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Study Guide - Annual Federal Tax Refresher

The study guide is provided to guide you through the course material in a step by step format.

Introduction

Each year, various limits affecting income tax return preparation and tax planning are affected by inflation-related changes. In addition, new tax laws come into being that may significantly affect taxpayers’ income tax liability. This course will examine many of those changes. 

The 2018 Annual Federal Tax Refresher course is designed to meet the requirements of the IRS Annual Filing Season Certificate program. It discusses new tax law and recent updates for the upcoming filing season, provides a general tax review, and examines important rules governing tax return preparer ethics, practices and procedures.

Learning Objectives

Upon completion of this course, a tax return preparer should be able to:

  • Apply the inflation-adjusted and other limits to the proper preparation of taxpayers’ income tax returns;
  • Calculate taxpayers’ additional tax liability resulting from the Medicare tax, net investment income tax and individual shared responsibility payment;
  • Recognize the federal income tax filing statuses and the criteria for their use;
  • Identify the types of income that must be recognized;
  • Apply the tax rules to the various credits and adjustments to income available to taxpayers;
  • Recognize the penalties that may be imposed on a preparer for failing to meet ethical and practice standards in preparing tax returns; and
  • Identify the duties and restrictions imposed on tax preparers under Circular 230.

Course material is an online PDF document available immediately upon purchase.

Prerequisite: None

Course level: Basic

Advanced preparation: None

Teaching method: Online study and exam

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Domain 1 - New Tax Law/Recent Updates

The learning objectives for this lesson are to gain an understanding of:

  • Annual Inflation Adjustments
  • Standard Deduction Increased
  • Standard Deductions for Blind and Senior Unmarried Taxpayers Increased          
  • Standard Deduction Eligibility
  • Exemption Amount IncreasedPersonal Exemptions    
  • Dependent Exemptions               
  • Income Tax Filing Threshold Amounts   
  • IRA Rollover Per Year Limit          
  • Tax Consequences of Violating the One-Rollover-Per-Year Rule
  • Some Rollover-type Transactions Unaffected by Ruling 
  • Rollover Transition Rule               
  • Status of Extender Tax Provisions            
  • Federal Income Tax Return Filing Due Dates       
  • Calendar Year and Fiscal Year Taxpayers              
  • Extensions of Time to File           
  • Automatic Extension of Time to File       
  • Individuals Outside the United States    
  • Individuals Serving in a Combat Zone

Domain 2 - General Tax Review

The learning objectives for this lesson are to gain an understanding of:

