Today, the IRS published the latest executive column, “A Closer Look,” which features Frank Nolden, Stakeholder Partnership, Education and Communications Director, discussing the benefits and history of  volunteer tax preparation sites. “The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs…help millions of low-to-moderate income taxpayers accurately prepare and file their tax returns for free with help from IRS-certified volunteers,” said Nolden. Read more here. Read the Spanish version here

“A Closer Look” is a column from IRS executives that covers a variety of timely issues of interest to taxpayers and the tax community. It also provides a detailed look at key issues affecting everything from IRS operations and employees to issues involving taxpayers and tax professionals.

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.

Purpose:
The purpose of Volunteer Tax Alerts (VTAs) is to update, correct or clarify tax law topics. VTA messages are valuable educational tools that are highly beneficial when delivered immediately to you as our intended audience, IRS VITA and TCE partners and certified volunteers. 

Link(s) to latest VTA:  VTA 2021-07 Claiming Recovery Rebate Credits

Key Messages for IRS VITA/TCE Partners: 
Site/local coordinators are to ensure all VTAs are reviewed and discussed with all volunteers. It is recommended that you hold daily debriefings with your volunteers to review identified trends. This is also a good time to allow your volunteers the opportunity to read the alert(s), ask questions or discuss any concerns surrounding their tax preparation experience.

Contact information: 
Partners are encouraged to direct any questions or concerns to their Relationship Manager.

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!