksshouldbe$2,068,changingtheAGIto$40,897,TXIto$9,905

Publication 4491X • 2013 Supplement • 4

Product Page Pen and Ink Changes

Non-Technical Changes

L&LTLesson9,Slide29

Thecorrectansweris2559.Roger’sdrivingexpensesareequalto$0.565X1,564,roundedoffequals$884.ThetotalamountofRoger’sbusinessexpensesis$1,675plus$884,or$2,559.

L&LTCOD,Slide27

CancellationofDebt,Example3:Form8949,PartII,Line3(g)–($250,000),Line4(g)–($250,000);ScheduleD(Form1040),PartII,Line10(g)–($250,000)

P4012 14

ThefollowingitemswereincludedintheL&LTWhat’sNewlesson,butwereleftoffthelistofImportantTaxLawChangesfor2013:

Same-Sex Marriage

TheInternalRevenueServiceissuedrulingIR-2013-72,whichruledthatsame-sexcouples,legallymarriedinjurisdictionsthatrecognizetheirmarriages,willbetreatedasmarriedforfederaltaxpurposes.Therulingappliesregardlessofwhetherthecouplelivesinajurisdictionthatrecognizessame-sexmarriageorajurisdictionthatdoesnotrecognizesame-sexmarriage.

Same-sexcoupleswillbetreatedasmarriedforallfederaltaxpurposes,includingincomeandgiftandestatetaxes.Therulingappliestoallfederaltaxprovisionswheremarriageisafactor,includingfilingstatus,claimingpersonalanddependencyexemptions,takingthestandarddeduction,employeebenefits,contributingtoanIRAandclaimingtheearnedincometaxcreditorchild tax credit .

Anysame-sexmarriagelegallyenteredintoinoneofthe50states,theDistrictofColumbia,aU.S.territoryoraforeigncountrywillbecoveredbytheruling.However,therulingdoesnotapplytoregistereddomesticpartnerships,civilunionsorsimilarformalrelationshipsrecognizedunderstatelaw.

Legally-marriedsame-sexcouplesgenerallymustfiletheir2013federalincometaxreturnusingeithertheMarriedFilingJointlyorMarriedFilingSeparatelyfilingstatus.

Individualswhowereinsame-sexmarriagesmay,butarenotrequiredto,fileoriginaloramendedreturnschoosingtobetreatedasmarriedforfederaltaxpurposesforoneormorepriortaxyearsstillopenunderthestatuteoflimita-tions .

Net Investment Income Tax

Anetinvestmentincometaxappliestoindividuals,estatesandtruststhathavecertaininvestmentincomeabovecertainthresholdamounts.ThistopicisoutofscopefortheVITA/TCEprograms.Taxpayersaffectedbythenetinvestmentincometaxshouldbereferredtoaprofessionaltaxpreparer.Additionalinfor-mationcanbefoundonwww.irs.gov.

Publication 4491X • 2013 Supplement • 5

Product Page Pen and Ink Changes

P4491 62Undertheheading“OtherW-2Income,”insertTIP:AFormW-2withcodeQinbox12,indicatingcombatpay,requiresMilitarycertificationtocompletethereturn .

P4491-W 5Line40,crossoutstandarddeduction;AustinXforline10–taxablestaterefund;Fleming:AddXfor15b,(IRA),48(CDC)and58(Add'ltaxforIRA);Sterling:addXfor39a(tp/spouseblind)–deleteXfor15b

P4491-W all returnsBox4(SStaxwithheld)onallW-2forms,andallSEforms,haveamountsusing2012software.Pleaseallowthecurrentyearsoftwaretocalculatetheseamountswhenpreparingfutureyearreturns.

P4491-W 28 Box4ofW-2isincorrect,allowTaxWisetocalculatethisfield.

P4491-W 30 ChangeSSNon1099-INTto112-XX-XXXX.

P4491-W 33 CDC,add:Thecampwasadaycampandinvolvednoovernightstays.

P4491-W 37Fifthbullet,add:MarkretiredandbegantakingannuitypaymentsfromtheRailroad

P4491-W 52 ChangeCollinsFinancialEINto24-6XXXXXX.

P4491-W 53 ChangeEmersonPensionFundto24-8XXXXXX.

P4491-W 56 Inbox9ofintakesheet,changeMary’sdateofdeathto12/12/CY.

P4491-W 59SSNusedforPetroleumOil&Gasshouldbe211-XX-XXXXinsteadof212-XX-XXXX

P4491-W 127Form2441shows$897perchildinthebreakdown.TheamountonLine3mustmatchLine1,BoxD.Oneofthechildrenshouldhavebeenmarkedas$896.

