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!

WASHINGTON ? The Internal Revenue Service announced that the nation’s tax season will start on Friday, Feb. 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.

The Feb. 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the Dec. 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.

This programming work is critical to ensuring IRS systems run smoothly. If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers. These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.

To speed refunds during the pandemic, the IRS urges taxpayers to file electronically with direct deposit as soon as they have the information they need. People can begin filing their tax returns immediately with tax software companies, including IRS Free File partners. These groups are starting to accept tax returns now, and the returns will be transmitted to the IRS starting Feb. 12.

“Planning for the nation’s filing season process is a massive undertaking, and IRS teams have been working non-stop to prepare for this as well as delivering Economic Impact Payments in record time,” said IRS Commissioner Chuck Rettig. “Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible.”

Last year’s average tax refund was more than $2,500. More than 150 million tax returns are expected to be filed this year, with the vast majority before the Thursday, April 15 deadline.

Under the PATH Act, the IRS cannot issue a refund involving the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law provides this additional time to help the IRS stop fraudulent refunds and claims from being issued, including to identity thieves.

The IRS anticipates a first week of March refund for many EITC and ACTC taxpayers if they file electronically with direct deposit and there are no issues with their tax returns. This would be the same experience for taxpayers if the filing season opened in late January. Taxpayers will need to check Where’s My Refund for their personalized refund date.

Overall, the IRS anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit if there are no issues with their tax return. The IRS urges taxpayers and tax professionals to file electronically. To avoid delays in processing, people should avoid filing paper returns wherever possible.

Tips for taxpayers to make filing easier

To speed refunds and help with their tax filing, the IRS urges people to follow these simple steps:

• File electronically and use direct deposit for the quickest refunds.
• Check IRS.gov for the latest tax information, including the latest on Economic Impact Payments. There is no need to call.
• For those who may be eligible for stimulus payments, they should carefully review the guidelines for the Recovery Rebate Credit. Most people received Economic Impact Payments automatically, and anyone who received the maximum amount does not need to include any information about their payments when they file. However, those who didn’t receive a payment or only received a partial payment may be eligible to claim the Recovery Rebate Credit when they file their 2020 tax return.  Tax preparation software, including IRS Free File, will help taxpayers figure the amount.
• Remember, advance stimulus payments received separately are not taxable, and they do not reduce the taxpayer’s refund when they file in 2021.

Key filing season dates

There are several important dates taxpayers should keep in mind for this year’s filing season:

• Jan. 15. IRS Free File opens. Taxpayers can begin filing returns through Free File partners; tax returns will be transmitted to the IRS starting Feb. 12. Tax software companies also are accepting tax filings in advance.
• Jan. 29. Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
• Feb. 12. IRS begins 2021 tax season. Individual tax returns begin being accepted and processing begins.
• Feb. 22. Projected date for the IRS.gov Where’s My Refund tool being updated for those claiming EITC and ACTC, also referred to as PATH Act returns.
• First week of March. Tax refunds begin reaching those claiming EITC and ACTC (PATH Act returns) for those who file electronically with direct deposit and there are no issues with their tax returns.
• April 15. Deadline for filing 2020 tax returns.
• Oct. 15. Deadline to file for those requesting an extension on their 2020 tax returns

Filing season opening

The filing season open follows IRS work to update its programming and test its systems to factor in the second Economic Impact Payments and other tax law changes. These changes are complex and take time to help ensure proper processing of tax returns and refunds as well as coordination with tax software industry, resulting in the February 12 start date.

The IRS must ensure systems are prepared to properly process and check tax returns to verify the proper amount of EIP’s are credited on taxpayer accounts – and provide remaining funds to eligible taxpayers.

Although tax seasons frequently begin in late January, there have been five instances since 2007 when filing seasons did not start for some taxpayers until February due to tax law changes made just before the start of tax time.

WASHINGTON – Starting this week, the Treasury Department and the Internal Revenue Service are sending approximately 8 million second Economic Impact Payments (EIPs) by prepaid debit card.

These EIP Cards follow the millions of payments already made by direct deposit and the ongoing mailing of paper checks that are delivering the second round of Economic Impact Payments as rapidly as possible.

For those who don’t receive a direct deposit, they should watch their mail for either a paper check or a prepaid debit card. To speed delivery of the payments to reach as many people as soon as possible the Treasury’s Bureau of Fiscal Service is sending payments out by prepaid debit card.

IRS and Treasury urge eligible people who don’t receive a direct deposit to watch their mail carefully during this period. The prepaid debit card, called the Economic Impact Payment card, is sponsored by the Bureau of the Fiscal Service and is issued by Treasury’s financial agent, MetaBank®, N.A. The IRS does not determine who receives a prepaid debit card.

Taxpayers should note that the form of payment for the second mailed EIP may be different than the first mailed EIP. Some people who received a paper check last time might receive a prepaid debit card this time, and some people who received a prepaid debit card last time may receive a paper check.

More information about these cards is available at EIPcard.com.

EIP Cards are safe, convenient and secure. EIP Card recipients can make purchases online or in stores anywhere Visa® Debit Cards are accepted. They can get cash from domestic in-network ATMs, transfer funds to a personal bank account and obtain a replacement EIP Card if needed without incurring any fees. They can also check their card balance online, through a mobile app or by phone without incurring fees. The EIP Card provides consumer protections including certain protections against fraud, loss and other errors.