  • Part I – The Income Tax Return 
    • Determination of Filing Status   
    • Marital Status   
    • Divorced or Separated Taxpayers            
    • Annulled Marriage         
    •     Married               
    • Death of a Spouse          
    • Single   
    • Married Filing Jointly     
    • Married Filing Separately             
    • Same Gender Marriage Filing Status       
    • Individuals must be Lawfully Married Under State Law  
    • State of Domicile not Controlling              
    • Same-Sex Spouses Subject to Usual Spousal Requirements        
    • Head of Household        
    • Qualifying Widow(er) With Dependent Child      
    •  Tax Related Identity Theft          
    • Claiming a Dependent  
    • Qualifying Child
    • Qualifying Relative
    • Relatives who Need Not Live with the Taxpayer
  • Part II – Earned Income
    • Taxability of Wages, Salaries, Tips and Other Earnings    
    • Advance Commissions and Other Earnings          
    • Allowances and Reimbursements           
    • Back Pay Awards             
    • Bonuses and Awards     
    • Differential Wage Payments      
    • Government Cost of Living Allowances 
    • Nonqualified Deferred Compensation Plans       
    • Notes Received for Services      
    • Severance Pay 
    • Sick Pay               
    • Social Security and Medicare Taxes Paid by an Employer               
    • Stock Appreciation Rights            
    • Tip Income         
    • Interest and Dividend Income   
    • Interest Income              
    • Taxable Interest              
    • Nontaxable Interest      
    • Education Savings Bond Program             
    • State or Local Government Obligations 
    • Dividend Income             
    • Qualified Dividends        
    • Required Holding Period              
    • Qualified Foreign Corporation   
    • Not Qualified Dividends               
  • Part III - Foreign Accounts, Refunds, Unemployment Compensation, Self-Employment Income and Social Security Benefits               
    • Schedule B, Part III Foreign Accounts and Trusts               
    • Taxable Refunds, Credits, or Offsets of State and Local Taxes     
    • Unemployment Compensation
    • Unemployment Compensation Taxable               
    • Nondeductible Contributions to Governmental Unemployment Compensation Programs            
    • Repayment of Unemployment Compensation  
    • Self-Employment Income and Expenses              
    • Income from Self-Employment
    • Self-Employment Expenses       
    • Social Security Benefits
    • Taxability of Benefits     
    • Reporting 
  • Part IV – IRAs, Pensions, Annuities, Capital Gains and Losses   
    • Taxable Distributions from IRAs, Pensions and Annuities              
    • Individual Retirement Arrangement Distributions          
    • Traditional IRA Distributions      
    • Premature Distributions              
    • Premature Distributions Avoiding Tax Penalty   
    • Pro-Rata Distribution of Non-Deductible Contributions 
    • Required Distributions during Owner’s Lifetime
    • Required Minimum Distribution Amount             
    • Required Traditional IRA Distributions at Owner’s Death               
    • Death Before an Owner’s Required Beginning Date
    • Life Expectancy Rule      
    • Surviving Spouse’s Life Expectancy Rule               
    • Five-Year Rule  
    • Surviving Spouse’s Election        
    • Death On or After the Required Beginning Date               
    • Roth IRA Distributions   
    • Non-Qualified Distributions of Gain before 59 ½ Subject to Tax Penalty 
    • No Required Lifetime Distributions         
    • Roth IRA Conversions & Transfers           
    • Roth IRA Death Benefit Distributions     
    • Life Expectancy Rule      
    • Surviving Spouse’s Life Expectancy Rule               
    • Five-Year Rule  
    • Surviving Spouse’s Election        
    • Qualified Retirement Plan Distributions
    • Cost Basis in a Qualified Retirement Plan              
    • Lump Sum Plan Distributions     
    • Periodic Payment Distributions 
    • Fully Taxable Periodic Payments              
    • Partly Taxable Periodic Payments            
    • Figuring the Tax-Free Part of Periodic Payments – General Rule
    • Early Distributions           
    • Required Minimum Distributions             
    • Plan Distributions of Non-Cash Assets   
    • Qualified Plan Rollovers               
    • Distributions Ineligible for Rollover         
    • Direct and Indirect Rollovers      
    • Plan Loans          
    • Specific Repayment Term Required        
    • Substantially-Level Amortization Required          
    • Maximum Loan Amount Limited              
    • Loan Agreement Required         
    • Death Benefits 
    • Roth Account Distributions         
    • Qualified Roth Account Distributions Tax-Free   
    • Nonqualified Roth Account Distributions              
    • Annuity Distributions    
    • Annuity Surrenders, Withdrawals and Loans      
    • Premature Distributions              
    • Amounts Received as an Annuity            
    • Annuitant’s Death After Annuity Starting Date  
    • Contract Owner’s Death Before Annuity Starting Date   
    • Estate Taxation of Annuities      
    • Capital Gains and Losses              
    • Short-Term and Long-Term Capital Gains and Losses      
    • Reporting Capital Gains and Losses         
    • IRS Form 8949, Sales and Other Dispositions of Capital Assets     
    • Schedule D
  • Part V – Adjustments and Deductions   
    • Adjustments to Income               
    • Deductible Part of Self-Employment Taxes         
    • Student Loan Interest Deduction             
    • Qualified Student Loan 
    • Dependents for Student Loan Interest Deductions        
    • Exceptions to Usual Dependent Rules   
    • Reasonable Period of Time         
    • Eligible Student
    • Qualified Education Expenses   
    • Adjustments to Qualified Education Expenses   
    • Amounts Included as Interest   
    • Amounts Not Included as Interest          
    • Eligibility to Claim the Deduction              
    • Determining the Student Loan Interest Deduction Amount         
    • Income and Filing Status may Affect Student Loan Interest Deduction   
    • MAGI Defined for Student Loan Interest Deduction       
    • Student Loan Cancellations and Repayment Assistance 
    • Tax-Free Student Loan Cancellation       
    • Qualified Lenders           
    • Eligible Educational Institutions 
    • Refinanced Loans           
    • Tax-Free Student Loan Repayment Assistance  
    • Tuition and Fees Deduction        
    • Eligibility to Claim a Tuition and Fees Deduction 
    • Expenses Qualifying for a Tuition and Fees Deduction    
    • Qualified Education Expenses – Tuition and Fees Deduction       
    • Double Benefit Prohibited          
    • Adjustments to Qualified Education Expenses   
