Liberty Tax Service Online Basic Income Tax Course. Lesson

Report
Liberty Tax Service Online
Basic Income Tax Course.
Lesson 19
1
Chapter 18 Homework 1
HOMEWORK 1: Sean D. (SSN 022-45-0947, born
12/12/1941) and Sue P. Summers (SSN 034-664362, born 2/9/1944) live at 22 Abbott Road,
Sacramento, CA 94211. In 2007, they filed MFJ. They
have no dependents. They will have a balance due for
2008 and want to figure the penalty themselves.
They are eligible to use the short method on Form
2210. They will pay their balance due on the due
date, April 15, 2009. Information from their 2007
and 2008 returns is as follows.
2
Chapter 18 Homework 1
2008
2008
2008
2007
2007
tax after credits (line 56 of Form 1040) - $6,784
withholding - $2,100
estimated tax payments - $2,000
tax - $6,194
AGI - $64,200
Sean and Sue do not want to pay a penalty for 2009. Their
filing status, etc. will remain the same as in 2008. Their
estimates for 2009 follow.
AGI expected for 2009 - $69,500
Estimated federal withholding for 2009 - $3,950
1. Prepare Form 2210 for Sean and Sue.
2. Prepare an Estimated Tax Worksheet and the paymentvouchers for Sean and Sue. Use the 2009 Tax Rate
Schedule and Standard Deduction Chart following.
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Chapter 18 Homework 1
4
Chapter 18 Homework 1
Standard Deduction for 2009
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Chapter 18 Homework 1
6
Chapter 18 Homework 1
7
Chapter 18 Homework 1
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Chapter 18 Homework 1
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Chapter 18 Homework 1
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Chapter 18 Homework 1
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12
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Chapter 18 Homework 2
HOMEWORK 2: Use the information from your
answer to Homework 2 in Chapter 7 for
Gerald T. and Belle M. Harrison. Assume that
the Harrison's were notified that their entire
refund was used to pay Belle’s past due
student loan payments. Gerald determines
that if he filed a separate return he would
claim all the dependent exemptions. Fill out
an Injured Spouse claim for Gerald.
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15
Chapter 18 Homework 2
16
Chapter 18 Homework 3
HOMEWORK 3: John A. Terry (SSN 500-18-1128, born
1/18/1966) is single and lives at 205 Stamford
Bridge Road, Ahoskie, NC 27910. His only income is
from working as a mechanic for Chelsea
Manufacturing. He has his HUD- 1 settlement
statement showing he purchased a home on August
1, 2008 for $165,000. John meets the qualifications
for the first-time home buyer credit. Prepare his tax
return.
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Chapter 18 Homework 3
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Chapter 18 Homework 3
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Chapter 18 Homework 3
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Chapter 18 Homework 3
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Chapter 18 Homework 3
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Chapter 18 Homework 3
23
Chapter 19: Extensions, Amended
Returns, Electronic Filing, State Returns
Chapter Content

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

Extension Requests
Amended Returns
Electronic Filing
Form 8888
State Returns
Key Ideas
Objectives
 Learn How to File an Extension Request
 Learn How to File an Amended Return
 Learn About Electronic Filing and How to File
Electronically
 Learn About Filing State Returns
24
EXTENSIONS
A. An extension is an extension of time to file and not
an extension of time to pay.
1. If cannot file by due date, may get an automatic
6-month extension of time to file
2. File Form 4868 for the 6-month extension of time
to file
3. With 6-month extension must file by October 15,
2009
4. Accurate estimated payment must be made by
regular due date, can send with Form 4868
5. If cannot pay full amount, can still get extension
but may owe interest on unpaid amount and
possibly a penalty for paying late
6. When you do file, enter payment made with Form
4868 on line 67 of Form 1040.
25
EXTENSIONS
On Form 1040, page 2
26
EXTENSIONS
OUTSIDE THE UNITED STATES
B. You are allowed an automatic 2-month extension to
file and pay federal income tax due if:
1. You are U.S. citizen or resident, and
2. On regular due date of return:
a. You are living outside U.S. and Puerto Rico,
and your main place of business or post of duty
is outside U.S. and Puerto Rico, or
b. You are in military or naval service on active
duty outside U.S. and Puerto Rico.
27
WHEN TO FILE YOUR 2007
RETURN
Table 19-1 shows the timelines for regular returns and extensions.