P4491-W 149 ChangecodefromAtoBonForm8949.

P4491-W 150 ChangecodefromBtoAonForm8949.

P4491-W 158 ChangecodefromAtoBonForm8949.

Publication 4491X • 2013 Supplement • 6

Product Page Pen and Ink Changes

P4942 1-9

Addthefollowinginformation:

TheNationalMortgageSettlementBorrowerPaymentFund(Fund),willmakeNMSPaymentstocertainborrowerswholosttheirprincipalresidencesinfore-closureonorafterJanuary1,2008,andonorbeforeDecember31,2011.TheNMSPaymentforeachloanisthesameamount(approximately$1,400).TheNMSPaymentisnotconsideredtobeforgivendebt.

AtaxpayerwhoreceivesanNMSPaymentpursuanttotheNationalMortgageSettlementduetotheforeclosureofthetaxpayer’sprincipalresidenceincludesthepaymentintheamountrealizedontheforeclosure.

IfataxpayerincludesanNMSPaymentintheamountrealizedand,asaresult,createsorincreasesagainontheforeclosureoftheprincipalresi-dence,thetaxpayermayexcludetheresultinggainfromgrossincometotheextent permitted under § 121 .

Examples:

Example1–Lossonasingle-unithome.In2011,A’samountrealizedontheforeclosureoftheprincipalresidencewas$125,000,itsfairmarketvalue.A’sadjustedbasisintheprincipalresidence($230,000)exceededA’samountrealized($125,000).Thus,Arealizeda$105,000($230,000–$125,000)lossontheforeclosure.Under§165(c),thislossisnotdeductiblebecauseA,anindividual,didnotincurthelossinatradeorbusiness,atransactionenteredintoforprofit,orasaresultofacasualty.TheNMSPaymentof$1,400thatAreceivedin2013reducesA’snondeductiblelossto$103,600andthusdoesnotincreaseA’staxableincome.

Example2–Gainonasingle-unithome.In2009,C’samountrealizedontheforeclosureoftheprincipalresidencewas$160,000,itsfairmarketvalue.C’samountrealized($160,000)exceededC’sadjustedbasis($155,000).Thus,Chada$5,000($160,000–$155,000)gainontheforeclosureoftheprincipalresidence.Cexcludesthisgainfromgrossincomeunder§121becauseCownedandusedthepropertyasaprincipalresidenceforatleasttwoofthefiveyearsprecedingthesale.TheNMSPaymentof$1,400thatCreceivedfromtheFundin2013increasesC’sgain(andtheamountexcludedunder§121)ontheforeclosureto$6,400.

OklahomadidnotjoinintheNationalMortgageSettlement,andborrowersinOklahomaarenoteligibleforitsdirectreliefmeasurestoborrowers.

P4961 3

Delete“PowerPoint”andreplacewith“training.”TherearetwoIntake/Interview&QualityReviewTrainingmodules.ThefirstoneispartoftheVolunteerStandardsofConducttrainingmoduleintheTest/RetestbookandthesecondoneisPublication5101,Intake/InterviewandQualityReviewTraining(PowerPoint).Allvolunteersarerequiredtotakethefirstone,butonlypreparers,QualityReviewers,instructorsandSiteCoordinatorsarerequiredtocompletethePowerPoint.

Publication 4491X • 2013 Supplement • 7

Product Page Pen and Ink Changes

P4961 4

ThechartcanbemisleadingasitrelatestoSiteCoordinators.IRSdoesnotrequireSiteCoordinatorstobecertifiedintaxlawiftheydonotprepareorreviewtaxreturnsoradviseclientsontaxlaw;however,apartnermaystillrequirethemtobecertifiedintaxlaw.

P4961 20-21Thephrase“certifiedvolunteer”shouldbecorrectedtosay“taxlawcertifiedvolunteer.”Agreetercannotperformtheactionitemsatthetopofpage21iftheyarenotcertifiedintaxlaw.

F6744 2-1 Changethefirstsentenceinthedirectionstoread:Thefirstfivescenarios….

F6744 S-3

Delete“PowerPoint”andreplacewith“training.”TherearetwoIntake/Interview&QualityReviewTrainingmodules.ThefirstoneispartoftheVolunteerStandardsofConducttrainingmoduleintheTest/RetestbookandthesecondoneisPublication5101,Intake/InterviewandQualityReviewTraining(PowerPoint).Allvolunteersarerequiredtotakethefirstone,butonlypreparers,QualityReviewers,instructorsandSiteCoordinatorsarerequiredtocompletethePowerPoint.

