Compliance

📘 Module 6: Filing & Compliance Basics

How to File Taxes Correctly & Stay Out of Trouble

👋 Welcome to Module 6!

This module teaches you the actual process of filing taxes and how to make sure you’re doing it right.

By the end of this module, you’ll know:

✅ What it means to file a tax return
✅ What documents are needed
✅ How to send returns to the IRS
✅ What the IRS looks for
✅ How to avoid penalties or rejections

🧾 What Does “Filing Taxes” Really Mean?

Filing taxes means you’re reporting income, credits, and taxes owed to the IRS for the year. You use forms like the 1040 to show:

How much the client earned
What they qualify for (credits, deductions)
Whether they get a refund or owe taxes

Once complete, you send the return electronically or by mail to the IRS.

📂 Documents You Need to File a Return

Before you can file, make sure you have the client’s:

✅W-2s (from jobs)
✅1099s (for self-employment, unemployment, interest, etc.)
✅Driver’s license or ID
✅Social Security numbers for client and dependents
✅Last year’s return (if available)
✅ Any proof of deductions (student loan interest, daycare, tuition, etc.)

💡 The IRS checks this info, so it must be correct!

🔐 Verifying Identity (Client Safety)

To prevent fraud, you’ll need to enter the client’s:

Name exactly how it appears on their Social Security card
Birthdate
Social Security Number
Driver’s license info (some states require this)

Make sure it matches IRS records — even one wrong digit can get the return rejected.

🖥️ E-Filing vs. Paper Filing

🔵 E-File (Electronic Filing)

Fastest, easiest way to file
IRS receives it within 24 hours
Refunds come quicker (7–21 days)
Can track the return and confirm it was accepted

🔴 Paper Filing

Slower — takes 4 to 12 weeks or more
More likely to be delayed or lost
No tracking once it’s mailed

📌 As a tax pro, you’ll almost always E-FILE.

📬 How Refunds & Payments Work

Refunds:

Client can get refund by direct deposit or paper check
Must enter correct bank routing and account numbers

If the client owes taxes:

Can pay online, by mail, or set up a payment plan
You don’t collect payment — they pay the IRS or state directly

⚠️ IRS Red Flags (What Not to Do)

These things can delay or block a return — or cause an audit:

SSNs or names that don’t match IRS records
Claiming children that don’t live with the client
Claiming fake income or expenses
Filing the same dependent on two returns
Big refund with little income (IRS might question it)

Teach your clients to keep it real — and protect your business by staying compliant.

📅 Deadlines to Know

Event	Date
Tax season begins	Late January
Tax deadline	April 15 (or next business day)
Extension deadline	October 15
Estimated payment due (Q1)	April 15

If a client can’t file by April 15, help them file an extension —itgives more time to file but not more time to pay.

✅ Student Filing Checklist

Before you hit “Submit,” double-check:

✅ Correct names and SSNs
✅ All income is reported
✅ Deductions and credits are entered
✅ Bank info is correct (for refund)
✅ Return is e-filed, not paper (unless necessary)
✅ Client signs all authorization forms (8879)

🧠 Real-World Example:

Client: Marcus Johnson

Has 1 W-2 job
Receives $1,200 in unemployment
Claims his 8-year-old daughter
Wants direct deposit

As the tax pro, you:

Enter both W-2 and 1099-G income
Add his daughter as a dependent
Check EIC and Child Tax Credit
Review everything for errors
File the return and confirm e-file acceptance
Explain that his refund should arrive in about 14 days

✅ Module 6 Activity

Scenario:

Client: Tamara

W-2 job
One 1099-NEC (side hustle)
Claimed her 3 kids last year
Got a letter from IRS about a mismatch

Instructions for students:

What documents do you need to file correctly this year?
What red flags should you check for?
Would you recommend e-filing or paper filing? Why?
What would you do if her kids were claimed by someone else?

📝 Module 6 Quiz

1. What’s the fastest and safest way to file taxes?
A) By mail
B) E-file
C) Fax
D) Drop off at the post office

2. What does the IRS use to verify identity?
A) School ID
B) Social Security number and birthday
C) Credit card
D) Facebook account

3. True or False: You can collect the IRS payment and forward it yourself.
A) True
B) False

4. What’s the deadline to file an extension?
A) April 1
B) April 10
C) April 15
D) April 30

5. What could cause a tax return to get rejected?
A) Client is self-employed
B) No bank account
C) Wrong Social Security Number
D) Claimed a refund

✅ Answer Key: