Transcript Slide 1

Familiarization Training
NJ TAX-AIDE
2014 – 2015
SOMERSET COUNTY
1
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
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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 Program
TY 2013 National Statistics
 Tax-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 computer
 Approximately 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 rules
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Types Of Returns You
Can/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 Conduct
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Getting Started
Overall 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-
filed
NOTE: Refer to Process Overview handout for more details
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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
Personal Information
2013
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Form 1040 Page 1 TP Information
Presidential Election Campaign
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Form 1040 Page 1 TP Information
Filing Status
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Form 1040 Page 1 TP Information
Exemptions (including Dependents)
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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
Income
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1040 Page 1 Adjustments to
Income
Adjustments
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1040 Page 1 Income
Adjusted Gross Income (AGI)
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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
Adjusted Gross Income (AGI)
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1040 Page 2 Taxes & Credits
- Deduct Itemized or Standard Deductions
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1040 Page 2 Taxes & Credits
- Deduct Exemptions
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1040 Page 2 Taxes & Credits
= Arrive at Taxable Income
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1040 Page 2 Taxes & Credits
Calculated Tax
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1040 Page 2 Taxes & Credits
- Deduct Nonrefundable Credits
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1040 Page 2 Taxes & Credits
+ Add Other Taxes
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1040 Page 2 Taxes & Credits
= Bottom Line is “Total Tax”
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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
- Apply tax withheld & estimated payments
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Payments/Refund/Owe
- Apply refundable credits
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Payments/Refund/Owe
- Total of all payments
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Payments/Refund/Owe
= Bottom Line (A refund / You owe)
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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
Direct Deposit information
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Payments/Refund/Owe/Sign
Signature Line
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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 1
Personal Information, Municipality Code, Filing Status, Exemptions
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NJ 1040 Page 1
Dependents, 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 2
Income
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NJ 1040 Page 2
Exclusions, 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 3
Tax, Credits & Penalties
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NJ 1040 Page 3
More 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:
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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
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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)
cont’d
 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
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TaxWise Online (TWO)
cont’d
 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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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
User Name set up by
administrator
Initially password is same
as User Name
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TWO Password Change Request
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TWO Password Change
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TWO Main Screen & Starting a New
Return
Start a new return
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TWO Start New Return
Enter SS # twice
SS# in XXX-YY-ZZZZ format
XXX=First 3 #s from problem
YY=Student ID
ZZZZ=4139 (EFIN)
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TWO Open Existing Return
(Select SS #)
Open an existing return by
clicking on SS #
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TWO Open Existing Return
(Enter SS #)
Open existing return by:
• Click on Open return icon
• Enter SS#
Always click on Go to Tax Forms; never use Go to Interview
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TaxWise Refund Monitor & Navigation
Tree
Refund Monitor
Adjusted Gross Income (AGI) amount &
Refund Amount provide running totals
Complete & Correct Form:
Check Mark
Incomplete or Incorrect
Form: All Red and Red
Exclamation Point
State Forms Loaded
when State is
Selected
82
TaxWise Forms Menu
Forms Menu:
List of all
Forms &
Worksheets
in TaxWise
Includes
State Forms
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TWO Field Color Coding
Underline Color in TWO
Calculated entry
Green
Non-Calculated or
Direct Entry
Black
Required entry
Red
Overridden field
Blue
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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
Basic taxpayer &
Spouse info
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Main Information Screen
Basic 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
Age & occupation
info
Blind & disabled questions
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Main Information Screen
Filing Status – TaxWise Tips
• 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
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TaxWise Main Information Screen
Presidential Election Campaign question
cont’d
Filing Status
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Main Information Screen
Filing Status – TaxWise Tips
 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)
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TaxWise Main Information Screen
cont’d
Personal Exemptions
Dependent Info
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Main Information Screen
Exemptions – TaxWise Tips
 TaxWise calculates first line of Exemptions
based on previous data
 Check box on lines 6A, B or C only if
appropriate
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Main Information Screen
Dependents – 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
State Info
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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 efile it. If NJ taken out on Main Info screen, NJ
return deleted
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TaxWise Main Information Screen
cont’d
Bank Account Info
for Direct Deposit &
Direct Debit
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Main Information Screen – TaxWise Tips
 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
100
TaxWise Main Information Screen
cont’d
Taxpayer & Spouse
PINs
Identity Theft PINs
101
TaxWise NJ 1040 Page 1
Municipality Code
Name & Address Changes
102
Additional NJ Exemption for FullTime 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
Dependents
Attending College
104
TaxWise Dependents’ Health Insurance &
Gubernatorial Elections Fund - NJ 1040 Page 2
Dependents’ Health Insurance Info
Gubernatorial Elections Fund
Questions
105
TaxWise NJ Dependents
Information Worksheet
Dependent Health Insurance
Link to Dependents Worksheet from NJ 1040 Page 3 Line 13
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Preparer Use Form
Foreign Language Question
Disability
Question
Counselor initials
Quality Reviewer Initials
107
Preparer Use Form – TaxWise Tips
 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
108
Entering Data into TaxWise for
1040 Page1
Pub 4012
109
Entering Data into TaxWise for
1040 Page 1
 Income:
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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
110
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 place
111
W-2 Wages & Tax Statement
Employer Info
Federal Wage &Tax Info
Employee Info
Check Boxes
State Wage & Tax Info
NJ Specific Taxes
2012
112
TaxWise W-2 Screen
113
Interest & Dividends Statements
1099-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
114
1099-INT Interest Statement
Interest Income
Payer Info
Early Withdrawal
Penalty
Federal Income
Tax Withheld
Payee Info
115
TaxWise Schedule B Interest
Statement Screen
116
1099-DIV Dividend Statement
Ordinary Dividends
Payer Info
Qualified
Dividends
Capital Gains
Distribution
Payee Info
Federal Taxes
Withheld
117
TaxWise Schedule B Dividend
Statement Screen
118
Retirement Income
1099-R
 Distribution from pension, IRA, annuities, etc.
 Enter info on TaxWise 1099-R screen
 TaxWise puts the proper info on the correct
1040 lines
119
1099-R Retirement Income
Gross Distribution
Taxable Amount
Payer Info
If taxable
amount not
determined,
there is more
to do
Payee Info
Checked if IRA
Distribution Codes
(on back or in Help)
120
TaxWise 1099-R Screen
121
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
122
NJ IRA Worksheet
Copy # of IRA being worked on
“Get the red out” if info not available
123
Unemployment Compensation
1099-G
 Unemployment compensation received from
government
 Enter info on TaxWise 1099-G screen
 TaxWise puts the proper info on the correct
1040 line
124
TaxWise 1099-G
Unemployment
Amount
Unemployment Info
Payer Info
Federal tax withheld
Federal & NJ Tax
Payee Info
Withheld
125
TaxWise 1099-G Screen
126
Social Security
SSA-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)
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