F6744 S-4

ThechartcanbemisleadingasitrelatestoSiteCoordinators.IRSdoesnotrequireSiteCoordinatorstobecertifiedintaxlawiftheydonotprepareorreviewtaxreturnsoradviseclientsontaxlaw;however,apartnermaystillrequirethemtobecertifiedintaxlaw.

F6744 S20-21Thephrase“certifiedvolunteer”shouldbecorrectedtosay“taxlawcertifiedvolunteer.”Agreetercannotperformtheactionitemsatthetopofpage21iftheyarenotcertifiedintaxlaw.

F6744 iv Secondbulletadd:SiteCoordinatorsmustalsotakethistraining.

Publication 4491X • 2013 Supplement • 8

Publication 4012, Volunteer Resource Guide

Insertthefollowingchartonpage11ofPublication4012.

Criteria Comparison of Traditional Schedule C and Schedule C PilotTraditional Schedule C Schedule C PilotBusinessexpensesupto$10,000 Businessexpensesupto$25,000Nobusinesseslosses Businesseslossesconfinedtoasingletaxyear

andwithnocarrybackorcarryforward–NoNetOperatingLosses(NOLs)

Nobusinessuseofhome Businessuseofthehome–Day-CareProvidersonly(mayrentorownhome)

NoSection179expensinginlieuofdepreciation Section179expensinginlieuofdepreciationNobusinesseswithinventory NobusinesseswithinventoryNobusinesseswithemployees NobusinesseswithemployeesElectronicpreparationispreferred,butnotrequired

Returnspreparedelectronicallyatsites

Cashonlytaxpayers CashonlytaxpayersDepreciationwouldnotbeallowed DepreciationwouldbeallowedVehicleexpense–onlystandardmileage(actualnotallowed)

Vehicleexpense–onlystandardmileage(actualnotallowed)

Publication 4491X • 2013 Supplement • 9

Publication 4491-W, VITA/TCE Problems and Exercises

Insertthefollowingchartsonpage96ofPublication4491-W.

2013 Line # Basic Beringer Washington Webster Graham7 Wages 35229 19981 52241 35816

8 a/b Interest 83 778 2279 a/b Dividend 72/72 190 / 19010 Statetaxrefund

computation 487

11 Alimonyreceived 12 ScheduleC SchCexpenses 13 Capital gains 15 1099-Rs–IRA 16 1099-Rs–Pension 1250019 Unemployment 2400

20a/b SocialSecurity 12900/1096521 Otherincome 125 22 Total income 37629 20136 53631 6069823 Educator expense 250 27 Deductiblepartofself

employmenttax

30 Penaltyearlywithdrawalofsavings

22 78 55

31 Alimonypaid 300032 IRA contribution 33 Studentloaninterest 396 50034 Tuition&fees 35 Jurydutypaytoemployer 37 AGI 37233 20114 53303 5714340 Standard/itemized

deductions8950 6100 14018 19646

Medical 0 0 Taxesyoupaid 5748 5440 Interest 3595 5656 Giftstocharity 4550 7550 Job expenses etc 0 Othermisc. 125 1000

42 Exemptions 15600 3900 7800 1950043 Taxable income 12683 10114 31485 17997

Publication 4491X • 2013 Supplement • 10

2013 Line # Basic Beringer Washington Webster Graham

44 Tax 1268 1058 3829 178347 Foreigntaxcredit 48 Child and dependent care 12549 Educationcredit–Form

88631058 1658

50 Retirementsavingscredit 120 51 Child tax credit 1148 52 Energycredit 54 Total credits 1268 1058 0 178356 Selfemploymenttax 57 SS/MC–Form4137 58 Additional tax on IRA 59 Househouldemployment

tax

59 RepaymentFTHBC 61 Total tax 0 0 3829 062 Federaltaxwithheld 1266 2997 5223 859663 Estimatedtaxpayments 64 EIC 1224 65 Additional CTC 852 100066 Refundableeducation

credit–Form88631000 1000

67 First-timehomebuyercredit

71 Misc.credits 72 Total payments 3342 3997 5223 1059673 Overpaid 3342 3997 1394 1059674 Refund 3342 3997 1394 1059675 Applyto2014 76 Owe 77 Penalty

