CA policy:  Basic Certification

  • Basic Certification is now permitted in Tax-Aide at the discretion of local leadership.  The Tax-Aide Scope Manual is the complete source of federal certification requirements.  Federal Advanced items are also Advanced for CA.  TaxSlayer’s initial California “splash page” questions (page 100) and e-file entries are Basic.  Otherwise, Advanced certification is required for California-specific entries unless designated in this manual with (B) for Basic.  (A) for Advanced designates a few items within the federal return that otherwise appear in Basic topics.  All State Section dollar amounts and other entries are (A) except where noted.

In general

  • CA policy:  California state returns are out-of-scope if you have not specifically received California Tax-Aide training.  This manual is not sufficient training.
  • The AARP Foundation Tax-Aide Program is limited in scope. Our mission is to provide high-quality free income tax assistance and tax form preparation to low and moderate-income individual taxpayers, with special attention to those ages 50 and older. 
  • Knowingly going out-of-scope violates Tax-Aide Standards of Conduct and should be reported to your LC; an incident report must be submitted.
    • Volunteers who knowingly prepare out-of-scope returns may be personal liable for mistakes; they are also subject to counseling and may be removed from the program.
  • The NTTC publishes the Tax-Aide Scope Manual, https://ta-nttc.tiny.us/Scope-Manual, a comprehensive list of which federal tax forms are in-scope and which are out-of-scope. Each site should have printed this document for reference; it’s available as a link in Chromebooks.
    • Note: Don’t use Pub 4012’s “Scope of Service” section (pages v ff). 
  • Also out-of-scope are certain high-income tax returns:
    • 1, 2. The additional Medicare tax on earned income or net investment-income tax [Schedule 2 Line 11, from Form 8959] applies for modified adjusted gross income (MAGI) over $250,000 for MFJ, $125,000 for MFS, or $200,000 for all other statuses, or if any one W-2 exceeds $200,000 (2025). 
      • MAGI is defined here as the total of Medicare wages (box 5 of Form W-2s), plus unreported tips (Form 4137 line 6), plus independent contractor income that the taxpayer thinks should have been treated as wages (Form 8919, which is out-of-scope). 
    • 3. If the taxpayer has any (net) business income [Schedule 1 Line 3] and 2025 adjusted gross income (AGI) less the standard or itemized deduction exceeds $197,300 ($394,600 for MFJ), the return is out-of-scope due to complexity of calculating the 20% Qualified Business Income (“QBI”) deduction.
    • Further nuances can make high-income returns out-of-scope:  see https://ta-nttc.tiny.us/Scope-Manual page 6.
    • Note: If AGI appears close to a threshold, the taxpayer should be advised we can’t prepare the return.  Don’t waste time preparing a return simply to see if a threshold has been reached.
  • When something is out-of-scope, there are two possibilities:
    • If it’s something that must be reported on a tax return, tell the taxpayer we can’t prepare the return.
      • For example, income from more than 14 days’ building/room rental must be reported, even if the taxpayer has a loss [the tax return is required to document the claimed loss], but is out-of-scope.
    • If the issue involves something optional – such as the deduction for a Simplified Employee Pension (SEP) plan (Schedule 1 Line 16), the taxpayer can choose:
      • (1) Don’t take that option (almost always this will be claiming a credit or a deduction), and have Tax-Aide prepare the return, for free.  If the taxpayer chooses this option, document the decision in a TaxSlayer note (page 8) and in the Intake Booklet.
        • Note:  It’s not an option to omit expenses on Schedule C!  Omitting information from a tax return cannot legally be done if it benefits the taxpayer. [Increasing net income on Schedule C can increase various credits, including EIC, that depend on the amount of earned income.]
      • (2) Use a paid tax preparer or use tax software themselves, particularly where the option involves significant dollar amounts. You must advise the taxpayer of this choice.

CA policy: California residency scope

  • California defines a resident as anyone who is either:
    • Present in California for other than a temporary or transitory purpose, or
    • Domiciled in California, but outside California for a temporary or transitory purpose, such as work.
    • Note: The FTB presumes residency if a person spends nine months or more of the calendar year in California.
    • Note: A person becomes a California resident when they make it their home versus when they come for a visit.
  • For full-year residents of California, always file a CA tax return (Form 540) when filing a federal return, unless the taxpayer has already filed for CA, such as via the FTB’s free CalFile service.
  • For part-year residents and California nonresidents who have income sources in CA, CA Form 540NR is required, which is out-of-scope.
    • A site is allowed to prepare only the Federal return in such cases, if the State Coordinator allows it; otherwise the federal return is out-of-scope as well. 

Other critical issues

  • Tax-Aide only prepares individual tax returns (Form 1040; Form 1040-SR is the same but with larger font and better readability).  Tax returns for other entities are out-of-scope. 
  • Regardless of training and/or certification, if you aren’t confident in your knowledge of forms or issues relating to a taxpayer’s return, you are not to prepare or review that return. 
  • When volunteers are uncertain if a complete, accurate return can be prepared, refer taxpayers to another counselor or site, or to a paid preparer. Alternatively, taxpayers may elect to prepare their own returns; free software is at irs.gov/filing/free-file-do-your-federal-taxes-for-free.
    • The IRS has a list of federal tax preparers with credentials, such as enrolled agents, at irs.treasury.gov/rpo/rpo.jsf, searchable by credential and zip code.
    • The California Society of Enrolled Agents (csea.org) has findanea.org to locate nearby EAs.
  • CA policy: Federal or California returns that require income splitting are out-of-scope, primarily because California is a community property state. Income-splitting is required for:
    • MFS and HOH returns if married (see limited exceptions in the Married Filing Separately section, page 14)
    • Registered Domestic Partners (RDP)
    • Returns of any filing status where a divorce occurred during the tax year but there was an intact household at any time earlier in that year
    • Injured spouse allocation (Form 8379).

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