EIP Cards are being sent in a white envelope that prominently displays the U.S. Department of the Treasury seal. The EIP Card has the Visa name on the front of the Card and the issuing bank name, MetaBank®, N.A. on the back of the card. Each mailing will include instructions on how to securely activate and use the EIP Card.

EIP Cards are being issued to eligible recipients across all 50 states and the District of Columbia. Residents of the western part of the United States are generally more likely to receive an EIP Card.

The swift issuance of this second round of payments follows the successful delivery of more than $270 billion in CARES Act Economic Impact Payments earlier this year. To check the status of a payment, visit IRS.gov/GetMyPayment. For more information about Economic Impact Payments visit IRS.gov/EIP.

Purpose

Guidance for volunteers and approving officials regarding taxpayer and volunteer expired photo
identification.

Identified Issues
Some state governments have extended expiration dates on state photo identification for their
residents. Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites
may accept expired state issued photo identification according to state guidance as valid for the
duration of the current filing season.

Message for Volunteers and Approving Officials

QSR 3: Confirming Photo Identification and Taxpayer Identification Numbers (TIN)
■ Coordinators must have a process in place to confirm taxpayers’ identities. This process must include
using acceptable documents to confirm taxpayers’ identities by reviewing photo identification for
primary and secondary taxpayers.
■ Volunteers reviewing original photo identification (ID) such as driver’s license (U.S.) and state ID may
accept expired identification according to state guidance on extended expiration dates.

QSR 5: Volunteer Agreement
■ Approving officials must validate volunteers’ identities using government-issued photo identification
(ID) when reviewing and signing Forms 13615. Volunteers’ identities must be verified prior to any
volunteers’ participation in the VITA/TCE programs. Government-issued photo ID includes valid
driver’s license (U.S.) and state ID.
■ Approving officials reviewing original photo identification (ID) such as driver’s license (U.S.) and state
ID may accept expired state identification according to state guidance on extended expiration dates.

Questions about this QSRA should be directed to your SPEC relationship manger.

Economic Impact Payments on their way, visit IRS.gov instead of calling

WASHINGTON – The Internal Revenue Service today urged people to visit IRS.gov for the most current information on the second round of Economic Impact Payments rather than calling the agency or their financial institutions or tax software providers. IRS phone assistors do not have additional information beyond what’s available on IRS.gov.

The IRS and the Treasury Department began issuing a second round of Economic Impact Payments, often referred to as stimulus payments, last week. 

The direct deposit payments may take several days to post to individual accounts. Some Americans may have seen the direct deposit payments as pending or as provisional payments in their accounts before the scheduled payment date of Jan. 4, 2021, which is the official date funds are available.

Paper checks also began going out and will continue to be sent through January. Some people will be mailed debit cards in January, and the IRS urges people to carefully check their mail. Mailed payments will require more processing and mailing time. Those who reside abroad will have longer wait times for checks as disruptions to air travel and mail delivery in some countries will slow delivery.

The IRS emphasizes that there is no action required by eligible individuals to receive this second payment. The payments are automatic, and people should not contact their financial institutions or the IRS with payment timing questions.

Eligibility
Generally, U.S. citizens and resident aliens who are not eligible to be claimed as a dependent on someone else’s income tax return are eligible for this second payment. Eligible individuals will automatically receive an Economic Impact Payment of up to $600 for individuals or $1,200 for married couples and up to $600 for each qualifying child. Most people who have an adjusted gross income for 2019 of up to $75,000 for individuals and up to $150,000 for married couples filing joint returns and surviving spouses, will receive the full amount of the second payment. For filers with income above those amounts, the payment amount is reduced.

Checking the status of a payment
Starting today, people can check the status of both their first and second payments by using the Get My Payment tool, available in English and Spanish only on IRS.gov.

Payment not received or less than expected? Claim on 2020 tax return
Payments started going out last week and will continue through mid-January. Direct deposit payments are being made first to those that have valid routing and account information on file for direct deposit purposes. Because of the speed at which IRS issued this second round of payments, some payments may have been sent to an account that may be closed or no longer active. By law, the financial institution must return the payment to the IRS, they cannot hold and issue the payment to an individual when the account is no longer active. While the IRS is exploring options to correct these payments, if you have not received your full payment by the time you file your 2020 tax return, you may claim the Recovery Rebate Credit on your tax return.

The credit is figured like the Economic Impact Payment, except that the credit eligibility and the credit amount are based on the 2020 tax year information, including income.

For people who received a partial Economic Impact Payment, they can take the Recovery Rebate Credit for any remaining amount they’re eligible for by completing line 30 of the 2020 Form 1040 or 1040-SR.

Changing bank account or mailing information
The IRS cannot change payment information, including bank account or mailing information. If an eligible taxpayer does not get a payment or it is less than expected, it may be claimed on the 2020 tax return as the Recovery Rebate Credit. Remember, Economic Impact Payments are an advance payment of what will be called the Recovery Rebate Credit on the 2020 Form 1040 or Form 1040-SR.

More information
For more information about Economic Impact Payments and the 2020 Recovery Rebate Credit, visit IRS.gov/eip. Starting next week, people can check the status of their payment at IRS.gov/GetMyPayment. For other COVID-19-related tax relief, visit IRS.gov/Coronavirus.