Resources For San Jose, CA, RSVP Tax Volunteers

Study Guides

This training resource is primarily intended to supplement the formal training offered free to Volunteer RSVP Tax Counselors and AARP Tax Volunteers. It uses material for the 2003 Tax Year. All of the material covered in the Text Book and in the formal classes is covered in these study guides. The material in these study guides is covered in the order presented in IRS Publication 17 and the IRS Tax Form 1040, this is different from the order presented in the Text Book and most RSVP and AARP formal classes.

The Study Guide is divided into eight classes. Clicking on the appropriate link below to go to the desired study guide. Each class takes about 3 hours.

Class Number One (Introduction)

Supplemental Information:

It is strongly recommended that for training purposes all work be done using Form 1040 and the 1040 associated Forms, Schedules and worksheets. The examples in the Text Book use Draft Forms but you should use the Final Forms, which you have downloaded. Also all exercises in the Text Book should be done on separate final forms rather than the abbreviated or draft forms included in the text. TaxWise, which is mentioned in the Text, is a computer program that is not available in this Training Resource. If you have TaxWise you can use it with the Practice Returns.

The Text Book shows, on pages 13 and 14, the front and back of a 1040 Form. Each line, of the 1040 Form, indicates which chapter in the book discusses that line of the Form. This can be helpful while doing returns for training but the Text Book should not be used when actually preparing a client’s Return. On pages 4 and 5 of the 1040 Instruction Book are page references to where the instructions for each line of the 1040 Form can be found. This can be very useful and can be used while preparing a client’s return. On pages 17 and 18 of the 1040 Instruction Book is a table indicating where to report certain items from Forms W-2, 1098 and 1099. This can also be used while preparing a client’s return and is quit useful.

IMPORTANT!!

The Text Book is only to help you learn about Tax Returns and should not be used for reference while doing a client’s return.

The 1040 Instruction Book can be followed page-by-page to guide you through the process of doing a return until you become experienced. This book provides the line-by-line instructions to use in preparing a client’s return.

READ every word on the Form. If you have a question RE-READ every word on the Form and the 1040 Instruction Book. If you still have a question consult Publication 17. Pub 17 is to be your reference book. If you still cannot find your answer, ask a senior counselor at your site. DO NOT GUESS!!

Reading:

Re-read and study the “Getting Started” link on the “Training Resources” web page.

Text Book
Read Chapter (pages 1-18).

IRS Publication 17 (Pub 17)
Study the inside front cover to see how it is organized
Read pages 1-22.

Study Form 1040 to see how it is organized and its general content.

Federal 1040 instruction booklet
Read pages 4-18.

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Class Number Two (Filing Status and Exemptions)

Supplemental Information:

You should download Practice Return 1. You will start completing lines 1 through 6d of a 1040 Tax Return using the data in Practice Return 1.

You will also need to download the 1040 fill-in tax form.

Other Forms will need to be downloaded later for future classes as you proceed to complete this Tax Return.

You will also want to download the fill-in 1040 worksheets.

As you read the Text book and Pub 17 it can be helpful to follow along in the 1040 Form and instructions.

Be sure to carefully go through each example and be sure that you understand it before continuing on.

Do ALL of the exercises and then check your answers with the ones given in the book. The book unintentionally has some incorrect answers so be careful. Make sure you understand how to get the correct answer.

Reading:

Text Book
Read Chapter 1, pages 1-1 to 1-38.

IRS Publication 17 (Pub 17)
Read Chapters 2 and 3, pages 23-36.

Federal 1040 instruction booklet
Read pages 19 through 21.

Exercises:

Text Book
Do questions 1-8 on pages 1-16 and 1-17. (Answers on page 1-18).
Do all questions on pages 1-27 and 1-28. (Answers on page 1-29).
Do both questions on page 1-35 (Answers on page 1-36).

1040 Instructions
Using pages 15 and 16, determine if the Taylors need to file.
(If you have questions about “Gross Income” refer to your Text Book or Pub 17.)
Using pages 19 and 20 determine what their filing status should be.
Using page 21 determine if Janet qualifies as their dependent also look at chart on page 32 of Pub 17.

Pub 17

Using page 10 of Pub 17 determine which Tax Form the Taylors should use.

Practice Return 1
Note the first 5 lines and the 3 Social Security Cards at the bottom of the information page.
On a new Form 1040, complete the “Filing Status” and “Exemptions” sections, lines 1-6d.

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Class Number Three (Income)

Supplemental Information:

In this class you will be completing Lines 7 through 12.

Tax Volunteers only do certain simple Business Returns using Schedule C-EZ and reported on line 12 of the 1040 Form. Check with your Site Coordinator for more details.

You will be working with W-2, 1099-INT and 1099-DIV forms in Practice Return 1. Be aware that the Forms from different issuers can look different from the ones in the Practice Return 1.

You might need to complete Interest and Ordinary Dividends Schedule B for this Class.

It might help for you to consult page 17 of the 1040 Instruction Book to determine where each item on the 1099 forms should be reported.

Reading:

Text Book
Read Chapter 2, pages 2-1 to 2-30.

