Tax Time Is Here! Some Helpful Tips for Members

The W-2 forms have been distributed and the clock is now ticking. There are less than 40 days remaining until the April 15 IRS filing deadline. The IRS has already announced that refunds will take longer this year due to budget cuts, so those who are expecting refunds should file earlier rather than later. To help members out with the always tedious task of filing tax returns, here are some useful tips.

For beginners, did you know that last year more than 2 million U.S. workers failed to file their tax returns even though they were due refunds? In fact, more than $2.6 billion in refund money from the 2013 tax year is still sitting in an Internal Revenue Service account. But it won’t be there for long. Under the law there is only a three-year reprieve for late filers to collect their refunds. More than three years after the filing deadline, the money becomes the government’s to keep. There are similar statistics for the tax years 2012 and 2011: millions of workers that failed to file tax returns and billions in unclaimed refunds!

Each year, many taxpayers fail to file a return because they don’t owe taxes. That’s not very smart because it means they won’t get any refunds they’re due. Remember, the IRS doesn’t send refunds until it gets a Form 1040 (or 1040A or 1040EZ). Other taxpayers had income tax withheld but didn’t have to file a return because they earned too little. But the only way they can get the withheld money back is to file a return. And, as we’ve explained many times before, there are many taxpayers who were eligible for the Earned Income Tax Credit (EITC) but didn’t claim it because they failed to file a return.

There is no penalty for late-filing in cases where refunds are due to taxpayers. If you think you may be entitled to some of the more than $7 billion in unclaimed refunds the IRS is holding, you can download a past Form 1040 from the IRS web site (www.irs.gov). If you need an old 1040A form or 1040EZ form instead, you can find them at the agency’s index of past-year forms. And be sure to check out the documents from the last three years if you didn’t file a return in those years. The IRS won’t send you your refund for a past year unless you filed in subsequent years as well!

Taxpayers who prefer the phone to a home computer to obtain forms can call toll-free 1-800-829-3676 to request them. You probably should ring up the IRS as soon as possible to allow ample time for processing and to make sure the forms get to you in time to meet the April 15 filing deadline. Once the forms are in hand, taxpayers who need help completing prior year returns or in gathering past income records may call the IRS help line, also toll-free, at 1-800-829-1040. You can also find forms at irs.gov or at local libraries and community centers.

This is also a good time to remind members about the Earned Income Tax Credit (EITC). It is a refundable credit that returns federal, state, and New York City tax dollars to qualifying families and individuals to help cover basic expenses. With an average payment that now exceeds $2,900 per year to qualifying New York households, the EITC helps hard-working families make ends meet. In order to claim the EITC, however, you must have earned income from employment, self-employment or another source, and you must meet certain rules, Most important of all is this: you must file a tax return to qualify for the EITC!

The maximum EITC credit depends on a number of factors, including filing status, the number of qualifying children, and income.

A good number of members who are full-time workers, especially those with children and those who are single parents, will qualify for the EITC. A higher percentage of members who are part-time workers will qualify for the EITC. So will many members who were laid off during the last year or who only worked seasonally. A higher percentage of members who are single parents will also qualify for the EITC, regardless of whether they worked full-time or part-time.

It is important to remember that the EITC is a credit, not a tax refund. What that means is that workers can qualify for the EITC even if they do not earn enough money to pay taxes!

Workers should also remember that the EITC is available retroactively for up to three years. This means that if you qualified for the EITC for the tax years 2011 and 2012 and did not claim it on your tax returns in 2013 and last year you are still entitled to the money—if you put a claim in for it on the tax return you file this year.

Do you qualify for the EITC? If so, how do you obtain it? The answer to both these questions can be found by making sure you file a tax return even if you don’t owe any taxes.

Remember, the only way you can claim EITC money or receive all the tax refund money that is due to you is by filing a tax return. More information on the Earned Income Tax Credit and the other issues discussed here can be obtained online by visiting: irs.gov

We should add that the Union Plus website (unionplus.org) has information on Turbo Tax discounts for union members.

If any of this is difficult to understand or appears to be confusing, keep in mind that there are many locations where taxpayers can get free or low-cost help in filing their taxes.

To find out if you qualify for free or low-cost tax preparation services New York City residents can call 311 or visit the website nyc.gov/consumers. The website also provides a list of all locations in the city that offer free or low-cost tax help. Furthermore, the website reviews the tax credits like EITC that may be available to you.

All members of our Union—regardless of whether you live in New York City—have access to free or low-cost assistance with tax preparation, if you qualify by income. The Volunteer Income Tax Assistance Program (VITA) offers free tax help to low and moderate-income workers who cannot prepare their own tax returns. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations. Most locations also offer free electronic filing. There is a toll-free phone number to help you locate the nearest VITA site: 1-800-906-9887. You can also find the VITA sites closest to your home or place of work by visiting the Internal Revenue Service’s website: http://IRS.gov

Other members may choose to use a professional tax preparation service like H & R Block, Jackson Hewitt, etc. While the professional services can cost $75 or more, studies have found that they often result in better refunds. But members who use these services should also beware of the Refund Anticipation Loans (commonly known as RALs) that are offered by these tax preparers. The interest rates on RALs are way too high to make these loans worthwhile. Remember, these are loans made with your own money. So why pay interest on them when you can expect the IRS refund in the next 60 days?

Regardless of whether you use a VITA site, a discounted tax preparation service or a professional tax service like H & R Block, the following tips will come in handy:

● Earlier is better when it comes to working on your taxes. Taxpayers are encouraged to get a head start on tax preparation, especially since early filers avoid the last minute rush and get their refunds sooner.

● Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don’t forget to save a copy for your files.

● Get the right forms. They’re available around the clock on this IRS Web site: http://IRS.gov

● Verify all Social Security numbers. Believe it or not, incorrect Social Security numbers are the most common errors found on tax returns! Taking care will reduce your chance of hearing from the IRS and speed up your refund.

Finally, here are two tips all taxpayers should know. The IRS maintains a website where hundreds of questions can be answered. The IRS website has extensive information about tax credits and tax deductions, and it has virtually every form anyone would need to file their taxes. And, yes, you can also see a list of free and discounted tax preparation sites at the IRS website as well. For more information, go to: http://IRS.gov

Taxpayers call also call the IRS customer service number for this kind of assistance: 1-800-829-1040, but service is much faster by going to the IRS’s website.