Watch for OUT OF SCOPE indicators throughout this web site.
Scope Manual Changes for Tax Year 2018:
- Medical expenses for self-employed taxpayers may now be entered as an expense on Schedule C for any active year. It will be shown as an adjustment to income in Form 1040 to the extent that it reduces self-employment income. This includes Medicare and other private medical premiums, including long term care insurance.
- Kiddie tax (investment income > $2,100) is now in scope for tax years 2018 only. See the resource web page for more details.
- Refund of previously taxed Veterans Disability Payments. See the resource web page for more details.
Tax provisions that expired as of December 2017:
- Mortgage insurance premiums as deductible home mortgage interest.
- Credit for certain nonbusiness energy property (Form 5695)
- Tuition and fees as an adjustment to income
- Exclusion of cancelled indebtedness on principal residence as income
Note: these provisions do apply if amending or preparing 2016, 2015 returns
VITA/TCE vs AARP scope:
In scope for AARP but noted as out of scope in the Pub 4491 or Pub 4012:
- State tax refund from any prior year when it is clearly fully taxable or fully nontaxable
- Sale of bonds that mature or are sold with no gain or loss or are reported on a brokerage statement with capital gain or loss only (no ordinary income/loss)
- “Sale” of totally worthless securities
- Form 5329 Part IX to waive additional tax for failure to take Required Minimum Distribution
- Section 1250 gains reported on Form 1099-DIV
- Form 1099-R codes 6, U and W; codes J and T if distribution is not taxable and if first-time homeowner exception does not apply
- Income from the rent of land reported on 1099-MISC or received as cash
- Canadian or German social security income that is treated as US social security
- Form 8283 to report non-cash donations of more than $500, but less than $5,000
- Form 1099-LTC and Form 8853 for Long-Term Care Insurance payments
- Form 8606 Parts I and II only
- Kiddie tax for all applicable income, not just taxable scholarships or grants (2018 onward only)
|To assist in identifying and preventing identity theft, Tax-Aide recommends taxpayers e-file returns, even if not required.
Since a $0 AGI return cannot be e-filed, enter $1 on Line 21 Other Income and describe as “IN ORDER TO EFILE.”
This will also force a long Form 1040 to print and to be transmitted in the e-file for years prior to 2018.
Out of scope in the Tax-Aide Scope Manual but allowed in Pub 4491 or Pub 4012:
- Rental income from sources such as a home except for:
- an active duty military taxpayer AND the Counselor and Quality Reviewer both have Military certification and
- rental of a personal residence for less than 15 days for the year, which is not considered a rental activity and is not reportable income.
- All other rental situations (room in home, apartment over garage, separate building, for profit, not for profit, Airbnb, etc.) are out of scope regardless of certifications.
- Schedule C-EZ continues out of scope as no training is provided.
- State/local unique topics set by regional or state leaders as out of scope due to complexity and/or lack of sufficient training.
- Specific in-scope tax law topics and state returns on which a counselor is not trained.
In and Out-of-Scope issues are noted throughout this web site. Some local sites may decide that certain topics are Out-of-Scope for their site (see your specific site page for that information). It is important that we only prepare returns that are 100% in-scope and for which we are trained.