    • Tax-Free Educational Assistance              
    • Refunds             
    • Expenses That Do Not Qualify   
    • Eligible Students – Tuition and Fees Deduction 
    • Claiming a Dependent’s Expenses           
    • Expenses Paid by the Dependent Cannot be Claimed by Taxpayer           
    • Expenses Paid By Others             
    • Tuition Reductions         
    • Figuring the Tuition and Fees Deduction               
    • Claiming the Deduction
    • Deduction Recapture    
    • Claiming the Standard Deduction             
    • Itemized Deductions     
    • State and Local Taxes    
    • State and Local Income Taxes    
    • State and Local General Sales Taxes       
    • Actual Sales Taxes          
    • Sales Tax Refunds           
    • Optional Sales Tax Tables            
    • Real Estate Taxes            
    • Mortgage Interest          
    • Points  
    • Charitable Contributions              
    • Limits on Charitable Contribution Deductibility  
    • Carryovers         
    • Contribution Records
  • Part VI – Child and Dependent Care, Education, Retirement and Child Tax Credits           
    • Child and Dependent Care Credit            
    • Eligible Care Recipients Limited to Qualifying Persons     
    • Eligible Taxpayers           
    • Education Credits            
    • American Opportunity Credit    
    • Eligibility to Claim an American Opportunity Credit           
    • Expenses Qualifying for an American Opportunity Credit              
    • Qualified Education Expenses - American Opportunity Credit     
    • Double Benefit Prohibited          
    • Adjustments to Qualified Education Expenses   
    • Tax-Free Educational Assistance              
    • Refunds            
    • Eligible Students – American Opportunity Credit              
    • Claiming a Dependent’s Expenses           
    • Expenses Paid By The Dependent           
    • Expenses Paid By Others             
    • Tuition Reductions         
    • Figuring the American Opportunity Credit           
    • Maximum American Opportunity Credit Subject to Income Limits/Filing Status  
    • Refundable Part of the American Opportunity Credit     
    • Credit Recapture             
    • Lifetime Learning Credit               
    • Eligibility to Claim a Lifetime Learning Credit        
    • Expenses Qualifying for a Lifetime Learning Credit           
    • Qualified Education Expenses – Lifetime Learning Credit              
    • Double Benefit Prohibited          
    • Adjustments to Qualified Education Expenses   
    • Tax-Free Educational Assistance              
    • Refunds              
    • Eligible Students – Lifetime Learning Credit         
    • Claiming a Dependent’s Expenses           
    • Expenses Paid By The Dependent           
    • Expenses Paid By Others             
    • Tuition Reductions         
    • Figuring the Lifetime Learning Credit      
    • Maximum Lifetime Learning Credit Subject to Income Limits/Filing Status            
    • Lifetime Learning Credit Recapture         
    • Retirement Savings Contribution Credit
    • Child Tax Credit and Additional Child Tax Credit 
    • Child Tax Credit
    • Credit Limits      
    • Claiming the Credit         
    • Additional Child Tax Credit          
  • Part VII – ACA Provisions and Earned Income Tax Credit               
    • Affordable Care Act Tax Provisions         
    • Tax-Favored Health Plans            
    • Over-the-Counter Drug Costs   
    • Nonqualified Distributions from Archer MSAs and HSAs
    • FSA Contributions Limited           
    • Unreimbursed Medical Expense Deduction Threshold Increased              
    • Medical Expense Deduction Threshold Increased for Age 65 Taxpayers in 2017  
    • Social Security Taxes      
    • HI Component Increased for High Earners           
    • 3.8% Additional Tax on Net Investment Income for Higher-Income Taxpayers    
    • Estates and Trusts          
    • Affordable Care Act Health Plan Requirements 
    • Individual Requirement to Maintain Health Coverage  
    • Reporting Form 1095-C 
    • Reporting Form 1095-B 
    • Penalty for Failure to Maintain Health Coverage               
    • Penalty Examples           
    • Exemptions from Penalty for Failure to Maintain Health Coverage           
    • Refundable Tax Credits to Assist in Purchase of Qualified Health Plan     
    • Eligibility for Credit         
    • Federal Poverty Level 
    • Amount of the Credit    
    • Benchmark Plan              
    • Taxpayer’s Expected Contribution          
    • Household Income         
    • Calculating the Credit    
    • Adjusted Monthly Premium      
    • Special Rules Applicable to the Tax Credit            
    • Reconciling Advance Premium Tax Credits           
    • Additional Tax Limitation             
    • Earned Income Tax Credit           
    • Adjusted Gross Income Limits   
    • Valid Social Security Number Required
    • Tax Filing Status               
    • Citizenship or Residency              
    • Foreign Earned Income
    • Investment Income       
    • Earned Income
    • EIC Rules That Apply Only if the Taxpayer Has a Qualifying Child
    • Relationship, Age, Residence and Joint Return Tests      
    • The Relationship Test    
    • The Age Test   
    • Student Defined             
    • Permanently and Totally Disabled Defined          
    • The Residency Test        
    • Exception for U.S. Military Stationed Outside the U.S.   
    • The Joint Return Test    
    • Child Must Have Valid Social Security Number   
    • Qualifying Child of More than One Person Rule 
    • Tiebreaker Rules             
    • Qualifying Child of Another Taxpayer Rule           
    • EIC Rules That Apply if Taxpayer Does Not Have a Qualifying Child            
    • The Age Rule     84
    • Death of Spouse During Year     
    • The Dependent of Another Person Rule              
    • The Qualifying Child of Another Taxpayer Rule  
    • The Main Home Rule     
    • Figuring the Amount of the Earned Income Credit           
    • Calculating Earned Income for EIC Purposes 
    • Taxpayers Not Self-Employed, Statutory Employees, Clergy or Church Employees           
    • Self-Employed Taxpayers, Statutory Employees, Clergy and Church Employees 
    • Due Diligence Requirements     
    • Eligibility Checklist – IRS Form 8867          
  • Part VIII – Tax Payments and Refunds   
    • Tax Withholding and Estimated Tax Payments   
    • Tax Withholding              
    • Form W-4           
    • Exemption from Withholding    
    • Penalties            
    • Withholding from Nonwage Income      
    • Estimated Tax   
    • Requirement to Pay Estimated Tax         
    • Payment and Refund Options   
    • Payment of Income Tax Owed  
    • Refunds              
    • Limit on Direct Deposit Refunds

