2004 TAX YEAR - Tri-CAP

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Transcript 2004 TAX YEAR - Tri-CAP

Basic B volunteer training
Tax year 2014
Basic B training overview
 Federal nonrefundable and refundable credits
 NEW: Premium Tax Credit and related credit
 Exemptions to the ACA insurance coverage
 Other federal taxes and related tax issues
 Financial services at the tax site
Affordable Care Act (ACA)
and the 2014 tax return
ACA the Basics
 The ACA created the Health Insurance Marketplace – Minnesota has it’s
own marketplace, MNsure
 MNsure marketplace is where Minnesotans find information about health
insurance options, purchase health insurance and enroll in public health
 Taxpayers must report whether he/she (and family) had insurance
coverage for the year on their tax return
The tax return
 A new tax credit, the Premium Tax Credit (PTC), is available to help
eligible taxpayers pay for coverage
 Taxpayers could elect to claim the PTC throughout the year to help
pay monthly insurance premiums – Advanced Premium Tax Credit
 The ACA also includes the individual shared responsibility provision,
which requires individuals to have health insurance coverage for their
 Form 8962, Premium Tax Credit (PTC), Form 8965, Health Coverage
Exemptions, and Form 1095-A, Health Insurance Marketplace
Line 46: excess advance
premium tax credit
 Must have purchased health insurance through MNsure marketplace
 Advanced payments of the Premium Tax Credit to help taxpayer pay
their 2014 monthly insurance premiums
 Advanced payments were based on the estimated income the
taxpayer entered on their MNsure application
 Complete Form 8962 to “reconcile” their payment – comparing what
they estimated their income would be and what their actual income
was for 2014 – did they receive too much advanced payment
 Must have Form 1095-A to complete the return
Line 61: health care,
individual responsibility
Taxpayer and each family member must have –
Health coverage,
Qualify for a health coverage exemption, or
Make a shared responsibility payment (SRP) on their tax return
What you need to
 Did everyone listed on the return have insurance coverage?
 Yes, is the insurance coverage considered MEC and what months was the
taxpayer (family) insurance in 2014
 No, is the taxpayer (family member) required to file a return or eligible for
an exemption from insurance coverage
Yes, the taxpayer (family)
has health insurance
 Is the health insurance considered minimum essential
coverage (MEC)?
 If the taxpayer (family) had MEC insurance coverage
all year, check the “full coverage” box on line 61, click
your heels and shout hooray!
 If the coverage was not all year, complete Worksheet
8 in TaxWise
no, the taxpayer (family) did
not have health insurance
 Check the federal filing requirement threshold to
determine whether the taxpayer is required to file a
 Determine whether the taxpayer (family) may qualify
for an exemption from the penalty
Minimum essential coverage
 Insurance through employer
 Insurance purchased through private company
 Insurance purchased through MNsure marketplace –
must have Form 1095-A to complete the return
 Student health plans
 Government-sponsored
Exemptions to the penalty
 Taxpayer (family) may be eligible for more than one exemption
 Find the exemption that is least complicated
 Undocumented taxpayers are exempt from the penalty (exemption
code C)
 Some exemptions require approval from the federal marketplace
 Taxpayer can elect to take the penalty without claiming an
Line 69: Net premium tax
 Credit based on MAGI and family size
 To be eligible must have purchased insurance through
MNsure marketplace
 Must have Form 1095-A from MNsure
 If taxpayer elected to receive the APTC, then the
portion used during the year will be deducted from
the calculated PTC amount
10 minute break
Topic 7: Nonrefundable
Line 48: Foreign Tax Credit
 Enter the amount shown in box 6 of
1099-DIV or 1099-INT directly on line 48
 If required to use Form 1116 then it is out-of-scope
Line 49: child and dependent care credit
 Max credit: $3,000 for 1 qualifying person, $6,000 for 2+qualifying
 Cannot be married filing separately
 Must have earned income
 Expenses must be paid by the taxpayer to work or look for work
 Form 2441
Qualifying person
 Child under age 13 and claimed as an exemption
