Académique Documents
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Item # D2H108721
Illinois
Income Tax Course
Participants Guide (2016)
Digital Edition
A Publication of
H&RBlock Services, Inc.
Kansas City, Missouri
The State Tax Training Team
Disclaimer
The following training was developed by the Client Support Center (CSC) for use by both Companyowned and Franchise-owned offices. Although some aspects of this training may not apply to
employees of a Franchise-owned office, training issues regarding customer service, client experience, tax law, or IRS rules and regulations apply to all Company and Franchise associates. If your
Franchise-office training policies differ from those presented, please bring them to the attention of
your respective Franchisee.
Acknowledgments
This book has been produced with the support of:
The State Tax Training Development Team: Mamta Bhagchandani, Kate Goad, Deborah
Milam, Patricia Myers, Sowmiya Ramachandran, Abbie Rhamy, Eric Strawder, Donna Wolfe.
The Editors: Chris Fischer, William Miller, Connie White, Leif Bahl, Ashton DelVecchio.
Production: Steve Wilton, Chris Fischer.
No part of this book may be reproduced or transmitted in any form or by any means, electronic or
mechanical, including photocopying, recording, or by any storage or retrieval system, without
permission in writing from HRB Tax Group, Inc.
Table of Contents
Preface............................................................................................................................................................ 3
ILLINOIS FUNDAMENTALS I
Overview................................................................................................................................................... 19.1
Objectives.................................................................................................................................................. 19.1
Illinois Residency...................................................................................................................................... 19.2
Resident................................................................................................................................................. 19.2
Part-Year Resident............................................................................................................................... 19.3
Nonresident........................................................................................................................................... 19.3
Military Resident.................................................................................................................................. 19.3
Filing Requirements................................................................................................................................. 19.3
Federal Preemption.................................................................................................................................. 19.4
Nonresident Retirement....................................................................................................................... 19.5
Military Spouse Residency Relief Act (MSRRA) ............................................................................... 19.5
Railroad Retirement Benefits.............................................................................................................. 19.6
Filing Status............................................................................................................................................. 19.6
Single or Head of Household............................................................................................................... 19.6
Married Filing Jointly......................................................................................................................... 19.7
Married Filing Separately................................................................................................................... 19.7
Widowed................................................................................................................................................ 19.7
Basis of Tax............................................................................................................................................... 19.8
Additions................................................................................................................................................ 19.8
Subtractions.......................................................................................................................................... 19.9
Contributions.......................................................................................................................................... 19.10
Chapter Overview Video........................................................................................................................ 19.10
ILLINOIS FUNDAMENTALS II
Overview................................................................................................................................................... 20.1
Objectives.................................................................................................................................................. 20.1
Illinois Deductions.................................................................................................................................... 20.2
Exemptions............................................................................................................................................... 20.2
Calculation of Illinois Tax....................................................................................................................... 20.2
Tax Credits............................................................................................................................................... 20.3
Property Tax Credit.............................................................................................................................. 20.3
Topic Overview Video............................................................................................................................... 20.4
K-12 Education Expense Credit.......................................................................................................... 20.4
Credit for Taxes Paid to Other States.................................................................................................... 20.4
Payments................................................................................................................................................... 20.5
Withholding........................................................................................................................................... 20.5
Estimated Taxes................................................................................................................................... 20.6
Amount Applied from a Prior Year..................................................................................................... 20.6
Refundable Credits................................................................................................................................... 20.6
Chapter Overview Video.......................................................................................................................... 20.6
ii
PREFACE
PURPOSE
The purpose of this state course is to provide you with an understanding of the state law as it relates to
the federal law. This course does not cover all areas of state taxation, but highlights topics that are covered in H&R Blocks Income Tax Course.
PREREQUISITES
This course was written with the assumption that you either have good working knowledge of basic federal income tax law or are currently completing H&R Blocks Income Tax Course.
CONTENT
This course is designed to provide you with the information you will need when assisting a typical taxpayer. Because the same course content is used throughout your state, some topics may be more or less
pertinent in your area. Please check your state Department of Revenues website for the latest forms.
The information in this course is based on tax law as it applies to the 2015 tax year. Tax laws are in
a constant state of change, and this course information reflects laws at the time of printing. It is your
responsibility to remain current on tax law.
COURSE CREDIT
Credit for this course is given by completing H&R Blocks Income Tax Course. A portion of some sessions
is allotted for state material.
COURSE COMPLETION
You are required to take H&R Blocks Income Tax Course exam in order to receive full credit hours for
this course.
