Tax Tips for 2009
Keep Your Tax Refund. Don't Give It Away!
Lots of money flows at tax time. And everyone wants a piece of it. Be smart
and keep all of your refund. Here are our simple tips for holding onto
your hard-earned money.
CONTENTS
Tip #1: Say "No" to money advances: rapid refunds, "Money Now" loans, and other
"fast money" products.
Tip #2: Use free tax filing help in your area.
Tip #3: Or file for free online.
Tip # 4: Claim all of the tax credits you qualify for.
| Tip #1: Say "No" to money advances: rapid refunds, "Money Now" loans, and other
"fast money" products. |
Many commercial tax preparers love to sell "rapid refunds." Don't
bite!
These offers are really high-interest short-term loans with outrageouly high interest
rates - ranging from 40% to over 700% APR. Worse yet, with electronic
filing, these offers don't deliver your refund that much faster. Typically,
they will speed up your refund by only a week or two, depending on
your situation.
Some tax preparers are switching to "prepaid" lines of credit. Again, be careful!
Waiting a few days for your tax return can be a much better deal.
If you fall for these schemes, you
are giving away a chunk of your refund to a money lender.
Keep all of your hard-earned
money and tax credits for yourself and your family. You deserve it! Say "No" to all forms of up-front
tax refund and loan offers.
According to the Center for Responsible Lending,
a 2005 study found that tax
preparers and lenders stripped about $1.57 billion in fees each year
from the earned-income tax credits paid to working parents. If you don't want
to be a part of this statistic, just say "No!"
| Tip #2: Get free tax filing help in your area. |
Qualified volunteers offer free tax filing help to low-income Mainers.
Check out these free tax help programs:
VITA and AARP Tax-Aide services have better error rates (make fewer mistakes)
than many commercial tax preparers. Many sites offer free e-filing, some offer
home visits, if needed, and a some - especially in Portland and Southern Maine - offer help in languages other than English.
Several regional tax help coalitions will also be open this year. They offer both free tax assistance and
help with building assets from the credits you've claimed:
In addition, the IRS provides
Taxpayer Assistance Centers at a few locations. There
are five in Maine: Augusta, Bangor, Lewiston, Presque Isle, and South Portland.
| Tip #3: Or file for free online. |
If your total household income is less than $50,000 and you don't itemize your deductions,
try free I-CAN!™
online filing. In 2006 taxpayers nationwide claimed over
$14,000,000 in federal tax refunds using this free I-CAN program! It's simple and it's free. Try it! (Offered in
English and Spanish)
| Commercial tax preparers who are offering Free File through the IRS have agreed not to sell "rapid refund" loans.
However, they may still charge you to file your state
tax return. So use
Maine's free I-file,
to file your state return.
Read more. |
Or visit the IRS site for links
to other free online filing options. Each provider sets its own
eligibility rules for its free filing program, so it's worth exploring several
sites to see if you qualify. (If you use one of these sites, be careful about
pop-up ads and add-on fees. Remember: Just say "No!")
The State of Maine has a direct
on-line "I-file" program for state income tax returns.
Attention Non-resident Aliens: Check out the
Guide
for Nonresident Aliens Preparing Federal Income Tax Returns posted
by the International Office of the University of Texas at Austin:
According to the site, this Guide will help you to:
- Determine if you are required to file a tax return;
- Determine which form or forms you should file;
- Understand the filing instructions; and
- Prepare and submit your own federal tax forms.
| Tip # 4: Claim all of the tax credits you qualify for. |
These four credits can be especially valuable to low-income taxpayers:
- Earned Income Credit (EIC)
The Earned Income Credit (EIC) for low-income taxpayers keeps growing. For
tax year 2008, the maximum credit for a household with two or more children
is $4,824. That can be money in your pocket! The IRS has reported that
several million households are leaving billions unclaimed. So don't
forget to claim this credit if you are eligible.
Read more
- Child Tax Credit
This is a partially refundable credit worth up to $1000 for each child
up to age 17.
New rules for the 2008 tax year expand the scope of this credit. An extimated 2.9 million chldren will
be eligible for the first time. An estimated 10.1 million previously-elgible children will receive more.
- Child and Dependent Care Tax Credit
This credit is offered by both the state and federal governments. It is worth only a portion of your total
child care costs, and there are caps. But the state credit is "refundable," meaning that you can claim it
(up to $500) even if you pay little or no tax.
More on Federal Child and
Dependent Care Credit
More on Maine Dependent Care Tax Credit
-
Recovery Rebate Credit
Remember the “rebates” (economic stimulus payments) the IRS sent out last year? Well,
some tax filers will get a second chance. If you were eligible for a “rebate” but did not file –
or did not get a response from the IRS-last year – you can still request your rebate in 2009.
It is now called the “Recovery Rebate Credit.” This is especially important for people who normally
do not file a tax return but who get Social Security, Veterans Disability Benefits, or Railroad Retirement
Benefits. Also, some people who qualified for a $300 rebate last year may be eligible for an additional $300
this year (because of the birth of a new child in 2008, for example).
Read more...
If you want to help spread the word about tax credits for low-income people and free tax
help, or just want to know more about these topics, go to the Center for Budget and Policy
Priorities page: National Tax Credit Outreach Campaign
More Resources from the IRS
1040 Central
IRS page for individuals, designed "to make the agency’s Web site an even easier-to-use source of
information."
Free Tax Help Available
This IRS press release outlines free tax help programs offered by the IRS and others.
Choosing a Tax Return Preparer
IRS Tips for finding a reputable tax preparer, and avoiding the bad ones.
|
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© Pine Tree
Legal Assistance
January 2009
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