28
PENALTIES FOR LATE PAYMENT
AND LATE FILING
Penalties For Late Payment And Late Filing
D. There are penalties for paying late and filing late.
1. Failure-to-pay penalty is usually 1/2 of 1% of any
tax (other than estimated tax) not paid by
regular due date
a. Charged for each month or part of month tax
is unpaid
b. Maximum penalty is 25%
c. May not be charged if you show “reasonable
cause”.
29
FAILURE TO FILE PENALTY
2. Failure-to-file penalty is usually charged if return
is filed after due date (including extensions) and
is usually 5% of tax not paid by paid by regular
due date
a. Charged for each month or part of month
return is late
b. Maximum penalty is 25%
c. If over 60 days late, minimum penalty is $100
or balance of tax due on return, whichever
smaller
d. May not owe penalty if good reason for filing
late.
30
AMENDED RETURNS
AMENDED RETURNS
A. If you discover errors on your return, you can file an
amended return or claim for refund.
1. Correct return if, after filing it, you find that you:
a. Did not report some income
b. Claimed deductions or credits you should not
have claimed
c. Did not claim deductions or credits you should
have claimed
d. Should have claimed a different filing status
31
AMENDED RETURNS
B. To file an amended return, use Form 1040X.
1. Cannot be filed electronically
2. File separate Form 1040X for each year being
amended
3. May need to amend state return as well
C. Form 1040X compares amounts from original return
with corrected amounts.
1. May result in additional tax due or refund
owed to you
2. Complete and attach appropriate forms and
schedules or it will be returned.
32
AMENDED RETURNS
D. Mail your Form 1040X to IRS Service Center where
you now live.
1. Use Table 19-2 to find out where to file Form
1040X.
E. File Form 1040X within 3 years after date you filed
original return or within 2 years after date you paid
tax, whichever is later.
1. Time for filing a claim for refund is same as time
for filing Form 1040X
2. If did not file original return when due, generally
can claim a refund by filing return within 3 years
from time tax was paid
3. May be limit on amount of refund.
33
AMENDED RETURNS
F. If amended return results in additional
refund, interest will be paid on it.
34
AMENDED RETURNS
35
AMENDED RETURNS
36
AMENDED RETURNS
37
AMENDED RETURNS
38
39
AMENDED RETURNS
WHEN TO FILE
Form 1040X. Generally, you must file your Form
1040X within 3 years after the date you filed your
original return or within 2 years after the date you
paid the tax, whichever is later.
The time for filing a claim for refund. The time for
filing a claim for refund is the same as the time for
filing a Form 1040X. Returns filed before the due
date (without regard to extensions) are considered
filed on the due date (even if the due date was a
Saturday, Sunday, or holiday). The time periods can
be suspended while you are financially disabled. See
Publication, 556, Examination of Returns, Appeal
Rights, and Claims for Refund, for more details. If
you do not file a claim within the time period, you
may not be entitled to a credit or a refund.
40
AMENDED RETURNS
Late-filed returns. If the original return was not filed
when it was due, a refund can generally be claimed
by filing the return within 3 years from the date the
return was due to get a refund. The return must be
received by the IRS within the 3 year period. If the
return is filed late, the postmark date does not
determine the date of filing.
There may be a limit on the amount of your refund.
If you file your claim within 3 years after the date
you filed your return, the credit or refund cannot be
more than the part of the tax paid within the 3-year
period (plus any extension of time granted for filing
your return) immediately before you filed the claim.
This time period is suspended while you are
financially disabled. Payments made before the due
date (without regard to extensions) of the original
return are considered paid on the due date.
41
AMENDED RETURNS
Dolly made estimated tax payments of $500 and got an
automatic extension of time to October 15, 2006, to
file her 2005 income tax return. She filed on
10/15/06 and paid $200 additional tax. Dolly later
realized she had additional deductions or credits and
wanted to amend her 2005 return to claim a refund
of $700. Will she be able to receive this refund?
YES OR NO?
42
AMENDED RETURNS
Dolly made estimated tax payments of $500 and got an
automatic extension of time to October 15, 2006, to
file her 2005 income tax return. She filed on
10/15/05 and paid $200 additional tax. Dolly later
realized she had additional deductions or credits and
wanted to amend her 2005 return to claim a refund
of $700. Will she be able to receive this refund?
YES
Because she filed her claim within 3 years after she
filed her return, she can get a refund of up to $700, the
tax paid within the 3 years plus the 6-month extension
period immediately before she filed the claim.