 Person who is physically/mentally incapable of self-care and
couldn’t be claimed as exemption because income was $3,950+
 Spouse who is physically/mentally incapable of self-care
Qualifying expenses
 Paid by the taxpayer (spouse) to work or look for work
 Child in nursery school or pre-school for children below level
of KG qualify for the credit
 Overnight camp does not qualify
 Day camp may qualify if the camp specializes in a
particular activity such as computers or soccer
Qualifying provider
 Payments cannot be made to the taxpayer’s (spouse)
 If payments are made to a taxpayer’s (spouse) child, he/she
cannot be a dependent and must be age 19 or older by
the end of the year
 If the provider refuses to give EIN/TIN, the taxpayer can still
claim the credit, see Pub 17, “provider refusal”
Line 50: Education credits
 American opportunity credit, max credit $2,500
per student
 Lifetime learning credit, max credit $2,000 per
 Cannot use both credits for the same student
 Form 8863
 These same rules apply to the tuition and fees
deduction on line 34
Cannot claim the credit
 Claimed as a dependent on another person’s
tax return, such as the taxpayer’s parent
 Filing status is married filing separately
 Was a nonresident alien for any part of 2014
(nonresidents are out-of-scope)
Education documentation
 Can be shown on Form 1098-T or annual statement from the
institution or receipts for books and equipment
 Reduce expenses by amounts received from scholarships and
grants shown in box 5 of Form 1098-T
 Use 1098-T Worksheet with every education credit determination,
this must be sent to reviewer completed. It is located on the
Document Center
American Opportunity Credit
 40% of the credit may be refundable
 Available for the first 4 years of post secondary education
 Pursuing a degree or recognized educational credential
 Enrolled at least half time
 No felony drug convictions
Not eligible for the refundable
American Opportunity credit
Taxpayer is (a) under age 18; or (b) age 18 and their
earned income was less than ½ of their support; or (c)
FT student over age 18 and under 24 and earned
income was less than ½ of their support; AND
At least one of his/her parents was alive at the end of
the year; AND
Taxpayer is not filing a joint return
Lifetime Learning Credit
 Nonrefundable
 Available for an unlimited number of years
 Do not to be pursuing a degree
 Can take one or more courses
 Felony drug convictions are permitted 
 Qualifies: tuition, required enrollment fees and course-related
materials such as books, supplies and equipment
 American opportunity credit: books, supplies and equipment do
not have to be purchased from the school
 Lifetime learning credit: books, supplies and equipment must be
purchased from the school
 Does not qualify: computer tech fees, student activity or athletic
fees, insurance, room and board, transportation
Calculating expenses
Use 1098-T worksheet on Document Center
Scenario 1
Course-related materials
Scholarships and Grants
Eligible expenses for credit
Line 51: retirement savings credit
 Taxpayers qualify if they made contributions to an
eligible plan
 Contributions to employer-sponsored plan are
shown in box 12, Form W-2
 Contributions to a traditional IRA or Roth IRA
 Must be age 18 or older and cannot be a FT student
 Form 8880
Line 52: Child Tax Credit
Nonrefundable credit up to $1,000 per child
Taxpayers not claiming the full amount may
be eligible for the refundable Additional Child
Tax Credit
Must have a Qualifying Child, determined by
info entered on TaxWise Main Information
Form 8812
Line 53: Residential Energy Credits
 Congress has extended this provision for tax year 2014 only
 $500 lifetime limit for all years after 2005
 Credit for homeowners who made energy saving
improvements to their home
 Cost of installation may qualify depending on the type of
 Expenses paid for with subsidized energy financing are not
eligible for the credit
Topic 8: Other taxes
 Line 57: self-employment tax
 Line 59: additional tax on IRAs, other qualified
retirement plans – early distributions subject to
10% penalty
 Line 60b: 1st time homebuyer credit
 Line 61: health care, individual responsibility
10 minute break
Topic 9: Payments
 Line 64: federal income tax withheld reported
on W-2s and other income statements
 Line 65: 2014 estimated tax payments and