IRS Publication 17 (Pub 17)
Be aware of Chapter 4 Decedents, pages 37-41, and Chapter 5 Tax Withholding and Estimated Tax, pages 42-49.

Read Chapters 6-9, pages 50-72.

Federal 1040 instruction booklet
Read pages 22 to 24, Lines 7 through 11. Line 9b is new for 2003 so read page 23 Line 9b.
Read pages B-1 and B-2 in the back of the book.

Practice Return 1

Read the front of both of the W-2 Forms and the back of W-2 Copy B and Copy C.

Read the front and back of the 1099-DIV and 1099-INT forms.

Exercises:

Do Exercise 1 page 2-4, Exercise 2 page 2-9, and Exercise 3 page 2-17of the Text Book. (Answers on page 2-31)

Practice Return 1
Complete Interest and Ordinary Dividends Schedule B if necessary.
Complete lines 7 through 12 of Form 1040.
Note, Line 12 Business Income, Tax Volunteers only do certain simple Business Returns using Schedule C-EZ. Check with your Site Coordinator for more details.

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Class Number Four (Income Continued)

Supplemental Information:

Since this study guide guides you through a 1040 Form line-by-line, we will be skipping ahead in the Text Book but we will come back to the missed chapters when we get to the lines that they cover on the 1040 Form.

You will complete lines 13a and 15a-16b and 19-22 on your Practice Return 1 Form 1040. NOTE volunteers DO NOT prepare returns with entries on lines 14 (from Sales of Business Property, Form 4797), 17 or 18.

Be aware that 1099-B Forms from different issuers can look different from the ones in the Practice Return 1. There are two versions of the SAME 1099-B included in the Practice Return 1 in order to show various types. Use the information from either one to prepare the Practice Return.

You might need to complete Capital Gains and Losses Schedule-D for this Class. Schedule-D was modified for 2003.

You might need Fill-in worksheets for Schedule D. These are included at the end of the 1040 Fill-in worksheets file included in this Training Resource. The worksheet for Taxable Social Security Benefits is also in that file.

Adobe Reader makes it easy to find answers in your Text Book, Pub 17 or the 1040 Instruction Book. Click on “edit” and select “Find” then, for example, enter ‘jury duty’ and click “Find.” You can continue to click “Find Again” to find all occurrences of the “Find” term(s) you have entered.

Reading:

Text Book
Read Chapter 11 pages 11-1 To 11-34
Read Chapter 12 pages 12-1 To 12-6
Read Chapter 13 pages 13-1 To 13-28.

IRS Publication 17 (Pub 17)
Be aware of Chapter 10, Rental Income and Expenses. Volunteers DO NOT prepare these returns.
Read Chapters 11-17, pages 73-123.

Federal 1040 instruction booklet
Read pages 22 to 28; Lines 7 through 21
Read pages D-1 to D-11, near the end of the booklet. Note page D-6 “Column (g). This is new for 2003 also look at Sch D carefully as it is also new for 2003.

Practice Return 1
Read the front and back of the 1099-B (there are two versions of the same 1099-B Form), 1099-R and the SSA-1099-Social Security Benefit Statement. Pay special attention to the note for box 7 of the 1099-R form.

Exercises:

Text Book
Do Exercises 1 through 6 on pages 11-9, 11-14, 11-17, 11-21, 11-28 and 11-31. (Answers on pages 11-35 to 12-45.)

Do Exercises 1 and 2 on page 12-6. (Answers on page 12-7.)

Do Exercises 1 - 14 on pages 13-5, 7, 8, 12, 13, 19, 21, 22, 23, 25, and 13-27. (Answers on pages 13-29 to 13-31.)

Practice Return 1
If needed; complete Capital Gains and Losses Schedule-D and any of its required worksheets.
Enter, in the appropriate place, the ‘capital gain distr.’ shown on the Form 1099-DIV
Complete the Taxable Social Security Benefits – Worksheet.
Complete the following lines on your Form 1040: 13a, 13b, 15a, 15b, 16a, 16b, 19, 20a, 20b, 21 and 22.
Note, use care in reporting the money received for jury duty and the disability money reported on Form 1099-R.

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Class Number Five (Adjustments and Deductions)

Supplemental Information:

You will complete lines 23 through 40 on your Practice Return 1 Form 1040.

Archer MSA contributions which were reported on line 27 in 2002 are now reported on line 33 (see Publication 969).

Education individual retirement accounts (education IRAs) were renamed Coverdell education savings accounts in 2002. You should Review Coverdell in chapter 2 and 3.

You might need the Fill-in IRA Deduction Worksheet for Line 24.

You might need Fill-in Itemized Deductions Schedule A.

Reading:

Text Book
Read Chapter 3 pages 3-1 To 3-27
Read Chapter 4 pages 4-1 To 4-21

IRS Publication 17 (Pub 17)
Read Chapters 18-27,29 - 31 pages 125-184 and 204-216.

Federal 1040 instruction booklet
Read pages 29 to 35, Lines 23 through 40
Read pages A-1 through A-6 at the back of the book.

