There are six practical problems associated with the IRS Certification Exam. Following is a discussion about each problem, providing tips to share with ACC 132 students (and volunteers). Basic Problem 1 (Basic Scenario 6) – THURSTON: Students will need to add two copies of Form W-2; add Schedule B and then on Line 1b of Schedule B will need to link to the Interest Statement. Students will need to add Worksheet 1 for the Social Security benefits. When entering info on Bridget’s W-2, students will need to take calculations off lines 3, 4, 5, and 6, and hit “Save Return”. Students will need to answer the questions on Form 8880 and hit “control + space bar” to get the red off of line 4. Basic Problem 2 (Basic Scenario 7) – SAWYER: Students will need to add Form W-2; add Schedule B and then on Line 1b of Schedule B will need to link to the Interest Statement. They also will add the 1099G Worksheet for unemployment benefits, and Form 8888 to purchase US Savings Bonds. Students will need to check the “DC” box after Emily and Greyson’s names on the Main Info Sheet, and answer the questions on Schedule EIC and the EIC Worksheet. Basic Problem 3 (Basic Scenario 8) – LIVINGSTON: This is a quality review problem. Therefore, students do not work the problem in the Practice Lab. On the basic exam, students will answer questions 25-30 related to this problem. Intermediate Problem 1 (Intermediate Scenario 3) – DAWSON: Students will need to add Form W-2. They will add and use Schedule A to itemize deductions. Students will need to include medical expenses, real estate taxes, mortgage insurance and premiums, and gifts to charity. They will also need to click “control + space bar” on Line 5b to get the red off. IMPORTANT! Students also will need to add Form 5405 for the Repayment of First Time Homebuyer Credit. Form 5405, Line 14 should have $7,500, and Lines 15 and 18 should have $500 (assume that they will once again be paying $500 for repayment). Finally, students will need to add Form 8863 for the Education Credit. Intermediate Problem 2 (Intermediate Scenario 4) - ALBRIGHT: Students will need to add Form W-2; add Schedule B and then on Line 5a of Schedule B will need to link to the Dividend Statement. They will add Schedule C-EZ and Form 1099 Misc. Students will need to add Worksheet 2 for Student Loan Interest. Students will add Form 5695 for the Residential Energy Credit and Form 1099-R for pension information. On Form 5695 for the Residential Energy Credit, $150 should be the amount on Line 6b. On Schedule C-EZ, students will need to enter gross income on Lines 1a and 1b and also calculate total expenses and put on Line 2. Students also will need to fill out Part III of the schedule (information on Lily’s vehicle). Advanced Problem 1 (Advanced Scenario 4) – WHEELER: Students will need to add two copies of form 1099-R. IMPORTANT!!! On Phoebe’s 1099-R, students will need to check the box that says “Check if disability and the taxpayer is disabled,” which is located under boxes 7 and 8. On Nathan’s 1099-R, students will need to scroll to the bottom of the page and fill out the “Simplified Method” box. Students also will have to add Schedule B, and link to the Interest Statement on Line 1b and the Dividend Statement on Line 5a. Finally, students will need to add Form 8949, link to the Capital Gains Worksheet by left clicking in Line 1 of Form 8949, then clicking on New, and clicking on Capital Gain/Loss Transaction Wkt., and enter the information for the short-term loss. IMPORTANT!!! Only add information on the worksheet. Go to page 2 and repeat the process for the Long Term Capital Gain, except you do not click on “New Worksheet” as you will use the existing one. Students will need to enter $375 on Line 14 of the Schedule D, and also will need to answer the questions on Schedule EIC and the EIC Worksheet.
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