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CONTENTS

Preparing For Your Tax Interview 1Tax Interview Questions

• Why Liberty Tax?• What to Expect?• What to Bring?• What’s Next?

Super Duper Tax Filing Checklist 4

Tax Tips 5

• Homeowners Can Claim Casualty Losses For Corrosive Drywall • Residential Energy Efficient Property Credit • Extended Tax Relief For Some Financially Distressed Homeowners • Deducting Mortgage Interest • Earned Income Credit (EITC) Qualifying Income Levels • Earned Income Credit (EITC) • Earned Income Credit (EIC) And Military Combat Pay • Child Tax Credit • Additional Child Tax Credit • The “Kiddie Tax” Concerning Children’s Investment Income • Adoption Credit Is Now Refundable • American Opportunity Tax Credit • Educational Expenses - Tuition And Fees Deduction • Lifetime Learning Credit • Student Loan Interest • Job Expenses May Be Deductible • Cell Phones Issued By Your Employer • Section 179 Expenses • Home Office May Provide A Deduction • Amending A Past Year’s Return • Installment Payment Plan

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Y O U D O L I F E . W E D O T A X E S .

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PREPARING FOR YOUR TAX INTERVIEW

Tax Interview Questions

WHY LIBERTY TAX®? Liberty Tax® is tax preparation at its best: simple, friendly, and professional. With our network of over 35,000 tax preparers and almost 18 million tax returns prepared, you are sure to receive accurate and honest professional tax advice backed by the tax industry’s most solid and reputable company. You will have peace of mind in knowing that Liberty Tax® preparers are specially trained and experienced to handle all tax situations, including yours!

WHAT TO EXPECT? Before your tax interview, organize your important documents using the checklist below and research deductions and credits that may apply to you. Documentation will vary based on your situation.

We know that taxes can be challenging and stressful. We strive to put the fun back into tax preparation. When you arrive at your local Liberty Tax®, not only will you be greeted by our Statue of Liberty wavers, but our tax experts will treat you like the valuable customer that you are. Comfortable waiting areas and entertainment await you, and Liberty Tax® offices are kid-friendly and offer a variety of refreshments.

Most offices are open year-round in order to assist with your tax needs. No appointment is necessary to have your taxes completed with us. Don’t wait; beat the rush. Simply call 1-866-871-1040 or use the office locator to locate your nearest Liberty Tax® office.

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WHAT TO BRING?

PERSONAL INFORMATION FOR EACH FAMILY MEMBER:• Name• Date of Birth• Social Security Card/ITIN/ATIN• Last Year’s Tax Return• Valid Driver’s License • W-2’s • Interest Form (1099-INT or substitute)• Dividend Slips (1099-DIV or substitute)• Stock Sales (1099-B or Broker Statement)• Self-Employment Income and Expenses• Sale of a Personal Residence• Rental Income and Expenses• Sale of any Business Assets• Gambling or Lottery Winnings (W-2G for some winnings)• State Income Tax Refund (1099-G)• Pension Income (1099-R)• Estimated Taxes Paid• Social Security or Railroad Retirement (SSA-1099 or RRB-1099)• IRA or 401(k) Distribution (1099-R)• Unemployment Compensation (1099-G)• Miscellaneous Income (1099-MISC)

DEDUCTIONS/ADJUSTMENTS:

• Medical Expenses • Real Estate or Personal Property Taxes• Mortgage Interest• Charitable Contributions (cash and non-cash)• Employee Business Expenses• Gambling Losses• Moving Expenses• Traditional IRA Contributions• Higher Education Expenses• Educator Expenses• Student Loan Interest

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TAX CREDITS:

• Child Care Provider/Address and Employer Identification Number (EIN) or Social Security Number (SSN)

• Adoption Expenses• Retirement Savings Contributions Credit

WHAT’S NEXT?Whether you may owe or are expecting a refund, your tax preparer will inform you of your next steps. Safeguard a copy of your tax return (your tax preparer will provide this to you), along with your other important paperwork, in case you need to file an amendment or reference it in the future. Other paperwork, such as documentation regarding the sale of your home or stock transactions, should also be kept.

We are here for you - before, during, and after you have completed your taxes with us. We will stand behind and guide you through your audit case, assist in amendments to your return, and answer any and all questions about the Affordable Care Act.

Be sure to take advantage of our Send-A-Friend program and earn cash for referring your family and friends to participating Liberty Tax® locations! Just think of it as our gift to you.

Keep in mind that the sooner you file, the sooner you will receive your refund. For the status of your refund, check out the “Where’s My Refund” tool on the IRS website. This tool will give you the most up-to-date refund information and is updated every 24 hours. You may access this tool 24 hours after the IRS accepts your e-filed return or 4 weeks after mailing a paper return.

See our Tax Glossary for a complete list of definitions and explanations of commonly used tax terms. A downloadable copy of the Tax Interview Checklist can be found in the Resource Center on our Frequently Asked Questions (FAQ) page.

