One Day Returning Counselor Training – Dist 5

1. One Day Returning Counselor Training – Dist 5 Bob Eslinger Pacific Region Training Advisor

2. AGENDA – RETURNING COUNSELOR ONE DAY TRAINING

3. INTRODUCTIONS Name How long have you been with AARP? What site do you serve? What one question would you like answered?

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11. MUST/SHOULD FILE QUIZ #1 Miranda, 17, is claimed on her parents’ return W-2 shows $2,000 in wages and Federal tax withheld of $155 Grandparents gave her a $3,000 CD as a gift She has no other income Must or should Miranda file?

12. MUST/SHOULD FILE QUIZ #1 ANSWER Miranda, 17, is claimed on her parents’ return W-2 shows $2,000 in wages and federal tax withheld of $155 Grandparents gave her a $3,000 CD as a gift Must or should Miranda file? Should: to get back her withholding CD is a gift – not counted in income

13. MUST/SHOULD FILE QUIZ #2 Kathy, 22, attends college full time Earned $850 babysitting Plus $3,000 reported on a W-2; no tax was withheld Must or should Kathy file?

14. MUST/SHOULD FILE QUIZ #2 ANSWER Kathy, 22, attends college full time Earned $850 babysitting Plus $3,000 reported on a W-2; no tax was withheld Must or should Kathy file? Must: had >$400 in self-employment If only W-2, would not have needed to file

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18. EIC QUIZ #1Tab H A 65-year-old gentleman, with no qualifying children, earned $5,000. Taxwise does not give him any EIC. Is this correct?

19. EIC QUIZ #1 ANSWERTab H A 65-year-old gentleman, with no qualifying children, earned $5,000. Taxwise does not give him any EIC. Is this correct? YES. He is too old to get the EIC. He is 65 years old.

20. EIC QUIZ #2 A young father of two earns $15,000. He sells his only stock, inherited from his mother, and makes a $3,500 capital gain. He is expecting a sizeable EIC. Is he correct?

21. EIC QUIZ #2 ANSWER A young father of two earns $15,000. He sells his only stock, inherited from his mother, and makes a $3,500 capital gain. He is expecting a sizeable EIC. Is he correct? NO.He gets nothing because his investment income is over the limit.

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32. EXEMPTIONS QUIZ #1 TAB C John supports his wife’s Uncle George who lives in another city and has $2,400 of taxable income John files MFJ Can John claim George as a dependent if all other tests met?

33. EXEMPTIONS QUIZ #3 Ralph is 64 and lives with his son and daughter-in-law all year Ralph earned $4,700 Can Ralph’s son claim him as a dependent?

34. EXEMPTIONS #3 ANSWER • Ralph is 64 and lives with his son and daughter-in-law all year • Ralph earned $4,700 Can Ralph’s son claim him as a dependent? • NO Income over $3,800

35. EXEMPTIONS QUIZ #4 Ralph’s children are also supporting his friend, Fred, who lives with them Fred’s only income is social security of $5,000 Can Fred be claimed?

36. EXEMPTIONS #4 ANSWER • Ralph’s children are also supporting his friend, Fred, who lives with them • Fred’s only income is social security of $5,000 Can Fred be claimed? • YES Gross income test does not count income that is exempt from tax

37. EXEMPTIONS QUIZ #5 Jennifer, age 25, is a full-time student, lived at home with her parents all year, and her parents provided over half of her support Jennifer made $3,000 Can Jennifer's parents claim her as a dependent?

38. EXEMPTIONS QUIZ #5 – ANSWER A Is Jennifer a Qualifying Child? • NO She satisfies the residency and relationship tests, but not the age test If Jennifer is not a Qualifying Child, is she a Qualifying Relative Dependent?

39. EXEMPTIONS QUIZ #5 – ANSWER B Is Jennifer a Qualifying Relative Dependent? • YES • She is their daughter • She earned less than $3,800 • Parents provided >50% support • Not the Qualifying Child of another • Can be claimed if all other tests met

40. EXEMPTIONS QUIZ #6 Stacy has a son, Ben, age 14, and they lived with Stacy's boyfriend (who is not Ben's father) all year Stacy made $7,000 and her boyfriend made $50,000 Can Stacy’s boyfriend claim Ben as a dependent?

41. EXEMPTIONS QUIZ #6 – ANSWERS • NO, if Stacy files a return • Ben would be a Qualifying Child of Stacy • YES, if Stacy does not file a return OR files ONLY to get a refund of withholding • Ben could be a Qualifying Relative Dependent of Stacy’s boyfriend It might be more beneficial, however, for Stacy to file and claim the EIC

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44. FILING STATUS QUIZ #1 TAB B • Mrs. Doe is divorced • Pays >50% cost of the home she shares with her 20-year-old daughter, Emily • Emily is single, works part time, and earned $4,000 that she spent on herself. She is not a student Can Mrs. Doe file as Head of Household?

45. FILING STATUS QUIZ #1 ANSWERS • Can Mrs. Doe file as Head of Household? • NO • Emily is not a Qualifying Child • >18 years of age • Not a student • Emily is not a Qualifying Relative Dependent • Income >$3,700

46. FILING STATUS QUIZ #2 • Mr. Buck provides total support for his two young children • His wife died in 2009, and he has not remarried What is the best filing status for Mr. Buck?

47. FILING STATUS QUIZ #2ANSWER 1 • What is the best filing status for • Mr. Buck? • HEAD OF HOUSEHOLD • What would have been best in TY2011?

48. FILING STATUS QUIZ #2ANSWER 2 • What would have been best in TY2011? • QUALIFYING WIDOW(ER) with Dependent Child

49. FILING STATUS QUIZ #3 • Jane, 69, whose husband died July 1, had a $20,000 pension and $15,000 in social security in the tax year • Her 10-year-old grandson lived with her and is her dependent What is the best filing status for Jane?

50. FILING STATUS QUIZ #3ANSWER 1 What is the best filing status for Jane? • MARRIED FILING JOINT Assuming nothing changes, what filing status is best for the following tax years?