Scope

Out of Scope by [line number]:

Our primary source document for scope is the

Tax-Aide Scope Manual

(What’s In – What’s Out).

Useful documents:

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:
    1. an active duty military taxpayer AND the Counselor and Quality Reviewer both have Military certification and
    2. 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.

Adherence to Scope video
NTTC Chair, Steve Conary’s comments (9/2015, 9 min)
Going out-of-scope is contrary to the IRS and AARP policies you accepted when you signed the Volunteer Agreement, you lose the protection of the Volunteer Act of 1997, you jeopardize the AARP Foundation grants from the IRS.

  • There is absolutely nothing for any Counselor to gain by working out of scope
  • Don’t make the taxpayer’s problem your problem
  • Even if you have stretched scope boundaries in the past – DON’T.

The following local documents provide useful Out-of-scope summaries: