What is 100% Accuracy Guarantee? - Red Cent, Inc · TS15 Gold Guarantee Job Aid • • • Step 3: Hand Clients the Brochure to Educate Them about Gold Guarantee . As directed in

TS15 Gold Guarantee Job Aid • • •

What is the Gold Guarantee®? For an additional fee of $ ________*, clients can choose to purchase the Gold Guarantee®, which provides an additional level of coverage above and beyond the 100% Accuracy Guarantee.

Terms and conditions for the Gold Guarantee are provided in the “Gold Guarantee Certificate” and the brochure you hand clients when discussing the product option during the interview.

Note: Gold Guarantee is an opt-in product and at all times the client drives the decision on whether or not to purchase it.

What is 100% Accuracy Guarantee? • • •

When clients pay for tax preparation at Jackson Hewitt®, they are automatically covered under our FREE 100% Accuracy Guarantee, which entitles them to reimbursement of penalties and interest charged by a taxing authority due to a Jackson Hewitt preparer or program error in the preparation of their tax return. Under the 100% Accuracy Guarantee, any additional taxes owed to the IRS are the taxpayer’s responsibility.

Clients receive the 100% Accuracy Guarantee whether or not clients choose to purchase the Gold Guarantee.

Terms and Conditions for the 100% Accuracy Guarantee are included in the brochure you hand clients during the tax interview.

What is Covered? When clients purchases the Gold Guarantee, they may receive reimbursement for any additional tax liability or reduction in refund up to $5,000, if a Jackson Hewitt tax preparer makes an error preparing their tax return. However, reimbursement under Gold Guarantee does not include penalties and interest, which is covered under the 100% Accuracy Guarantee.

Gold Guarantee coverage is effective through the third anniversary of the date of the filing deadline for the covered tax return (usually April 15). This does not include extension date and is subject to receiving payment for the Gold Guarantee within 30 days from the date of Certificate.

*Gold Guarantee fees (in addition to preparation fees) are set locally. Consult your supervisor for the cost associated with the Gold Guarantee product in your office.

© 2014 Jackson Hewitt Tax Service Inc. All rights reserved. 1


Gold Guarantee Reimbursement Any reimbursement received by clients under the Gold Guarantee is considered income and is taxable to clients for the year in which they are received. Clients that receive a Gold Guarantee payment of $600 or more will receive a 1099-MISC in the following tax year. This is reported on the tax return as 'Other Income'.

Subject to the $5,000 limit, Jackson Hewitt will “gross up” the Gold Guarantee reimbursement payment.

Coverage Examples

Additional Tax Liability: A client paid $1,200 in federal tax, but upon discovery of an error, they learn that they actually owe $2,000.

Gold Guarantee will reimburse the client the additional $800 they owe plus “gross up”.

Reduction in Refund Amount: A client received a $1,000 refund, but upon discovery of an error they learn that their actual refund should’ve been only $400. They must pay the IRS $600.

Gold Guarantee will reimburse the client for the $600 plus “gross up”.

What does “gross up”

mean? • • •

The gross up is an estimate of the taxes due on the Gold Guarantee income. It is calculated using the taxpayer's filing status, taxable income, and applicable tax bracket. What this essentially means is that Jackson Hewitt will cover the taxes the client will have to pay on the Gold Guarantee reimbursement.

For example, a claim is approved for an additional tax liability of $1,000. The taxpayer's filing status is married filing separate and their taxable income is $75,000. This puts them into the 28% tax bracket. The gross up on that $1,000 is $280. So the total payout is $1,280.



Claim Submission, Processing, & Requirements IF A CLIENT PURCHASES THE GOLD GUARANTEE AND IS NOTIFIED OF AN ERROR ON THEIR

RETURN BY A TAXING AUTHORITY, THEY MUST:

• Notify their local Jackson Hewitt office in writing or in person promptly upon discovery of an error or receipt of a letter from a taxing authority.

• Provide their local Jackson Hewitt office with copies of all documents related to the claim or otherwise requested (including any letters from a taxing authority and all documentation supporting their tax return). *Per the Jackson Hewitt Tax Compliance Office it is recommended that you retain a paper or scanned copy of appropriate documents for each client for at least five years.

• Allow their local Jackson Hewitt office to investigate, question, or challenge the additional tax or shortfall in refund, in any manner they deem appropriate and cooperate and assist them in these efforts.

Jackson Hewitt will work with the client to resolve the issue, which may include reimbursement for any additional tax liability or reduction in refund amount, up to a cumulative total of $5,000 for all covered tax returns.

But it is the responsibility of the client to pay any tax liability to the taxing authority and/or any other amounts to any third parties or their local Jackson Hewitt office on a timely basis, regardless of the timing of the Gold Guarantee reimbursement payment.



Presenting Gold Guarantee During the Tax Interview Follow these key steps when presenting Gold Guarantee to clients:

Step 1: Educate Clients about our 100% Accuracy Guarantee Use the ProFiler script to explain the 100% Accuracy Guarantee. This script appears right before the Fee Review Summary screen, at which time you will review tax preparation fees and the Jackson Hewitt product and services clients receive for free with paid tax preparation.

Step 2: Recite the Script in ProFiler® to Explain the Gold Guarantee Use the ProFiler script to explain the Gold Guarantee. Then ask clients if they would like to purchase the Gold Guarantee. Remember that Gold Guarantee is an opt-in product and at all times, the client drives the decision on whether or not to purchase.

(This question will not appear for clients requesting a Transmit Only service, Amended Tax Return, Extension and/or a Prior Year return, since these returns are not eligible for the Gold Guarantee product. It will also not appear in offices located in Hawaii, Tennessee, or Wisconsin. Gold Guarantee cannot be offered in these states.)

As I mentioned earlier, your tax return is covered with our Accuracy Guarantee for FREE. For an added level of protection and coverage, you should consider purchasing our Gold Guarantee! Let me share some of the benefits with you!

With the Gold Guarantee, you may receive reimbursement for any additional tax liability or reduction in refund up to $5,000, if a Jackson Hewitt tax preparer makes an error preparing your tax return.

Here’s an example: • Let’s say the IRS finds an error, or disagrees with a deduction on your tax

return, and they reduce your refund by $4,000 and charge you penalties and interest of $200. The 100% Accuracy Guarantee covers the $200 penalties and interest charges.

• With Gold Guarantee coverage, if it’s our mistake, you don’t have to worry about the $4,000 either.

• Plus, the Gold Guarantee covers not only your federal return, but your state and local returns too.

Preparer: Hand your customer the brochure and inform them they can review it for more detail including terms and conditions.

Would you like to purchase the Gold Guarantee for $XX?

Accuracy Guarantee: Again, I guarantee your return will be 100% accurate. As I mentioned earlier, this means that you don’t have to worry about penalty and interest charges. We’ll reimburse you if we make an error preparing your return.



Step 3: Hand Clients the Brochure to Educate Them about Gold Guarantee

As directed in ProFiler®, make sure every client is handed the brochure titled, “Big Refund, Huge Guarantees”. Instruct the client to review it for information on the Jackson Hewitt 100% Accuracy Guarantee and the Gold Guarantee.



Step 4: Record Client’s Decision & Collect Signatures

Note: The client signature is required on the Gold Guarantee Certificate whether or not the client decides to purchase the Gold Guarantee coverage.

Clients Choose to Purchase the Gold Guarantee: If clients choose to purchase Gold Guarantee, enter “Yes” in ProFiler. You will then be prompted with the reminder below, to explain to clients that the Gold Guarantee will not be valid unless the Gold Guarantee fee is fully paid.

Explain that if their tax proceeds are not sufficient to pay ALL fees, then the Gold Guarantee will not be valid. (All fees include the tax preparation fee (current and prior year), financial product fees, Gold Guarantee fees, and any other fees that franchisees may charge.)

When the Gold Guarantee Certificate prints during FOP, the box for “I/we agree to purchase the Gold Guarantee for <a price> and agree to the terms and conditions of this Gold Guarantee Certificate” will be pre-checked.

The primary taxpayer, and spouse if applicable, will be required to sign the certificate confirming the purchase.

Preparer: Confirm that the customer has chosen the Gold Guarantee and explain that it will not be valid unless it is paid for. Explain that their purchase will be confirmed on the Gold Guarantee Certificate at the end of the interview.

Darlene Training 2/1/2015 X



Clients Choose Not to Purchase the Gold Guarantee: If clients decide not to purchase the Gold Guarantee, you will enter “No” in ProFiler and explain to the client that they have decided not to purchase the Gold Guarantee and will be asked to confirm their choice on the Gold Guarantee Certificate at the end of the interview.

When the Gold Guarantee Certificate prints during FOP, the box for “Gold Guarantee has been explained and I/we decline to purchase either the up to $5,000 coverage or the up to $1,500 coverage limit of Gold Guarantee” will be pre-checked on the certificate. The primary taxpayer, and spouse if applicable, will be required to sign the certificate confirming their decision to decline to purchase the product.

Preparer: Confirm that the customer has declined the Gold Guarantee and explain that they will be asked to confirm their choice on the Gold Guarantee Certificate at the end of the interview.

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Gold Guarantee (with lower coverage amount)

Your office may also offer clients a secondary offer that provides coverage up to $1,500 for a lower cost of $_________.

(Your Supervisor will inform you about whether or not you offer this lower coverage option.)

The Gold Guarantee (with lower coverage amount) is only presented to clients if they decline the offer to purchase Gold Guarantee.

If clients decline to purchase the Gold Guarantee product, the script for the Gold Guarantee (with lower coverage) appears in ProFiler.

Follow this script in order to educate clients. Remember, Gold Guarantee is an opt-in product and at all times the client drives

the decision on whether or not to purchase it.

The Gold Guarantee Certificate that prints during FOP / ESS will be populated with information that reflects the clients’ product decision.

Follow the same procedures to review and complete paperwork as you would for clients that purchase the regular Gold Guarantee

product.


Top Reasons for Gold Guarantee Claims The top five errors in order of frequency were:

1. Extension PMT/Estimated Taxes 2. Form W-2 3. Form 1099R 4. Dependents 5. Social Security

Extension PMT/Estimated Taxes – Common Errors Error: Preparer enters prior year payments, or amount due with prior year return or installment payments for a prior year as an extension or estimated payment.

TRAINING: Review Basic Tax Prep (BTP) Chapters 23 and 24.

Tax Tip • Confirm with the clients that the estimated payments made were for the current tax year. Federal and state

estimated payment reported in the return will be listed on the Return Verification Form. • Verify that the return was extended and extension payment is for the current tax year if taxpayer reports

extension payment, particularly on returns prepared prior to April.

Form W-2 – Common Errors Error #1: A W-2 is overlooked.

TRAINING: Review BTP Chapter 4.

Tax Tip • Check Client Data Sheet (if your office used these) for the number of W-2s entered and confirm the number of W-

2s the client received and the number included on the return. The number of W-2s entered in the return is listed on the Return Verification Form.

• Make sure you enter amounts from all boxes on the Form W-2 into the W-2 popup in ProFiler. • Ask the taxpayer if they worked any other jobs that they didn’t have a W-2 form.

Error #2: Social security wages or social security withholding is entered as federal withholding.

Tax Tip • Confirm withholding on the actual W-2 box 2 with the amount entered into ProFiler. • The amount of Social Security taxes and Medicare taxes withheld in boxes 4 and 6 are not part of the federal or

state income tax withholding.

© 2014 Jackson Hewitt® Tax Service Inc. All rights reserved. 1

Error #3: Amounts in W-2 boxes 9 and 10 are not entered.

Tax Tip • Remember, the IRS receives a copy of the Form W-2 and they are matching what is entered into the return with

the information on the W-2. • Box 10 has tax consequences and requires an additional form or computation.

Error #4: Wage information is entered from a paystub

Tax Tip • Wage information is entered from a paystub as though a W2 has been provided. • Net wages are entered instead of Gross Wages. Paystub is not for the entire work period.

Error #5: Preparer does not check Box 13 when applicable

Tax Tip • ProFiler cannot calculate the correct IRA contribution deduction (line 32) if the Retirement Plan box has been left

blank in error.