19
Illinois Fundamentals I
OVERVIEW
This chapter will reinforce the concepts outlined in your instructor-led training. Additionally, it will provide a more in-depth analysis of certain items in that training. As with the instructor-led segment, this
chapter begins with state residency, moves on to filing requirements and filing status, and then concludes
with the starting point for Illinois taxation.
OBJECTIVES
At the conclusion of this chapter you will be able to:
Apply Illinois residency rules to determine when a taxpayer is a resident of the state.
Outline the filing requirements imposed by Illinois.
Analyze the various filing statuses offered by Illinois to determine which is applicable in a given situation.
Identify the additions and subtractions necessary in some situations to arrive at Illinois base income.
19.1
ILLINOIS RESIDENCY
A taxpayers state of residency is significant when completing state tax returns. Most states tax residents
and nonresidents differently. Additionally, some states impose different filing requirements on nonresidents versus residents. Finally, a taxpayer may be a resident of a state for part of the year. As a part-year
resident, the taxpayer will generally be subject to the resident rules during the period the taxpayer is a
resident, and the nonresident rules during the period the taxpayer is a nonresident.
Resident
A taxpayer is a full-year resident of Illinois if they are domiciled in
Illinois for the entire year and if their absences from the state are for a
temporary or transitory purpose. A taxpayer is also a full-year resident
if they are in Illinois for the entire year for other than a temporary or
transitory purpose. Residents of Illinois file Form IL-1040.
Generally, a temporary or transitory purpose is a trip where the taxpayer is merely passing through, staying while on a vacation or during
a brief rest, fulfilling a short-term obligation, or staying for short-term
business purposes.
A taxpayers domicile is their one true permanent home. One way to tell whether a taxpayers home is
their domicile is to determine if it is the place to which they would return after a long trip or vacation.
A taxpayer can have only one domicile, even if they are a resident of more than one state. To change the
state of domicile, the taxpayer must be physically present in the new state and have an intent to indefinitely reside in that new state.
Reciprocal Agreements
Generally an Illinois resident must pay Illinois tax on all income regardless of where it is earned.
However, under Illinois set of reciprocal agreements, an Illinois resident who worked in Iowa, Kentucky,
Michigan, or Wisconsin must file Form IL-1040 and include as Illinois income any wages, salary, or tip
income received from an employer in these states. Any compensation paid to Illinois residents working
in these states is supposed to be taxed only by Illinois. Under these reciprocal agreements, the states do
not tax the compensation of Illinois residents.
If any employer in Iowa, Kentucky, Michigan, or Wisconsin incorrectly withheld
that states income tax from an Illinois residents compensation, the correct form
can be filed with that state to claim a refund. Any tax withheld by an employer
for these states cannot be used to claim the credit for taxes paid to another state
on the taxpayers Illinois return which will be discussed later.
However, it should be noted that income other than wages, salaries, and tips
from a reciprocal agreement state by an Illinois resident may be taxed by that
other state. For example, if an Illinois resident sells land located in Kentucky,
then Kentucky may impose income tax on the proceeds of the sale.
Part-Year Resident
A taxpayer is an Illinois part-year resident if they established Illinois
residency during the year or were an Illinois resident, who established
residency in another state during the year. A taxpayer can establish
Illinois residency during the year by changing their domicile to Illinois,
and, similarly, they can terminate their Illinois residency by establishing domicile in another state during the year.
Taxpayers who are part-year residents should file IL-1040, Individual
Income Tax Return, and Schedule NR, Nonresident and Part-Year
Resident Computation of Illinois Tax.
Nonresident
A taxpayer is a nonresident of Illinois if they were domiciled in another state or foreign country for the
whole year, and they did not reside in Illinois for the entire year for a purpose other than a temporary
or transitory purpose. Thus, a taxpayer will not be a resident or even a part-year resident if they visit
Illinois for a short term stay, and do not intend to remain in the state indefinitely.
Taxpayers who are nonresidents and who have income from Illinois should file IL-1040, Individual
Income Tax Return, and Schedule NR, Nonresident and Part-Year Resident Computation of Illinois Tax.
Military Resident
Members of the military who are domiciled in Illinois when they enter
military service remain Illinois residents even if stationed in another
state. The taxpayers domicile will not change unless they file Form
DD-2058, State of Legal Residence Certificate, with the military. This
form is used by military servicemembers to indicate a change in the
servicemembers state of legal residence, and is filed with the military
and not the state of Illinois. This means that if the servicemember has
not changed their state of legal residence and they meet the states filing requirement, they will still have to file in Illinois even if they have
been stationed outside of the state. On the other hand, nonresident
military servicemembers will not become residents of Illinois solely
due to being stationed in Illinois for a long period of time.
FILING REQUIREMENTS
An Illinois resident must file Form IL-1040 if any of the following is true:
They were required to file a federal tax return.