Publication 4491X • 2013 Supplement • 11

2013 Line # Advanced Austin Fleming Sterling Kent7 Wages 12475 19259 23239

8 a/b Interest 417/418 490 2682/2699 a/b Dividend 149 / 149 163/106 108 / 10810 Statetaxrefund

computation73 200

11 Alimonyreceived 2400 12 ScheduleC 7896 557 Sch.Cexpenses 4980 109913 Capital gains 75 11858 -300015 1099-Rs–IRA 268 5000 9277/62816 1099-Rs–Pension 9397/8686 20069/19842 14038/1360817 Rent,royalty 19 Unemployment 1345 1380

20a/b SocialSecurity 7368/205 50517/13709 13682/327421 Otherincome 170022 Total income 21931 36317 46062 4437623 Educator expense 27 Deductiblepartofself

employmenttax 558 40

30 Penaltyearlywithdrawalofsavings

24

31 Alimonypaid 360032 IRA contribution 600033 Studentloaninterest 26834 Tuition&fees 31835 Jurydutypayyougave

employer

37 AGI 21931 35759 46062 3412638 AGI 21931 35759 46062 3412640 Standard/itemized

deductions9410 8950 14600 14490

Medical 0 2765 Taxesyoupaid 3033 4473 Interest 4677 2997 Giftstocharity 1700 2555 Job expenses etc Othermisc. 1700

42 Exemptions 3900 7800 11700 1950043 Taxable income 8621 19009 19762 13646 Tax 838 2216 778 447 Foreigntaxcredit 13 448 Child and dependent care 430

Publication 4491X • 2013 Supplement • 12

2013 Line # Advanced Austin Fleming Sterling Kent

49 Educationcredit–Form8863

50 Retirementsavingscredit 51 Child tax credit 1000 52 Residentialenergycredit 54 Total credits 1430 13 456 Selfemploymenttax 1115 7957 SS/MC–4137 58 Additional tax on IRAs 500 59 RepaymentofFTHBC 500 60 Othertaxes 61 Total tax 1338 2401 765 7962 Federaltaxwithheld 3559 3337 5539 446263 Estimatedtaxpayments 40064 EIC 1530 367365 Additional child tax credit 100066 Refundableeducation

credit–Form8863 925

67 First-timehomebuyercredit

72 Total payments 3559 4867 5539 1066073 Overpaid 2221 2466 4774 1058174 Refund 2221 2466 4774 529175 Applyto2014 529076 Owe 77 Penalty

Publication 4491X • 2013 Supplement • 13

2013 Line #

Military/International Woods Brooks Lincoln Surry

7 Wages 29,135 44,900 29443 790278 a/b Interest 372/191 1349 9 a/b Dividend 77/77 187/150 10 Statetaxrefund

computation

11 Alimonyreceived 12 SchC-EZ ScratchpadEXP 13 Capital gains -954 16 15 1099-Rs–IRA 16 1099-Rs–Pension 17 Rent,royalty -2068 19 Unemployment

20a/b SocialSecurity 21 Otherincome -2945722 Total income 28,630 43,305 30792 4957024 Businessexpensesof

reservists1747

26 Movingexpenses 416 27 Deductiblepartofself

employmenttax

30 Penaltyearlywithdrawalofsavings

31a Alimonypaid 32 IRA contribution 33 Studentloaninterest 35 Jurydutypayyougave

employer

37 AGI 28,630 40,872 30792 4957038 AGI 28,630 40,872 30792 4957040 Standard/itemizeddeduc-

tions12,200 12,200 12200 12200

Medical 0 Taxesyoupaid 0 Interest 0 Giftstocharity 0 Job expenses etc Othermisc.

42 Exemptions 11,700 19,500 7800 1170043 Taxable income 4,730 9,172 10792 2567044 Tax 468 903 1078 384747 Foreigntaxcredit 12 696 48 Child and dependent care 330 600

Publication 4491X • 2013 Supplement • 14

2013 Line #

Military/International Woods Brooks Lincoln Surry

49 Educationcredit–Form8863

573 247

50 Retirementsavingscredit 456 135 51 CTC 0 100052 Energy 54 Total credits 468 903 1078 160056 Selfemploymenttax 59 Additional tax on IRA 60 Othertax 61 Total tax 0 0 0 224762 Federaltaxwithheld 2,886 5,170 1059 397763 Estimatedtaxpayments 64 EIC 1,399 65 Additional CTC 1,000 3,000 66 Refundableeducation

credit–Form8863

67 First-timehomebuyercredit

71 Misc.credits 72 Total payments 3,886 9,569 1059 397773 Overpaid 3,886 9,569 1059 173074 Refund 3,886 9,569 1059 173075 Applyto2014 76 Owe 77 Penalty