Step by step: preparing a workbook return in TaxWise

Once again, Eco 391 students are preparing for the VITA certification exam to be given on the first day of class, practicing by working on the workbook returns (which are similar to the scenarios that come up on the VITA exam and also similar to many situations that come up "in real life" for taxpayers at our VITA site.)  Some tips are listed below.  Any other readers of this blog can find this case study in Pub 4491W on pages 11-15.

1) First step:  before you even open TaxWise, review and annotate the Intake & Interview sheet.  Use the information in Tab B of Pub 4012 to determine the filing status of the taxpayer.  Use the information in Tax C of Pub 4012 to determine whether any of the people who live with and/or are supported by the taxpayer can be claimed as dependents.  Circle any entries marked "Yes" on page 2 of the Intake/Interview sheet and annotate with the documents or information from the interview notes.  You can see my annotated sheets for the Beringer case below. (My annotations are in red. Click on the images to see larger versions. If you have questions about any of this, please feel free to post questions below or in the Nexus class discussion forum.)

Step 2: Start a new return in TaxWise.  Begin by filling in the Main Info screen using the information from the taxpayer's Intake and Info sheet and the Social Security cards for the taxpayer and dependents.  Since this taxpayer has two "Qualifying Children" who lived with her as dependents, you should enter Code 1 on their lines and check the EIC box on their lines to bring up the Earned Income Credit forms.  This taxpayer also has a "Qualifying Relative" dependent (her mother), and you should enter her as Code 3.  Since QR dependents never qualify a taxpayer for EIC, you would not check the EIC box on the taxpayer's mother's line.  Note that Willie Cash is not a QR dependent (why?) and no information for Willie should be entered on the tax return.

After you have filled out the Main Info screen completely, you should see a green checkmark next to the Main Info in the left sidebar and you can move on.

Step 3: Enter all information from the taxpayer's documents in the appropriate forms or worksheets.  Also, make sure that the relevant information from every entry marked "Yes" on page 2 of the return is entered into the appropriate place in TaxWise.  (Tab K has some helpful information for this or, again, feel free to post a question on the discussion forum.)

Step 4: Look at every form in the left sidebar and "get the red out," by completing the requested information in every red field.

After the entire left sidebar has no more red, print the return to a PDF and walk line by line through the 1040, explaining to your imaginary taxpayer (Sheryl Beringer) the reasoning behind each of the entries in her return.  (Note to my class--this is exactly what we did in 2014 TaxWise back at our training session in November.  What you are doing in this first exercise is the same scenario in 2015 TaxWise.  You will notice that some of the answers are slightly different, due to minor inflation adjustments in the tax parameters between 2014 and 2015.)   

If class members have questions, please feel free to email me or to post questions on the discussion board in Nexus.  I am happy to go into your TaxWise return and troubleshoot if you are having difficulty with anything. Anyone else with questions is welcome to post them in the comments section below.