2014 Tax Season PTIN requirements Common Tax Issues Bank Product Credits Information What’s New for Tax Information needed Season 2011 from Taxpayer Compliance and Filing Status Due Diligence Dependent Information Earned Income Tax Credit (EITC)
PTIN requirements All paid preparers Renewal will be must have completed available from 15 hours of CE October 16 through credits by December December 31 31, 2013. annually. All paid preparers Preparers may apply must renew/apply online or by mailing for their PTIN by in payment with the December 31, 2013. Form W-12. Costs $64.25 to start, PTIN Application then $63.00 per
PTIN Requirement Electronic Filing Many tax return preparers • This requirement will be will be required to file tax phased in as follows: returns electronically. – Tax preparers who prepare 11 or more individual or trust returns in 2013 will be required to e-file.
Bank Product Information • Electronic Refund Check • In the past this (ERC) – Customer will product has been receive refund check within called a Bonus 8 – 15 days and will be printed in the office that filed Deposit or Bonus the return. All fees will be Check. taken out of the check, so • DO NOT HAVE TO taxpayer does not have to pay out of pocket for return. COLLECT FEES UP FRONT, FEES will be taken out of the taxpayers check!
Non-Bank Products • Direct Deposit - an electronic deposit into their pre- existing checking or savings account • Electronic Mailed Check - you prepare their return, e-file it and the customer has their refund mailed to their home • Paper Return - You and the client sign the return and mail it in. This process takes the longest to receive their refund
Non-Bank Products • ALL NON-BANK PRODUCTS MUST BE PAID FOR BY THE TAXPAYER BEFORE BEING TRANSMITTED AND BEFORE THE TAXPAYER IS GIVEN A COPY OF THE RETURN!!!!!
Information needed from Taxpayer! And forms you need to retain! • Completed Taxpayer Information Sheet. • Copies of IDs (Driver’s License, Social Security Card) • Signed copy of Reg. 7216 Third Party Disclosure. • Signed copy of the Federal 8453 or Federal 8879. • Signed copy of the State 8453. • Signed copy of Form 8867 EIC Checklist. • Copies of Forms W2, W2G, 1099R, etc. – as well as any supporting documents. • Copy of every completed Tax Return, Federal and State. • Signed Advent Loan Application. • All pertinent Tax Documents must be retained at the relevant tax office for no less than three years. • All Acknowledgements received, in reference to electronic returns prepared • Signed copy of Authorization of Services. • Signed copy of Military Borrower Identification Statement(if applicable).
Filing Status You must determine your • In general, your filing filing status before you status depends on can determine your filing whether you are requirements, standard considered unmarried or deduction and correct tax. married on the last day of You also use your filing the tax year. status in determining • For Federal Tax whether you are eligible to purposes, a marriage claim certain deductions means only a legal union and credits. between a man and a woman as husband and wife.
Filing Status • Single • Head of Household (HOH) • Married Filing Joint • Married Filing Separately • Qualifying Widow(er)
Unmarried vs. Married • You are considered • You are considered unmarried for the married for the whole year if, on the whole year is on the last day of the tax last day of the tax year, you are year you and your unmarried or legally spouse meet any of separated from your the following tests: spouse under a divorce or separate maintenance decree.
Dependent/Exemption information Exemptions There are two types of exemptions: Personal exemptions and exemptions for dependents. While each is worth the same amount ($3,650 for 2011), different rules apply to each type.
Exemptions for Dependents You can claim an exemption for a qualifying child or qualifying relative only if the these three tests are met. 1. Dependent taxpayer test. 2. Joint return test. 3. Citizen or resident test. These three tests are explained in detail later.
Overview of the Rules for claiming an Exemption for a Dependent
Dependent Taxpayer Test • If you could be claimed as a dependent by another person, you cannot claim anyone as a dependent. Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent.
Citizen or Resident Test • You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year.
Qualifying Child There are five tests that must be met for a child to be your qualifying child. The five tests are: 1. Relationship, 2. Age, 3. Residency, 4. Support, and 5. Special test for qualifying child of more than one person.
Relationship Test To meet this test, a child must be: Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.
Age Test To meet this test, a child must be: Under age 19 at the end of the year, A full-time student (post secondary) under age 24 at the end of the year, or Permanently and totally disabled at any time during the year, regardless of age.
Residency Test To meet this test, your child must have lived with you for more than half of the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents
Residency Test continued Temporary absences Your child is considered to have lived with you all during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military Service.
Residency Test continued Death or Birth of Child • A child who was born or died during the year is treated as having lived with you all year if your home was the child’s home the entire time he or she was alive during the year. The same is true if the child lived with you all year except for any required hospital stay following birth.
Support Test to be a Qualifying Child To meet this test, the child cannot have provided more than half of his or own support for the year.
Qualifying Relative There are four tests that Age must be met for a person to be your qualifying Unlike a qualifying child, a relative. The four tests qualifying relative can be are: any age. There is no age 1. Not a qualifying child test for a qualifying test, relative. 2. Member of household or relationship test, 3. Gross Income test, and 4. Support test.
Qualifying Relative Member of household or Relatives who do not have to live Relationship Test with you. A person related to you in any of the following To meet this test, a person ways does not have to live with you all year as a must either: member of your household to meet this test. Your child, stepchild, foster child, or a 1. Live with you all year as a descendant of any of them. member of your household, Your brother, sister, half brother, half sister, step brother, or step sister. or Your father, mother, grandparent, or other direct 2. Be related to you in one of ancestor, but not foster parent. the ways listed under Your stepfather or stepmother. A son or daughter of your brother or sister. Relatives who do not have to Your son-in-law, daughter-in-law, father-in-law, live with you. mother-in-law, brother-in-law, or sister-in-law.
Qualifying Relative Gross Income Test To meet this test, a person’s gross income for the year must be less than $3,900.
Qualifying Relative How to determine if support test Support Test is met. You figure whether you have To meet this test, you provided more than half of a generally must provide person’s total support by more than half of a person’s comparing the amount you total support during the contributed to that person’s calendar year. support with the entire amount of support that person received from all sources. This includes support the person provided from his or her own funds.
Scenario #1 • Theresa, who is single, lost her job in 2013. She and her eight-year-old son Julian moved in with a friend of the family, Elizabeth. Theresa and Julian lived there the entire year of 2013. • Julian’s father died in 2008. • Elizabeth paid all the cost of keeping up her home. • Elizabeth, who is single, provided all of Theresa’s and Julian’s support during 2013. • Elizabeth’s total income in 2013 was $42,000. • Neither Theresa or Julian received any income in 2013. • Elizabeth, Theresa and Julian are U.S. citizens and have valid social security numbers.
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