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SUPER DUPER TAX FILING CHECKLIST

It is that time of year when you start to receive mail that says, “Tax information included.” I know I have thought a few times, “Do I really need this?”

Here is a checklist of items that you may need to complete your filing. Don’t worry, we have seen our fair share of organizational systems including bags, shoeboxes, briefcases, and even old beer boxes. Your specific paperwork certainly depends on your filing status and occupation, but this list will help to get you started.

Personal Data• Social Security numbers (including spouse

and children)• Child care provider tax ID or SSN and address

Home and Rental Property Data• Mortgage interest (form 1098)• Home equity loan interest• Real estate taxes paid• Sale of your home or other real estate (form 1099-S)• Rental Property income• Rental property expenses

Income Data• W-2 forms• Pensions and annuities documentation• Partnership and trust income• Jury duty pay• Alimony received• State and local income tax refund• Scholarships and fellowships• Prizes and awards• Gambling and lottery winnings

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Financial Assets and Liabilities• Interest income statements (forms 1099-INT & 1099-OID)• Dividend income statements (form 1099-DN)• Tax refunds and unemployment compensation (form 1099-G)• Proceeds from broker transactions (form 1099-B)• Miscellaneous income (form 1099-MISC)• Retirement plan distribution (form 1099-R)• Student loan interest paid• Early withdrawal penalties on CDs

Home and Rental Property Data• Mortgage interest (form 1098)

Tax TipsHOMEOWNERS CAN CLAIM CASUALTY LOSSES FOR CORROSIVE DRYWALLThere’s tax relief for homeowners who have incurred property damages from corrosive imported drywall installed between 2001 and 2009. They may deduct all the expenses paid for damages to wiring and replacing affected appliances as casualty losses in the year they were paid if they haven’t filed a claim. If the homeowner has a pending insurance claim for the damages, they may claim 75% of the loss. After the claim is resolved, reimbursements may result in income that may be taxable.

RESIDENTIAL ENERGY EFFICIENT PROPERTY CREDITFor eligible property placed in service during 2012 you can claim a credit of up to $500 of the cost of certain energy efficient property. The residential energy credit may offer a tax break on a 2012 return if all installation is done and/or work was completed in 2012. Residential energy credits apply to homes, houseboats, mobile homes, condominium, and qualifying manufactured homes. The 2012 credit must be reduced by the amount of any residential energy credit taken after 2005.

DEDUCTING MORTGAGE INTERESTHome ownership is often the tipping point to itemizing deductions and deducting certain qualified expenses, rather than taking the standard deduction amount. When deducting mortgage interest, you may deduct it on your primary home, a second mortgage, points, a home equity loan, or line of credit secured by your home. Mortgage insurance premiums are deductible as interest through December 31.You can claim a boat or RV as a first or second home if it has facilities for sleeping and cooking, and has a toilet. Married taxpayers filing jointly may deduct up to the fair market value of your home or $750,000, whichever is less. Single taxpayers may deduct up to the fair market value

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of your home or $375,000, whichever is less. Interest paid to refinance is deductible. By January 31 of each year, homeowners should receive Form 1098, Mortgage Interest Statement.

EARNED INCOME CREDIT (EITC) QUALIFYING INCOME LEVELSThe maximum amount of income that a taxpayer can earn and still get the Earned Income Tax Credit has increased. The taxpayer may be able to take the credit if:

• They have three or more qualifying children and earn less than $49,194 ($54,884 if married filing jointly).

• They have two qualifying children and earn less than $45,802 ($51,492 if married filing jointly).

• They have one qualifying child and earn less than $40,320 ($46,010 if married filing jointly). • They have no qualifying children and earn less than $15,270 ($20,950 if married filing jointly).

EARNED INCOME CREDIT (EITC)The maximum credit amounts for this year are:

• $6,431 with three or more qualifying children • $5,716 with two qualifying children • $3,461 with one qualifying child • $519 with no qualifying children

Investment income must be $3,500 or less for the year.

EARNED INCOME CREDIT (EIC) AND MILITARY COMBAT PAYIf you serve in a combat zone, you can choose whether or not to claim it as earned income to figure your eligibility for the earned income. This decision can increase or decrease the amount of the Earned Income Credit received. The amount of combat pay is reported on box 12 of Form W-2. For those in the military, combat pay, the Basic Allowance for Housing, and the Basic Allowance for Subsistence are considered non-taxable income.

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CHILD TAX CREDITMore people may be eligible to claim the child tax credit. The child tax credit is worth up to $2,000 per qualifying child. A qualifying child must be under 17, a son, daughter, stepchild, eligible foster child who is a dependent, brother, sister, stepbrother, stepsister, or descendent of one of them (including grandchild, niece, and nephew). The refundable portion of the credit is limited to $1,400, and the earned income limit for the refundable credit is $2,500. ADDITIONAL CHILD TAX CREDITA refundable additional child tax credit may be available to those who qualify and have not used up the available amount. The percentage used to determine the credit is 15% of the earned income amount over $3,000.

