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Posts Tagged ‘Earned Income Tax Credit’

The IRS wants military personnel and their families to know that they can get tax help free of charge.

The no-cost tax help comes courtesy of the Volunteer Income Tax Assistance, or VITA, program. Both the IRS and the U.S. Armed Forces participate in the VITA program, which offers everything from complimentary tax preparation service to free tax advice for members of the military and their families.

What’s more, the Armed Forces Tax Council – which oversees military tax programs worldwide – does outreach with the IRS to those in the armed forces. The council includes tax program coordinators for the Air Force, Army, Coast Guard, Marine Corps, and Navy.

The trained volunteers who offer tax assistance through VITA even work on military-based sites. These tax pros are trained to handle questions and issues that face those in the military, such as combat zone tax benefits or how those with children can take advantage of the Earned Income Tax Credit.

If you go to a military VITA site for free tax advice or tax filing services, the IRS recommends that you bring the following documents with you:

•                Valid photo identification

•                Social Security cards for you, your spouse and dependents or a social security number verification letter issued by the Social Security Administration

•                Birth dates for you, your spouse and dependents

•                Wage and earning statement(s) — Form W-2, W-2G, 1099-R

•                Interest and dividend statements (Forms 1099)

•                A copy of last year’s federal and state tax returns, if available

•                Checkbook to get routing number and account number for direct deposit

•                Total amount paid for day care and day care provider’s identifying number

•                Other relevant information about income and expenses

For those who are married and filing joint returns, both spouses must be present if you want to file a tax return electronically.

If someone can’t be present, you must have a valid power of attorney allowing the tax forms to be signed and filed.

However, if one spouse is in a combat zone, a special exception can be granted to using a power of attorney. In such a case, the filing spouse would only need to file a written statement attesting to the fact that the other spouse is in a combat zone and is unable to sign.

It’s often well worth it to pay a professional or to use computer software in preparing an income tax return. But for those on a budget, getting qualified help at no cost is the best of both worlds. And that’s what the professionals who volunteer with VITA offer.

If you can’t make it to a VITA site, at the very least take a few minutes to read IRS Publication 3, the Armed Forces Tax Guide. You can get it online at http://www.IRS.gov or call this toll-free number for a copy of the guide: 800-829-3676.

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If you haven’t filed a tax return in years, the Internal Revenue Service wants you – and not in the way that you think.

The IRS is actually looking to return $1.3 billion in unclaimed refunds to roughly 1.4 million people who never filed a federal income tax return for 2006. If you happen to be among those non-filers, you must act fast because to collect any money you are owed, a tax return for 2006 must be filed by April 15, 2010. Under the law, you only have 3 years to claim a tax refund; after three years, any money that would have been due to you becomes the property of the U.S. Treasury.

Lots of people don’t file tax returns for a host of reasons. Some people earned too little money, and weren’t required to file. They may nevertheless be entitled to a refund, based on taxes paid or tax credits for which they were eligible. At other times, however, people don’t file a return simply because they owe money – or they’re scared that they may owe money. Even if you owe the IRS, chances are you can work out a payment plan to clear up past-due payments. If you didn’t owe money, and didn’t file a 2006 tax return, you don’t have to worry about penalties because penalties are only imposed on individuals who had taxes due.

According to IRS statistics, the typical unclaimed refund for 2006 is $604.

The states with the highest numbers of non-filers who have a 2006 tax refund waiting for them are: California (159,800 individuals); Texas (109,600 individuals); Florida (101,700 individuals); and New York (76,700 individuals).

What’s more, many people who didn’t file their taxes a few years ago may stand to gain even bigger refunds if they made less than approximately $38,000 in 2006 and claim the Earned Income Tax Credit.

For more information about getting an unclaimed refund, check out more on this IRS video in English or Spanish.

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By Lynnette Khalfani-Cox, The Money Coach

It’s time to get busy filling out those tax returns. Mercifully, you don’t have to pore over thousands of pages of the IRS tax code, nor do you have to pay an expensive accountant in order to get your taxes done by the April 15 deadline.

If you earned roughly $42,000 or less, or if you can’t prepare you own taxes, you can get help in filling out your tax return and even claiming the EITC from a Volunteer Income Tax Assistance (VITA) site in your area.

The VITA Program operates nationwide, and is staffed by individuals who are trained in completing basic tax returns. You can find a local VITA site by calling 800-829-1040. Most of the country’s 12,000-plus VITA sites are run out of community agencies, neighborhood centers, libraries and schools.

Here is what the IRS recommends you bring to a VITA site to have your tax returns prepared:

• ID: Proof of identification
• SS cards: Social Security Cards for you, your spouse and dependents and/or a Social Security Number verification letter issued by the Social Security Administration
• DOB: Birth dates for you, your spouse and dependents on the tax return
• Tax forms: Current year’s tax package if you received one
• W2: Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
• 1099: Interest and dividend statements from banks (Forms 1099)
• Last return: A copy of last year’s federal and state returns if available
• Bank info: Bank routing numbers and account numbers for Direct Deposit
• Daycare info: Total paid for daycare provider and the daycare provider’s tax identifying number (the provider’s Social Security Number or the provider’s business Employer Identification Number)

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By Lynnette Khalfani-Cox, The Money Coach

One special feature of the earned income tax credit is that you can get it sooner, rather than later. If you expect to qualify in 2009 for the earned income tax credit and you have at least one dependent child, you can request part of that credit right now under the “Advance EITC Program.”

Here’s how it works. You fill out a Form W-5, which is called the Earned Income Credit Advance Payment Certificate. (Get a Form W-5 from your employer, or download a copy from: http://www.irs.gov/pub/irs-pdf/fw5.pdf.) Soon after you complete the W-5, you will begin receiving advance EITC payments through your employer. The EITC payments are added to your regularly scheduled paychecks.  If you are self-employed, you cannot qualify for the advance payment.

In 2009, the maximum advance EITC payment amount you can receive through your employer is $1,826. Once tax season rolls around next year, you can still claim the earned income tax credit and receive the balance of any money that may be due you, above and beyond the $1,826 that was added to your pay over the course of this tax year.

To be eligible for the advance earned income credit payment, all four of the following must be true:

• You (and your spouse, if filing a joint return) have a valid Social Security Number
• You expect to have at least one qualifying child, and to be able to claim the earned income credit using that child
• You expect that your 2009 earned income and adjusted gross income will be less than $35,463 (or $38,583 if married filing jointly), with one qualifying child. Or you expect to have two or more qualifying children, and you expect your 2009 income will be less than $40,295 (or $43,415 if married filing jointly).
• You expect to be able to claim the EIC for 2009

The W-5 form is very short, easy to fill out, and will likely take you just one minute to complete.

On the W-5, you simply print or type your full name and social security number. Then you answer “Yes” or “No” to two questions, and check a box indicating your tax filing status (i.e. single, head of household, qualifying widow(er), or married filing jointly). At the bottom of the form, you sign and date the W-5, and that’s it.

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