Form 1099-R Common Errors Error #1: Preparer overrides the Form 1099-R taxable distribution (Box 2a) in ProFiler. If the taxable amount (Box 2a) is blank on the actual form, the preparer may not think it is taxable and therefore leaves that filed blank in ProFiler.

TRAINING: Review BTP Chapter 13.

Tax Tip • Most pensions and traditional IRA distributions are taxable. • If taxable amount is blank on the 1099-R, the gross amount must be entered in Profiler as the

taxable amount. • Explain to the taxpayer that distributions from non-Roth pension and IRA accounts are taxable in

full, unless they put money into the account and didn’t deduct the contribution. If they have these types of contributions, only a portion of their distribution is not taxable.

ProFiler Warning Message If the distribution code in Box 7 is 1, 2, 3, 4, 5, 7, 9, A, L, S, or U, then the 1099-R distribution is most likely taxable and an amount needs to be entered in Profiler for box 2a.

ProFiler purposely enters the amount from Box 1 in Box 2a in order to correctly calculate the taxable amount of the 1099-R distribution. If Box 2a of the original 1099-R document shows a different amount than Box 1, then enter that amount in Box 2a. Otherwise, the amount that populates in Box 2a should not be removed – EVEN IF THE ORIGINAL 1099-R DOCUMENT DOES NOT HAVE AN AMOUNT IN BOX 2a.


Error #2: Preparer enters the distribution as a Rollover when it is not.

Tax Tip: • The preparer enters the popup correctly, but answers ‘yes’ to “Distribution rolled to another retirement

plan.” • A direct rollover from one plan to another plan will be coded G or H. • When a distribution has any other code, be sure the taxpayer understands it must have been rolled over

or converted to one of the retirement plans listed in ProFiler (IRA, SIMPLE IRA, SEP, ROTH, etc.). Question your taxpayer carefully about what type of plan he rolled the funds to or answer NO if the customer actually received the funds and DID NOT recon tribute the funds into one of the plans listed in the gatekeeper in ProFiler.

• If the taxpayer claims the distribution was rolled over once they received the check, ask where it went, when did they complete the rollover, and what account did they roll it into.

Error #3: Preparer believes distribution is not taxable if taxpayer is disabled.

Tax Tip • Pension plan distributions for disability are generally taxable. • Enter the Form 1099-R into ProFiler exactly as it appears, allowing it to populate box 2a – remember to

only change the pre-populated amount in box 2a if there is a different amount on the actual 1099-R form. • If you are not sure the taxable amount is correct, ask questions. • Remember to check Box 2b and if the ‘Taxable amount not determine’ box is checked, some of the

distribution may not be taxable. ProFiler will calculate the taxable amount. Error #4: Preparer enters distribution type code 2 or 7 instead of 1. The result is the 10% additional tax is not calculated.

Tax Tip • Make sure you enter the actual code from Form 1099-R Box 7. • If the taxpayer feels the code is incorrect on the Form 1099-R they must go back to the issuer for a corrected

1099-R.

Error #5: Preparer enters an invalid exception to the 10% early distribution tax, Code 1.

Tax Tip • Review valid exceptions and explain that pension distributions generally have the distribution code that

reflects the exception. • Make sure you ask questions in the 1099-R penalty exception section. • Ask the taxpayer questions regarding the distribution and record the answers in the Return Notes section of

ProFiler. • Ask if the disbursement was used to pay medical bills or to purchase a new home (IRAs only). • If the taxpayer does qualify for an exception to the 10% additional tax and there is a code 1 in the

distribution field, you must complete Form 5329. • If the taxpayer does not qualify for an exception, the distribution is subject to the 10% additional tax.

The Return Verification Form reflects the number of 1099-R forms reported in the return.


Dependents – Common Errors Error #1: Preparer enters a child on the return that is actually not the taxpayer’s child.

TRAINING: Review BTP Chapter 2

Tax Tip • Remember that dependency rules can be complicated. The interview questions in ProFiler should always be used. • Be clear when asking the taxpayer questions because the terms used have different meaning for tax purposes than

they sometimes mean to the taxpayer. “Is this your child?” could be answered ‘Yes”, because the taxpayer considers the child their own because the child is living in the home. A child is not your stepchild if you are not or have not been married to the biological parent.

