The IRS requires all VITA/TCE sites to operate within a basic 'scope of practice' which simply means there are some tax returns or some situations that keep us from preparing your taxes, even if you qualify otherwise.
What We Can Do: Sites can prepare basic Federal and State returns including:
- Income from wages (reported on a form W-2), social security benefits, pensions and retirement accounts, interest and dividends, self-employment income with simple business expenses, and proceeds from the sale of stocks and bonds where the cost basis is provided.
- Credits including the Earned Income Tax Credit, Child Tax Credit, credit for dependent care expenses, education credits, and qualified residential energy credits.
- Where the taxpayer has received a completed form 1099-C from the lender, the information on the form 1099-C is correct, and there is no interest reported in Box 3.
- Where the home has never been used in a trade or business, or as rental property.
- Where there is not a bankruptcy involved.
- Where the mortgage was used only to buy, build, or improve the principal residence. If any part of the mortgage was used to pay off other expenses – for example, if proceeds from a refinance were used to pay off credit cards, pay for education, etc., then it is outside the scope of the VITA program.
Certain types of returns are beyond the scope of the program and cannot be prepared by a VITA or TCE tax site, even if the taxpayer meets the income requirements (see below).
What We CANNOT Do: Sites cannot prepare basic Federal and State returns where:
- There is self-employment income (generally reported on form 1099-MISC) where any of the following is true:
- Expenses exceed $10,000
- Expenses include depreciation or business use of the home
- A loss is reported
- There are proceeds from the sale of stocks and bonds where the cost basis is not included on the form 1099-B
- There is income from rental property
- There are other forms dealing with advanced tax situations. The site coordinator at each VITA/TCE will let you know if you have a 'special out of scope' return.
If your return is deemed 'out of scope' you will be instructed to consult a paid tax preparation company or individual. Under IRS guidelines for VITA/TCE we cannot recommend any specific tax preparation agency, company, or individual.
Download a list of items needed, items in scope, and items out of scope here: https://www.irs.gov/pub/irs-pdf/p3676bsp.pdf