Welcome!
This is the first in a series of seven webinars
covering the Tax Law topics.
Volunteer Training Materials
• Student Training Guide
• 2007 VITA/TCE Workbook Comprehensive
Problems and Practice Exercises
• 2007 VITA/TCE Volunteer Test/Retest
• Volunteer Resource Guide Publication 4012
• Link and Learn interactive website
http://www.irs.gov/app/vita/index.jsp
Volunteer Rights &
Responsibilities
Form 13615 Volunteer • Treat all taxpayers professionally,
Agreement, Standards of with courtesy and respect
Conduct • Safeguard the confidentiality of
taxpayer information
• Only prepare returns within the • Apply tax laws equitably and to
scope of your training and the best of your ability
experience • Do not solicit business from
• Exercise reasonable care in the taxpayers you assist or use
use and protection of equipment knowledge gained about them for
and supplies any direct or indirect personal
• Do not accept payment for benefit for you or any other
services provided individual or organization
Volunteer Rights &
Responsibilities
Am I legally liable for returns I prepare?
No, you are protected by the Volunteer
Protection Act of 1997, as long as you are
acting within the scope of your volunteer
responsibilities and the harm was not caused
by willful or criminal misconduct
Tax Identification Numbers
(pgs 3-7 thru 3-10 in Student Training Guide)
To file a tax return the taxpayer and If the tax payer does not
anybody who is listed on the return have a Social Security Card, he
Is required to have one of the or she can obtain one by
following: filing a form with the Social
Security Administration.
• Social Security Number
• Individual Taxpayer Identification If the taxpayer is not eligible to
Number (ITIN) apply for a SSN, and has not
note: ITIN’s are most often used by
resident aliens yet applied for an ITIN, you can
fill out and submit Form W-7
• Adoption Taxpayer Application for Individual
Identification Number (ATIN) Taxpayer Identification Number
with the taxpayer’s tax return
using taxwise.
Verifying the SSN or the ITIN is
Correct on the W-2
If the taxpayer’s W-2 does not have the correct SSN, prepare
the tax return with the materials provided. However, the
taxpayer needs to request a correct W-2 form the employer
Before submitting the tax return.
Note: Taxpayers who have ITINs must file their tax returns
using the ITIN but are allowed to attach W-2 forms showing
erroneous SSNs.
Who is required to file: Gross
Income
(Volunteer Resource Guide- Who must File- Chart A)
If your filing status is… And at the end of the 2007 you THEN file a return if your gross
were… income was at least…
Single Under 65 8,750
65 or older 10,050
Married filing Jointly under 65 (both spouse) 17,500
65 or older (one spouse) 18,550
65 or older (both spouses) 19,600
Married Filing Separately Any age 3,400
Head of Household Under 65 11,250
65 or older 12,550
Qualifying Widow(er) with Under 65 14,100
Dependent Child 65 or older 15,150
Who is required to file: Exceptions
to the Gross Income Requirement
The most common circumstances under which a return
must be filed even if the taxpayer does not meet the
gross income filing requirements are:
• An individual owes uncollected social security or medicare
tax, usually on tips
• An individual receives advance earned income tax credit
payments during the year
• An individual has net profit from self-employment of $400 or
more
People Not Required to File
• Individuals may choose to file, even though they are
not required to file in order to claim certain tax
credits, such as the EITC.
Federal Filing Statuses
For assistance determining Five Federal Filing Statuses
the Filing Status of the • Single
taxpayer use the chart entitled • Married Filing Jointly
Determining Filing Status • Married Filing Separately
under the Filing Status Tab in • Head of Household
the Volunteer Resource • Qualifying Widow(er)
Guide (Publication 4012).
Filing Status: Single
Taxpayers who are Taxpayers are considered
considered single will single if on the last day of
use the Single filing the year, they were
status if they do not • Unmarried
qualify to use the Head • Legally separated or
of Household or divorced
Qualifying Widow(er) • Widowed before the
filing Status. beginning of the tax year
and did not remarry
Married Filing Jointly and Married
Filing Separately
The Married Filing Jointly Status and the Married Filing
separately Status can be claimed by taxpayers who, on the last
day of the tax year:
• Were married and lived together as husband and wife
• Were married and living apart, but were not legally separated
or divorced
• Lived together in a common law marriage that is recognized
in the state where they currently live or the state where the
common law marriage began (in Montana common law
marriages are recognized)
• Did not remarry and their spouse died during the year
Married Filing Jointly or Married
Filing Separately?
