Entering Basic Taxpayer Information into Tax Wise Pub

Entering Basic Taxpayer Information into Tax. Wise Pub 4012 1

Sample Intake/Interview Sheet 2

Sample Intake/Interview Sheet (cont’d) 3

Tax. Wise Main Information Screen Basic taxpayer & Spouse info 4

Main Information Screen Basic Information – Tax. Wise Tips § Enter names § Without punctuation marks (except for hyphen) § § Use field help (? ) to determine what is allowed Last name of spouse is only needed if different from taxpayer § Primary SS # is automatically populated from info entered to start return § Spouse’s SS # must be entered § Enter zip code - TW populates city and state 5

Tax. Wise Main Information Screen cont’d Age & occupation info Blind & disabled questions 6

Main Information Screen Filing Status – Tax. Wise 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 exemptions • Enter date of death (if taxpayer died in 2014 or 2015 only - since using 2014 software) • TW will check box to indicate who is filing return for deceased taxpayer 7

Tax. Wise Main Information Screen Presidential Election Campaign question cont’d Filing Status 8

Main Information Screen Filing Status – Tax. Wise 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 (2012 or 2013, since we are using 2014 software) 9

Tax. Wise Main Information Screen cont’d Personal Exemptions Check if taxpayer can be claimed on another person’s return Dependent Info 10

Main Information Screen Exemptions – Tax. Wise Tips § Tax. Wise calculates first line of Exemptions based on previous data § Check box on lines 6 A, B or C only if appropriate § Check line 6 A if taxpayer can be claimed on another person’s return (e. g. – college student claimed on parents’ return) 11

Main Information Screen Dependents – Tax. Wise Tips n List dependents from youngest to oldest n Enter 1 -12 in M in HM (Months in Home) box n Use Code box drop-down menu to select relationship code n Check DC box (Child & Dependent Care) if there are eligible expenses n Always check EIC box for children n CTC box is automatically checked by Tax. Wise if child is eligible 12

Tax. Wise Main Information Screen cont’d State Info NJ forms populated in Forms Tree NJ state return automatically e-filed after Federal return is accepted 13

Tax. Wise Main Information Screen cont’d Bank Account Info for Direct Deposit & Direct Debit* Enter after return is finished so taxpayer can decide if wanted 14

Main Information Screen – Tax. Wise Tips n Bank Information Section n 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 n Do not use deposit slip info or handwritten information n Will also have to enter information a second time at bottom of Form 1040 Page 2 for verification purposes 15

Tax. Wise Main Information Screen cont’d Taxpayer & Spouse PINs – any 5 digits Identity Theft PINs – 6 digits provided by IRS 16

Tax. Wise NJ 1040 Page 1 Municipality Code Name &/or Address Change 17

Tax. Wise Gubernatorial Elections Fund - NJ 1040 Page 2 Gubernatorial Elections Fund questions – different format than Presidential Election Campaign question 18

Preparer Use Form Use drop-down menus or type in answers Foreign Language Question Disability Question Counselor initials Quality Reviewer Initials; Enter after QR complete 19

Preparer Use Form – Tax. Wise Tips n Must answer language/disability questions on Lines 11/12 from info on Interview/Intake Sheet, Page 3 n Answers are used for grant and statistical purposes only n Enter preparer’s/quality reviewer’s initials on Lines 13/14 n Qualify reviewer’s initials should be entered after quality review is complete 20

Entering Data into Tax. Wise for 1040 Page 1 Pub 4012 21

Entering Data into Tax. Wise for 1040 Page 1 n Income: n n n 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 n Adjustments: n Student loan interest deduction n All entries are made on appropriate forms & Tax. Wise transfers to 1040 Page 1 22

W-2 Wage & Tax Statement n Employer issues to employee for tax year n Includes: Employer identification info n Employee identification info n Wages earned n Taxes withheld n n All info to be entered in Tax. Wise as shown on W-2 form 23

