HLS TaxHelp Training

1. PLEASE SIGN IN! HLS TaxHelp Training February 2, 2008 (2007 Calendar Year Returns) TaxHelp Board: Jesse Gurman, Amber Greaves, Lane Morgan

2. Overview • Sign in if you haven’t already • Tax law • Interviewing • Using TaxWise • Review and filing • Certification

3. Tax Basics: Filing Status • Who has to file? Most people if > $8,750, p. 8 • Status – use workbook chart & tips, pp. 12-13 • Single (has no dependents) • Married filing jointly • Married filing separately • Head of household (unmarried or separated, w/deps) • Qualifying widow(er) with dependent child • Married filing separately reduces credits – whenever possible file married/jointly or HoH • Non-US citizens – intermediate issue

4. Tax Basics: Dependents • Use charts & tips, pp. 15-19 • Children < 18 in HH, >50% expenses, tiebreakers • College students 19-24, >50% expenses, “primary” res • Qualifying relatives (or non-relative in HH), <$3400 • Dependent as filer (“CAN” not “WILL” someone claim) • Child credits automatic in TW, except child/dep care • EIC – reqs mostly the same, but check (esp SSN) • Divorce – no EIC or HoH for noncustodial, even w/perm • Dependency and HoH not always same (student, parent)

5. Tax Basics: Income Types Earned v. unearned (definition) Wages (form W-2) both federal and state info, match address check for part-year state residency issues some government jobs/pensions not taxed by state Bank interest (form 1099-INT), dividends (1099-DIV) IRA, 401(k), other pensions (form 1099-R) taxes are only owed if disbursed, or Roth IRA Social security, unemployment, worker’s comp, gambling Self-employment – intermediate only

6. Tax Basics: Earned Income Credit • Primary focus of VITA/TaxHelp • Credit targeted to low-income taxpayers • Higher for taxpayers with dependents • must file married/jointly or head of household • Use flow chart/checklist to ensure all requirements met (pp. 35-38) • EIC worksheet will pop up in Taxwise automatically if income cutoff is met • Cutoffs: ~$38k (>1qc), ~34k (1qc), ~13k (0qc)

7. Tax Basics: Tuition Credits/Deductions • 3 different ways, all non-refundable • Hope Credit: first 2 years of undergrad, 100% credit of up to $1650 paid • Lifetime Learning Credit: any undergrad, grad or vocational, 20% credit of up to $10k paid • Straight deduction: @ tax rate, up to $4k paid • Unless you are sure, try all 3 • Make sure to follow charts carefully • Hope and LLC form 8863, deduction 1040 p. 1

8. Tax Basics: Other Deductions/Credits • Keep an eye out during the interview • You can ask every question until you feel comfortable, or by “group” • Ones that come up the most: • student loan interest • IRA contribution • Retirement Savings Credit (form 8880)

9. Tax Basics: State (MA) • Credits/deductions • Rent • Transportation • Home heating oil • Proof of Health Insurance • new this year • taxpayer should receive MA 1099-HC in mail • if no insurance, might be MA refund penalty • First time state filers can NOT e-file for MA

10. Intermediate-Level Issues: Itemized Deductions • Almost everyone takes standard deduction • Ask taxpayer if he/she has itemized before • Biggest reasons to itemize • Mortgage • Large health care costs • Other large purchases (e.g. new car) • must be > $5,350 (s), $10,700 (m), $7,850 (HoH) • Itemized returns can only be completed by intermediate-certified volunteers

11. Intermediate-Level Issues: Self-Employment Income • Some taxpayers will have self-employment income (housekeeping, babysitting, small business, etc.) • May have 1099-misc or no documentation • Returns with self-employment income can only be completed by intermediate-certified volunteers

12. Advanced Issues • We do not cover them • They include: • complicated investments beyond 1099-int/div • sale of any stock, property, other capital gain • business income beyond basic self-employ • If you have any doubt or questions, ask a site expert – do not try to do it yourself

13. Logging into TaxWise • Website is https://twonline.taxwise.com, or https://twonline.taxwise.com/training • User = first initial + last name (all caps) • Initial password will be the same (you will have to change it the first time) • Our client number is 796235 • EFIN is 040449 (don’t need for login)

14. Completing the Return: Interview • Review intake form, introductory chat • Size up the bigger issues • filing status and dependents • types of income • possible credits • Start TaxWise interview, enter info • Keep in mind what is being asked and why • If any intermediate issues, refer to expert

15. Completing the Return: Forms • USE ALL CAPS NO PUNCTUATION • Check for red anywhere, CTRL + space • Do federal and state unless reason not to • Be very careful with SSNs and addresses • Encourage e-file, but paper if taxpayer prefers • Check or direct deposit; voucher or e-withdrawal • Utilize 4012, Pub 17, irs.gov, and site expert • See Taxwise flow chart p. 40

16. Completing the Return: Review • Diagnostic check • Every return must be quality reviewed, w/sheet • E-file whenever possible • you will not e-file yourself, just mark “ready for e-file” • if paper filing, indicate in return status • Print 2 copies, 1 for taxpayer, 1 for us • Taxpayer signature, form 8879 • Attach intake, 1040, W2, 1099-R, etc.

17. Certification • For tax lessons/reference info: http://www.irs.gov/app/vita/index.jsp • For the test: http://linklearn.webtechteam.com/login.aspx?ReturnUrl=/default.aspx • Basic level only (unless you want to do intermediate) • 80% right, 2 tries, question types rotate • Use 4012, Pub 17, and TaxWise! • When you are done, email the pdf to agreaves@law.harvard.edu and you will be scheduled