People should be on the lookout for identity theft involving unemployment benefits

The IRS urges taxpayers whose identities may have been used by thieves to steal unemployment benefits to file a tax return claiming only the income they actually received.

In 2020, millions of taxpayers were affected by the COVID-19 pandemic through job loss or reduced work hours. Some taxpayers applied for and received unemployment compensation from their state. By law, unemployment benefits are taxable.

Scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation
using stolen personal information of individuals who had not filed claims. Payments made as a result of these fraudulent claims went to the identity thieves.

Taxpayers who receive an incorrect Form 1099-G should contact the issuing state agency to request a revised form. If they’re unable to get a timely, corrected form from states, they should still file an accurate tax return, reporting only the income they received. They should save whatever documentation they have regarding their attempts to receive a corrected form from their state agency.

What people should if they think they might be an identity theft victim
People should visit Identity Theft Central for more information about the signs of identity theft.

Taxpayers do not need to file a Form 14039, Identity Theft Affidavit, with the IRS about an incorrect Form 1099-G. An affidavit should only be filed only if the taxpayer’s e-filed return is rejected because a return using the same Social Security number already has been filed.

If a taxpayer is concerned that their personal information has been stolen and they want to protect their identity when filing their federal tax return, they can request an identity protection PIN from the IRS.

An Identity Protection PIN is a six-digit number that prevents someone else from filing a tax return using a taxpayer’s Social Security number. The IP PIN is known only to the taxpayer and the IRS, and this step helps the IRS verify the taxpayer’s identity when they file their electronic or paper tax return.

States should not issue Forms 1099-Gs to taxpayers they know to be victims of identity theft involving unemployment compensation.

3:10 pm ET:  MFA via text messaging has been restored

10:50am ET

As our engineers continue to work with the service provider, MFA via Text has been turned off. What this means is that when you are presented the page to MFA for your account, only e-mail will be available.

MFA via text messaging has been temporarily turned off.  The taxpayers will need access to their email accounts in order to complete the authentication process.  Once the MFA service provider is back online, we will re-enable the feature

VITA/TCE Volunteer Tax Alert

VTA 2021-05, Economic Impact Payments for Residents of U.S. Territories

Purpose:

To alert VITA/TCE volunteers about Economic Impact Payments (EIPs) and the Recovery Rebate Credit for residents of U.S. territories.

Message to Volunteers:
Special rules in the law apply to Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. In general, the tax authorities in each U.S. territory will make payments to eligible residents. Individuals who are residents of one of these U.S. territories with questions about a payment should contact their local tax authority.

Individuals who received an EIP from more than one jurisdiction:
Resident of a U.S Territory: Individuals who received a payment from the IRS and a U.S territory tax agency and are residents of a U.S. territory for the 2020 tax year should consult with their U.S. territory tax agency concerning information about an incorrect or duplicate payment.

Not a resident of a U.S. Territory: Individuals who received a payment from more than one jurisdiction and who are NOT residents of a U.S. territory for the 2020 tax year should return any incorrect or duplicate payment received from the U.S. territory tax agency to the IRS following the instructions about repayments. Go to the Economic Impact Payment Information Center on IRS.gov, Topic I: Returning the Economic Impact Payment for instructions.

Individuals who did not receive an EIP or believe they did not receive the correct amount:

For residents of a U.S. territory, don’t complete the Recovery Rebate Credit Worksheet and don’t enter an amount on line 30 of Form 1040 or Form 1040-SR. In general, the tax authorities in American Samoa, Guam, Puerto Rico, the U.S. Virgin Islands, and the Northern Mariana Islands will provide the Recovery Rebate Credit to eligible residents. Territory residents should direct questions about Economic Impact Payments or the 2020 Recovery Rebate Credit to the tax authorities in the territories where they reside.

Completing the return of a resident of a U.S. territory using TaxSlayer:

Select “SKIP” on the Recovery Rebate Credit screen. This will allow you to prepare the return without completing the Recovery Rebate Credit Worksheet.

Resources:
■ Tax Year 2020 Form 1040 and Form 1040-SR Instructions
■ Economic Impact Payment Information Center

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and for your dedication to top QUALITY service!

VITA/TCE Volunteer Tax Alert

VTA 2021-02 Certification Testing and Using Practice Lab – UPDATE
Purpose

Volunteers should use caution when completing their certification tests using the Practice Lab.