W-2 Wage & Tax Statement cont’d n Each W-2 must be entered on a separate Tax. Wise screen n Click on + next to W-2 in Forms Tree to add extra W -2 screens n Tax. Wise transfers info onto appropriate 1040 lines 24

W-2 Wages & Tax Statement Employer Info Federal Wage &Tax Info Employee Info Check Boxes State Wage & Tax Info NJ Specific Taxes 25

Tax. Wise W-2 Screen Indicate whose W-2 Verify address on W-2 against Main Info address If red, verify Boxes 2, 4, 6 Check to override TWO calculations In Boxes 3 -6 or 16 26

Tax. Wise W-2 Screen Enter EIN; TWO may populate employer’s name & address Enter Boxes 1 & 2; TWO calculates Boxes 3 -6 Use field help (? ) to see what special characters are allowed Verify address on W-2 Enter zip code; TWO populates city & state If red, verify Boxes 2, 4, Boxes 6 TWO recalculates 3 -6 if entry in Box 7 27

Tax. Wise W-2 Screen TWO recalculates Boxes 3 -6 if necessary based on Box 12 Entries in Boxes 7 or 14 Verify address Be on W-2 sure amounts in Box 14 are next to proper label Check box at top of W-2 screen if. Be state surewages amounts need are tonext be overridden to proper If red, verify Boxes 2, 4, 6 label 28

Interest & Dividends Statements 1099 -INT & 1099 -DIV n Issued by financial institutions for interest &/or dividends received n Enter info from these forms in Tax. Wise on Interest Stmt or Dividend Stmt screens (under Sch B in tree) n All 1099 -INTs can be entered together on 1 Tax. Wise Interest Stmt; all 1099 -DIVs can be entered on 1 Tax. Wise Dividend Stmt n Tax. Wise transfers info to Sch B Interest & Ordinary Dividends & then to appropriate lines on 1040 p

1099 -INT Interest Statement Interest Income Payer Info Payee Info Early Withdrawal Penalty Federal Income Tax Withheld 30

Tax. Wise Schedule B Interest Statement Screen All 1099 -INTs go on one screen (unlike W-2 s or 1099 -Rs on multiple screens); no blank lines between entries 31

1099 -DIV Dividend Statement Ordinary Dividends Payer Info Qualified Dividends Capital Gains Distribution Payee Info Federal Taxes Withheld 32

Tax. Wise Schedule B Dividend Statement Screen All 1099 -DIVs go on one screen (unlike W-2 s or 1099 -Rs on multiple screens; ) no blank lines between entries 33

Retirement Income 1099 -R n Distribution from pension, IRA, annuities, etc. n Enter info on Tax. Wise 1099 -R screen n Each 1099 -R must be entered on a separate Tax. Wise screen n Click on “+” next to 1099 -R in Forms Tree to add extra 1099 -R screens n Tax. Wise transfers info onto appropriate 1040 lines 34

1099 -R Retirement Income Gross Distribution Taxable Amount Payer Info Payee Info Checked if IRA Distribution Codes (on back or in Help) 35

Tax. Wise 1099 -R Screen Verify address on W-2 against Main Info address Enter Payer ID; TWO may populate payer’s name & address 36

Tax. Wise 1099 -R Screen cont’d 1099 -R code Check if IRA distribution 37

Unemployment Compensation 1099 -G n Unemployment compensation received from NJ government n Enter info on Tax. Wise 1099 -G screen n Tax. Wise transfers info entered onto appropriate 1040 lines 38

Tax. Wise 1099 -G Unemployment Amount Payer Info Payee Info Federal Tax Withheld 39

Tax. Wise 1099 -G Screen Unemployment benefits Federal tax withheld 40

Social Security SSA-1099 n Enter info from SSA-1099 onto Tax. Wise 1040 Worksheet 1 screen n Includes: 2014 net benefits (from Box 5) n Medicare Parts B, C & D (from Description box) n n n Tax. Wise transfers to Schedule A Detail Medical Expenses Federal income taxes withheld (from Box 6) 41