They were not required to file a federal tax return, but their Illinois base income from Line 9 is greater
than their Illinois exemption amount.
FEDERAL PREEMPTION
There are some situations where state law is overridden by federal law. This is called federal preemption.
Federal preemption is most commonly associated with retirement income; however, the Military Spouse
Residency Relief Act most commonly affects wage and salary income.
Nonresident Retirement
Under federal law, a state is generally prohibited from taxing pension benefits received by nonresidents
of that state. This means the pension is usually taxable only by the taxpayers state of residence.
Illinois cannot tax qualifying pension benefits received by a nonresident of
Illinois, even if the source of the pension was Illinois.
Example: A taxpayer worked in Illinois for their entire career, and then
retired to Florida. If the taxpayer successfully terminated their Illinois
residency, then Illinois will not tax their retirement, even though all of the
income used to fund their retirement benefits was earned in Illinois.
The statute 4 U.S.C. 114 protects taxpayers from being taxed by a state
if the taxpayer receives the following types of retirement income as a nonresident:
A qualified trust under Internal Revenue Code (IRC) 401(a).
A simplified employee pension (SEP) under IRC 408(k).
An annuity plan or contract described in IRC 403(a) and (b).
An IRA (IRC 408(a)) or individual retirement annuity (IRC 408(b)).
A section 457 plan.
A governmental plan (IRC 414(d)).
A trust described in IRC 501(c)(18).
Any nonqualified deferred compensation plan described in IRC 3121(v)(2)(C).
Also included are any retirement payments made to a retired partner in a partnership for prior service
performed.
taxpayer might consider waiving their protections under the MSRRA and choosing to change their state
of domicile to the one in which they are physically located and working.
FILING STATUS
Each state is permitted to have its own set of filing statuses. These filing statutes may or may not match
the federal filing status categories. In Illinois, there are four filing status categories, versus five for federal
tax purposes. In general, taxpayers filing an Illinois return should use the same filing status for their
Illinois return as their federal return. However, there are some exceptions. Each filing status will be
discussed in-depth below.
Widowed
In Illinois, the widowed filing status is the filing status generally used by taxpayers who filed as qualifying widow/widower for federal tax purposes. As with
head of household, the state adopts the federal test for determining whether
the taxpayer can use this filing status on their Illinois return. As with federal
the taxpayer is eligible to use this filing status only for the two years following
the year of the spouses death. Consequentially, the taxpayer may file as widowed in Illinois if they meet the following federal requirements:
The taxpayer was entitled to file a joint return with their spouse for the year the spouse died. It does
not matter if a joint return was actually filed.
The surviving spouse did not remarry in the year the deceased spouse died or in any other year they
file as a widow(er).
The taxpayer had a child, stepchild, or adopted child for whom the taxpayer can claim an exemption.
(Foster children are not included for purposes of determining eligibility.)
This child lived in the taxpayers home for the entire year excluding temporary absences.
The taxpayer paid more than of the cost of keeping up a home for themselves and the child.
BASIS OF TAX
The starting point for computing Illinois tax is federal adjusted gross income (AGI). Certain additions and
subtractions must be made to their AGI in order to arrive at the taxpayers Illinois base income. These
modifications are made on Schedule M, Other Additions and Subtractions for Individuals.
Additions
Additions are instances where, due to differences between Illinois and federal law, amounts must be
added back to federal AGI to calculate Illinois base income. Most additions concern more complicated
tax situations. However, it is important to be able to recognize when an addition might be necessary in
order to prepare the return correctly. Illinois additions include the following, most of which are beyond
the scope of this course:
Interest that is exempt for federal tax purposes but is taxable under Illinois law.
The taxpayers childs federally tax-exempt interest and dividend income as reported on federal Form
8814.
Distributive share of additions received from a partnership, S corporation, trust, or estate.
Lloyds plan of operations loss.
Earnings distributed from IRC Section 529 college savings and tuition programs.
Illinois special depreciation addition.
Subtractions
Subtractions arise due to differences between federal and Illinois law. These are items subtracted from
federal AGI to arrive at Illinois base income. Illinois has many subtractions which include, but are not
limited to:
U.S. Treasury bonds, bills, notes, savings bonds, and U.S. agency interest.
Contributions made to certain college savings plans.
Distributive share of partnership, S corporation, trust, or estate subtractions.
Interest earned on investments through the Home Ownership Made Easy Program.
Illinois special depreciation subtraction.
In some cases, military pay.
Ridesharing money and other benefits.
Payment of life insurance, endowment, or annuity benefits.
Tax-exempt obligations of Illinois state and local government interest.
Again subtractions generally occur in situations where the taxpayers return is more complicated.
