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Other Income

Other Income. Form 1040 – Line 21 Pub 4012 – Pages D-3 and D-4 Pub 4491 – Part 3 – Lesson 16. Intake/Interview. Form 1040 – Line 21. Examples:. Pub 17, pg 94. Gambling winnings including lotteries and raffles Reported on 1099-MISC, Box 3

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Other Income

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  1. Other Income Form 1040 – Line 21 Pub 4012 – Pages D-3 and D-4 Pub 4491 – Part 3 – Lesson 16

  2. Intake/Interview NTTC Training – TY2015

  3. Form 1040 – Line 21 NTTC Training – TY2015

  4. Examples: Pub 17, pg 94 • Gambling winnings including lotteries and raffles • Reported on 1099-MISC, Box 3 • Reported on 1099-MISC, Box 7 (but “not a business”) • 1099-LTC • Jury duty pay and Poll Worker Pay (not on W-2) • Other: • Prizes and awards • Medical study subject pay • Cancellation of credit card debt NTTC Training – TY2015

  5. National Mortgage Settlement • Taxpayers may receive a settlement payment • Relates to a home lost in foreclosure 2008 – 2012 • No tax form (1099) issued • Out-of-scope NTTC Training – TY2015

  6. Other Income • Generally does NOT include 1099-MISC non-employee compensation (Box 7) which is business income – Sch C • Does NOT include rent or royalty income which are reported on Sch E • DOES include income not reported on other lines and schedules NTTC Training – TY2015

  7. Line 21 in TaxWise Link to Wkt 7 Other Income Worksheet, if not already on tree. NTTC Training – TY2015

  8. Gambling income Link to W-2G If no W-2G, use L 16 NTTC Training – TY2015

  9. NTTC Training – TY2015

  10. Bottom of W-2G Check if not taxable by state Losses automatically transfer to Schedule A limited by amount of winnings. If no W-2G, ensure losses are entered on Schedule A, but do not exceed winnings. NTTC Training – TY2015

  11. Other Income If 1099-MISC received If NO 1099-MISC received NTTC Training – TY2015

  12. Long Term Care Payments1099-LTC • LTC Insurance Contracts – • Generally reimbursements not taxable • Per diem costs up to an aggregate limit of $330/day are non-taxable • Reported to taxpayer on 1099-LTC • Complete Form 8853, Section C (Sections A and B remain out-of-scope) NTTC Training – TY2015

  13. Long Term Care Payments1099-LTC XX NTTC Training – TY2015

  14. Accelerated Death Benefits 1099-LTC • Insured has been certified by a physician as terminally ill • Fully excludible • Certified as chronically ill • Treated the same as paid under a qualified long-term care insurance contract NTTC Training – TY2015

  15. Long Term Care Payments1099-LTC • If there are multiple payees under the insurance contract, refer the taxpayer to a paid preparer NTTC Training – TY2015

  16. Long Term Care Payments1099-LTC • Complete Form 8853 Pg 2 • Either add or link from Wkt 7 • TaxWise will carry taxable amount, if any, to 1040 Wkt 7 L 11 • Unreimbursed medical expenses can be deducted on A Detail, if itemizing NTTC Training – TY2015

  17. Form 8853 NTTC Training – TY2015

  18. Cancellation of Debt Pub 4012 – pg D-32 • Nonbusiness credit card debt only • Taxpayer must be solvent immediately before debt cancelled • Value of assets exceeds value of liabilities • Not in bankruptcy • Otherwise out-of-scope NTTC Training – TY2015

  19. Cancellation of Debt • Lenders must issue Form 1099-C if cancel $600 or more of debt • Less than $600 must also be reported as income by taxpayer • Cancelled debt included on Form 1040, Line 21 NTTC Training – TY2015

  20. Form 1099-C OOS OOS Nonbusiness credit carddebt only Nonbusiness credit carddebt only NTTC Training – TY2015

  21. Income – Quality Review The final question with respect to income: Did you have any other income? NTTC Training – TY2015

  22. Other Income Questions? Comments… NTTC Training – TY2015

  23. Medicaid Waiver Payments Entire Lesson Difficulty of Care Payments 4491 – Part 3 – Lesson 16

  24. Medicaid Waiver Payments • Paid by state or county • Paid to caregiver to provide nonmedical support services to an individual in caregiver’s home • Frequently paid to care recipients own family NTTC Training – TY2015

  25. Difficulty of Care Payments • IRS Notice 2014-7 • Treats “qualified Medicaid waiver payments” as difficulty of care payments • MUST be excluded from Income NTTC Training – TY2015

  26. Income Documents • Each state reports payments according to its own rules • 1099-MISC Box 7 • 1099-MISC Box 3 • W-2 • Not reported • Other… NTTC Training – TY2015

  27. Tax Return • Enter income from W-2 on Line 16 of Wkt 7 as negative number OR • Enter income from 1099-MISC on Line 21 (using Wkt7 Line 2) • Enter same amount as a negative number on Line 21 (using a blank line on Wkt7) labeled “Notice 2014-7” NTTC Training – TY2015

  28. In TaxWise • Worksheet 7 NTTC Training – TY2015

  29. Reported on W-2 • Payments entered on a W-2 and then excluded are automatically deducted by TWO from earned income for • EIC • ACTC • Dependent care credit NTTC Training – TY2015

  30. Schedule C • Report payments on Schedule C if taxpayer is in the business of providing care • Enter exclusion as an other expense on Schedule C • Do not exclude income if care is for more than 5 adults or more than 10 children NTTC Training – TY2015

  31. Excluding Payment from Return • Taxpayer must exclude income from return. • Will likely receive a notice of omission from IRS • Should answer with “Notice 2014-7” NTTC Training – TY2015

  32. Quality Review • Verify if amount has been excluded from all applicable worksheets/forms, (EIC, ACTC, & Dependent Care Credit) • Verify the dollar amount on Wkt7 NTTC Training – TY2015

  33. Medicaid Waiver Payments Questions? Comments? NTTC Training – TY2015

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