Don't Mess With Taxes

UPDATE, March 24, 2020: As the coronavirus spread across the United States, the Internal Revenue Service and many associated tax programs have been adversely impacted. Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites were among those affected, with most closing earlier this tax season. If COVID-19 conditions improve in some clinic areas before the new July 15 tax filing and payment deadline, some VITA and TCE operations may reopen. Meanwhile, some are offering phone help. Check with your local clinic (details on how to do that in the post below).

Volunteer tax preparers help Florida taxpayers complete and file their taxes. (Photo courtesy United Way of the Big Bend)

You checked out Free File, but you're just not comfortable relying on the tax software alone. But when you looked into hiring a tax preparer, the fees put too much pressure on your already stretched budget.

Good news! There are tax-savvy volunteers across the United States ready to help lower-income and older taxpayers fulfill their annual filing responsibilities.

These folks are at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) locations nationwide. They are members of your local community who have been certified by the Internal Revenue Service.

Best of all, their tax help is free for those who meet their eligibility guidelines.

Free help to fit filing needs: To get tax preparation help at a VITA program, the key requirement is income.

VITA services are free to individuals who generally make $56,000 or less. However, VITA services also take into account whether a filer has disabilities and how well they speak or understand English.

Language challenges are a big one here in Texas, where the native language of more and more Lone Star State residents is Spanish. You'll more than likely find VITA workers here who can converse in both languages.

Head to Houston, the most diverse city in the United States (not just Tejas) and you'll no doubt find a VITA office or two that offers tax help to those more comfortable speaking not only español, but also Chinese, Cantonese, Hindi, Korean, Mandarin, Russian, Tagalog and Vietnamese.

Once VITA workers help eligible taxpayers complete their returns, they'll then electronically file them, again at no cost.

The TCE program operates essentially the same way. TCE sites offer no-cost tax help for all taxpayers, but focus on filers who are 60 years of age and older.

Help with especially confusing tax benefits: Many of the taxpayers who can use VITA or TCE services also qualify for tax breaks that can be confusing.

Tops at many taxpayers' "help, please!" lists are the Earned Income Tax Credit (EITC) and a couple of family tax breaks that were revised under tax reform, the expanded Child Tax Credit and the new Credit for Other Dependents.

The EITC is a significant tax credit for workers who earned $55,952 or less in 2019. On this year's returns, it could pay as much as $6,557 to a family with three or more children. But you don't have to have young dependents to get the EITC. Qualifying filers without kids could get a credit of up to $529.

And while the IRS notes that 25 million taxpayers received more than $61 billion in EITC benefits last year, around 20 percent of taxpayers who qualify for this credit fail each year to claim it. Its complexity often is cited as a reason the EITC is overlooked (or ignored).

That's too bad. The EITC, like the similarly confusing family related tax breaks, are credits, which means they can provide dollar-for-dollar reductions in a filer's tax liability. The EITC and additional child component of the Child Tax Credit also are refundable credits. As the name indicates, they could produce tax refunds for qualifying taxpayers.

VITA volunteers can help taxpayers though the complexity of these tax credits.

Meanwhile at TCE locations, volunteers tax preparers here are ready to answer older taxpayer's questions about pensions and retirement-related issues.

Many of the IRS-certified volunteers at TCE locations are retired individuals, so they personally know the issues that this segment of taxpayer face.

Sort-of DIY: Some VITA and TCE sites also give filers the option to prepare their own basic federal and state tax returns for free using Web-based tax preparation software.

How is this do it yourself option at a VITA or TCE location different from Free File? In-person, not online, help is on hand.

At participating sites, you start working on your taxes using the online software, but if you run into a problem, A VITA or TCE volunteer is there to help guide you through the process.

Look for the "Self-Prep" notation in the location listings if you're interested in trying to do your taxes yourself, but like the idea of expert back-stopping if you have trouble or questions.

Finding a nearby VITA or TCE site: VITA and TCE sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country.

You can find the nearest VITA or TCE by using the IRS' Free Tax Prep online search tool or by calling toll-free 1 (800) 906-9887.

Most TCE sites are operated by the AARP Foundation's Tax Aide program. You can find the TCE Tax-Aide site nearest you between January and April by using the AARP Site Locator Tool or calling toll-free 1 (888) 227-7669.

You can also use the IRS2Go mobile app to find a site near you.

With a couple of clicks on my laptop I found 10 VITA or and 15 TCE locations within 25 miles of my house. Hey, I'm a Texan. We're used to driving longer distances. You can search for sites as close as 5 miles from your home.

Sites are added as they share their opening date, so if you don't find one convenient to you, keep checking for newly added locations.

Pre-help preparation: VITA and TCE are free, but just as if you were going to a private paid tax pro, you still must be prepared before you get to one of the sites.

To ensure that your tax return can be completed accurately, bring with you:

• Proof of identification, such as a photo ID
• Social Security cards or Individual Taxpayer Identification notices/cards for you, your spouse and any dependents
• Birth dates for you, your spouse and dependents you will claim on the return
• Proof of foreign status if applying for ITIN
• All W-2, 1099 and other wage-earning forms and statements, as well as documents showing income from investments
• Any other information for other income not reported on a 1099
• Information supporting all deductions and credits, such as how much paid for daycare services and the daycare provider's tax identification number
• Affordable Care Act documents, notably Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance payments of Premium Tax Credit
• Proof of an account at a bank or other financial institution (for example, a blank check) for direct deposit of refund
• A copy of last year's tax federal and state returns, if applicable
• For filing of prior year returns, copies of income transcripts from IRS and, if applicable, your state filings

Also note that if you're married and you and your spouse want to file a joint return, both of you must come to the VITA or TCE site. This is because both spousal signatures are required, even when a return is e-filed.

Finally, note that while VITA and TCE volunteers strive to provide the best tax help they can, available return preparation services can vary at each site due to the availability of volunteers certified with the tax law expertise required to file your return.

Lots, but not total, tax help: Finally, realize that while VITA and TCE volunteers are a great help to millions of eligible taxpayers every filing season, they are not miracle workers.

They also focus on helping as many eligible taxpayers as possible. To that end, they typically help the larger pool of taxpayers who have more basic tax filing needs.

You can find more on the type of tax issues VITA and TCE will and won't tackle in IRS Publication 3676-B.

That's why VITA and TCE will not help prepare returns that involve:

• Schedule C sole proprietor returns with losses (sorry, gig workers and full-time freelancers)
• Complicated Schedule D filings, i.e., capital gains and losses (sorry, big-time investors)
• Form 8606, reporting of non-deductible IRA contributions
• Form 8615, minor's investment income, aka the kiddie tax (sorry, parents, this family-related tax matter doesn't make the free-help cut)
• A couple of Social Security matters, specifically Form SS-5, request for Social Security Number, and Form SS-8, determination of worker status for purposes of federal employment taxes and income tax withholding

Still, for most taxpayers, the VITA and TCE services should do a fine job of helping you take care of your tax filing obligation.

Plus, the price is right and the trained volunteers might even be able to find ways to save you a few tax dollars.

You also might find these items of interest:

• 14 million taxpayers paid to file instead of using Free File
• Special clinics help low-income taxpayers resolve IRS issues
• High school senior's volunteerism essay offers a valuable tax lesson

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