Identified Issues
The Practice Lab has incorporated additional 2020 tax law changes, including the rebate recovery calculation to account for the first and second economic impact payments. These updates will have an impact on the Link and Learn online certifications answers.

Messages to Volunteers
1. Final revisions of the Form 6744, VITA/TCE Test-Retest, have already printed/posted. Because of this, specific questions regarding the economic impact payment/recovery rebate credit will not be updated. In the initial rollout of the online certifications and published Form 6744, we included the following disclaimer:

“Note: Congress may have enacted additional legislation that will affect taxpayers after this publication went to print. Please answer questions based on the information provided in Publication 4491, VITA/TCE Training Guide, and Publication 4012, VITA/TCE Resource Guide.”

Regardless of the calculation using the Practice Lab or other software, volunteers should follow this guidance. These questions can be answered without using software and using the publications stated above with the 10-2020 Revision date.

Also, there are some questions where the additional economic impact payment/recovery rebate credit will impact calculations for bottom line amounts. These questions will not be updated either. However, you can enter these answers to score correctly:

■ Basic Scenario 7, Test Question 24 – Emma has a balance due of $________ on her 2020 tax return. Answer: 289

■ Advanced Scenario 7, Test Question 27 – What are the total payments reported on the Kennedys’ Form 1040? $________. Answer: 4385

■ Advanced Scenario 7, Retest Question 27 – What are the total payments reported on the Kennedys’ Form 1040? $________. Answer: d. $4,385

2. The following disclaimer was added for Advanced Scenario 6, Question 17, with the initial release of the Practice Lab:
“Note: In the initial release of the Practice Lab, last year’s Federal Poverty Line amount is used to calculate Form 8962, Premium Tax Credit. Enter 1646 as the correct answer.”

3. New and more specific information has been released regarding the deferral for certain Schedules H and SE filers. Taxpayers can’t defer amounts they’ve already paid, which includes:
■ Federal income taxes withheld
■ Estimated taxes
■ Amounts paid with request for extension to file
■ Excess social security and tier 1 RRTA taxes withheld
This information changes an answer:

■ Advanced Scenario 8, Test Question 35. – Which of the following statements is true? Answer: d. Richard does not have the option to defer half of his share or the employer share of Social Security tax.

Resources
Practice Lab
VITA/TCE Central

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and for your dedication to top QUALITY service!

VITA/TCE Volunteer Tax Alert

VTA 2021-06, Validating Prior Year Adjusted Gross Income for 2020 Electronic Tax Return

Purpose:

To provide information to VITA/TCE volunteers at Facilitated Self Assistance (FSA) sites assisting taxpayers in electronically filing their tax returns.

Message to Volunteers:

When self-preparing and filing taxes electronically, taxpayers must sign and validate their electronic tax return by entering their prior-year Adjusted Gross Income (AGI) or their prior-year Self-Select PIN.

Use the following tips to assist taxpayers in finding their prior-year AGI:
■ If the taxpayer’s 2019 tax return has not yet been processed, enter $0 (zero dollars) as the prior year AGI.
■ If the taxpayer used the “Non-Filers: Enter Payment Info Here” tool, which was used by individuals who did not have a filing requirement to register for an Economic Impact Payment in 2020, enter $1 as the prior year AGI.
■ If the taxpayer is a first-time filer over the age of 16, enter $0 (zero dollars) as their AGI.

For taxpayers who have a copy of their 2019 tax return:
■ On the 2019 tax return, AGI is on line 8b of the Form 1040 and Form 1040-SR.
■ Taxpayers who had their return prepared at a VITA/TCE site or used a paid preparer last year might obtain a copy of last year’s tax return from that preparer.
■ Taxpayers who are using the same tax preparation software used last year will likely be able to access their prior-year tax return through the software.
■ Taxpayers who are not using the same tax preparation software as last year may be able to access the prior-year software and view an electronic copy of their prior-year return.
■ Taxpayers who have an Identity Protection (IP) PIN (via a CP01A or the Get an IP PIN Tool), should enter it when prompted by their software. It will serve to verify identity, instead of prior-year AGI or prior-year Self Select PIN. Starting mid-January 2021, taxpayers can opt into the IP PIN program through the online tool.

