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Andrews-Single Senior Taxpayer

Tax Year 2025

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FOR USE BY AARP FOUNDATION TAX-AIDE VOLUNTEERS ONLY

Click here for the latest version of this document.

FOR USE BY AARP FOUNDATION TAX-AIDE VOLUNTEERS ONLY

The instructor should introduce themselves to the class.
Prior to the class or at the beginning of the class, arrange for each new counselor to have at least one experienced counselor sitting next to them.
Prior to the class, be sure to go to https://ta-nttc.tiny.us/Workbook-Answers for the answers to this exercise.
The intent is to have this exercise completed step by step, keeping the class together.
Tools needed for this exercise: (Can put on Chalkboard)

Andrews Exercise in Workbook page 52.
Chromebook with TaxSlayer open. Counselors will need to have passwords out to log into Practice Lab.
Qualifying Child or Relative Resource Tools (Quad-Fold and Colorado Resource Toolbox).
The Training Resource Links Sheet contains a link to the NTTC 4012. Instructors may have already had counselors bookmark the NTTC 4012.

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Learning Objectives

Complete a basic return in TaxSlayer Practice Lab
Discuss filing status
Enter common forms of income for a retired taxpayer in TaxSlayer

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Single Senior Taxpayer

Tax topics:

Single Filing Status
Income: Wages, Social Security, IRA Distribution, and Interest
Standard Deduction

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Andrews – Single Senior Taxpayer Tax Year 2025

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Step	Description	Tax Form	Adjusted Gross Income (AGI)	Federal Tax Refund or Amount Due	Comment
	BASIC INFORMATION
1	Wages	W-2
2	Social Security	SSA-1099
3	IRA Distribution	1099-R
4	Interest	1099-INT

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Importance of Filing Status NTTC 4012 Tab B

Filing requirement
Size of standard deduction
Computation of tax
Eligibility for tax credits

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Five Choices for Filing Status

Single (S)
Married filing jointly (MFJ)
Married filing separately (MFS)
Head of household (HoH)
Qualifying Surviving Spouse (QSS)

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Two Criteria for Determining Filing Status

Marital status on last day of tax year*
Persons supported by taxpayer or living in the home

*Using the federal definition of “married”

Legal marriage under laws of state or foreign country
Does not include civil unions or registered domestic partners if not called a marriage by state or foreign country

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Filing Status: Single

Not married as of December 31 or
Legally separated or divorced or
Widowed before the beginning of the tax year and did not remarry

AND

No person supported

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TaxSlayer: Preparing the Return �NTTC 4012 TAB B

Open TaxSlayer Practice Lab 2025 and start a new return for Tom Andrews
Enter information and notice fields with “*” that are required
Enter Filing Status
Enter Personal Information

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Income

Taxable vs Non-Taxable
Earned vs Not Earned
NTTC 4012 covers all forms of income in Tab D. This tab should be considered a standing resource for this presentation.

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Income: Wages

Earned Income
Reported on Form W-2
Intake/Interview & Quality Review Sheet

Page 2 - Tax-Aide Intake Booklet

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Form W-2

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W-2 Box 12 codes

D – Elective deferrals to a section 401(k)
DD – Cost of employer-sponsored health coverage
E – Elective deferrals under a Section 403(b) salary reduction agreement

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Out of Scope - W-2 Box 12 Codes

R – Archer Medical Savings Acct (MSA)
T – adoption benefits
Z – nonqualified deferred compensation
Q – nontaxable combat pay (unless certified for Military)
FF – Qualified Small Employer Health Reimbursement (QSEHRA, additional rules)

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TaxSlayer: Enter Income - Wages

Enter wages (Method #1)*

View the expanded menu on the left side of the screen
Select “Income” from menu > Click “Wages and Salaries”
Enter the data on the W-2

*NTTC 4012 Tab O covers three methods of data entry

Note the AGI and refund

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Social Security Income

Social Security income can be:

A retirement benefit (most common)
A disability benefit
A survivor benefit (parent (rare)/spouse/children)

Benefits are reported on Form SSA-1099 or RRB-1099
Must be reported on the tax return (of the recipient!)
Can be taxable depending on AGI (maximum taxable: 85% of benefits)

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Income: Social Security – Form SSA-1099

Box 5 is the Social Security Benefit

Medicare premiums carry to Schedule A
Add Medicare Part B & Prescription Drug together. Carries to Schedule A for itemized deductions

Withholding is rare and can be missed

Check if there are any lump sum benefits
Taxpayer must bring tax return for the year of the benefit

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Four Types of IRAs

Personal retirement savings plans with tax advantages

Traditional
Roth
Savings Incentive Match Plans for Employees (SIMPLE)
Simplified Employee Pension (SEP)

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Individual Retirement Arrangements (IRAs)

Traditional IRA contributions:

Tax deduction for some (most?) contributions
Account amounts are not taxed until distributed

Roth IRA contributions:

No tax deduction but…
Account amounts are not taxed

Contributions to all types may be eligible for retirement savings contributions credit (“Saver’s Credit”)

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Eligibility Requirements For IRA Contributions

No age limits on IRA contributions
Must have taxable compensation
Time limit:

By the due date for filing the return: (4/15/2026)

IRA set up
Contributions made

Deductibility limit of IRA contributions

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IRA Contribution Limit

Contribution and deduction limit for TY25

$7,000 ($8,000 if you're age 50 or older) (For each taxpayer and spouse)

Allowable contribution amount applies to total of IRAs (including Roth IRAs)
May need to manually check that total Roth and traditional IRA contributions do not exceed the contribution limit

