# Presentation: 486178

## Lesson 14

**Finishing the Return**

**Notes:**
This lesson contains information for all courses and has been updated for Tax Year 2007.

Military information is at the end of the lesson.

  References:
Form 1040-ES, Estimated Taxes for Individuals
Form 8158, Quality Review Checklist
Form W-2, Wage and Tax Statement
Form 1099-INT, Interest Income
Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc.
Form 1099-DIV, Dividends and Distributions
Form W-4, Employee’s Withholding Allowance Certificate
Form W-4P, Withholding Certificate for Pension or Annuity
Form 8888, Direct Deposit of Refund

Progress to the next slide.

## Objectives

- Calculate and report federal income taxes withheld from all sources
- Calculate and report estimated tax payments
- Calculate the refund or amount due
- Determine if estimated taxes should be paid
- Determine who qualifies for an extension of time to file
- Determine if changes to Form W-4 or Form W-4P should be suggested

**Notes:**
Review the objectives with the class.

Progress to the next slide.

## Checklist for Finishing the Return

- Withholdings, Payments, and Other Credits
- Paying Taxes or Adjusting Withholding
- Advance Earned Income Tax Credit
- Name, Address, and Taxpayer Identification Section

**Notes:**
Have students read the student text section “Checklist for Finishing the Return.”
Ask students to explain where to find the amount of federal income tax withheld (Forms(s) W-2 and some Form(s) 1099 .
Explain that all payment options are available for paper returns, except the Electronic Funds Withdrawal which is available only for electronic returns.
Ask for a volunteer to give an example of when someone may need to make estimated payments. (If they expect to owe more than $1,000 in 2008 after subtracting withholdings and credits.)
Stress the importance of properly completing the name and address information.
Guided Questions:  
When should the taxpayer identification section be completed? (After the rest of the return has been completed for a hand-prepared return.)
Is it important to have the taxpayer sign the return? (Yes. An unsigned return is not considered valid and cannot be processed.)

Progress to the next slide.

## Checklist for Finishing the Return–continued

- Return Assembly and Copy
- Site Identification Number
- Quality Review
- Signing the Return
**Self-Select PIN**
**Practitioner PIN**
- Taxpayer Question
- Where to Mail Paper Returns

**Notes:**
Make sure that students know their Site Identification Number and where to place it on the return. Explain to the students that this does not cause the return to have a higher chance of being audited. Instead, it allows the IRS to track how many people are assisted through the VITA/TCE program.
Tell the students that the IRS does not provide VITA/TCE sites with envelopes for mailing paper returns. Some sites may choose to provide pre-addressed envelopes at their own expense.
Remind students that a quality review must be conducted on every return prepared at the site. Form 8158, Quality Review Sheet, or approved alternative should be executed for all returns to assure completeness and accuracy.
The 100% quality review of all returns is in addition to diagnostics run on any software program to check math and missing information on the return.
Discuss the “Personal Identification Number (PIN) Guidelines for Self-Select PIN and Practitioner PIN.”
Remind students that taxpayers who e-file will not receive a tax package in the mail the following year. Forms can be obtained by calling the toll-free forms number (800-829-3676) or on the Internet at www.irs.gov.

Progress to the next slide.

## Federal Tax Withholding

- Add all federal withheld income tax together
- Withheld income tax can appear in:
- Form W-2, box 2
- Form 1099-R, box 4
- Form 1099-INT, box 4
- Form 1099-DIV, box 4
- Form W-2G, box 2
- Form 1099-G, box 4
- Form 1099-MISC, box 4
- Form SSA-1099

**Notes:**
Review where to find the amount of federal income tax withheld.
Remind students that they should not include the amount withheld for social security and Medicare with the federal withholding.
Point out that more social security recipients are requesting that federal income tax be withheld from their social security payments.
Have the students read Examples 1 and 2 and then ask if there are any questions.

Progress to the next slide.		

