Level 1 & 2 Returns

2. Level 1 & 2 Returns

4. What is a Level 1 Return? • Just W-2s

5. W-2 • What information is reported on Form W-2? • W-2 reports wages, salaries, tips, and federal income tax withheld, as well as Social Security and Medicare taxes withheld

7. W-2 • Box 1: Total Wages • Any taxable fringe benefits (such as group term life insurance) are also included • Box 2: Federal Income Tax Withheld • Amount of federal taxes you have paid throughout the year • Box 3: Social Security Wages • Total amount of wages subject to Social Security tax • Typically the same as the Total Wages in box 1

8. W-2 • Box 4: Social Security Tax Withheld • Normally, social security tax is a flat tax rate of 6.2% on wage income • Box 5: Medicare wages and tips • Amount of wages subject to Medicare tax • Box 6: Medicare tax withheld • Medicare tax is a flat rate of 1.45% of your total Medicare wages

9. W-2 • Box 7: Social Security Tips • Amount of tip income that you reported to your employer • Box 7+ Box 3 = Box 1 • Box 13: Retirement Plan (checked) • Taxpayer participated in employer’s retirement plan • Box 14: Other Tax Information • Various amounts such as union dues, employer-paid tuition assistance, or after-tax contributions to a retirement plan

10. W-2 (State) • Box 16: State Wages • Total amount of taxable wages earned in that state • Box 17: State income tax withheld • Total amount of state income tax withheld from your paychecks for the wages reported in Box 16

11. W-2 (Local) • Box 18: Local Wages • Total amount of wages subject to local, city, or other state income taxes • Box 19: Local income tax withheld • Total amount of taxes withheld from paychecks for local, city, or other state income taxes • Box 20: Locality name • Brief description of tax being paid

12. W-2 Simulation • http://apps.irs.gov/app/understandingTaxes/hows/mod02/sim_mod02_01.jsp

13. Interest Income • Interest is the charge for the use of borrowed money • Your money earns interest when it is • Deposited in bank accounts, savings, loans, and credit unions • Used to buy certificates of deposit or bonds • Lent to another person or business

15. 1099-INT • Box 1: Regular taxable interest (from things such as bank accounts) • Box 2: Any amount taxpayer paid in early withdrawal penalties from CDs (Certificate of Deposits) or other securities. This is part of miscellaneous investment expense • Box 3: Interest received from U.S. government securities. This is only taxable at the federal level, not state or local.

16. 1099-INT • Box 4: Any federal tax withheld on interest income by the payer • Box 6: Foreign tax paid; this will be used as a credit or deduction • Box 8: Tax-free interest

17. 1099-G--Unemployment

18. Intake Interview • When a client comes in, they fill out an intake form which has a lot of key information on it • Greeter’s facilitate this • Tax preparers get the filled-in intake sheet along with all of the necessary forms

23. TaxWise • System that we use to file returns

24. TaxWise Demo