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Lesson 1

Lesson 1. Getting Started – Taxpayer Identification Numbers and Exemptions. Objectives. Explain the importance of the taxpayer identification number (TIN) Identify the 3 types of Taxpayer Identification Numbers (TINs) Define the terms personal and dependency exemption

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Lesson 1

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  1. Lesson 1 Getting Started – Taxpayer Identification Numbers and Exemptions

  2. Objectives • Explain the importance of the taxpayer identification number (TIN) • Identify the 3 types of Taxpayer Identification Numbers (TINs) • Define the terms personal and dependency exemption • Apply the dependency exemption tests for qualifying child/relative

  3. Form 13614 Intake and Interview Sheet: Part I

  4. Form 13614 Intake and Interview Sheet: Part II

  5. Form 13614 Intake and Interview Sheet: Part III

  6. Taxpayer Identification Numbers • The Taxpayer Will Need • TINs – What are they? • TINs – Who Needs One? • TINs – How to obtain them?

  7. Individual Taxpayer Identification Numbers • Who Needs an ITIN? • Assisting Taxpayers with No ITIN • Assisting Taxpayers with an ITIN

  8. Individual Taxpayer Identification Numbers • SSN/ITIN Mismatches • ITIN Resources for Volunteers

  9. Summing Up Taxpayer Identification Numbers • Required Supporting Documentation • TINs – SSNs, ATINs, ITINs • ITIN/SSN Mismatches • ITIN support

  10. Exemptions • Personal exemptions • Dependency exemptions • $3,300 each for Tax Year 2006 • Additional exemption amounts of $500 for each displaced individual as a result of Hurricane Katrina (up to a maximum of $2,000, $1,000 for married filing separate)

  11. Personal Exemptions Personal Exemptions • Taxpayer Exemption • Exemption for a Spouse

  12. Dependency Exemptions • The Uniformed Definition of a Child • Qualifying Child • Qualifying Relative

  13. Tax Year 2006 Dependency Tests • Qualifying Child • Tie-Breaker Rule • Qualifying Relative • The Dependent Worksheets

  14. Tax Year 2006 Dependency TestQualifying Child • Qualifying Child • Age Test • Support Test • Residence Test • Citizen or Resident Test

  15. Tax Year 2006 Dependency TestQualifying Relative • Relationship or Member of Household • Not a Qualifying Child • Gross Income • Support • Citizen or Resident

  16. Tax Year 2006 Dependency Test Summary of the Rules • Dependents on more than 1 return • Joint Returns and Dependents • Residency Requirement • Dependent - Qualifying Child • Dependent - Qualifying Relative

  17. Tax Year 2006 Dependency Support Test • A qualifying child must not have provided more than half of his/her own support • The taxpayer must provide more than half of the support of a qualifying relative • Exceptions to the Support Test

  18. Support Test • Sources of Support • The individual’s contributions • The taxpayer’s contributions • State contributions

  19. Determining Support • Worksheet for Determining Support • What’s Included • What’s Not included

  20. Support Exceptions • Multiple Support • Custodial and Non-Custodial Parents

  21. Tax Relief for Temporary Relocation Special rules apply for determining support for taxpayers relocated as a result of Hurricane Katrina, Rita, or Wilma.

  22. Additional Exemption Amount • Claim an additional exemption amount of $500 per person (up to $2,000 - $1,000 if married filing separately) for providing housing to a person displaced from main home as a result of Hurricane Katrina • Claim an additional exemption amount on Form 8914, Exemption Amount for Taxpayers Housing Individuals displaced by Hurricane Katrina

  23. Form 8158 Quality Review Checklist

  24. Tax Year 2006 Tools for Determining Dependency • Tools for Determining Personal and Dependency Exemptions • Claiming the Exemption on the return • Apply what you have learned

  25. Summing Up Exemptions • Exemptions impact taxable income • Change in exemption tax law last year • Use the Dependency Tools

  26. Military Matters • Explain how to obtain an SSN for children born abroad • Determine whether an individual is a nonresident alien or a resident alien • Determine if an exemption can be claimed for a nonresident spouse • Determine if an individual can be claimed as a dependent

  27. Children Born Abroad • Must have a Tax Identification Number to be claimed as a dependent

  28. Determining Residency Status • Resident • Nonresident • Dual Status

  29. Residency Status Tests • Green Card • Substantial Presence

  30. Exceptions to the Substantial Presence Test • Commuter • Short stay • Medical condition • Exempt Individual

  31. Residency Status • Part Year Resident • Enlistees as Resident Aliens • Choices – Nonresident Spouse • Dual-Status Aliens • Undocumented Aliens

  32. Exemptions • Foreign Spouse • Married Filing Separate

  33. Dependents – Armed Forces Members • Change in Tax Law Last Year • Claiming a Dependent • Citizen and Residency Test

  34. Summing Up This Military Segment • Resident or nonresident • Personal exemptions • Dependents

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