## Estimated Tax Payments

- Verify all federal estimated tax payments
- Be sure to include:
- An overpayment from the 2006 return that was applied to 2007 tax payments
- Payments made using Form 1040-ES, including the payment made in January 2008

**Notes:**
Tell students that most people who make estimated tax payments make four payments per year. The payments are due on April 15, June 15, September 15, and January 15 of the following year. Some taxpayers choose to make estimated payments more frequently, but they are not required to do so.
Explain to students where to look on the 2006 return to see if the refund was applied to the 2007 tax year. (It is the amount on Form 1040, line 75, or Form 1040A, line 46.)
Optional group activity: 
To review students’ understanding of estimated tax payment or underpayment of estimated tax, tax withheld, and refund or amount owed, divide the class into groups of four or five. Have each group write five questions that review the material covered in this lesson. Allow five to seven minutes for this part of the activity. When all groups have finished writing their questions, have students from each group read their questions to the class and have the other groups answer the questions.
Review any points that the students found difficult.

Progress to the next slide.

## Refund or Balance Due

- If the total payments exceed the total tax, this is an overpayment
- Overpayments are refunded unless applied to other accounts or tax years
- If the total tax exceeds the total payments, this is a balance due to be paid with the return

**Notes:**
Review the points on the slide.
Remind students that if a taxpayer (or volunteer) has not rounded the amounts reported on a tax return, it is possible that the amounts overpaid or owed are less than $1. Students may wonder if a taxpayer must send a check or money order to the IRS for that amount. The answer is no. Conversely, a taxpayer who has overpaid by less than $1 will not receive a refund unless the taxpayer sends a written request asking for the refund.
Discuss direct deposits and required routing and account numbers of checking or savings accounts.
Discuss Form 8888. Remind volunteers to double check account and routing numbers. The IRS is not responsible for refunds that are deposited into an incorrect account.  
Discuss the various payment options if there is a balance due on the return. Note that an estimated tax penalty may be applicable.
Progress to the next slide.

## Extensions

- Within the United States
- Outside the United States and Puerto Rico

**Notes:**
 Discuss e-file and paper options to obtain an extension to file.
 Remind students the extension to file is not an extension to pay.
 Review the automatic 2-month extension for those who reside outside the United States or 
    Puerto Rico. 

  Progress to the next slide.

## Figuring Estimated Tax for 2008

- If it is expected that $1,000 or more will be owed on the 2007 return **and**
- Withholding and credits to be less than the smaller of 90% of 2008 tax or 100% of 2007 tax**
- Use Form 1040-ES to calculate estimated tax payments
- All checks or money orders should be made payable to: United States Treasury

**Notes:**
Have the students read the “Figuring Estimated Tax for Next Year” section of the student text.
**Mention the exception for farmers or fishermen.
Discuss Example 4.
Ask the students to name some instances when taxpayers need to make estimated tax payments. Allow several students to answer.
Review Form 1040-ES. (You will need to provide this for your students. The most current version is available at www.irs.gov.)

Progress to the next slide.

## Form W-4 and Form W-4P

- These forms are used to tell payers how many withholding allowances the taxpayer is claiming
- If there is a balance due on the 2007 return, the withholding may need to be adjusted
- To change the withholding, a new Form W-4 or Form W-4P should be completed and presented to the payer

**Notes:**
Discuss with the students when a taxpayer needs to consider changing his or her withholding. (When the taxpayer has a large refund or large balance due.)
Remind students that there is no penalty for having too much withheld. In fact, many taxpayers request excess withholding so that they will receive a large refund.  
Tell students that if they are working with someone who has been struggling to get by and that person is due a large refund, they may suggest that the person decrease his or her withholding. This would allow the taxpayer to receive more money in each paycheck and not have such a large refund.

Progress to the next slide.

