By Meg Newman and Adam Perry
Did you know that US taxpayers leave $2 billion dollars in tax benefits unclaimed each year? Does some of this money belong to you or someone you know? Free tax assistance is available for income-eligible workers at convenient locations throughout the District. Avoid costly preparer fees and take advantage of fast, free electronic tax filing, beginning late January.
How can filing my taxes help me?
The Earned Income Tax Credit (EITC) is a unique tax credit for people who work. According to a recent study by the Center on Budget and Policy Priorities, approximately 46,300 working families and individuals in the District of Columbia claimed the credit in 2005—returning nearly $120 million to DC residents, with an average refund of over $2,400 per household. Yet one of every five or six people who qualifies for the EITC doesn’t claim it—either because they don’t know about it or can’t or don’t file their tax returns—potentially losing out on thousands of dollars that they may be owed.
Even if you do not qualify for the EITC, you might receive a refund because of another credit or deduction, or because you had too much money taken out of each paycheck during the year. Many people who aren’t required to file should file to get a refund. The only way to know for sure if you are one of these people is to complete your tax forms.
Where can I get free tax help?
Throughout the filing season, the DC Earned Income Tax Credit (DC EITC) Campaign operates sites across the region that offer free tax preparation and other services. Individuals with incomes below $22,000 and households with total incomes of below $45,000 can go to a free tax site to get help completing their tax forms. Your return will be prepared quickly and filed electronically to expedite your return check. It will also be reviewed several times to ensure accuracy prior to transmittal. An interactive map and full list of these tax sites is available at dceitc.org.
What’s the catch? How do you offer this great service for free?
The campaign is able to operate thanks to more than 600 community volunteers who receive extensive training to provide this service to the public. They are overseen by tax professionals well-versed in tax benefits for low-income filers, and when there is a particularly complex return, the campaign can link taxpayers to additional resources in the community. If you or someone you know is interested in registering with the campaign as a volunteer and participating in training, sign up today at dceitc.org.
Do tax sites offer other financial services?
All the DC EITC Campaign’s neighborhood tax sites will offer information about asset-building resources in addition to tax filing. Filers will be able to sign up for DC Saves (dcsaves.org), a free financial resource that includes access to free financial planning sessions, low- or no-fee savings accounts, credit counseling, money management courses and more. Some sites will also allow customers to enroll in no-fee bank accounts directly on-site. Others will offer free credit counseling services, unique savings opportunities, and information about benefits that can increase families’ economic security. The campaign also regularly holds “Super Saturday” events with extensive financial services. Mark your calendar now for the DC Saves Financial Fair at THEARC, 1901 Mississippi Avenue, SE, on April 4, 2009.
I’m ready for my refund check now! Why shouldn’t I get my taxes filed early through a paid preparer?
Refund Anticipation Loans, or RALs, are a pricey and dangerous way to get money quickly. These loans are made against an anticipated tax refund. If the refund doesn’t come through as expected or is garnished, then the taxpayer must repay the difference, plus the hefty interest rate (last year these rates ranged from 58 percent to 125 percent). Pay stub and holiday RALs are especially risky because there is an increased chance of miscalculating the refund. Using a December pay stub alone, the preparer has no way of knowing what other income may affect the tax return—income, for example, from unemployment insurance, or another short-term job. Don’t get caught in this trap! Filing your taxes electronically and using direct deposit can get your refund back to you within 7-10 days of filing—and you can avoid extra check-cashing fees and even direct deposit your refund in up to three different accounts.
This financial feature is presented by the Capital Area Asset Builders. Visit caab.org for information on its financial education and savings programs. For more information about free tax filing options and tips on how to choose a paid preparer wisely, visit dcsaves.org.
Meg Newman and Adam Perry are the campaign coordinator and volunteer coordinator for the DC Earned Income Tax Credit Campaign. For more information, visit dceitc.org
DISCLAIMER: The information and views presented in this column are those of the authors and do not reflect the views of DISB.