However, a full list of additions and subtractions with more detailed information on these items is available in the instructions for Schedule M, Other Additions and Subtractions for Individuals.
CONTRIBUTIONS
Taxpayers may reduce their Illinois tax refund, or increase their balance due, by contributing to certain
charitable organizations. Donations, which must be at least $1, will reduce the taxpayers refund, or
increase the balance due, by the amount contributed. Contributions may be made to any of the following
funds:
Wildlife Preservation Fund.
Child Abuse Prevention Fund.
Alzheimers Disease Research Fund.
Assistance to the Homeless Fund.
Penny Severns Breast, Cervical, and Ovarian Cancer Research Fund.
Military Family Relief Fund.
Diabetes Research Fund.
Watch Video
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20
Illinois Fundamentals II
OVERVIEW
This chapter covers some of the concepts, rules, and exceptions necessary to complete an Illinois tax
return that were not included in the instructor-led portion of the course. These include deductions, credits, payments, and voluntary contributions. These items are generally determined under Illinois law, and
may be significantly different from similar federal items.
OBJECTIVES
At the conclusion of this chapter, you will be able to:
Identify the exemption amounts available in Illinois.
Summarize the calculation of Illinois income tax.
Outline the Illinois nonrefundable credits.
Identify ways to pay Illinois income tax, including refundable credits.
20.1
ILLINOIS DEDUCTIONS
Illinois does not allow either a standard deduction or any itemized deductions.
EXEMPTIONS
In Illinois, taxpayers receive a deduction of $2,150 for each exemption claimed on their federal return. Taxpayers can receive an additional $1,000 exemption for each of themselves, or their spouse, if 65
or older, and an additional $1,000 exemption for each of themselves,
or their spouse, if legally blind. If the taxpayer or spouse is 65 or
older and blind, then the additional exemption amount is $2,000
($4,000 if both spouses are legally blind and 65 or older).
However, it may be necessary to redetermine who gets what exemptions in a situation where the couple filed jointly for federal tax purposes, but are filing separately for Illinois.
Example: Jim and Mary file jointly for federal tax purposes and
claim their child Timmy. In Illinois, they file separately because
Mary was an Ohio resident for the first two months of the year.
Under this example, each spouse would claim his or her own exemption and then they would have to decide who will claim Timmy on
their separate return.
For Illinois residents, the total exemption amount is deducted from
base income to arrive at net income. The tax rate is then multiplied
by net income. Nonresidents compute their Illinois base income and
tax liability on the Illinois Schedule NR.
multiplied by the 3.75% flat tax rate to arrive at the tax liability, before any credits, payments, or withholding, for Illinois.
TAX CREDITS
Illinois, like most other states, allows taxpayers to claim certain nonrefundable credits to reduce their
Illinois tax liability. A nonrefundable credit reduces the taxpayers liability but not below zero. Thus, if a
nonrefundable credit is $1,000, but the taxpayers tax liability is only $200, then the taxpayer will claim
a credit of $200 (the amount of the taxpayers liability). The remaining $800 is lost, or, in some instances,
may be carried forward for use in a future year.
In Illinois, the most common nonrefundable credits for individuals are the:
Property Tax Credit.
K-12 Education Expense Credit.
Watch Video
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The income must have been earned during the period the taxpayer was an Illinois resident.
The income subject to the other states tax must be included in the taxpayers Illinois base income.
A deduction for the income tax paid to the other state was not claimed when the taxpayer figured their
federal adjusted gross income as shown on the Illinois tax return.
The credit cannot be claimed for any tax paid to another state on gambling winnings from the other
state.
Additionally, the credit cannot be claimed for any wages that are classified as Illinois wages. For additional information on what constitutes Illinois wages, please see the withholding page later in this
course.
If the taxpayer earned wages, salaries, tips, or other compensation for work performed in Iowa,
Kentucky, Michigan, or Wisconsin, those amounts will not be included in the calculation of the credit
for taxes paid to another state. This is the case because, as a result of the reciprocal agreements with
these states, this income is not subject to Illinois tax, as we discussed in Chapter 19.
PAYMENTS
Before we discuss refundable credits we will discuss payments of state taxes made toward the tax liability. Illinois, like most states, has three general ways that most taxpayers pay their taxes during the year.
These options are:
Withholding.
Estimated tax payments.
Amount applied from a prior year.
These payment methods are alternative options to paying any tax due with the taxpayers return when
the return is filed.
Withholding
In Illinois, the withholding rate for 2015 will generally be 3.75%. However, withholding is one area in
which the Illinois tax system does become rather complicated. This is because the withholding rules are
different than those used by other states, and they affect certain taxpayers ability to claim a credit for
taxes paid to other states. In most instances, if any of the following tests are met, the wages are subject
to Illinois withholding:
The employees services were performed wholly in Illinois.