amount applied from 2013 return to 2014 taxes
Topic 10: Refundable credits
Line 66a: Earned Income Credit
Part A – Rules for everyone
 Must have valid social security number
 Cannot file married filing separately
 U.S. citizen or resident alien all year
 Cannot file Form 2555 or 2555-EZ
 No investment income $3,350+
 Cannot be a qualifying person of another person
Line 66a: earned income credit
Part B – Rules with a qualifying child
 Meet rules for everyone in Part A
 Have a qualifying child
 Cannot be the qualifying child of another
 Qualifying child cannot be used by more than
one person
Line 66a: Earned Income Credit
Part C – Rules with no qualifying child
 Meet rules for everyone in Part A
 At least age 25 but under age 65 as of
December 31
 Cannot be the dependent of another person
 Lived in the U.S. more than ½ the year
 Cannot be the qualifying child of another
child tests
Earnings not eligible for EIC
 Income received for work while an inmate
 Income received from work experience and
community service programs for welfare
recipients, generally reported in box 3 of Form
 Disability insurance payments reported in box 12
of Form W-2 with code J
 Any nontaxable income received from someone
for services performed
 Unemployment compensation
Taxpayer with an SSN is claiming
a child with an ITIN
Taxpayer qualifies for EIC,
but no EIC for child
Taxpayer with an ITIN is claiming
a child with an SSN
No EIC for taxpayer or child
Taxpayer with an SSN and
spouse with an ITIN is claiming a
child with an SSN
No EIC for taxpayers or child
Taxpayer with an SSN is claiming
a child with an SSN and a child
with an ITIN
The child with the SSN
qualifies the taxpayer for EIC,
but the child with an ITIN
does not
 A refundable credit is the unused portion of the child tax credit
 Taxpayer with more than $3,000 of taxable earned income may
be eligible regardless of the number of qualifying children
 Taxpayer with 3+ children may be eligible regardless of income
 FORM 8812
Line 68: American Opportunity Credit
Line 69: Net Premium Tax Credit
Topic 11: Refund or tax owed
Line 76: refund amount
There are 4 options…
1. Apply it to 2014 taxes
2. Direct deposit
3. Receive a paper check
4. Purchase U.S. savings bonds
Taxpayers without direct deposit option should be offered prepaid debit
card (CFR Card)
Tri-CAP services
Products you work with
most closely:
Prepaid debit cards
Savings bonds
Credit Reports
Chex Systems
Financial Fitness
Your Role
 You spend the most amount of time with each customer
 You are the customer’s most trusted advisor
 Open a CFR card for customers without direct deposit
 Reveal the expected refund amount
 Make the savings pitch with savings account or savings bonds
 Have customers fill out Credit Report and Chex Systems
 Sign up for a Financial Fitness Class at Tri-CAP
 Fill out savings pigs and enter to win CASH!!
Prepaid Card
 Our goal is 100% direct deposit
 Faster than a paper check (2-3 weeks)
• Safer and more
missing checks
• Avoids high
check cashing
Notice of Account Information
To open a CFR Card refer to the Vic Net home page under CFR Debit Card
select the site and follow the instructions.
After a CFR Card has been accepted print the “customer copy form” on
the VIC Net homepage under CFR Debit Card.
Place customer account number and information in the fields, print and
send to the review process.
Customer will get this document back for their records.
No Credit check is required to open this almost FREE account.
See fee schedule for applicable fees in the document center under CFR
Do you have money in savings?
(n= 9,734)
I don’t
Less than
I do not
have any
Do you have a
savings account?
$500 $1,000
More than 6%
Why a savings campaign?
Tax time can be the most savable moment
Saving is a priority for the majority of customers
yet few do save at tax time
Want something that customers and volunteers
can rally behind
1. Customers save at least $50 of their
federal refund –Enter into Tri-Cap drawing
2. Tri-CAP staff enters savers into promotion to
have 100 chances to win $100 weekly
prizes during tax season
3. Optional: customer can submit a photo on
their own to be eligible for a contest to win
$25,000 grand prize.
Have fun!
 Help customers reach their
savings goals
 Encourage savings for a
rainy day
“I believe in the power of savings.
