Software Training – Sample Tax Scenarios

Purpose of Self-Study

After watching the orientation ad introduction videos for tax

preparation, please complete these tax training scenarios to

learn the basics of a tax return with MyFreeTaxes.

Scenario 1

After you create your training account, give your taxpayer a

date of birth of September 12, 1973 and a filing status of

Single with no dependents.

On the Income Checklist screen, choose the first option,

“Employment Wages” to enter wage income from the W-2

on the following slide.

555-55-XXXX

12-3123123 $10,325

$10,325

$10,325

$1,124

$434

$150

Your Employer1234 Main St.Philadelphia PA 19104

Your Taxpayer’s NameAddressCity, State Zip

Continue through the tax return and take the Standard

Deduction, but make an adjustment to your income of $400

in student loan interest from Sallie Mae.

After you’ve gone through the Credits, Taxes, and Federal

Wrap-Up sections of the return, answer the following

questions (answers are located on the last slide):

1.What is the taxpayer’s Earned Income Credit?

2.What is the taxpayer’s federal refund amount?

Scenario 2Go back to the Personal Information section and change your

taxpayer’s status to Head of Household and add three

dependents, all of whom are your children as well as U.S.

citizens who lived with you all year. Choose a name for each

dependent and use the following dates of birth:

• January 7, 2007

• August 13, 1993 (this dependent has no income, does not attend college, and is not disabled)

• December 14, 2009

On the Income Checklist screen, if Employment Wages is still

checked from the previous scenario, leave it selected. Also

select Interest Income.

Then edit your existing W-2 record with the information shown on

the following slide (if you deleted your previous W-2 record,

create a new one).

555-55-XXXX

Your Employer1234 Main St.Philadelphia PA 19104

12-3123123 $25,436

$25,436

$25,436

$3,206

$1,068

$369

Your Taxpayer’s NameAddressCity, State Zip

Then enter the following Interest Income:

300Your BankAddressCity, State Zip

Your Taxpayer’s Name

Address

City, State Zip

Continue through the tax return and take the Standard

Deduction, with no adjustments to income. Claim the Earned

Income Credit for both qualifying children.

3. What is the taxpayer’s Earned Income Credit?

Although the forms for the Child Tax Credit and Additional Child

Tax Credit are not available yet, the software has still calculated

those amounts.

4. What is the taxpayer’s CTC?

5. What is the taxpayer’s Additional CTC?

6. What is the taxpayer’s total federal refund?

Scenario 3Now go back to your taxpayer’s personal information and

change your date of birth to November 23, 1944. Remove

the three dependents you created in the last scenario, and in

the income section, remove your wage and interest income

from Scenario 2 (un-checking the boxes in the Income

Checklist will delete those records). Then check the boxes for

Retirement Plan (1099-R) and Social Security (1099-SSA)

income.

Enter the following retirement income for an ordinary pension

with a regular distribution:

10,000

10,000

1,079

7

Your Pension FundAddressCity, State Zip

Then enter the following Social Security Income:

13

555-55-XXXXYour Taxpayer’s Name

$5,000 $5,000

14

7. From the Income Checklist – how much Social Security

income was counted as taxable income?

8. How much is the taxpayer’s federal income amount if the

Standard Deduction is taken and no credits are claimed?

See Next Slide for Answers.

Answers

15

1. $280

2. $1,385

3. $3,417

4. $184

5. $1,816

6. $8,439

7. $0

8. $1,079