How to Claim and Keep the Tax Refund You’ve Earned
by Colleen Dailey
Do you think of the Internal Revenue Service as your friend? It’s more likely that the thought of filing your income tax return fills you with anxiety or dread. But would you be surprised to learn that each year, U.S. taxpayers fail to claim about $2 billion dollars income tax refunds they’ve earned? Some taxpayers simply don’t file a tax return, and others who do file make mistakes and don’t claim all the money that they are owed.
Could you or someone you know be missing out on a valuable income tax refund that can help you cover critical expenses during these tough economic times? If so, you should know that free tax assistance is available for income-eligible workers at convenient locations throughout the DC metro area. You can avoid costly tax preparation fees and take advantage of fast, free electronic tax filing, from late January through April 15, 2009.
How can filing my taxes help me?
The tax code is filled with provisions that exclude certain types of income and activities from taxation, which basically means a bigger paycheck for you. For example, the Earned Income Tax Credit (EITC) rewards work by giving low-wage workers refunds based on their annual income and household size. More than 46,000 DC workers claimed the credit in 2005, returning nearly $120 million to their households—with an average refund of more than $2,400! 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 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 still be eligible for a refund if you qualify for other credits or deductions, or because you had too much money taken out of your paychecks 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?
The DC Earned Income Tax Credit (DC EITC) Campaign operates sites throughout the metro area that offer free tax preparation and e-filing services. Individuals with incomes below $22,000 and households with total incomes below $42,000 can get free help completing and filing their tax forms at more than ten locations. Tax forms are prepared quickly and are filed electronically to ensure a quick turnaround time on refunds. Most tax sites are open from late January through April 15. A list of free tax site locations with hours of operation is available at www.dceitc.org or 1-877-SAVE-515 (phone line is live after Jnauary 1).
What’s the catch? How do you offer this great service for free?
The Campaign receives financial support from the District of Columbia government and several private foundations; operational support is provided by dozens of community partners and more than 600 volunteers who are trained annually to provide this service to the public. Our tax preparers are supervised by experienced tax professionals, and every return is reviewed for accuracy. If a taxpayer has a complicated return or a dispute with the IRS that needs to be resolved, we can connect them with other resources in the community. And, in addition to providing free tax services, we also connect filers to other valuable services, like free financial education classes, one-on-one budget and credit counseling, and special savings products and programs.
If you or someone you know is interested in volunteering with the Campaign to provide this valuable public service, learn more and sign up today at http://dceitc.org/volunteer.html.
What do I need to bring to the tax site?
It’s important that you bring complete documentation to the tax site. This includes a Social Security card for yourself and anyone else who is listed as a taxpayer or dependent on your return; a list of birth dates for everyone listed on the return; all W2s and official taxpayer documents that you received in the mail; and any receipts or other records to verify charitable contributions or expenses that qualify you for tax credits or deductions. Additionally, bring your checkbook or your bank routing number and account numbers to ensure a fast and secure refund.
I usually file the first week of January so I can get my refund fast. Why should I wait?
If you have all of your income documents for 2008 and have a service that you trust, there is no disadvantage to filing your returns with them, other than the additional cost. But no matter how you file your returns, be sure to steer clear of Refund Anticipation Loans, or RALs, which are a pricey and risky way to get money quickly. These loans are made against an anticipated tax refund. If the refund doesn’t come through as expected, then the taxpayer must repay the difference, plus the hefty interest rate (last year these rates ranged from 58% to 125%). 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 will also avoid extra check-cashing fees by direct depositing your refund.