43
AMENDED RETURNS
If you file a claim more than 3 years after you file your
return, but within 2 years from the time you paid the
tax, the credit or refund cannot be more than the tax
you paid within the 2 years immediately before you
file the claim.
Example:
Abbey filed her 2005 tax return on 4/15/06. She paid taxes
of $500. On 11/1/07 after an examination of her 2005
return, she had to pay an additional tax of $200. On
5/11/09, she files a claim for a refund of $300. However,
because she filed her claim more than 3 years after she
filed her return, her refund will be limited to the $200 she
paid during the 2 years immediately before she filed her
claim.
44
AMENDED RETURNS
EXCEPTIONS FOR SPECIAL TYPES OF REFUNDS
There are exceptions for special types of refunds and
deadline dates and limits may be different for:
1. Qualified reservist distributions
2. First-time home buyer credit
3. Bonus depreciation for the Kansas City disaster area
4. Recovery rebate (2008 only)
5. Federal telephone excise tax (2006 only)
6. Nontaxable combat pay
7. Tax shelters
8. A bad debt
9. A worthless security
10. Net operating loss carryback
11. Carryback of certain business tax credits
12. A claim based on an agreement with the IRS extending the
period for assessment of tax
13. Foreign tax paid or accrued
14. An injured spouse claim. Instead, file only Form 8379.
45
AMENDED RETURNS
A Form 1040X based on a bad debt or worthless
security generally must be filed within 7 years after
the due date of the return for the tax year in which
the debt or security became worthless. A Form 1040X
based on a net operating loss carry-back or a general
business credit carry-back generally must be filed
within 3 years after the due date of the return.
46
AMENDED RETURNS
PROCESSING CLAIMS FOR REFUNDS
Claims are usually processed shortly after they are
filed. Your claim may be accepted as filed,
disallowed, or subject to examination. If your claim
is disallowed, you will receive an explanation of why
it was disallowed.
47
AMENDED RETURNS
INTEREST ON REFUND
If you receive a refund because of your amended
return, interest will be paid on it from the due date of
your original return or the date you filed your
original return, whichever is later, to the date you
filed the amended return. However, if the refund is
not made within 45 days after you file the amended
return, interest will be paid up to the date the refund
is paid. Your refund may be reduced by an additional
tax liability that has been assessed against you. Also,
your refund may be reduced by any amounts you owe
for past-due child support, debts to another federal
agency, or for state tax. Remember if your return is
changed for any reason, it may affect your state
income tax liability and require the filing of an
amended state return.
48
AMENDED RETURNS
FORM 1040X
After you have completed the background information on Form
1040X, note that the lines 1-15 have 3 columns labeled A, B,
and C.
Column A: In this column enter amounts from your original return
or if you previously amended that return or if the return was
changed by the IRS, enter the adjusted amounts.
Column B: In this column enter the net increase or decrease for
each line you are changing. Show the decreases in
parentheses. Explain each change in Part II. Reference the
reason to the line on the form where the change was made. If
you need more space, attach a statement. Also attach any
schedule or form relating to the change.
49
AMENDED RETURNS
Column C: In this column either add the increase in
column B to column A or subtract the decrease in
column B from column A. For any item you do not
change, enter the amount from column A in column C.
Alan Arbor originally reported $11,000 as his adjusted
gross income on his 2007 Form 1040. He received
another W-2 for $500 after he filed his return. He
completes line 1 of Form 1040X as follows:
Column A
Column B
Column C
$11,000
$500
$11,500
He would also report any additional Federal income tax
withheld on line 11 in column B.
50
AMENDED RETURNS
If you are providing additional information and not changing
amounts you originally reported, skip lines 1-33 and
complete Part II and, if applicable, Part III. To help you
complete Form 1040X use the following:
1. If you are changing income or deductions - start with
line 1
2. If you are changing only credits or other taxes - start
with line 6
3. If you are changing only payments - start with line 10
Lines 1-5 of Form 1040X pertain to income and deduction
changes. Lines 6-10 deal with tax liability. Lines 11-18 are
for payments. Lines 19- 24 are for the figuring of your
refund or amount you owe.
Page 2 of Form 1040X consists of Part I (exemptions, lines
25-33), Part II (explanation of changes to income,
deductions, and credits), and Part III (presidential election
campaign fund).
Refer to the instructions for Form 1040X for specific line
instructions.