SSA-1099 Medicare Part B Box 5 Amount Medicare Part D If more than one Medicare premium, link to scratch pad to enter all Federal Tax Withheld 42

Tax. Wise 1040 Worksheet 1 Screen (for Social Security) From SSA-1099 Box 5 From Medicare scratch pad 43

Tax. Wise Scratch Pad for Medical Expenses Description should reference where scratch pad links to Medicare Premiums for Parts B & D 44

Student Loan Interest Deduction n Can deduct qualified student loan interest as an adjustment to income n On 1040 Line 33 n Enter on 1040 Worksheet 2 in Tax. Wise n Probably not in the Forms Tree – use Add button at top of Tree or link from 1040 Line 33 45

Tax. Wise 1040 Worksheet 2 Screen (for Student Loan Interest) Student Loan Interest 46

Other Sources of Income Not Covered in Familiarization n Examples of other sources of income we might see but not covered in familiarization: n n n n 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 47

Entering Data into Tax. Wise for 1040 Page 2 Pub 4012 48

Form 1040 Page 2 Taxes & Credits n Start with AGI n Deduct itemized or standard deductions n Deduct personal exemptions n Arrive at taxable income n Alternative Minimum Tax (Out of Scope) n Apply non-refundable tax credits n Add other taxes n Bottom line is Total Tax 49

Standard vs. Itemized Deductions n Everyone is allowed a standard deduction n Tax. Wise determines amount of standard deduction depending on: Filing status n If taxpayer is age 65 and older n If taxpayer is blind n n For some, itemized deductions can be more beneficial than standard deduction 50

Standard/Itemized Deductions on 1040 Extra standard deduction – 65 or older Standard deduction 51

Standard vs. Itemized Deductions cont’d n Itemized deductions include: Medical n Taxes (e. g. -state/local taxes paid, real estate taxes) n Mortgage Interest n Charitable Contributions n Miscellaneous deductions n n Enter itemized deductions in Tax. Wise on Sch A & Sch A Detail n Tax. Wise determines whether standard or itemized is better & transfers to 1040 Line 40 52

Schedule A Itemized Deductions 2014 Medical Expenses Taxes You Paid Interest You Paid Gifts to Charity Casualty/Theft Losses Miscellaneous Deductions Check next to Sch A in Forms Tree indicates taxpayer is taking itemized deductions 53

Items Not Eligible as Itemized Deductions n Clients frequently bring in extra documents that cannot be claimed as deductions n Counselor must determine which documents are not needed for tax return. Examples include: Household bills (water, sewer, credit cards, etc. ) n Funeral expenses n Life insurance proceeds n Ineligible charitable contributions n 54

Medical Expenses Paid n Medical expenses can be claimed on both Federal and NJ tax returns n On Federal, can claim medical expenses above 10% of AGI; 7. 5% if 65 or older n On NJ, can claim medical expenses above 2% of NJ gross income n Enter expenses on Sch A Detail screen & TW will do appropriate calculations for both Federal & NJ 55

Tax. Wise Schedule A Detail for Medical Expenses Medicare Premiums from 1040 Wkt 1 56

Real Estate Taxes Paid n Real estate taxes paid can be claimed on both Federal and NJ tax returns n On Federal, real estate taxes claimed as an itemized deduction on Schedule A n On NJ, taxpayer can claim a property tax deduction or credit (whichever is greater) Property taxes entered on NJ Worksheet F n NJ 1040 Lines 37 b and 37 c must be completed with block/lot and municipality codes n Tax. Wise automatically determines whether deduction or credit is greater n 57

Tax. Wise Schedule A Real Estate Taxes Property Taxes on Principal Residence 58

Tax. Wise NJ Worksheet F for Property Taxes on Main Home TW determines whether Property Tax Deduction or Credit is better 59

