Tax Basics
What are 4 out of the 5 Filing Statuses?
Single: Non-married individuals with no dependents
Married Filing Jointly: Married couple that agree to file a joint return
Married Filing Separately: Married couple that cannot agree to file a joint return
Qualifying Widower: Widow with a dependent in the two years following the death of their spouse
Head of Household: Non-married individual with dependent(s)
What are the 2 types of credits?
Refundable and Nonrefundable credits
What is a W-2 used for?
A W-2 tax form shows important information about the income you’ve earned from your employer, amount of taxes withheld from your paycheck, benefits provided and other information for the year. You use this form to file your federal and state taxes.
What should you do if a client does not bring their physical social security card?
Do not continue with the return and notify a PD/SM.
Do Tax Bracket Thresholds generally increase or decrease every year?
Increase
What is the difference between an adjustment and a deduction?
-Adjustment: Decreases the amount of income on which the taxpayer will be taxed
-Deduction: Amount subtracted from the AGI to further decrease taxable income
What are the 2 types of income for tax purposes?
Earned and unearned income
What form is used to report non-employment income?
1099-NEC
How should you enter an ITIN in Taxslayer?
Did the Value of the Earned Income Tax Credit Increase or Decrease for 2024?
Increase
When would you Itemize Deductions rather than using the flat Standard Deduction Amount for a client?
While this situation is rare, the taxpayer can choose to enter expenses if the total amount is larger than the standard deduction amount.
Name 2 examples of unearned income
Interest, social security, retirement, etc.
Is a 1099-G or a 1099-B used for Unemployment?
1099-G
What should you do if a client has no taxable income?
File a paper return
Tax Bracket Thresholds differ for the different filing statuses (T/F).
True
What is the Standard Deduction for Single in 2024?
$14,600
Name one Refundable Credit we have looked at:
Earned Income Tax Credit, Child Tax Credit, American Opportunity Education Credit, etc.
What form is used for Capital Gains/Losses?
1099-B
What role does a PD/SM have vs. a Volunteer in the eyes of VITA and the IRS?
-Volunteer: Preparer
Standard Deductions Typically Raise from year to year to account for deflation in the economy (T/F).
False, inflation
Walk Us Through the Basic Tax Equation (Hint: Starts with Total Income and ends with Taxes Owed/Refund Due)
Total Income - Adjustments
=Adjusted Gross Income (AGI)
AGI - Deductions
=Taxable Income
Taxable Income x Tax Rate
= Gross Tax
Gross Tax - Tax Credits
= Taxes Owed
Taxes Owed - Withholdings
= Tax Owed/Refund Due
What is the main difference between the Lifetime Learning Credit and the American Opportunity Credit?
The AOC is partly refundable and is only applicable for the first 4 years of higher education, while the LLC is nonrefundable and can be used after the AOC is no longer applicable.
What is the difference between a 1099-INT and a 1099-DIV?
-1099-INT: for interest payments
-1099-DIV: for dividend payments
If a taxpayer owes taxes and cannot pay them what method can we inform them about and help set up?
Payment Plan
What is the Name of the Act that established various energy–related tax credits that can still be claimed in 2024?
The Inflation Reduction Act