51
ELECTRONIC FILING
A. IRS e-filing is faster and more accurate than
processing paper returns.
1. Refer to Table 19-3 for benefits of electronic
filing.
B. Electronic return consists of following:
1. Data transmitted
2. Taxpayer’s electronic signature using a PIN
3. Does not include forms or schedules not accepted
by electronic filing system; sent with Form 8453
C. In most states, you can also electronically send state
return simultaneously with federal return.
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ELECTRONIC FILING
53
ELECTRONIC FILING
REFUNDS
D. Refunds issued faster with e-filing.
1. Most within 3 weeks
2. Many in about 14 days if direct deposit
3. RAL’s available from lending institutions provide
loan on your refund in 1-2 days
4. If you owe past-due amounts, may not get all of
refund.
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ELECTRONIC FILING
OFFSET AGAINST DEBTS
As with a paper return, you may not get all of your
refund if you owe certain past-due amounts, such as
federal tax, state tax, a student loan, or child
support.
BALANCE DUE
If you have a balance due with your return, you must
pay it by the due date of your return to avoid latepayment penalties and interest. You can make your
payment electronically, by credit card, or a direct
debit to your checking or savings account.
55
ELECTRONIC FILING
TAX PROFESSIONAL
You can electronically file your return by using
a tax professional or using your personal
computer. Many tax professionals file
returns electronically for their clients.
You can prepare your own return and have a
tax professional electronically file it for you, or
you can have the tax professional prepare and
electronically file your return. The tax
professional who electronically transmits
returns to the IRS is authorized by the IRS to
do so as an electronic return originator (ERO).
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ELECTRONIC FILING
FORM 8879
When your tax return is completed, you electronically
“sign” the return by entering your self-selected PIN
using the computer keyboard. If you are filing a joint
return, both taxpayers must sign using a PIN. You
can authorize your tax professional to input your PIN
as your signature by using Form 8879, IRS e-file
Signature Authorization.
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ELECTRONIC FILING
58
ELECTRONIC FILING
Joel S. Pryce (SSN 091-72-2448) is filing an electronic return.
Joel lives at 1322 Nineteenth St., St. Louis, MO 63103.
Chuck Harris (PTIN, P00543444) from Liberty Tax Service
(EIN 55-1234567) prepares his return as a paid preparer at
the office at 12 Bonnie Rd., St. Louis, MO 63103. The
following information for Joel is taken from the
electronically prepared Form 1040:
Line 38: $29,000
Line 61: $ 2,650
Line 62: $ 3,359
Line 73a: $ 709
Line 75:
0
The DCN for this return is 00-567890-55639-9.
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ELECTRONIC FILING
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ELECTRONIC FILING
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ELECTRONIC FILING
MAKING CHANGES TO FORM 8879
Once you have signed Form 8879, the ERO cannot make
changes to this document that exceeds specific tolerances
established by the IRS without preparing a new form.
These tolerances are:
1. The amount of total income or AGI does not differ
from the amount on the electronic portion of the
tax return by more than $50; or
2. The amount of total tax, Federal income tax
withheld, refund, or amount you owe does not
differ from the amount on the electronic portion
of the tax return by more than $14.
If one of these amounts does exceed the tolerance limit, you
will need to sign a new Form 8879 showing the changes
before the return can be filed.
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ELECTRONIC FILING
Once the IRS has accepted your e-filed return, you are
not able to make any changes to it such as canceling
a direct deposit request. Sending in a paper return at
this point would result in the IRS having a duplicate
return for you and this could result in a delay of your
refund. If you need to change your return after it has
been accepted by the IRS, you should send a paper
amended return. After the IRS has accepted the
original return, the refund should be issued within 3
weeks. However, some refunds may be delayed
because of compliance reviews to ensure that returns
are accurate.
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ELECTRONIC FILING
Self-Select PIN
1. Allows taxpayers to sign e-filed return
using a five-digit PIN
2. PIN can be any five numbers you choose
except all zeroes
3. PIN can be used if file taxes yourself or
use tax professional
4. You can authorize the preparer to enter
your PIN for you
5. If filing a joint return, a PIN is needed
for each taxpayer
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ELECTRONIC FILING
PRACTIONER PIN
The Practitioner PIN is the electronic
signature program used by tax professionals
(EROs). Taxpayers that are eligible to file
Form 1040, 1040A, or 1040EZ and have
their return prepared professionally can use
this method.