THE “KIDDIE TAX” CONCERNING CHILDREN’S INVESTMENT INCOME Children with investment income over $2,100 will be taxed at the same rates as trusts and estates, which are 10% up to $2,550; 24% for $2,551 to $9,150; 35% for $9,151 to $12,500; and 37% for over $12,500.

ADOPTION CREDIT IS NON-REFUNDABLE The maximum adoption credit is $13,840. The full credit will be allowed for adopting a special needs child, regardless of whether the taxpayer has qualifying expenses. Taxpayers who adopt and file for their “qualified adoption expenses” must file a paper return with Form 8839, Qualified Adoption Expenses, and required documentation.

AMERICAN OPPORTUNITY TAX CREDITUnder the American Opportunity Tax Credit, taxpayers may deduct qualified education expenses up to $2,500 per eligible student. Taxpayers may receive the credit of up to 100 percent of the first $2,000 in expenses, fees and tuition, and 25 percent of the next $2,000 education expenses. Unlike the Hope Credit, which could only be claimed for expenses during the first two years of a student’s college education, the AOTC can be claimed for the full four years. Qualified education expenses include tuition and related expenses. Additionally, the definition of “qualified education expenses” has been expanded to cover course materials, meaning taxpayers may include the costs of books, supplies and equipment needed for a class. The full credit will be available to single taxpayers whose adjusted gross income is $80,000 or less and married couples filing jointly, whose AGI is $160,000 or less.

EDUCATIONAL EXPENSES - TUITION AND FEES DEDUCTIONThe tuition and fees deduction is in effect for higher education costs for yourself, your spouse, or a dependent. The tuition and fees deduction has some little known advantages over other deductible education expenses: the tuition and fees deduction can be taken for qualified education expenses connected to employment, without the taxpayer being required to itemize deductions. The costs of books, activity fees, and supplies may also be deductible.

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LIFETIME LEARNING CREDIT The Lifetime Learning Credit may also benefit graduate students or those returning to school. The credit covers qualified tuition and related expenses for the taxpayer, his or her spouse, and eligible dependents. Unlike the American Opportunity Credit, the Lifetime Learning Credit is available to graduate students and covers up to 20 percent of out-of-pocket expenses up to $10,000, for a maximum amount of $2,000 per year.

STUDENT LOAN INTEREST Taxpayers repaying a student loan (or education loan) may qualify to deduct up to $2,500 of their student loan interest as an adjustment to income. There are AGI limitations which determine deductibility. The credit may be phased out if your modified adjust gross income exceeds certain limits. The phase-out levels are less than $70,000 for single taxpayers and less than $145,000 for married filing jointly.

JOB EXPENSES MAY BE DEDUCTIBLE Generally, you can depreciate the amount you spent for tools used in your work. Some of the other expenses you may deduct include union dues, job-related magazines and books, and other related business expenses. If your employer requires you to wear work clothes or uniforms that are not suitable for everyday wear, you may deduct the cost and upkeep. If you are taking classes related to your current job to improve your performance, these educational expenses may be deductible.

CELL PHONES ISSUED BY YOUR EMPLOYER Cell phones issued by an employer are no longer considered “listed property,” and depreciation documentation and extensive record keeping that was required is no longer necessary. If your employer requires you to use your personal cell phone for business purposes, reimbursements of these expenses are not taxable.

SECTION 179 EXPENSES Careful tax planning year-round can pay off at tax time for small business owners. Small businesses can expense up to $1 million of the first $2.5 million of business expenditures considered section 179 expenses. These include tangible property used for a business or trade such as computer software. New businesses can deduct up to $10,000 in start-up expenses on their first tax return.

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HOME OFFICE MAY PROVIDE A DEDUCTION A home office can qualify as the principal place of business if it is used exclusively and regularly by the taxpayer to conduct administrative or management activities of a trade or business. You may also deduct the square footage used to store inventory. There must be no other fixed location of the business where the taxpayer can conduct these activities. The area claimed can only be used for your business, and not at all for personal use. You may or may not be able to claim the entire amount. You can if your gross income from the business is equal or greater than your total business expenses.

AMENDING A PAST YEAR RETURN You can amend your tax return if you’ve filed, and later realize that you’ve omitted income, made a mistake, or overlooked some deductions. You can amend your return by filing Form 1040X within 3 years after the date you filed your original return. You cannot change your filing status from married filing jointly to married filing separately after the due date of the original return.

INSTALLMENT PAYMENT PLAN You may be able to pay the taxes you owe in installments if you can’t pay the total to the IRS by the tax deadline. If you are not currently paying by an installment plan, complete Form 9465, Installment Agreement Request, and attach it to the front of the return. You should send as much of the payment as possible with the return in order to limit penalty and interest charges which will continue accumulating until the total amount due is paid off. Taxpayers who have already mailed or electronically filed their returns can mail Form 9465 to their appropriate IRS Service Center. An IRS representative will contact you to discuss the situation and arrange the payments.

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