Tax Credits & Tax Refunds

This post is the ninth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

So today is the deadline for filing your federal tax return (and most state returns). Although many people associate filing their taxes with feelings of confusion, stress, and general misery, tax time can also help give low- and moderate-income families a financial boost through federal tax credits like:

• Earned Income Tax Credit, designed to supplement the wages of low- and moderate-income families (those who earned less than $50,270 in 2012). This credit is worth up to $5,891 and is available as a refund for families who owe little or no income tax.
• Child Tax Credit, designed to help families offset some of the costs of raising children. This credit is worth up to $1,000 per child. Families who owe little or no income tax can receive some or all of this credit as a refund if they earned at least $3,000 in 2012.  
• Child and Dependent Care Tax Credit, designed to offset some of the child and dependent care costs that families incur in order to work. This credit is worth up to $2,100, though the amount that can be claimed is limited by the amount a family pays in federal income taxes.

And many states offer their own versions of these credits. Read more »

This post is the sixth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. 

Taxes. Just saying the word can make people groan. But the reality is, this time of year can actually bring good news to low- and moderate-income families all over the country. Federal tax credits such as the Child and Dependent Care Tax Credit (worth up to $2,100), the Child Tax Credit (worth up to $1,000 per child), and the Earned Income Tax Credit (worth up to $5,891), can give a boost to families whose incomes are too low to owe taxes. 

One family in Dallas took advantage of free tax preparation at a United Way VITA site and was rewarded for their effort. They qualified for the federal EITC and received nearly a $6,000 refund! Less than two weeks later, the refund was in the family's bank account and helped to pay for things that the family really needed: children's clothes, a crib, and a new car.  Read more »

This post is the fourth in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts.

Not to make you panic, but there’s about a month left before the April 15 tax-filing deadline. State and federal income tax refunds can provide a significant economic boost for families. If you work with families (including your own!), you should know about some of the ways that families can use their tax refunds to build up their economic security, other than paying bills or making long-deferred purchases. If families file their taxes electronically and choose direct deposit for their refunds, they can:

• Put some of their refund in up to three different accounts, including checking and savings accounts, but also passbook savings, IDAs, IRAs, HSAs, Archer MSAs, and Coverdell education savings accounts. That means that they can save not just for a rainy day, but specifically for retirement, medical costs, or educational expenses.
• Buy a U.S. Savings Bond worth up to $5,000.
• Families can choose how much to put in the different accounts or the Savings Bond.

This post is the third in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts. Read more »

This post is the second in a series of weekly posts containing tax information and filing tips. Check back next week for our next post, or click here to read past posts.

We’ve all seen it – the person on the corner dressed as some patriotic character spinning around a “HUGE TAX REFUND” sign. Since it’s the taxpayer (YOU) that is ultimately responsible for all the information on your tax return, promises of huge tax refunds are sometimes too good to be true. Here are some tips to help you avoid scams.  

1. IRS representatives do not initiate taxpayer communication by going go door-to-door or sending emails. If someone knocks on your door or sends you an email claiming to be a helpful representative from the IRS, do not give them your Social Security Number or any private financial information.  
2. You must provide proof of eligibility for any tax credits you are going to claim. Some preparers claim that if you pay them a fee, they will get you these credits without proof – they can’t.
3. The Economic Recovery Credit Program, Making Work Pay, and the Recovery Rebate Credit are EXPIRED programs – anyone that says they will get you these credits is trying to pull a fast one.

Advocates serving survivors of domestic violence know that survivors face a number of pressing needs – including safety or shelter or immediate access to cash. Many advocates and survivors may not think about tax issues when they are dealing with those others. But taxes can be an important way for survivors to establish economic independence – and there are some potential pitfalls that survivors need to be aware of. Read on to learn more!

Q: Should my client file a tax return on her own?

A: If your client is married, there are a couple of things she needs to think about before she files her taxes. If she files using Married Filing Jointly status, she will be on the hook for any tax liability (unless she qualifies for innocent spouse relief), and she will need to sign the return along with her husband. If she files using Married Filing Separately status, she will not be eligible for many tax credits, like the federal EITC, the federal Child Tax Credit, or the federal Child and Dependent Care Tax Credit, that could otherwise give her a financial boost (see below). If she files as Single or Head of Household, however, she will not be subject to joint tax liability and she may qualify for credits like the EITC. She can file as Single if she is legally separated from her husband. If she is either legally separated OR lives apart from a spouse for the last 6 months of the year and pays half of the costs to maintain a household where a dependent child lives for over half the year, she can also file using Head of Household status. Read more »

Last month, Pennsylvania provided increased protection for domestic violence victims living in affordable housing in the Low-Income Housing Tax Credit Program (LIHTC). The LIHTC program uses federal tax credits to incentivize the development of low-income housing, and each state, through Housing Finance Agencies, administers the program on behalf of the federal government.

The Pennsylvania Housing Finance Agency made history in September when it released its 2013 Qualified Allocation Plan (QAP). The QAP establishes Pennsylvania’s requirements for administration of the LIHTC program in the state. One line in the 27-page document has the potential to have a big impact for victims of domestic violence: “Experience as of [sic] victim of domestic violence alone may not constitute good cause for eviction under the terms of the lease.” This change to Pennsylvania’s LIHTC administration has been long advocated for by two local organizations that work directly with LIHTC renters—Community Legal Services and Regional Housing Legal Services. Read more »

As the year-end expiration date for the Bush-era income tax cuts draws nearer, taxes seem to be an increasingly hot topic. So far, however, some expiring tax provisions have largely escaped media attention. These include improvements to refundable tax credits, like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), that were enacted in 2009 as part of the American Recovery & Reinvestment Act (ARRA). These credits help low- and moderate-income families, millions of whom will lose benefits if the ARRA improvements are allowed to expire – as the tax plan proposed by Republican leaders in Congress would do, even as it maintains tax cuts for the richest two percent of Americans.

The $160,000 tax break that millionaires will receive if the Bush-era tax cuts are extended next year does not include the effect of another tax cut that also has remained mostly under the radar: the 2010 estate tax cut. If this tax cut is allowed to expire on schedule at the end of the year, and the federal estate tax reverts to its 2009 level as President Obama has proposed, 99.7 percent of estates will still be exempt from the tax. Read more »

I’m at that time in life when lots of my friends are having kids. I’m thrilled for my friends - their kids are awesome and adorable. But one thing they’re not is cheap. And if Republicans have their way, kids are about to get even more expensive.

New analysis by the Tax Policy Center shows that the tax bill (H.R. 8) introduced by Rep. Dave Camp (R-MI) (a bill virtually identical to S. 3414 which was introduced by Senate Republican leaders and rejected by a majority of the Senate last week) ends tax cuts for millions of hard-working families. In fact, more than one-third of all families with children and nearly three-quarters of low-income families with children (who make an average of $17,400 a year) would lose valuable tax benefits under Rep. Camp’s bill. The loss would be particularly hard for women who are the majority of low-income parents.

Wonder why so many families will lose out under Rep. Camp’s tax bill? It, like the bill introduced by Senate Republican leaders, would end tax cuts for low- and moderate-income families that were put into place by the American Reinvestment and Recovery Act of 2009. The National Economic Council estimates that by letting these tax cuts expire:

• 12 million families would lose an average of $800 from the elimination of the Child Tax Credit expansion.
• 11 million families would lose an average of $1,100 from the repeal of the American Opportunity Tax Credit for college expenses.
• 6 million families would lose an average of $500 from the elimination of improvements to the Earned Income Tax Credit.

End Tax Cuts for the Richest 2%, Not Working Families

Tell your Representative to vote for tax fairness!

Call 1-888-744-9958 today!

Whew, that was a nail biter!

Last week, the Senate voted 51 to 48 to stand up for tax fairness. This week your Representative will cast a vote on two tax cut bills — one that would help millionaires and one that would help working families.

Demand Tax Fairness Now: Call 1-888-744-9958 and listen to easy instructions and a sample script.

H.R. 15, introduced by House Democratic leaders, would end Bush-era tax cuts that benefit only the richest 2% of Americans and extend improved tax credits for low- and moderate-income working families.

H.R. 8, introduced by Rep. Dave Camp (R-MI), would leave no millionaire behind by continuing Bush-era tax cuts for the richest 2% of Americans — and end improved tax credits for low- and moderate-income working families.

And here's the kicker. More than one in three families with children — and three out of four low-income families with children — would lose out under H.R. 8. Read more »