Alternative Methods for taxpayers who do not have a copy of their 2019 tax return:
■ If taxpayers do not have a copy of their tax return, they may use a Get Transcript self-help tool to get a Tax Return Transcript showing their AGI.
■ Taxpayers can use Get Transcript Online to immediately view their AGI. They must pass the Secure Access identity verification process. Select the Tax Return Transcript and use only the “Adjusted Gross Income” line entry.
■ Taxpayers can use Get Transcript by Mail or call 800-908-9946 if they cannot pass Secure Access and need to request a Tax Return Transcript. Please allow 5 to 10 days for delivery. Use only the “Adjusted Gross Income” line entry.

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and for your dedication to top QUALITY service!

VITA/TCE Volunteer Tax Alert

VTA 2021-04 Publication 4012 Update

Purpose:

Publication 4012, VITA/TCE Volunteer Resource Guide (Rev. 1-2021), is now available for download and review. This new revision contains the changes included in Publication 4491-X, VITA/TCE Training Supplement. This publication contains critical new tax law information, new TaxSlayer screen shots, corrections and updates.

Message to Volunteers:

The Publication 4012 (Rev. 1-2021) now includes changes due to Consolidated Appropriations Act, 2021, signed into law on December 27, 2020. This includes information about:
■ Economic Impact Payments
■ Recovery rebate credits
■ Educator expense deduction
■ Election to use 2019 earned income to figure the 2020 earned income credit and additional child tax credit
■ Other updates

There were additional topics added to scope:
■ Form 8615, Tax for Certain Children Who Have Unearned Income (also known as Kiddie Tax), requires Advanced certification and is limited to:
■ Native Americans receiving per capita payments
■ Alaska residents receiving permanent fund dividends
■ Form 8814, Parent’s Election to Report Child’s Interest and Dividends, requires Advanced certification and is limited to Alaska residents receiving permanent fund dividends
■ Three-year spread of coronavirus-related distributions from eligible retirement plans, as well as special rollover rules with respect to such distributions, to qualified individuals. Advanced certification is required.

Updated TaxSlayer screenshots were added for:
■ Form 1099-NEC, Non-Employee Compensation
■ Schedule SE Deferral
■ Form 5329, Part I – Additional Tax on Early Distributions
■ Form 7202, Credits for Sick Leave & Family Leave

The updated version of Publication 4012 also includes other changes not listed here.

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and for your dedication to top QUALITY service!

VITA/TCE Volunteer Tax Alert

VTA 2021-03 Product Updates and New Legislation
Purpose:

Publication 4491-X, VITA/TCE Training Supplement, is now available for download and review. All volunteers who prepare tax returns must review this information before preparing tax year 2020 returns. This supplement contains critical new tax law information, new TaxSlayer screen shots, corrections and updates to the VITA/TCE training and testing materials.

Message to Volunteers:

Changes due to the Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, are included in the Publication 4491-X. This includes information about:
■ Economic Impact Payments
■ Recovery rebate credits
■ Educator expense deduction
■ Election to use 2019 earned income to figure the 2020 earned income credit and additional child tax credit
■ Other updates

There were additional topics added to scope:
■ Form 8615, Tax for Certain Children Who Have Unearned Income (also known as Kiddie Tax), requires Advanced certification and is limited to:
■ Native Americans receiving per capita payments
■ Alaska residents receiving permanent fund dividends

■ Form 8814, Parent’s Election to Report Child’s Interest and Dividends, requires Advanced certification and is limited to:
■ Alaska residents receiving permanent fund dividends

■ Three-year spread of coronavirus-related distributions from eligible retirement plans, as well as special rollover rules with respect to such distributions, to qualified
individuals. Advanced certification is required.

Updated TaxSlayer screen shots were added for:
■ Form 1099-NEC, Nonemployee Compensation
■ Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals
■ Deferral of self-employment (SE) tax

Publication 4491-X contains a list that can be used to make pen-and-ink changes to:
■ Publication 4012, VITA/TCE Volunteer Resource Guide
■ Publication 4491, VITA/TCE Training Guide
■ Form 6744, VITA/TCE Volunteer Assistor’s Test/Retest
■ Publication 4704-FS, Foreign Student and Scholar Test
■ Publication 4011, VITA/TCE Foreign Student and Scholar Volunteer Resource Guide

Replacement pages are also included for volunteers who wish to print and replace hard-copy pages in their printed training materials or to extract and insert the updated pages into their PDF files.

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and for your dedication to top QUALITY service!