• Explain concepts that have a different tax meaning than everyday meaning such as head of household. • Ask additional questions when not comfortable or sure about the information being presented by the taxpayer. • Enter all additional questions and answers into ProFiler Notes section while you are asking the questions. Always

explain in notes why the child’s name is different from the taxpayer’s name. Error #2: Child is being claimed on another return.

Tax Tip • Confirm with the client that no one else may be claiming the dependent. • If the client has an IRS error stating the child has been previously claimed, explain that the IRS can’t release the

information on who claimed the child due to the privacy act. Provide the taxpayer with a list of information the IRS will need from them such as child’s birth certificate, school records, social worker’s records on the family, etc.

Error #3: The dependent qualified last year, but does not qualify this year.

Tax Tip • Make sure you review questions on dependents every year. • Explain why the child no longer qualifies so the taxpayer understands. • For children of divorced parents, make sure you have noted in ProFiler notes which year the taxpayer can claim

the child. Error #4: Child is a dependent, but does not qualify for Earned Income Credit or Head of Household status or qualifies for Earned Income Tax Credit, but is not a dependent and does not qualify for Child Tax Credit. Tax Tip

• Explain to the client that a non-custodial parent will receive the exemption and the Child Tax credit for the child they are permitted to claim, but those children do not qualify the taxpayer for the Earned Income Tax Credit, Head of Household filing status or the Child and Dependent Care Credit.

• The child can only qualify the custodial parent (the parent they live with for more than half the year) for Head of Household filing status, EITC and the credit for child and Dependent Care.

The Return Verification Form lists each dependent being claimed by the taxpayer, and their relationship.


Form SSA-1099 – Common Errors Error #1: Preparer does not include Social Security benefits, because they do not think it is taxable. TRAINING: Review BTP Chapter 14

Tax Tip • ALWAYS enter SSA-1099 income. • ALL Social Security benefits must be reported on Form 1040, Line 20a. Social Security benefits are taxable in many

situations. Enter the full amount and Profiler will determine the taxable amount, if any. • The IRS does not differentiate between Social Security benefits for retirement and Social Security benefits for

disability. • If the client has claimed Social Security benefits in the previous year, LYS will carry that information as a Source of

Income in the current year. DO NOT UNCHECK THIS BOX. Ask the taxpayer for their SSA-1099. Error #2: Lump sum calculation is done incorrectly and none of the benefits are taxable, or preparer only includes the benefits for the current year. Tax Tip

• Train preparers to use the lump sum interview in ProFiler. • Prior year adjusted gross income needs to be entered for each year the benefit covers.

The Return Verification Form will reflect “Y” for each taxpayer with reported Social Security Benefits.

Forms RRB-1099R and RRB-1099 – Common Errors Retired railroad workers can receive two complete different forms for reporting retirement benefits. Form RRB-1099R reports transactions related to the taxpayer’s railroad pension plan. Form RRB-1099 reports the taxpayers Social Security Equivalent payments. TRAINING: Review Chapter 13 and 14 Error #1: The preparer enters information from only one of the Forms when the taxpayer has received both Forms because they believe they contain duplicate information. Tax Tip

• When a taxpayer provides the RRB-1099R or the RRB-1099 be sure to ask if the taxpayer receives both pension benefits and Social Security equivalent benefits.

• If so, be sure to check RRB-1099 AND RRB-1099R in the gatekeeper so ProFiler can populate each pop-up. • The Return Verification Form will reflect the number of 1099-R submitted and/or Railroad Retirement Benefits

(Y) have been entered for the taxpayer or spouse into ProFiler.


Schedule A – Common Errors Error #1: Preparer duplicates entries. TRAINING: Review BTP Chapters 8 & 21 and Spotlight on Schedule A. Tax Tip

• Spot check returns to make sure double entries have not been made.