The employees services were performed in Illinois, except
for some incidental services performed outside the state.
The employees services are not located in one state only,
but the employee works at least partly in Illinois, and the
employers headquarters or management are located in
Illinois.
The employees services are not located in any one state exclusively, the employers headquarters or
management are not located in a state where the employee performs services, and the employee is an
Illinois resident.
As mentioned previously in the section on the credit for taxes paid to another state, if the wages are
Illinois wages under these tests, and the taxpayer was an Illinois resident at the time the wages were
received, then the wages are not eligible for the credit for taxes paid to another state.
Estimated Taxes
A taxpayer should make quarterly estimated tax payments if they anticipate
their withholding, other tax payments, and credits will be insufficient to cover
their state tax liability. Generally, taxpayers who are independent contractors, own small businesses, or had unexpected income that was not subject to
withholding will likely need to make estimated tax payments. Taxpayers who
are required to make estimated tax payments but fail to do so may be subject
to penalties for failing to do so.
REFUNDABLE CREDITS
For individuals, Illinois only has one refundable credit. This credit is the
states Earned Income Credit. For Illinois residents, this credit is 10% of
the taxpayers federal Earned Income Credit. This means the taxpayer
must first meet the qualifications to claim the federal Earned Income
Credit. Nonresidents and part-year residents may also receive this credit; however, it is prorated based on the percentage of their income from
Illinois sources. This credit is claimed by completing Step 3 of Illinois
Schedule ICR.
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CS0.1
Pamela R Allsop
Taxpayer SSN:
Taxpayer DOB:
Health insurance:
Address:
Living arrangement:
Work phone:
(XXX) 555-5501
Cell phone:
Taxpayer email:
prallsop@net.net
Taxpayer occupation:
Administrative Assistant
Pamela is not blind or disabled. She may not be claimed as a dependent on anyone elses tax return. She is not a student, and she elects to designate $3 to the
Presidential Election Campaign Fund. She is a U.S. citizen. She is not married.
She rents an apartment and lives by herself. She has no authority over a foreign
account in excess of $10,000 and did not receive a distribution from, nor was she
the grantor of or transferor to, a foreign trust. She consents to the use of her tax
return information for other products and services. The IRS has not issued an
Identity Protection ID Number for her return.
CS1.1
Questions
As you complete the case study in BlockWorks, consider the following questions.
When you have completed the case study in BlockWorks, write your answer in
the space provided.
1. Is Pamela required to file a federal income tax return?_________ If she is
not required to file, is there any benefit for her to file anyway?__________
2. If Pamela is not required to file a federal return, is she required to file an
Illinois return?__________ If she is not required to file, is there any benefit
for her to file anyway?_________
3. What is Pamelas refund or balance due for Illinois? _______________
Information Documents
Information Documents
Corey D Wilson
Taxpayer SSN:
Taxpayer DOB:
Health insurance:
Address:
Living arrangement:
Work phone:
(XXX) 555-5501
Cell phone:
Taxpayer email:
c_wilson@net.net
Taxpayer occupation:
Driver
Household Information
Corey lives alone and has no dependents.
the return.
Questions
As you complete the case study in BlockWorks, consider the following questions.
When you have completed the case study in BlockWorks, write your answer in
the space provided.
1. Is Corey required to file a federal income tax return?__________ If he is not
required to file, is there any benefit for him to file anyway?__________
2. If Corey is NOT required to file a federal return, is he required to file an
Illinois return?____________ If he is not required to file, is there any benefit
for him to file anyway?___________
3. What is Coreys refund or balance due for Illinois? _______________
Information Documents
Information Documents
Kelly L Warren
Taxpayer SSN:
Taxpayer DOB:
November 2, 1995
Health insurance:
Address:
Living arrangement:
Work phone:
(XXX) 555-5501
Cell phone:
Taxpayer email:
k_l_warren@net.net
Taxpayer occupation:
Grocery Clerk
Kelly is not blind or disabled. She may be claimed as a dependent on her parents return, and they will claim her this year. She is a student and received
a 1098T. Her parents paid for her schooling and will be taking any education
credits for this year. Kelly elects to designate $3 to the Presidential Election
Campaign Fund. She is a U.S. citizen. She is not married. She rents an apartment on the campus of her school with two other students. She has no authority
over a foreign account in excess of $10,000, and did not receive a distribution
from, nor was she the grantor of or transferor to, a foreign trust. She consents to
the use of this tax return information for other products and services. The IRS
has not issued an Identity Protection ID Number for her return.