TaxWise transfers to Schedule A Detail Medical
Expenses
Federal income taxes withheld (from Box 6)
127
SSA-1099
Medicare Part B to
1040 Wkt 1
If Medicare Part D, link to
Scratch pad for both Parts
B&D
Box 5 Amount to
1040 Wkt 1
Federal Tax Withheld
To 1040 Wkt 1
128
TaxWise 1040 Worksheet 1 Screen
(for Social Security)
From SSA-1099 Box 5
From Medicare scratch
pad
129
TaxWise Scratch Pad for Medical
Expenses
Medicare Premiums
for Parts B & D
130
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
131
TaxWise 1040 Worksheet 2 Screen
(for Student Loan Interest)
Student Loan Interest
132
Other Sources of Income Not
Covered in Familiarization
 Examples of other sources of income we
might see but not covered in familiarization:
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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
133
Entering Data into TaxWise for
1040 Page2
Pub 4012
134
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
135
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
136
Standard/Itemized Deductions on
1040
Extra standard deduction –
65 or older
Standard deduction
137
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 40
138
Schedule A Itemized Deductions
2013
Medical Expenses
Taxes You Paid
Interest You Paid
Gifts to Charity
Casualty & Theft Losses
Miscellaneous Deductions
139
Items Not Eligible as Itemized
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

140
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
141
TaxWise Schedule A Detail for
Medical Expenses
Medicare Premiums
from 1040 Wkt 1)
142
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

143
TaxWise Schedule A Real Estate
Taxes
Property Taxes on
Principal Residence
144
TaxWise NJ Worksheet F for
Property Taxes
Property Taxes on
Main Home
TW determines whether Property Tax Deduction
or Credit is better
145
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

146
TaxWise NJ Worksheet F for Rent
Rent Paid
18% of Rent can be
Claimed as Property
Taxes
TW determines whether Property Tax Deduction
or Credit is better
147
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
148
CTC Box on Main Info Screen
TW automatically
populates if eligible
149
CTC on 1040
Child Tax Credit
150
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
151
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

152
EIC on Main Info Screen
Check EIC box for all
dependents. TW
determines if eligible
153
EIC Worksheet
Answer only questions in red. Follow “go to” directions
154
Additional NJ Entries
NJ 1040 Instruction Booklet
155
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


If seller did collect sales tax but at a rate lower
than New Jersey's


purchaser should pay NJ sales tax
purchaser should pay the difference in sales tax
Use NJ 1040 line 45 with scratch pad
156
TaxWise NJ 1040 Line 45 - Use Tax
Due on Out-of-State Purchases
Use Tax Due on Outof-State Purchases. If
0, “get the red out.” If
> 0, document on
scratch pad
157
TaxWise 1040 Page 2 Screen
cont’d
2nd Entry of Bank Account Info
for Direct Deposit & Direct Debit
158
Finalizing the Return &
Concluding The Interview
IRS Form 13614-C Intake/Interview &
Quality Review Sheet
159
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
160
Forms to be Corrected in Forms
Tree
Click on item(s)
in red on Forms
Tree
161
Items to be Corrected
Scroll down to item
underlined in red
& correct/complete
162
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

163
Finding Routing Number &
Account Number on a Check
Robert & Mary Smith
54 Main Street
Bridgewater, NJ 08807
Routing Number Account Number
164
TaxWise Main Info Screen – Bank
Account Information Section
Routing & Bank
Account Info (from
check)
165
TaxWise 1040 Page 2 Screen
cont’d
2nd Entry of Bank Account Info
for Direct Deposit & Direct Debit
166
NJ Direct Deposit or Direct Debit
Worksheet
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
167
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

168
Run Diagnostics
Click on Run Diagnostics icon.
Review and fix identified errors
169
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
170
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
rejects
171
Setting Return Stage
Click on Return
Summary Icon
172
Return Stages in E-File Status
Section of Return Summary
173
Printing Return
Click on Print Return icon
174
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
By signing 8879, taxpayer(s) are acknowledging 2010
they are responsible
for return and are giving permission to e-file
176
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
177