65
ELECTRONIC FILING
FORM 8453

Form 8453, U.S. Individual Income Tax Transmittal for an IRS
e-file Return, is a transmittal cover sheet used to send any
required paper forms or supporting documentation to the
IRS. The ERO mails Form 8453 to the IRS within three
business days after acceptance of the electronically filed
return.

Use the same Declaration Control Number assigned to the efiled return for the DCN on Form 8453. Only the items listed
on Form 8453 maybe sent to the IRS..
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ELECTRONIC FILING
FORM 8888
1. You can direct deposit refund to 3 separate
accounts
2. E-file or paper return
3. Need correct routing #s and account #s
If you file Form 8888, you cannot:
1.Choose to receive any part of your refund as a
paper check.
2. Request a deposit of your refund to an account
that is not in your name
3. Cross out or whiten out any numbers. If you do,
the IRS will reject your direct deposit and send
you a paper check.
4. Direct the refund into the account of others.
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ELECTRONIC FILING
You should check with your financial institution to get the
correct routing and account numbers and make sure your
deposit to the type of account will be accepted. The IRS is
not responsible for a lost refund if you enter the wrong
account information and the refund is deposited into a
wrong account. In that situation, the taxpayer must work
directly with the respective financial institution to recover
their funds. Some financial institutions will not allow a joint
refund to be deposited into an individual account (even
though the IRS will allow a joint refund to be direct
deposited into the separate account of either one of them).
If the direct deposit is rejected, a check will be sent
instead. The IRS is not responsible if a financial institution
rejects a direct deposit.
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ELECTRONIC FILING
A deposit into an IRA using Form 8888 does not give
you an opportunity to specify for which year the
contribution would apply in order to avoid exceeding
annual contribution limitations.
If the refund amount is adjusted by the IRS for any
reason, they will make adjustments to Form 8888
deposit requests accordingly with a “bottoms up”
approach and adjust the last account listed first and
work it’s way up to the second and then to the first.
The IRS recommends electronic filing when using
Form 8888 in order to receive the added benefit of
the “extra checking” for accuracy on parts of the
return that occur when e-filing, including the
checking of the math and to minimize some common
problems. If the IRS adjusts the refund expected by
the taxpayer, a letter will be sent to the taxpayer
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notifying them of the amounts and reason(s).
ELECTRONIC FILING
70
ELECTRONIC FILING
The IRS may reject an electronically-filed return. If
rejected, return not considered filed by IRS.
Specific reject codes with explanations allow ERO
to know exactly where error occurred. IRS sends
acknowledgement or rejection notice to ERO within
2 work days of original transmission.
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ELECTRONIC FILING
The most common reject codes are:
 Code 501. On Schedule EIC, the qualifying SSN,
and the corresponding name control (first four
letters of the last name) must match information
received from the Social Security Administration.
 Code 502. The employer identification number
(EIN) from Form W-2, W-2GU, W-2G, 1099-R, or
2439, must match the IRS Master File.
 Code 503. Spouse’s SSN and name control must
match the corresponding data on the IRS Master
File.
 Code 504. Dependent’s SSN and corresponding
dependent name control must match the data on
the IRS Master File.
 Code 507. Dependent’s SSN was previously used
for the same purpose.
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ELECTRONIC FILING
FRAUD AWARENESS
There are some indicators of fraudulent activities that are
documented by the IRS. It is a good idea to be aware of
them so that you can avoid sending nonstandard forms to
the IRS with your return or conduct yourself in a
suspicious manner. Some indicators include:
 A typed, handwritten, duplicated, or corrected Form W2
 A Form W-2 for a firm in the area that differs from other
W-2 forms from the same firm
 Suspicious person accompanying a taxpayer, and
observed on prior occasions
 Multiple refunds directed to the same address or post
office box
 Employment or earnings which are not welldocumented
 Similar returns from different individuals.
73
STATE RETURNS
STATE RETURNS
Forty-two states (including the District of Columbia) have
individual income tax and require income tax returns
from individuals required to file. Alaska, Florida,
Nevada, South Dakota, Texas, Washington, and
Wyoming do not have individual income tax. New
Hampshire and Tennessee have taxes on interest and
dividend income in excess of limits that are based on
filing status.
States with individual income tax also have specific forms and
instructions on how to properly prepare the state
return. Each state has its own state tax website which
can be found at
http://www.taxadmin.org/fta/link/forms.html.