## Completing and Assembling the Return

- Confirm SSNs or ITINs on return
- Paper returns must be assembled by sequence number
- Form W-2 and/or Form(s) 1099 (federal copy) must be attached to Form 1040 for paper returns
- Site Identification Number–very important
- Assigned by Territory Office
- Proper location is in the Paid Preparer section

**Notes:**
For a paper return, the best time to complete the taxpayer identification section is after the return is complete.
Verify that SSNs and taxpayer(s) names are correct and follow the same order as the previous year’s return.
Form W-2 must be attached to paper Form 1040 on the left margin along with any Form 1099 that shows federal income tax withheld.
Form 8453 is used to transmit certain forms that cannot be filed electronically. This form has been revised and no longer requires a signature.
Emphasize the importance of the site identification number (SIDN). 

Progress to the next slide.

## Quality Review

- Accuracy and quality of return preparation are cornerstones of VITA/TCE programs.
- Every site must have a Quality Review process.

**Notes:**

For the 2008 filing season, the Quality Review effort at VITA/TCE sites are ongoing.
All tax returns prepared at the site must be reviewed for quality using Form 8158, Quality Review Sheet on your site’s equivalent form.
This quality review is in addition to diagnostic checks made by any software program. Generally diagnostic checks only confirm math errors or missing data.
A comprehensive quality review confirms with the taxpayer, using the supporting documentation provided, that the return is a complete and accurate statement of the client’s tax responsibility for the year.

Progress to next slide.

## Quality Initiatives

- Pre-tax preparation includes volunteer certification and Standards of Conduct
- Form 13614–Intake and Interview Sheet or your site’s approved alternative form completed with every return
- Form 8158, Quality Review Sheet, or your site’s approved alternative form, completed for every return

**Notes:**
Volunteers can only prepare returns or perform quality reviews at the level for which they are certified.
Use the Intake and Interview Sheet (or approved alternative form) to complete a probing and comprehensive interview with the taxpayer.
Form 8158, Quality Review Sheet, has been revised. Consider each item on the form to ensure quality and accuracy for every taxpayer.  
If an item is incorrect, make the needed corrections to the return. 

Progress to the next slide.   

## Decedents

- “Deceased” on the top of return, name and date of death
- Married Filing Jointly – surviving spouse enters “Filing as surviving spouse” in signature area on Form 1040.
- Single return – Personal representative signs and submits Form 1310 to claim a refund
- Power of Attorney – attach to Form 1040

**Notes:**
Discuss the requirements for filing a return for a deceased taxpayer based on how the return is being filed.

Military and International students, progress to the next slide; others go to the Lesson Summary slide and proceed.

## Combat Zone Provisions

- Determine who qualifies for an extension of deadline
- Identify special tax benefits that are available to persons who die in a combat zone or from a terrorist or military action.
- Explain how to file claims of forgiveness

**Notes:**
Review the objectives with the class.

Progress to the next slide.

## Extension of Deadline

- Actions extended
- Length of extension
- Requirements for the extension

**Notes:**
Have the students read the “Extension of Deadline” section in the student text.
Discuss Examples 1, 2, and 3.
Ask the students if they have any questions. If they are having trouble calculating the extension, rework the examples until they understand the calculation.

Progress to the next slide.

## Decedents

- Filing a return
- Combat Zone Forgiveness
- Military or Terrorist Actions

**Notes:**
Have students read the remainder of the lesson and complete Exercise 1-4.
Review the answer to the exercise with the class. Ask if they have any questions.

Progress to the next slide.

## Lesson Summary

- Establish a Quality Review process
- Execute a Quality Review for every return
- If you are not already filing returns electronically, please consider this option
- SIDN on all returns

**Notes:**
  Stress again privacy and quality.

Progress to the next slide.

## Comprehensive Course Problems and Exercises 

** ****Application of Tax Law**
**(Publication 678-W) **
- Basic Course
- Intermediate Course
- Advanced Course
- Military Course
- International** **Course

**Comprehensive Course Problems and Exercises **

**Notes:**
Refer the students to Publication 678-W.
Complete the applicable course problems with the student.
Encourage the students to complete the applicable exercises.