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IRA Contribution Limit

Allowable contribution no more than taxable compensation

Compensation: Taxable W-2 income, self-employment income, and grandfathered alimony (pre-2019)
Not compensation: interest, dividends, pensions, scholarships, unemployment, Social Security or rental income

MFJ - include both spouse’s compensation for limit

Nonworking spouse IRA eligible

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Traditional IRA Contributions Can Be Nondeductible

Check if taxpayer or spouse participates in employer’s plan
Check if AGI is too high
Contributions made by our taxpayers are generally deductible

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IRA Contribution – Limitations

Roth IRA modified AGI limit (regardless of employer plan)

$165,000 for single filing status (rare for our taxpayers)
Different limits for other filing status

ALL is excess contribution when modified adjusted gross income (MAGI) is over the limit

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IRA Contribution: Excess contribution

Withdraw excess amount until due date of the return

Otherwise, return is Out of Scope
Subject to 6% penalty each year until remedied

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Individual Retirement Account (IRA) Distributions Income

Voluntary distribution or required minimum distribution (RMD)
Trustee to trustee transfer (not taxable)
Rollover (not taxable if done correctly)
Conversion (traditional to Roth, taxable)

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The nature of the IRA (traditional or Roth) and the distribution determines whether the distribution is fully or partially taxable.
The current age for a required minimum distribution from an IRA has been pushed back to 73. Counselors preparing tax returns normally don’t care whether a distribution is an RMD or not, the tax treatment and data entry do not change, but a client who does not take an RMD in a given year might face tax consequences going forward so it is something to watch for and warn them about.
Rollovers and transfers:
Trustee-to-trustee: 100% not taxable (also referred to as “transfer”)

Trustee will normally not issue a 1099-R.
If 1099-R is issued, should be code G (not taxable).
Can be done as often as taxpayer wishes.

Taxpayer takes funds (“rollover”)

Not taxable if rolled to another traditional IRA within 60 calendar days, will have to manually correct the taxable amount if any amount is actually rolled over.
Part not rolled is taxable

Possible additional tax if < 59½.

Allowed one rollover in any 12-month period from any IRA to any IRA

From a company plan to an IRA or vice-versa, no limit.

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IRA Distribution - Form 1099-R�

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IRA Distribution – Box 7 Codes

Most common Form 1099-R Distribution Codes

1 – Early Distribution
3 – Disability
4 – Death
7 – Normal Distribution
G – Rollover
Y7 – Normal IRA distribution that qualifies as QCD

Some codes are OOS - check Tax-Aide Scope Manual if unsure

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NEW!

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Qualified charitable distributions (QCD)�New Code Y on 1099-R

Use Interview to determine

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Taxpayer is charitably inclined

Individual Retirement Account (IRA)

70 ½ years old

Qualified Charitable Distribution (QCD)

Traditional IRA

Inherited IRA

LESS

COMMON

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TaxSlayer: Enter Social Security Income

Enter Tom’s social security income (Method #2)

Select “Summary/Print” from menu
Click “Social Security“ in the “1040 view”
Click “Social Security Benefits/RRB-1099” in the IRA/Pensions Menu
Enter the information from Tom’s Form SSA-1099

Note AGI and refund

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TaxSlayer: Enter IRA Distribution Income

Enter the information from Tom’s 1099-R (Method #3)

View the expanded menu on the left side of the screen
Enter the form number “1099-R” in the Form Finder field
Enter the information from Tom’s Form 1099-R

Note AGI and refund

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Interest Income

Not Earned Income
Interest sources:

Bank and credit union deposits
Bonds (corporate or government)
Money loaned out

Check the Intake and Interview Sheets

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Interest Income: Tax Forms

Form 1099-INT or 1099-OID
Brokerage Statement
Schedule K-1
From payer without a tax form

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Interest Income

IRS: All interest must be included in the return
Taxable or Tax-exempt Interest Income

Different rules for State and Federal

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Interest Income: Taxable? Tax-exempt?

Non-taxable interest for federal; state may tax

State or municipal obligations; including

D.C.
U.S. possessions
See Pubs 4491 and 4012 for others

U.S. obligations (T-Bills, Savings Bonds, etc.) are fully taxable for federal tax but exempt from state tax

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Form 1099-INT

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FATCA is out of scope

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TaxSlayer: Enter Interest Income

Enter Interest

Using any of the three methods utilized earlier, enter the information from Tom’s Form 1099-INT

Note AGI and refund

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Standard Deduction

Standard Deduction is calculated by TaxSlayer
There is an additional standard deduction for each taxpayer age 65 and over

Only applies if taxpayer uses standard deduction
This is existing tax law

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Enhanced Deduction for Seniors

From 2025 through 2028 can claim an enhanced deduction of:

$6,000 for Single (S)
$12,000 for Married Filing Jointly (MFJ) and if both spouses qualify

Must be age 65 by Dec 31
Must have a Social Security Number that is valid for employment

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NEW!!

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Enhanced Deduction for Seniors

Phases out at modified adjusted gross incomes of:

$75,000 for Single (S)
$150,000 for Married Filing Jointly (MFJ)

Taxpayers filing Married Filing Separately (MFS) are ineligible to claim this deduction

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NEW!!

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Review Return

Select “Summary/Print” or “Preview Return”
Review the amounts for the income types entered (wages, social security, IRA, interest)
Note the amount of the Standard Deduction
Note the new Enhanced Deduction for Seniors

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Review of Today’s Class

Practiced using TaxSlayer to enter a tax return
Learned about the importance of filing status
Learned about income for our typical senior taxpayer
Observed changes in AGI and refund as income items were added
Learned about the new enhanced deduction for taxpayers over 65

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Tom Andrews-Single Senior Taxpayer

Congratulations!!
You have prepared your first �Tax-Aide tax return
Completing the return for submission will be covered later

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