Practice Return 1
Reread the first page of information

Exercises:

Text Book
Do Exercises 1-3 on pages 3-6, 3-10 and 3-16. (Answers on page 3-28 and 3-29.)

Do Exercises 1-6 on pages 4-4, 4-6, 4-10, 4-12, 4-14 and 4-15. (Answers on pages 4-23 - 4-25.)

Practice Return 1
Complete Itemized Deductions Schedule A if it is needed
Complete Form 1040 lines 23-40

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Class Number Six (Tax and Credits)

Supplemental Information:

You will complete lines 41 through 48 on your Practice Return 1 Form 1040.

Line 41: Form 8814, Parents’ Election To Report Child’s Interest and Dividends (is rare).

Line 41: Form 4972, Tax on Lump-Sum Distributions (is rare).

Volunteers rarely need to complete line 42 or Alternative Minimum Tax Form 6251.

Volunteers rarely need to complete line 44 or Foreign Tax Credit Form 1116.

You might need the Fill-in Credit for child and dependent care expenses Form 2441 for Line 45.

You might need the Fill-in Credit for the elderly or disabled Schedule R for Line 46.

You might need the Fill-in Education Credit Form 8863 for Line 47.

You might need the Fill-in Retirement savings contributions credit Form 8880 for Line 48.

Reading:

Text Book
Read Chapter 5 pages 5-1 To 5-9
Read Chapter 7 pages 7-1 To 7-12
Read Chapter 8 pages 8-1 To 8-12
Read chapter 14 pages 14-1 to 14-6.

IRS Publication 17 (Pub 17)
Read Chapters 32-37 and 39, pages 217-247 and 267-270.

Federal 1040 instruction booklet
Read pages 36 to 39, Lines 41 through 48

Exercises:

Text Book
Do Exercises 1 and 2 on page 5-4 and Exercise 3 on page 5-7. (Answers on page 5-8 and 6-9.)
Do Exercises 1 on page 7-6, Exercise 2 on page 7-10. (Answers on pages 7-12 to 7-15.)
Do Exercise 1 on page 8-11. (Answer on page 8-13.)

Practice Return 1
If needed complete the following:
Credit for child and dependent care expenses Form 2441,
Credit for the elderly or disabled Schedule R,
Education Credit Form 8863 and/or
Retirement savings contributions credit Form 8880.
Complete Form 1040 lines 41-48

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Class Number Seven

Supplemental Information:

You will complete lines 49 through 62 on your Practice Return 1 Form 1040.

You might need the Fill-in Form Adoption Credit Form 8839 for Line 50.

Volunteers rarely need to complete Mortgage Interest Credit Form 8396 or District of Columbia First Time Homebuyer Credit Form 8859 for line 51

Volunteers rarely need to complete General business credit Form 3800 or Credit for prior year Minimum Tax Form 8801 for line 52

Reading:

Text Book
Read Chapter 9 pages 9-1 To 9-9
Read Chapter 10 pages 10-1 To 10-5

IRS Publication 17 (Pub 17)
Read Chapter 38, pages 254-260

Federal 1040 instruction booklet
Read pages 40to 43, Lines 49 through 62

Exercises:

Text Book
Do Exercise 1 page 9-9. (Answer on page 9-27.)

Practice Return 1
If required complete the following Forms and Schedules:
Adoption Credit Form 8839,
Mortgage Interest Credit Form 8396,
District of Columbia First Time Homebuyer Credit Form 8859,
General business credit Form 3800 and/or
Credit for prior year Minimum Tax Form 8801
Complete Form 1040 lines 49-62

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Class Number Eight

Supplemental Information:

You will complete lines 63 to the end of your Practice Return 1 Form 1040.

You might need the Fill-in 1040 Worksheets for Child Tax Credit, and Earned Income Credit.

You might need Fill-in Additional Child Tax Credit Form 8812.

Reading:

Text Book
Read Chapter 9 page 9-10 to 9-26
Read Chapter 10 pages 10-6 To 10-14
Read Chapter 6 pages 6-1 To 6-28

IRS Publication 17 (Pub 17)
Read Chapter 37, pages 252-262

Federal 1040 instruction booklet
Read pages 44 to 50; Lines 63
Read top of page 51
Read pages 56 to 61, lines 64-end

Exercises:

Text Book
Do Exercises 2-4 on pages 9-11, 9-13 and 9-20. (Answers on pages 9-27to 9-39.)
Do Exercise 1 on page 10-11. (Answer on pages 10-15 to 10-17)
Do Exercise 1 and 2 on page 6-25. (Answer on page 6-29).

Practice Return 1
If needed complete the Worksheet for Earned Income Credit.
If needed complete the Schedule EIC Earned Income Credit.
Complete Form 1040 line 64 to the end

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Summary

Doing Tax Returns is the best way to become comfortable with the process and to gain speed. It is highly recommended that you complete Practice Return 2 and any of the practice returns that cover areas in which you feel that you might be weak. Answers are not provided for any of the Practice Returns on this Web Site.

You are encouraged to do the additional problems in the Text Book. These are on pages CW-1 through CW-22 and pages CP-1 through CP-18. Answers to these problems are on pages CW-23 through CW-36 and CP-19 through CP-28.