74
STATE RETURNS
RESIDENCY
To file a state income tax return, it is necessary to determine
the following:
Your residency status in each state. You may be a full-year
resident, part-year resident, or nonresident. You may, in
certain cases, be both a part-year resident and a
nonresident in the same year. Your residency status is
important in deciding which state form to use. Some
states have separate forms for residents, part-year
residents, and nonresidents.
The income you have for each state that is taxable and the
state that it is taxable to. Generally, if you receive
income from a state in which you live, you are taxed by
that state. If you live in one state but have wages in
another state, you probably are subject to income tax in
both states. When a taxpayer is taxed on the same
income in two states, they may qualify to take an “outof-state” tax credit on one state’s return, usually the
resident state return. Usually if you earn income in a
state, you are subject to tax by that state.
75
STATE RETURNS
MILITARY PERSONNEL
An active duty military person may get special
treatment under state tax laws. His or her state of
residency is not determined in the same way. It
generally depends on what the service person
established as a home state of record. This is
originally based on where the person lived when they
entered the service. Once this is established, the
home of record does not change unless the service
member changes it officially through the military
personnel office.
Treatment of military pay is taxable to the home state
of record only if it is taxed at all. If the service
member has income, such as a rental property or
another job, from a state other than his home state,
it is taxable in that state and may be taxable in the
home-of-record state.
76
STATE RETURNS
FORMAT OF STATE RETURN
The format of a state return is generally one of four
types:
1. One that uses the federal Form 1040 to carry over
information such as wages, interest, dividends,
etc. that are taxable.
2. One that starts with carrying over the federal AGI
(FAGI) from the federal return. The state then
makes adjustments to the FAGI to arrive at a
state AGI.
3. One that starts with the federal taxable income.
This is basically the FAGI minus exemptions and
deductions.
4. One that starts with federal tax liability.
77
STATE RETURNS
Some areas in which state returns tend to differ from
the federal return are:
 Child care credit
 Pensions
 Capital gains
 Moving expenses
 Active duty military income and military
retirement income
 Social security
 Itemized deductions
 Depreciation
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EXTENSIONS, AMENDED RETURNS,
ELECTRONIC FILING, STATE RETURNS
KEY IDEAS
o You can get an automatic 6-month extension of time
to file by filing Form 4868 by the regular due date for
your return. An extension of time to file is not an
extension of time to pay.
o You can file an amended return by using Form
1040X. You must file your Form 1040X within 3 years
after the date you filed your original return or within
2 years after the date you paid the tax, whichever is
later.
79
EXTENSIONS, AMENDED RETURNS,
ELECTRONIC FILING, STATE RETURNS
o The processing of an electronic return is faster and
more accurate than the processing of paper returns.
Form 8879 is the signature document for electronic
filed returns.
o Form 8453 is used as a transmittal cover sheet for
documents required to be mailed.
o If the IRS rejects your electronically filed return, it
means that the return is not filed with the IRS.
o Most of the common IRS reject codes for electronic
filing involve SSN and name data that does not match
the IRS Master File and the SSA records.
80
EXTENSIONS, AMENDED RETURNS,
ELECTRONIC FILING, STATE RETURNS
o Form 8888 can be used to direct deposit a federal
refund into 3 or more accounts at banks or financial
institutions. The preparer must be very careful when
using this form as with all direct deposits so that the
taxpayer’s refund is not “lost”.
o Forty-two states (including the District of Columbia)
have individual income tax and require income tax
returns from individuals required to file.
o Some states also have separate local income tax
returns to be filed.
o Active duty military personnel may get special
treatment under state tax laws.
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CLASSWORK 1
CLASSWORK 1 TRUE OR FALSE:
1. Generally, to get an automatic extension of time to file,
you must file Form 4868 by the regular due date of your
return.
2.
Some items that may differ in a state return from a
federal return are capital gains and pensions.
3.
An extension of time to file is not an extension of time to
pay.
4.
If you live in one state but have wages in another state,
you will pay taxes only in the state in which you reside.
5.
A U.S. citizen living in Europe on the due date of their
return receives an automatic 2-month extension.
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CLASSWORK 1
6.
For state filing purposes, your “home state” is usually
the state in which you reside.
7.
You must file an amended return if you claimed
deductions or credits you should not have claimed.
8.
A handwritten Form W-2 might be an indication of fraud.