VTA 2021-01 Certification Testing and Using Practice Lab

Purpose

Volunteers should use caution when completing their certification tests using the Practice Lab.

Identified Issues
The Practice Lab has not incorporated all 2020 tax law changes. Additionally, it does not include the 2020 draft versions of all the forms or schedules. This may cause users to make inadvertent errors when taking their certification tests.

Please note that certain calculations could change as the IRS continues to finalize instructions for tax year 2020. TaxSlayer is working diligently with the IRS and state agencies to incorporate updates as they receive them.

The 1040 View in the Practice Lab still reflects 2019 Form 1040. It is recommended that volunteers generate the tax return PDF from the Client List or Summary/Print menu to see the return on a tax year 2020 draft Form 1040.

Message to Volunteers

Unless you have an immediate training need to certify for tax year 2020, volunteers should wait to take the 2020 VITA/TCE certification tests when the final forms are available in the Practice Lab.

The identified issue in the Practice Lab may affect your answers for any certification or practice return preparation scenarios that include:
■ Form 1099-NEC
■ The deduction for charitable contributions
■ The recovery rebate credit
■ Credits for sick and family leave for certain self-employed individuals
■ The deferred payment of 50% of Social Security tax for certain individuals
■ The inclusion of coronavirus-related distributions in income ratably over a 3-year period, and repayments of those distributions
Other tax provisions may also be affected.

The IRS anticipates that Form 1040 will be finalized in mid-December. TaxSlayer will then begin to update the Practice Lab with the final 2020 form at that time. Again, volunteers not having an immediate need to certify should wait until the Practice Lab is updated. Volunteers who have a need to certify early may discuss the impact and possible workarounds with their SPEC relationship manager.

Use caution when completing the following test scenarios
■ Basic Scenario 6
■ Name of charitable organization and date of contribution not provided. Enter the name of any charitable organization and date in tax year 2020.
■ The screen to input direct deposit information is not available.
■ Basic Scenario 7
■ Name of charitable organization and date of contribution not provided. Enter the name of any charitable organization and date in tax year 2020.
■ The EIN on Form W-2 auto-populates with a different name and address. Type over the data with information shown on Form W-2.
■ Basic Scenario 8
■ The form used to request a split of refund is not in the first TaxSlayer software release in the Practice Lab.
■ The EIN for the daycare provider auto-populates with a different name and address. Type over the data with the information shown on the statement.
■ Advanced Scenario 6
■ In the Interview Notes, between the first and second sentence of the seventh bullet, add “He received a scholarship and the terms require that it be used to pay tuition.”
■ The recovery rebate credit does not calculate in the first TaxSlayer software release in the Practice Lab. Completion of the tax return is not needed to respond correctly. Refer to the information in Publication             4491 and/or Publication 4012.
■ The screen to input direct deposit information is not available in the Practice Lab.
■ Advanced Scenario 7
■ The sale date of stock is indicated as 12/1/2020 on Form 1099-B. If you are taking the test prior to 12/1/2020, enter a date in tax year 2020 prior to this date.
■ Advanced Scenario 8
■ In the Interview Notes, third sub-bullet of the seventh bullet, replace 3/15/2020 with 4/15/2020.
■ Form 1099-NEC is not in the first TaxSlayer software release in the Practice Lab. Enter the information in Box 7 on the Form 1099-MISC screen.
■ The new Part III of Schedule SE does not calculate the deferral of self-employment tax payments. Completion of the tax return is not needed to respond correctly. Refer to the information in Publication 4491             and/or Publication 4012.
■ Military Scenario 5
■ In the Interview Notes, on the Social Security card for Joseph Stevens, replace 959 with 659.
■ Federal Income Tax Updates for Circular 230 Professionals Return Preparation Scenario 5
■ Name of charitable organization and date of contribution not provided. Enter the name of any charitable organization and date in tax year 2020.
■ The screen to claim a recovery rebate credit is not available in the first TaxSlayer software release in the Practice Lab. This does not affect the answer to any test question.

Resources
For specific information refer to the following resources:
■ TaxSlayer VITA/TCE Blog
■ Draft 2020 Form 1040
■ Draft 2020 Instructions for Form 1040 and 1040-SR

For additional questions, please talk to your site coordinator, partner or IRS SPEC relationship manager.

Thank you for volunteering and for your dedication to top QUALITY service!