Domain 3 - Ethics, Practices & Procedures

  • Requirement to Give Taxpayer a Copy of Return              
  • Tax Return Preparers Required to Sign Returns 
  • Tax Return Preparers Required to Furnish Identifying Number  
  • Requirement to Retain a Copy of Return              
  • Prohibition on Negotiation of Client Refund Checks        
  • Due Diligence in Preparing Returns         
  • Compliance with E-file Procedures          
  • Affected Tax Return Preparers 
  • Timing of Taxpayer Signature    
  • Timing of Filing 
  • Recordkeeping
  • Prohibited Filing with Pay Stub  
  • Proper Handling of Rejects       
  • Negligent or Intentional Disregard and Willful Understatement of Liability           
  • Tax Return Preparer Duties and Restrictions       
  • Practitioner Competence            
  • Written Advice 
  • Solicitation of Business 
  • Advertising and Solicitation Requirements          
  • Professional Fee Information    
  • Disclosure of Responsibility for Costs     
  • Communication of Fee Information        
  • Retention of Communications Containing Fee Information          
  • Improper Associations  
  • Unauthorized Practice of Law    
  • Responding to IRS Requests for Information      
  • Requested Material not in Practitioner’s Possession       
  • Material Requested Concerning Alleged Practitioner Violation   
  • Interference with an IRS Request for Information           
  • Knowledge of Client Omissions
  • Requirement for Accuracy          
  • Return of Client Records              
  • Nature of Client Records             
  • Conflicting Interests      

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