Error #2: Schedule A deductions are extremely high in comparison to gross income. Tax Tip

• Review the Schedule A to ensure accuracy. • Enter notes in Preparer Notes in ProFiler explaining the taxpayer’s unique situation that resulted in a high amount

of Schedule A deductions. • Enter notes in ProFiler explaining the taxpayer’s unique situation that resulted in high amount of Schedule A

deductions. • Tax payer claims medical insurance premiums they paid with pre-tax money. • Tax payer does not reduce medical expenses by any reimbursed insurance benefit. • Tax payer claims mortgage interest when they are not legally liable for the loan.

Error #3: Unreimbursed employee expenses are entered that the taxpayer cannot substantiate to the IRS. Tax Tip:

• Total miles on a business vehicle are entered as current year business miles or commuting miles are entered as business miles. Review the difference between commuting miles and business miles.

• Employer reimbursement is not entered when applicable. • Remind taxpayer he must retain all records of business expenses, mileage log, etc. Make note in Preparer Notes

that you have advised the taxpayer of his responsibility to have receipts and retain receipts. The taxpayers total Schedule A deductions and Employee Business Expenses claimed are reflected on the Return Verification Form.

Form 1099 – MISC – Common Errors Error: Preparer does not include 1099-MISC income or selects an incorrect type of income. TRAINING: Review BTP Chapter 17 and Spotlight on Form 1099-Misc Tax Tip

• Focus on selecting the correct type of income. • When income is entered in Form 1099-MISC, Box 3, ask questions about the type of income entered. If the

income entered is payment for services rendered or a job done, enter the income on Schedule C. • If there is non-employee income in Box 7, select ‘SE Income’ from the drop-down at the top of the pop-up Form

1099-MISC. • The number of 1099-MISC forms entered in the return is reflected on the Return Verification Form.


Schedule C – Common Errors Error #1: Preparer enters the same deductions on Schedule C and Form 2106 (Schedule A) or enters employee expenses on Schedule C. TRAINING: Review BTP Chapter 17 and Spotlight on Schedule C. Tax Tip

When entering the business name in the Schedule C, enter the name of the taxpayer’s business or SAME if no separate business name. Do not enter the name of the business that issued the 1099-MISC. Make sure you enter the name exactly the same each time if you have multiple 1099s for the same business.

Error #2: Preparer enters mortgage interest, taxes, and utility expenses on Schedule C. Tax Tip

• Be aware that expenses for home office should be entered on Form 8829 as either indirect or direct expenses and not directly on Schedule C. Indirect expenses include mortgage interest, homeowner’s insurance, real estate taxes, utilities.

• The non-business portion of mortgage interest and real estate tax expenses carry automatically to Schedule A. DO NOT REPEAT THESE ENTRIES ON THE SCHEDULE A.

Error #3: Preparer enters the total miles on the vehicle as current year business miles or enters commuting miles as business miles. Tax Tip

• Review the difference between commuting miles and business miles and make sure to ask about each category of mileage.

Form 1099-INT & 1099-DIV – Common Error Error: Preparer does not enter 1099-INT or 1099-DIV income. TRAINING: Review BTP Chapter 11 Tax Tip

• Confirm the number of 1099s the client received and the number included on the return. Compare this to the number reflected on the Return Verification Form.

• If the client has prepopulated information from LYS in the program and doesn’t have a 1099 ask if the closed the account before deleting.

• Be sure when entering information from a 1099B, that you have included every category. Often the preparer enters interest, dividends and does not enter stock transactions.


Form 1099-C Error: Preparer enters an incorrect exception code, generally insolvency (B) or cash basis taxpayer (F). TRAINING: Review BTP Chapter 14 Tax Tip

• Generally insolvency is selected and the worksheet has not been completed to see if the taxpayer qualifies. • Cash basis taxpayer is used as an exception, and the taxpayer does not have a business.

MANY GOLD GUARANTEE ERRORS CAN BE AVOIDED IF THE TAXPAYER AND PREPARER DO A CAREFUL REVIEW OF THE RETURN VERIFICATION FORM


Documents

What is 100% Accuracy Guarantee? - Red Cent, Inc · TS15 Gold Guarantee Job Aid • • • Step 3: Hand Clients the Brochure to Educate Them about Gold Guarantee . As directed in