9.
Generally, you must file your Form 1040X within 2 years
after the date you filed your original return or within 3
years after the date you paid the tax, whichever is later.
10. A legal marriage will automatically change the woman’s
maiden name to her married name for tax purposes.
11. A Form 1040X based on a worthless security must be
filed within 3 years after the due date of the return for
the tax year in which the security became worthless.
83
CLASSWORK 1
12. If the IRS rejects an electronically filed return, the IRS
considers the return filed but needing correction.
13. You may have a refund from an e-filed return directly
deposited into your savings account.
14. Once signed, Form 8879 cannot be changed if the
amount of total income differs from the amount on the
electronic portion of the return by more than $50.
15. An ERO can prepare your tax return, including Form
8879.
84
CLASSWORK 1
16. When used, a signed Form 8879 must always be sent to
the IRS to follow up on the e-filed return.
17. You can enter your own PIN or authorize the tax
preparer employed by an ERO to enter it on your behalf.
18. Form 8888 is used to request a paper refund check from
IRS.
85
CLASSWORK 1
CLASSWORK 1 TRUE OR FALSE:
1. Generally, to get an automatic extension of time to file,
you must file Form 4868 by the regular due date of your
return. T
2.
Some items that may differ in a state return from a
federal return are capital gains and pensions. T
3.
An extension of time to file is not an extension of time to
pay. T
4.
If you live in one state but have wages in another state,
you will pay taxes only in the state in which you reside. F
5.
A U.S. citizen living in Europe on the due date of their
return receives an automatic 2-month extension. T
86
CLASSWORK 1
6.
For state filing purposes, your “home state” is usually
the state in which you reside. T
7.
You must file an amended return if you claimed
deductions or credits you should not have claimed. T
8.
A handwritten Form W-2 might be an indication of fraud.
T
9.
Generally, you must file your Form 1040X within 2 years
after the date you filed your original return or within 3
years after the date you paid the tax, whichever is later.
F
10. A legal marriage will automatically change the woman’s
maiden name to her married name for tax purposes. F
11. A Form 1040X based on a worthless security must be
filed within 3 years after the due date of the return for
the tax year in which the security became worthless. F
87
CLASSWORK 1
12. If the IRS rejects an electronically filed return, the IRS
considers the return filed but needing correction. F
13. You may have a refund from an e-filed return directly
deposited into your savings account. T
14. Once signed, Form 8879 cannot be changed if the
amount of total income differs from the amount on the
electronic portion of the return by more than $50. T
15. An ERO can prepare your tax return, including Form
8879. T
88
CLASSWORK 1
16. When used, a signed Form 8879 must always be sent to
the IRS to follow up on the e-filed return. F
17. You can enter your own PIN or authorize the tax
preparer employed by an ERO to enter it on your behalf.
T
18. Form 8888 is used to request a paper refund check from
IRS. F
89
CLASSWORK 2
CLASSWORK 2 PROBLEM 1:
1. Howard J. Pratt (SSN 403-82-1111, born 7/7/1960) is
single and lives at 396 Bay Street, Norfolk, VA 23501. He
has a Form W-2 with wages of $25,000 and no other
income. His withholding is $2,300. His estimated total
tax liability for 2008 is $2,050. Complete Form 4868 for
him.
90
CLASSWORK 2
91
CLASSWORK 2
92
CLASSWORK 2
CLASSWORK 2 PROBLEM 2:
2. Using the tax return for the D’Andrios found in
Homework 2 from Chapter 8, complete Form 8879.
Dominic will enter his own PIN (25644) and Lucille
authorizes the Liberty Tax Service preparer to enter
her PIN (24599) for her. The DCN for the electronic
return is 00-567890-55667-9 and the ERO’s EFIN/PIN
is 56789012126.
93
CLASSWORK 2
94
CLASSWORK 2
95
CLASSWORK 2
CLASSWORK 2 PROBLEM 3:
3. Using the tax return for the D’Andrios found in
Homework 2 from Chapter 8, prepare an amended
federal return using the additional information
provided in the following W-2 form that Lucille forgot
to enter on the original return.
96
CLASSWORK 2
CLASSWORK 2 PROBLEM 3
97
CLASSWORK 2
98
CLASSWORK 2
99
CLASSWORK 2
100
CLASSWORK 2
101
CLASSWORK 2
102
CLASSWORK 2
103
QUESTION & ANSWERS
104

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