Married filing jointly is Situations in which to Use the
usually the more Married Filing Separately
Status:
advantageous filing
• When itemizing deductions, MFS
status on the Federal Tax status may result in a lower tax
Return. liability
• On the Montana State Tax
Return, the MFS status (3a) will
usually result in a lower tax
For more information about the liability.
differences between the two • When one spouse does not want
to be responsible for the other
statuses refer to pg. 4-3,4-4 in the spouse’s tax obligations
Student Training Guide
What if a spouse has died during
the year?
• Taxpayers whose spouses have died during the tax year
are considered married to that spouse for the entire year,
providing the taxpayer did not remarry during the same
tax year.
In this case the taxpayer can choose to file Married Filing
Jointly or Married Filing Separately.
• If the taxpayer has remarried or has chosen to file MFJ
with their new spouse, a tax return may need to be filed
for the deceased spouse using the Married Filing
Separately status.
Qualifying Widower with a
Dependent Child status
A taxpayer, whose spouse died in one of the two years
prior to 2007 (either 2006 or 2005) and who has one
or more dependent children, may claim the Qualifying
Widow(er) with a Dependent Child status.
Qualifying Widower with a
Dependent Child Status
To qualify, a taxpayer must:
• Be eligible to file a joint return for the year the spouse died,
regardless of whether the taxpayer actually filed a joint return
that year
• Have had a spouse who died in 2005 or 2006. The taxpayer
must not have remarried before the end of 2007
• Have a child, stepchild, or adopted child who qualifies as the
taxpayer’s dependent for the year
• Have furnished over half the cost of keeping up a home for
himself/herself and the qualifying child for the entire year
Head of Household
Taxpayers may choose the Head of Household filing
status. If they meet all of the following requirements:
• Are considered to be unmarried, but are not a Qualifying
widow(er) with dependent child on the last day of the tax
year
• Paid more than half the cost of maintaining a home
during the tax year
• Had a qualifying person living in their home for more half
the year (except for temporary absences such as school
or incarceration)
• For a married taxpayer “considered unmarried” the
taxpayer must also have a child they claim as a
dependent.
Cost of Maintaining a Home
What is included What is not included
Rent Clothing
Mortgage interest Education
Real Estate taxes Medical treatment
Insurance on the Home
Vacations
Repairs
Life Insurance
Utilities
Food eaten in the home Transportation
Rental value of a home owned
by the taxpayer
Services provided by the
taxpayer or others
Married, But Unmarried for tax
purposes
• The person must file a separate return from his or
her spouse
• The person must have provided more than half the
cost of maintaining his home for the tax year
• The home must have been the principal place of
abode of the taxpayer and his qualifying child or
relative
• The person’s spouse must not have lived in the
home at any time during the last six months of the
year
Montana Filing Statuses
• Single
• Married Filing Jointly
• Married Filing Separately on same Form (3a)
• Married Filing Separately on Separate Forms
• Married Filing Separately Spouse not Filing
• Head of Household
(www.mt.gov/revenue/formsandresources/taxamnesty.asp)
Exemptions
An exemption is a dollar amount ($3,400) that can be
deducted from an individual’s total income, thereby
reducing the taxable income.
• Personal Exemptions allow the taxpayer to claim
themselves and possibly their spouse
• Dependent Exemptions allow the taxpayer to claim
qualifying dependents
Claiming the Taxpayer’s Own
Personal Exemption
• A taxpayer cannot claim a personal
exemption for his/herself if they can be
claimed as a dependent on someone else’s
return.
Claiming a Personal Exemption for
the Taxpayer’s Spouse
To claim a personal exemption for one’s spouse
the taxpayer must meet the following conditions:
• Married as of December 31 of the tax year
• Spouse cannot be claimed as a dependent on
another person’s tax return (note: a spouse is never
considered the dependent of the other spouse)
• Files a joint return, or files a separate return and the
spouse had no income and is not filing a return
Claiming a Personal Exemption for
a Deceased Spouse
A taxpayer whose spouse • Did not remarry by
died during the tax year Dec 31 of the tax year
can generally claim the • Was not divorced
personal exemption for legally separated from
the deceased spouse if their spouse on the
the taxpayer meets all of date of death
these conditions: • Would have been able
to claim the exemption
under regular
circumstances
Beginning the Tax Return
Webinars
• Dec 13th Filing Status & Exemptions
• Dec 20th Dependency
• Jan 3rd Income
• Jan 10th Retirement & Social Security
• Jan 17th Tax Credits
• Jan 24th Education & Scholarships
• Jan 31st Itemized Deductions
All webinars will start at 7:30 and last for an hour.