General overviews & how to enter most common types
Did you know, There are 2 types of Income: Earned Income: per IRS: 'Earned income includes all the taxable income and wages you get from working for someone else, yourself or from a business or farm you own.' **Farm income is Out of Scope for VITA
See section below for how to calculate taxable portion of 1099-R when Box 2a is blank and there is an amount in Box 9b |
Click image for PDF or this link for PowerPoint Presentation
Click image for PDF or this link for PowerPoint Presentation
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Social Security Income--there are 3 types (Basic certified can do)
Income received from Social Security for Retirement and Disability (SSDI) is reported on an SSA-1099. Many people believe it to not be taxable. This is not necessarily true. Social Security Income can be taxable IF their income crosses a certain threshold. How much is taxable depends on the total income. Up to 85% of their Social Security benefits may be subject to income tax. Those whose filing status is Married Filing Separately and who lived with their spouse in the tax year will find 85% of their Social Security income subject to income tax. If Client doesn't have their SSA-1099. Click here for options. Supplemental Income (SSI) is not taxable, does not get reported on a tax return and there is no tax form issued for it. |
Click image for PDF and this link for PowerPoint Presentation
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If your client is aged 55 to 59 1/2 and they retired and took money from their retirement account--they may be exempt from the 10% penalty rule-- click the images to read this article and then check out the IRS website to see who qualifies for the exemption
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Click image below for IRS webpage that goes over all the exemptions to the 10% penalty rule
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Unemployment-for Florida clients
Super easy to enter, but not always easy to get the 1099-G from the state. Florida's Department of Economic Opportunity website has been a struggle to navigate since COVID, and now with their new upgraded security, ID.ME, many are having trouble getting through. And once you access the site, downloading the form may be blocked by 'pop-up blockers'. The PDF shows how to allow pop up blockers---> |
. Tip Income
*If Reported on a W-2 (just data entry the W-2 as it appears and there is nothing else you need to do (Basic certified can do this) *If Not reported to employer on W-2 must be Advanced certified (see PDF for how to enter) PUB 4012 PAGE D-7.Enter on screen for W-2 --unreported tips. IF any month they received less than $20--then visit form 4137 to remove Social Security & Medicare Taxes for those small tip earnings. Self-employed- if the tips are not included in any statements being entered like 1099-K or 1099-NEC, then enter the amount of tips on the Schedule C --> Income menu-->First Box . **Sometimes I like to click the 3 lines and type a description for this box (e.g., 1099-K, tips, Uber 1099-K, Lyft 1099-K, cash, etc.). I do this if they have 2 or more sources of income that need to be keyed--when you list things, it gets printed on a statement which could be beneficial for them if they get audited, but also if they want to study/review how their business is doing. |
Refund of State/Local Income Taxes-- Reported on Form 1099-G Box 2 (Basic certified can do)
If your client filed a state or Local tax return in the prior year, received a refund AND they itemized deductions on their Federal return, then they must report the state/local refund as income. Florida does not have state income tax so we very seldom see clients with state income tax refunds--and of those we see, very seldom have itemized deductions. Since this website is used by so many in other states, and we get people that move here during the year from another state, I am adding this resource shared by Kenny Hayes from a VITA/TCE program up North. Thanks Kenny! |
Gambling Losses--
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Client has 1042-S for Gambling Winnings See how to enter on a 1040 (Basic certified can do)
*Client must be:
We do not file 1040NRs, Out of Scope, except for Foreign Students and you have to be International Student certified. |
Hobby Income or Business? Read article to understand difference--basically it boils down to what is the intent of doing that activity?
A hobby isn’t a business because it isn’t carried on (done) to make a profit. If you receive income for an activity that you don’t carry out to make a profit, the expenses you pay for the activity can not be deducted on your tax return. The income would get reported as Other Income (Line 8 of the 1040). See Not-for-Profit Activities in chapter 1 of Pub. 535. You must still report the income you receive on your Schedule 1 (Form 1040). |
Election / Poll Worker Income -contrary to what a lot of people think, it must be reported
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Click the links below to go to the IRS Link&Learn online interactive Modules on or click image (updated end of November each year)
Or view Income section of PUB 4491 (available as a PDF) updated generally by mid October-click link The content in these sections can be reviewed at any time as not much changes here year after year. If we get a new income form, it will be added October-November and will also be added to the Important Changes Section as well. |
You can contact me at maryvitataxes@gmail.com
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Please note: I, Mary Meador, AM NOT a certified accountant or tax law expert. I volunteer with VITA providing free tax preparation for individuals and families whose income is less than $66,000 a year. We deal with simple returns at our sites. I cannot guarantee the accuracy of all the information on this site as tax laws change and I may not have a clear understanding of complicated issues. I am trying to provide basic tax preparation information for our volunteers to get started--remember Publication 4012 is your go-to resource for questions, as well as irs.gov and Publication 17. I hope you find this information useful and easy to understand. Thanks for being a VITA/TCE volunteer!
All images from our UWLHG Canva account unless promoting the resource linked to |