Help With Tax Preparation

Although we wrote about this last year in March, it doesn’t hurt to mention it again now that tax season is here. AARP, in cooperation with the IRS, offers free tax preparation help for the elderly through the TCE or tax counseling for the elderly program. Sites are staffed by trained volunteers and are found in many communities. You can find locations by calling1-888-227-7669 toll free, or check their website at: http://www.aarp.org/findtaxhelp

VITA stands for volunteer income tax assistance, and is run by the IRS. It is designed to serve those who make $50,000 or less annually. It also has numerous sites in communities nationwide. These can be found by calling 1-800-906-9887.

VITA is available to military families through the AFTC or Armed Forces Tax Council.

According to the IRS website, you should come prepared with the following items:

  • ID
  • Social Security cards for all members of your family.
  • Previous year’s tax form.
  • Birth dates of all members.
  • W-2 forms.
  • Unemployment compensation records.
  • Records of interest and dividends earned.
  • Record of social security payments received.
  • Record of pension payment received.
  • Record of state and federal income tax paid.
  • Checkbook so you will have the bank information for direct deposit of your refund.

In addition, if you are not taking the standard deduction, you will need to bring records of interest paid on your home mortgage, charity donations, money spent on continuing education, and money spent for daycare along with the daycare provider’s tax id.

Tax Refund Missing?

Are you one of those people who suddenly realized you never got your tax refund? Maybe you moved and forgot to notify the post office of your new address. Or perhaps you entered your address incorrectly on your income tax return. If so, the IRS is trying to find you so they can give you your money and clean up their accounting before the next tax season begins.

An easy way to check on your refund is to use the online tool called Where’s My Refund? at http://www.irs.gov/individuals/article/0,,id=96596,00.html?portlet=108. If you don’t have access to a computer, you can use the same tool by calling 1-800-829-1954.

The IRS also gives a warning about scam artists who may try to get you to give them personal information on the phone, through regular mail, or through emails. Make sure you read their precautions here: http://www.irs.gov/privacy/article/0,,id=179820,00.html. If you have any doubts about mail or phone calls you receive, call the IRS first to verify that the person who contacted you is legitimate.

One way to avoid these problems in the future is to use e-file and direct deposit for your income tax returns and refunds. Not only is it free, but it’s safer and faster.

If you don’t get around to contacting the IRS for your refund, it will be added to your refund or subtracted from the amount owed when you file next year.

Free Tax Preparation and e-file

If you’ve been putting off doing your taxes, and would like to avoid manually filling out the forms, you might want to take advantage of a program offered by the IRS. It is a combination online tax preparation and e-file service for those who have an adjusted gross income of under $58,000. If you don’t fit the income requirement, there is another option which offers online versions of the paper tax forms along with a free e-file. For instructions and more information, you can access their site here: http://www.irs.gov/efile/article/0,,id=118986,00.html.

This service is available because of an agreement between the IRS and several tax software companies which are members of the Free File Alliance. You can choose which company’s software you wish to use. Depending on which one you pick, you may be able to file your state income tax return this way as well.

If you are due a refund, you can elect to receive a paper check, or have a direct deposit made to your bank account. The direct deposit option is quicker, and if you have it put in your savings account, there will be less temptation to spend it.

Tax Refund or Government Loan?

It’s certainly nicer to get an income tax refund than have to pay additional taxes. However, if you are getting a large refund, you might want to consider changing the number of exemptions you are claiming on your W-4 form.

Some people who have difficulty saving money like the idea of claiming fewer exemptions than they are allowed. That way more is taken out of their paycheck each pay period, and at the end of the year, they receive a large tax refund. It is their own personal savings plan.

However, what is really happening is that they are loaning money to the government without charging interest. At the end of the year, they get back only the money they loaned. If they had instead taken that money and invested it, they would have more than when they started.

If you are one of these people and would like to change your withholding taxes to more accurately reflect your actual tax liability, the IRS website has a calculator to help you here: http://www.irs.gov/individuals/article/0,,id=96196,00.html

State Tax Credit for Renters

Although home owners reap the most benefits when it comes to tax deductions, renters shouldn’t overlook one possible credit for which they may be eligible.

A part of your rental payment each month goes to paying the cost of your landlord’s taxes on the property you rent. As a result, some states have a rental credit for tenants in order to offset this. To make a claim, you would first need to contact your state treasury department to find out if your state offers this benefit.

Be aware also that there may be certain restrictions such as income or residency requirements. If your state has this credit, there is usually a particular formula they use to determine the amount you can claim.

A few things to keep in mind if you think you might be eligible:

  • Make sure you keep your rental receipts. Contact your landlord if necessary to get a copy of your rental agreement and payment.
  • Don’t forget to check this out if you own a mobile home or modular house, and rent the property on which it sits.
  • You may be eligible for this even if you don’t have sufficient income to file an income tax return.

As noted in the previous blog, the AARP help centers have volunteers who can assist you with this and other tax questions.

Free Tax Assistance

It’s that time of year again when you face the dreaded job of doing your income taxes. Fortunately, if you are in the low to middle income category, or in the military, there are free services available to help you. Since these are staffed by experienced volunteers, you may find that they save you money as well.

AARP has sites throughout the U.S. You may even see them at your hometown library or church. You can find locations by calling 1-888-227-7669 toll free, or check their website at: http://www.aarp.org/findtaxhelp.

VITA stands for volunteer income tax assistance, and is run by the IRS. It also has numerous sites in communities nationwide. These can be found by calling 1-800-906-9887 .

TCE or tax counseling for the elderly is another program sponsored by the IRS and run by AARP. To find out more information, call 1-800-829-1040, or contact AARP through their website or at 1-888-227-7669.

VITA is also available free for military personnel and their families. These are overseen by the AFTC or Armed Forces Tax Council. Sites are located on military bases.