Tips for 2017: 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.
Notice, March 18, 2016 The IRS has announced that about 4,100 Mainers have unclaimed Federal Income Tax refunds from 2012. The average potential refund for these unfiled returns is $651.
If you haven't filed your 2012 Federal Income Tax Return, it's not too late! There are no late-filing fees for people getting refunds, and you have until April 19th to file your 2012 taxes. Visit the IRS announcement for more information about how to file your 2012 Federal Income Tax Return.
- Tip #1: Say "No" to hidden tax prep fees.
- 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 #5: File for an exemption to the health insurance "shared responsibility payment" if you qualify.
- Tip #6: Say "No" to tax scammers.
Tip #1: Say "No" to hidden fees.
Good news! Most commercial preparers have abandoned the predatory "Rapid Refund" business. Read this story, which includes tips on getting your refund fast - and for free.
But the bad news: Many of these for-profit tax preparers are making up for their losses by upping their fees and not telling you up-front what the fees will be. See: Tax Preparers Targeting Poor With High Fees (New York Times, April 2014).
Ask about the fees up front. And refuse to go any further if you think the fees are too high. Better yet: Take advantage of free tax prep from trained volunteers.
If you fall for tax prep fees, you are giving away a chunk of your refund. Keep all of your hard-earned money and tax credits for yourself and your family. You deserve it! Say "No" to all forms of tax prep fees. (Although people with higher incomes can afford and choose to pay a fee, people with low incomes need every dollar they earn. Do you think it's fair to pay a fee to get your hard-earned tax credits? Can you really afford to pay?)
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:
- AARP Tax-Aide
To find the site nearest you, use AARP's online search tool or call 1-888-687-2277
- VITA (Volunteer Income Tax Assistance) IRS-Sponsored Program
Go to the IRS website and use locator tool or call the IRS at 1-800-906-9887 (After reading the IRS' brief introduction, follow the "continue" link to reach the locator tool.)
VITA and AARP Tax-Aide services have better error rates (make fewer mistakes) than many commercial tax preparers. Many of these help sites offer free e-filing. Some offer home visits, if needed, and some - especially in Portland and Southern Maine - offer help in languages other than English.
Another way to find free help sites is though the Maine CA$H Coaltion. They offer both free tax assistance and help with building assets from the credits you've claimed. Go here to find a Coalition in your county. (If your county is not covered, use the AARP and VITA site links above.)
Another way to find a free tax filing center near you is to call 211, or use the 211 Maine website to search for free tax sites here.
Special events in Portland:
ASL Tax Day – Saturday, February 25; Time slots available 10:30 - 1:30
Only for deaf and hard of hearing individuals; Certified interpreters will be available
Appointments Only; For appointments and for more information, contact Michelle Ames at 766-7111 or firstname.lastname@example.org
In addition, the IRS provides Taxpayer Assistance Centers at a few locations. There are four in Maine: Augusta, Bangor, Presque Isle, and South Portland. NOTE: Due to budget cuts, these centers can no longer help you prepare your return. But they may be able to answer your questions.
Tip #3: File for free online.
The IRS partners with several commercial preparers who provide free online filing for low-income taxpayers. Go to IRS links to free online filing options. Each provider sets its own eligibility rules, so it's worth exploring the options before choosing an online tool. Also, be careful about pop-up ads and add-on fees. Remember: Just say "No!"
If you made under $64,000 in 2016, you can file your state and federal taxes for free online. Learn more about this option and file for free online.
NOTE: Some of the participating partners in the "Free File" alliance will not charge for your federal return but will charge for state forms. Don't bite! The State of Maine has a free on-line "I-file" program for state income tax returns.
Attention Non-residents: Check out the Tax Asssistance pages posted by the International Office of the University of Texas at Austin. According to the site, this Guide will help you to:
- Understand the filing instructions
- Prepare and print your own federal tax returns through an online tax program
- Answer general questions regarding non-resident taxes
Tip # 4: Claim all of the tax credits you qualify for.
These five 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 2016, the maximum credit for a household with three or more children is $6,269. 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.
Use this online estimator tool or the IRS's "EITC Assistant" to see if you qualify. It's easy.
Watch this video to learn more about the Earned Income Tax Credit.
- Child Tax Credit
This is a partially refundable credit worth up to $1,000 for each child up to age 17. You must earn at least $3,000 in taxable income to be eligible. Read more
IRS's Child Tax Credit Facts
- 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
Watch a video with more information about the Child and Dependent Care Tax Credit.
- Educational Tax Credits (the American Opportunity Tax Credit and the Maine Education Opportunity Tax Credit)
The American Opportunity Tax Credit can be worth as much as $2,500 each year for students who are in their first four years of college. The credit is for your tuition, educational materials, and some computer or internet expenses. See the IRS website for more information about what expenses qualify. You must meet certain income requirements. However, you may qualify for a partial refund of up to $1,000 even if you do not owe taxes. Immigrants who are residents may also claim this credit. For more information, see the IRS website.
If you have graduated, you may qualify for the Maine Educational Opportunity Tax Credit. You must live in Maine and have graduated from a Maine school. You must work in Maine. You may qualify even if you took classes outside Maine. The amount of the credit is a somewhat complex formula based on your loan payment amounts, up to a capped amount. Use the EOTC Estimator to see how much this credit may be for you. To learn more, see the Educational Opportunity Tax Credit FAQs.
Tip #5: Don't pay the health insurance "shared responsibility payment" if you qualify for an exemption.
Most people know by now that under "ObamaCare," you must pay a tax penalty if you didn't sign up for health coverage. Although this is the general rule, many people do not have to pay the penalty. This is especially true if you have a low income and could not afford coverage through the marketplace. There are many other exceptions, including economic "hardship," as defined by the law. Go here to learn more.
Tip # 6: Say "No" to tax scammers.
Did you receive a flier, e-mail or phone call from the IRS asking for your personal information? Watch out! That message is a scam. Learn more about how to spot a scam and how to protect yourself by watching this video from the IRS:
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 site: Get It Back: Tax Credits for People Who Work
More Resources from the IRS
Filing Your Taxes
IRS intro page with links to more commonly needed information
Free Tax Help Available
More about free tax help programs and what to bring with you to a help session.
Choosing a Tax Preparer
IRS Tips for finding a reputable tax preparer and avoiding the bad ones.
December 2015, partially updated January 2017