CS3.1
9. Enter any data necessary to clear critical (red) diagnostics before previewing
the return.
Questions
As you complete the case study in BlockWorks, consider the following questions.
When you have completed the case study in BlockWorks, write your answer on
the space provided.
1. Is Kelly required to file a federal income tax return?___________ If she is
not required to file, is there any benefit for her to file anyway?____________
2. If Kelly is NOT required to file a federal return, is she required to file an
Illinois return?___________ If she is not required to file, is there any benefit
for her to file anyway?______________
3. Why wasnt Form 1098-T entered on Kellys tax return?______________
4. What is Kellys refund or balance due for Illinois? _______________
Information Documents
Information Documents
Josephine A Santos
Taxpayer SSN:
Taxpayer DOB:
Health insurance:
Address:
Living arrangement:
Home phone:
Work phone:
(XXX) 555-5501
Cell phone:
(XXX) 555-5001
Taxpayer email:
jsantos@net.net
Taxpayer occupation:
Equipment Manager
watches Antonio before and after school. Her mother enjoys spending time with
Antonio and does not charge for this. She consents to the use of her tax return
information for other products and services.
She lived in Illinois all year.
Household Information
Dependent name:
Antonio Santos, Jr
Dependent Relationship:
Son
Dependent SSN:
748-01-2500
Dependent DOB:
Student:
Yes
Health insurance:
Support:
that the information will flow from another form in the tax return. For line
26, the information will come from the W-2, Box 17.
6. A few lines from the bottom, note the Third Party Designee. Ask the client
if you can check that box in order to allow H&R Block to discuss matters
regarding their return.
7. Josephine may be eligible for the K-12 Education Expenses credit. She paid
$425 for her son Antonios tuition and books at the First Elementary School,
in Your City, Illinois. He is in the second grade. Select Schedule ICR and
enter information needed to take this credit
8. Josephine does not qualify for the ACA short gap exemption.
9. Enter any data necessary to clear critical (red) diagnostics before previewing
the return.
Questions
As you complete the case study in BlockWorks, consider the following questions.
When you have completed the case study in BlockWorks, write your answer on
the space provided.
1. Is Josephine required to file a federal income tax return?_________ If she
is not required to file, is there any benefit for her to file anyway?__________
2. If Josephine is NOT required to file a federal return, is she required to file
an Illinois return?_________ If she is not required to file, is there any benefit
for her to file anyway?_____________
3. What is Josephines Filing Status for Illinois?_________________
4. Preview the return and look at each line to continue becoming familiar with
the order and the process of the calculations, and how the form is laid out.
5. What else do you notice regarding additional line items that are on her
Illinois return?____________________________________________
6. What is on line 2 and how did it get there?_________ What is on line
7?________ From what form did it flow to the IL-1040?______________
View the form. Back to the IL-1040: what is on line 10? ______________ Is
there a figure on line 17?_________ From what form did this come to the
IL-1040?_________ Is there an amount on line 29?_______________ Did you
enter information that resulted in this amount?__________ How is the figure on line 31 determined?__________
7. What is Josephines refund or balance due for Illinois? _______________
Information Documents
Information Documents
Donald G Granger
Taxpayer SSN:
Taxpayer DOB:
April 1, 1974
Health insurance:
Spouse name:
Krys P Granger
Spouse SSN:
748-01-1800
Spouse DOB:
May 5, 1975
Health insurance:
12 months through
spouse's plan
0 months of no coverage
Address:
Living arrangement:
Home phone:
Work phone:
(XXX) 555-5501
Cell phone:
(XXX) 555-5001
Taxpayer email:
dggranger@net.net
Taxpayer occupation:
Childcare Specialist
Spouse occupation:
Childcare Specialist
CS5.1
Donald and Krys come to H&R Block every year to have their tax return prepared. They are married and wish to file a joint return. They are not blind or
disabled. No one may claim them as dependents. Neither is a student. Krys
does not wish to designate $3 to the Presidential Election Campaign Fund, but
Donald does. Both are U.S. citizens. They give H&R Block consent to use their
tax information for all purposes. The Grangers have no authority over a foreign
account in excess of $10,000 and did not receive a distribution from, nor were
they the grantors of or transferors to, a foreign trust. The IRS has not issued an
Identity Protection ID Number for their return.
Donald is provided with health care coverage from his employer for himself, his
wife, Krys, and for his son, Brian. Donald and Krys brought their documents
with them today.
They lived in Illinois all year.
Household Information
Dependent name:
Brian Granger
Dependent Relationship:
Son
Dependent SSN:
748-01-2800
Dependent DOB:
Student:
Yes
Health insurance:
Support:
Brian lived with Donald and Krys all year long and does not have any income.