Tax. Wise NJ 1040 Line 37 Property Taxes TW transfers from Worksheet F Block & Lot #s Municipality Code Worded incorrectly; do not check 60

Rent Paid n Rent paid cannot be claimed on Federal tax return n Portion of rent paid can be claimed on NJ tax return Rent paid entered on NJ Worksheet F n Tax. Wise calculates the 18% of rent paid that constitutes property taxes n Tax. Wise automatically determines if property tax deduction or credit is greater n Rent & property taxes can both be claimed, but not for same time period n 61

Tax. Wise NJ Worksheet F for Rent Paid – 18% can be claimed as Property Taxes + 18% of Rent TW determines whether Property Tax Deduction or Credit is better 62

Child Tax Credit (CTC) n Non-refundable credit that allows taxpayers to claim tax credit per qualifying child n Tax. Wise automatically populates CTC box on Main Info screen if eligible& calculates this credit n If not claimed in full, taxpayer may be eligible for refundable Additional Child Tax credit 63

CTC Box on Main Info Screen TW automatically populates if eligible 64

CTC on 1040 Child Tax Credit 65

Payment/Refund/Owe/Sign n Start with total tax n Apply tax withheld & estimated payments n Apply refundable credits n Bottom line n Refund n You owe n Direct deposit information n Signature line 66

Finalizing the Return IRS Form 13614 -C Intake/Interview & Quality Review Sheet 67

Finishing Federal & NJ Returns n After all client’s tax documents are entered: n Ensure all forms in red in Forms Tree are complete and accurate (GET THE RED OUT) n Click on red item in Forms Tree & Tax. Wise will take you to correct screen n Scroll down until you find item(s) underlined in red n Correct or complete red item(s) n Once items are all corrected or completed, form name will turn green in Forms Tree 68

Forms to be Corrected in Forms Tree Click on item(s) in red in Forms Tree 69

1040 Page 1 n Question above 1040 Line 10 must be answered: “Did you itemize deductions last year and receive state or local tax refunds, credits, or offsets? ” n Be sure to read question carefully n This question not on actual 1040; only on Tax. Wise 1040 screen n Info used to determine if last year’s state refund must be declared as income on federal return this year 70

1040 Page 1 71

1040 ACA Worksheet n Must indicate status of health insurance coverage for every person listed on the return (Affordable Care Act - ACA) n Complete 1040 ACA Wkt line for each person n If person does not have health insurance coverage for every month in year, may have to pay individual responsibility payment (if not eligible for exemption) n May have to reconcile health insurance subsidies received through ACA during the tax year 72

1040 ACA Worksheet All family covered by health insurance for whole year 73

Earned Income Credit (EIC) n Refundable tax credit for people who work but do not earn high incomes n There are requirements that must be met to get this credit (details in later Tax Training) n For this class: n Check EIC box next to every dependent’s name on Main Info Screen 74

Earned Income Credit (EIC) n (cont’d) Answer questions carefully on Sch EIC & Sch EIC Wkt n n n Follow questions in order they are shown (from top to bottom & left to right) Only answer questions in red; some questions Tax. Wise has already answered from prior input Follow “Go to” instructions after answering each question 75

EIC on Main Info Screen Check EIC box for all dependents. TW determines if eligible 76

Sch EIC Answer only questions in red. Follow “Go to” directions 77

Sch EIC Worksheet Answer only questions in red, from top to bottom and left to right. Follow “Go to” directions 78

Diagnostics n Run Diagnostics (icon at top of TW screen) to ensure Federal return is accurate before moving on to finalizing NJ return Click on item in Diagnostics that needs correction. Tax. Wise will take you to correct screen n Correct error(s) or enter missing info n n Must re-run Diagnostics after corrections to ensure everything is now OK 79

Run Diagnostics Click on Run Diagnostics icon. Review and fix identified errors 80

Final NJ Items NJ 1040 Use Tax n Individual buys a product/service outside of NJ (or on Internet), intended for use in NJ n If seller did not collect sales tax n n If seller did collect sales tax but at a rate lower than New Jersey's n n purchaser should pay NJ use tax purchaser should pay the difference in sales tax Use NJ 1040 line 45 with scratch pad to explain n If no use tax due, must “get the red out” 81

Tax. Wise NJ 1040 Line 45 - Use Tax Due on Out-of-State Purchases. If 0, “get the red out. ” If > 0, document on scratch pad 82

Handle Refund/Amount Due n Run Diagnostics again & correct any errors n Inform client if refund is due or money owed n Taxpayer can have refund deposited directly into bank account or have tax due transferred electronically from bank account to IRS n Confirm preference for direct deposit or direct debit for both Federal & NJ. May now be different from preferences listed on Intake/Interview sheet 83

Bank Account Information n On Federal return, must enter routing number and bank account number twice on 2 different Tax. Wise screens Main Info screen for both direct deposit/debit n 1040 Page 2 for direct deposit Form ACH 1040/ES for direct debit n n NJ has its own Deposit/Direct Debit Worksheet (NJ 1040 DD Wkt) 84

Finding Routing Number & Account Number on a Check Henry & Mary Brown 29 Diamond Road Denville, NJ 07834 (include hyphens) 85

Bank Account Information on Tax. Wise Main Information Screen Bank Account Info for Direct Deposit & Direct Debit 1040 Page 2 turns red in Forms Tree after Bank Account info entered on Main Info screen 86

Bank Account Information on Tax. Wise 1040 Page 2 Screen 2 nd Entry of Bank Account Info for Direct Deposit Direct Debit 87

NJ Direct Deposit or Direct Debit Worksheet Check to use same bank info as Federal; no need to re-enter bank account info Check to use different bank info from Federal or if Federal balance due/ NJ refund; must then enter bank account info twice at bottom of this form Check if taxpayer desires check Must also answer foreign bank account question at bottom of page 88

Concluding The Interview IRS Form 13614 -C Intake/Interview & Quality Review Sheet 89

Creatinge E-file n Click on “Create e-File(s)” box (at bottom of Diagnostics box) n E-file creation can generate different errors than Diagnostics. Correct until E-file is successfully created n If not ready to e-file, set return stage Click on Return Summary icon OR Close return & click on Stage column for appropriate client return in list n Select appropriate return status from drop-down menu n 90

Setting Return Stage Using Return Summary Icon Click on Return Summary Icon 91

Return Stages in E-File Status Section of Return Summary 92

Stage Column on Client Return List 93

Quality Review (QR) QR is a requirement on 100% of returns n When the tax return has been completed in Tax. Wise, another certified counselor (second pair of eyes) performs a quality review n QR counselor continues probing while referring to Part VIII of the Intake/Interview Sheet n Verify all info from Intake/Interview form & source documents n Re-run diagnostics n Correct errors after consulting with counselor n Create e-file again 94

Print Return n Click on Print Return icon at top of Tax. Wise screen n Tax. Wise will create a PDF file including all the necessary pages of the Federal & NJ returns n Open the PDF file and print as you would normally on your computer n Your ERO will help you connect to the network printers if you are using your own laptop 95

Printing Return Click on Print Return icon 96

Finalizing Return with Taxpayer n Review printed return with taxpayer n Line-by-line Federal & NJ 1040 s n Highlight any carryovers or “issues” n Have taxpayer(s) sign Form 8879 IRS E-File Signature Authorization If joint return, BOTH taxpayers MUST sign n Tell taxpayers they are responsible for return n n Assemble packet for taxpayer in envelope n Return all source documents, Intake/Interview sheet, 8879, etc. n ERO will e-file returns & notify counselor of rejects 97

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 98

Benefits of E-Filing Returns n File federal & state returns simultaneously n Faster/more accurate processing – Calculations done by Tax. Wise n Faster processing for refunds n Direct deposit within 7 -14 days n Proof of filing – IRS/State acknowledgements n File early, delay payment until April 15 99