Also, I found the goals and measuring
the goals as a good motivator.”
Series I U.S. Savings Bonds
Bonds make great gifts - Can purchase up to two Series I U.S. savings bonds
each tax season
Bonds are easy – Can split federal tax refund by buying a bond. The rest can
be directly deposited or mailed as a check.
Use form 8888 to split
Federal refund between
savings, checking and
savings bonds.
Refer to the 8888
training guide on the
document Center
Series I U.S. Savings Bonds
Bonds are flexible - Purchase bonds starting at $50 in $25 increments up to
$5,000 (ex. $50, $75, $100, etc.).
Bonds are safe - An investment backed by the U.S. Treasury Department with
very low risk of default. They never lose value.
Purchase savings bonds regardless of credit or banking history.
the Refund
• Reveal the expected
refund to prompt
savings decision
• Write refunds (or
amounts due) on
preparer checklist
• Make the savings pitch
to all customers
receiving a refund
Create your savings pitch
Ask everyone receiving a refund if they would like
to save
Frame the savings pitch as the default or norm
Keep it simple. For example:
“Let’s get you entered to win 100 weekly prizes of $100.
How much of your refund would you like to save?”
“If your refund allowed, what would you save some for?”
“How much should we put in a savings account?”
SaveYourRefund Recap
of customers
have no
Indicated they
wanted to “save
some” of their
Form 8888
allows tax filers
to split and save
their refund
• 100 weekly
prizes of
$100 during tax
• Series I U.S.
savings bond
• $25,000 grand
prize photo
have no savings
• New savings
• Existing
• Tri-CAP Contest
Savings pig
Financial coaching program
Financial Fitness
Encourage customer to select yes on the
client survey for the Financial Fitness Class,
Chex System and Credit Report.
Enter this information on the Preparer Use
Form in Taxwise
Key takeaways
Our customers are experts in their own lives and
make the best decision for their situation
The majority of customers want to save
Our role is to provide info about direct deposit
and savings opportunities to all customers
Everybody at our tax sites plays a role in making
financial capability possible for our customers
Line 78: Amount Owed
Option 1: Pay in full within 60 to 120 days with no fee, interest and
penalties charged on payments after April 15.
Option 2: Set up an installment agreement with the IRS.
Option 3: Taxpayer should file their return by the deadline and pay as
much as they can.
Do not complete Form 2210,
IRS will calculate any penalty.
Topic 12: Related tax issues
Power of Attorney (POA)
 Power of Attorney is the taxpayer’s written authorization for a
representative to act on their behalf in tax matters
 The representative must have Form 2848
 Follow the steps outlined in the Volunteer Tax Manual – ask your tax
site manager for assistance
Injured spouse allocation
 MFJ taxpayers and one spouse owes past-due federal or state debt
 The “injured spouse” is the spouse that does not owe the past-due
 Complete Form 8379 to allow the “injured spouse” to receive their
“portion” of the federal refund
 Minnesota does not have an “injured spouse” program
Amend prior year tax returns
 May need to amend return to correct errors or omissions on a return
they have already filed
 The IRS may file on the taxpayer’s behalf if the return is not filed. The
taxpayer can amend the IRS-filed return
 Amended returns cannot be e-filed
 Refer customers needing an amended return to the Tri-CAP main
Resident alien or nonresident alien?
 What do you do if an individual may be attending school in the U. S.
on a student visa and/or an individual has checked the “No” box on
Form 13614-C indicating they are not a U. S. Citizen?
 Use Determining Residency Status decision tree to determine whether
individual is a resident alien or nonresident alien
 If you determine the individual is a resident alien, complete Form
1040. If the individual had a “green card,” they are eligible for tax
 If you determine the individual is a nonresident alien, refer them to
their college’s international student program as this is out-of-scope for
 Basic certification, use paper Form 6744 booklet to
complete questions 1 – 13
 Advanced certification, use paper Form 6744 booklet to
complete questions 1 – 7
 Consider viewing the health savings account training online
at the on the training center and certifying at the HSA level