He is not disabled and is not married. Brian is a U.S. citizen.
Before completing the Illinois return, you will need to make the following changes to their tax data.
1. On the Personal Information screen, change their ZIP code to your local
Illinois ZIP code.
2. Select the federal Wage W2 input screen. In the Employee Information section, change the ZIP code to your local Illinois ZIP code. Scroll down to the
State and Local Taxes section to enter the state abbreviation as IL. Do this
on both Forms W-2.
3. Next, select the +/- tab. Select the box next to Illinois and uncheck the box
next to Missouri. This will remove Missouri from the tax return and add
Illinois.
4. Click on the IL tab and select the General Info page. Review all of the items
on the page to ensure that you understand the questions to be asked and
answered on this page.
5. Select IL-1040 Pg 1. As before, read all of the items on the page to make
sure that you understand the questions that must be asked and answered.
6. Proceed to IL-1040 Pg 2. Read all of the lines. Notice that several lines have
**, such as line 26, IL income tax withheld, and line 33, Amount of IL Form2210 penalty. As you have learned in your federal case studies, the ** means
that the information will flow from another form in the tax return. For line
26, the information will come from the W-2 Box 17.
7. A few lines from the bottom, note Third Party Designee. Ask the client if you
can check that box in order to allow H&R Block to discuss matters regarding
their return.
8. What will you need to do regarding Donalds retirement distribution on the
Illinois return?
9. When completing the Illinois return, consider that the Grangers do not rent
their home, they own it. They do not have a mortgage, and did not have
other items to warrant itemizing on their federal return. Their 2015 property taxes paid, $2,872, would be eligible for the Illinois credit. Although
they did not itemize, you will need to enter the property tax information on
federal Schedule A. Add the form to your return. On line 6, select detailed
statement. In the description field, enter IL02-07-223-8556 (exactly as written); this is the PIN. Enter the amount of the taxes paid. Go to IL-ICR. In
Box 4b, enter the county and insure the property PIN appears correctly.
10. In addition, they may be eligible for the K-12 Education Expenses credit.
They paid $1,650 per term (2 terms), for Brians schooling at Briarwood
Middle School, in Your City, Illinois. Brian is in the seventh grade. Select
Form ICR and enter information needed to take this credit.
11. Enter any data necessary to clear critical (red) diagnostics before previewing
the return.
Questions
As you complete the case study in BlockWorks, consider the following questions.
When you have completed the case study in BlockWorks, write your answer in
the space provided.
1. Are the Grangers required to file a federal income tax return?____________
If they are not required to file, is there any benefit for them to file?_________
2. If they are NOT required to file a federal return, are they required to file an
Illinois return?_________ If they are not required to file, is there any benefit
for them to file anyway?__________
3. Preview the return looking at each line to continue to become familiar with
the ordering and the process of the calculations and how the form is laid out.
4. What else do you notice regarding additional line items that are on their
Illinois return?____________
5. What is on line 10?_________ Is there a figure on line 17?________ From
what form did this come to the IL-1040?_________ Review the ICR. Return
to IL-1040. Is there a figure on line 29?_______ How is the figure on line 31
determined?
6. What is the Grangers refund or balance due for Illinois? _______________
Information Documents
Information Documents
Jose Lopez
Taxpayer SSN:
Taxpayer DOB:
August 1, 1983
Health insurance:
Spouse name:
Aricela Lopez
Spouse SSN:
748-01-1915
Spouse DOB:
Health insurance:
Address:
Living arrangement:
Home phone:
Work phone:
(XXX) 555-5501
Cell phone:
(XXX) 555-5001
Taxpayer email:
joselopez@net.net
Taxpayer occupation:
Construction Foreman
Spouse occupation:
Homemaker
Jose and Aricela agree to share information for all purposes. Neither of them
is blind or disabled. They cannot be claimed as dependents on anyone elses tax
return, and neither of them is a student. They both elect to have $3 designated
to the Presidential Election Campaign Fund. They are U.S. Citizens. The IRS
has not issued an Identity Protection ID Number for their return. They have no
authority over a foreign account and own no foreign financial assets. Neither of
them received a distribution from, nor were they grantors of or transferors to,
a foreign trust.
They lived in Illinois all year.
They have two children.
Household Information
Dependent name:
Lucia Lopez
Dependent Relationship:
Daughter
Dependent SSN:
748-01-2900
Dependent DOB:
Student:
Yes
Health insurance:
Support:
Dependent name:
Carlos Lopez
Dependent Relationship:
Son
Dependent SSN:
748-01-3900
Dependent DOB:
Student:
Yes
Health insurance:
Support:
The children have no income and their parents provide all support.
ment. In the description field, enter IL02-07-223-8556; this is the PIN. Enter
the amount of the taxes paid. Go to IL-ICR. In Box 4b, enter the county and
ensure the property PIN appears correctly
10. In addition, they may be eligible for the K-12 Education Expenses credit.
They paid $350 for Lucias schooling at Simpson Elementary School, in
Your City, Illinois. Lucia is in the fifth grade. Select Form ICR, and enter
information needed to take this credit.
11. Enter any data necessary to clear critical (red) diagnostics before previewing
the return.
Questions
As you complete the case study in BlockWorks, consider the following questions.
When you have completed the case study in BlockWorks, write your answer on
the space provided.
1. Are the Lopezes required to file a federal income tax return?______________
If they are not required to file, is there any benefit for them to file?_______
2. If they are NOT required to file a federal return, are they required to file
an Illinois return?_________ What is their filing requirement threshold? If
they are not required to file, is there any benefit for them to file?___________
3. Preview the return and look at each line to continue becoming familiar with
the order and the process of the calculations, and how the form is laid out.
4. What else do you notice regarding additional line items that are on their
Illinois return?____________________________________________________
5. What is on line 10?_________ Is there an amount on line 17?________ From
what form did this come to the IL-1040?________ Is there an amount on line
29?______ How is the figure on line 31 determined? Review the ICR.
6. What is the Lopezs refund or balance due for Illinois? _______________
Information Documents
Information Documents
Taylor Duvall
Taxpayer SSN:
Taxpayer DOB:
Health insurance:
Address:
Living arrangement:
Home phone:
Work phone:
(XXX) 555-5501
Cell phone:
(XXX) 555-5001
Taxpayer email:
tduvall@net.net
Taxpayer occupation:
Machine Operator
Taylor is a new client. He has been a widower for five years. He is not blind or
disabled and may not be claimed as a dependent on anyone elses tax return.
He provided over half of the household support for his son and his niece. He is
not a student, and elects to designate $3 to the Presidential Election Campaign
Fund. He is a U.S. citizen. He has no authority over a foreign account in excess
of $10,000 and did not receive a distribution from, nor was he the grantor of
or transferor to, a foreign trust. He consents to the use of his tax return information for other products and services. The IRS has not issued an Identity
CST1.1
Thomas Duvall
Dependent Relationship:
Son
Dependent SSN:
748-91-2000
Dependent DOB:
June 1, 2003
Student:
Yes
Health insurance:
Support:
Dependent name:
Cayla Johnson
Dependent Relationship:
Niece
Dependent SSN:
748-91-3000
Dependent DOB:
April 4, 2009
Student:
Yes
Health insurance:
Support:
Thomas and Cayla lived with Taylor all year. They are not permanently and
totally disabled. They have no income of their own. Neither is married, and
neither is the qualifying child of anyone else. Both are U.S. citizens. Cayla is
the child of Taylors sister. Caylas parents are deceased. Taylors mother, who
lives nearby, takes care of the children while Taylor is at work. She enjoys
spending time with her grandchildren and does not charge for this.
Other Information
In addition to his W-2, Taylor also brought in a 1099-INT, and a 1099-R for a
distribution from a 401K plan with his prior employer from some years ago. The
munibonds were 100% IL bonds. When Taylors wife died, there was an insurance policy that paid off the mortgage on their home. He does not have sufficient
deductions to itemize. He paid property taxes on the home during 2015. The
taxes paid in 2015 (for 2014) were $1,973, and his property ID is Your County,
02-07-223-8556. He had school expenses for the children. Thomas is in the seventh grade, at Simpson Middle School, and had expenses of $290. Cayla is in
the second grade, at Bellville Elementary, and had expenses of $200. Taylor has
the receipts for the school expenses. In memory of his wife, Taylor contributes
what he can each year to the Diabetes Research Fund. For 2015, he wishes to
contribute $350.
Questions
As you complete the Test Case Study in BlockWorks, consider the following
questions. When you have completed the case study in BlockWorks, write your
answers here.
1. What is Taylors federal AGI on 1040A Line 21? (If more than $999, include
comma. If zero or blank, enter 0.)____________________
2. What is the amount of Taylors Illinois Tax before any credits? (If more than
$999, include comma. If zero or blank, enter 0.) _________________
3. What is the amount of Taylors Total Nonrefundable credits on IL Sch ICR?
(If more than $999, include comma. If zero or blank, enter 0.) ____________
4. What is the amount on Line 36? (If more than $999, include comma. If zero
or blank, enter 0.) _______________
5. What is the amount on Line 40? (If more than $999, include comma. If zero
or blank, enter 0.)_______________
Information Documents
Information Documents
Information Documents