Stacie's Tax Stuff

IR-2014-10, Jan. 31, 2014 — As the Internal Revenue Service starts processing returns today, it joins partners nationwide in launching the Earned Income Tax Credit Awareness Day outreach campaign to ensure that millions of low-and moderate-income workers get the credit they deserve and get it right.

Local officials and community organizations across the country are holding news conferences and outreach events highlighting the benefits of this key work incentive for individuals and families who earned $51,567 or less last year. An estimated four out of five eligible workers and families get the credit, but millions miss it annually either because they don’t claim it when filing or don’t file a tax return at all.

“One-third of the population eligible for EITC changes each year as their personal circumstances change,” said IRS Commissioner John Koskinen. “We want workers who may qualify for EITC for the first time to have all the information they need to get the EITC and get it right.”

The EITC varies depending on income, family size and filing status. The IRS has upgraded the interactive EITC Assistant, at www.irs.gov/eitc, to better help taxpayers and tax preparers. People can answer a few questions about income, family size and filing status, among other things. The EITC Assistant will help determine eligibility and will figure an estimated EITC refund. You can even get a printout explaining why you do or do not qualify. Last year, over 27 million eligible workers and families received more than $63 billion total in EITC, with an average EITC amount of $2,300.

Workers, self-employed people and farmers who earned $51,567 or less last year could receive larger refunds if they qualify for the EITC. That could mean up to $487 in EITC for people without children, and a maximum credit of up to $6,044 for those with three or more qualifying children. Unlike most deductions and credits, the EITC is refundable. In other words, those eligible may get a refund from the IRS even if they owe no tax.

Get the Credit: How to Claim the EITC

To get the EITC, workers must file a tax return, even if they are not required to file, and specifically claim the credit. Free tax help is available. Those eligible for the EITC have free options:

• Free File on IRS.gov Free brand-name tax software walks people through a question and answer format to help them prepare their returns and claim every credit and deduction for which they are eligible.
• Free File using Free File Fillable Forms. This option, designed for taxpayers comfortable preparing their own returns, allows people to file electronically for free using online versions of IRS paper forms.
• Free tax preparation sites EITC-eligible workers can seek free tax preparation at thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites. Tolocate the nearest site, taxpayers can search www.IRS.gov or call the IRS at 800-906-9887.

The IRS reminds taxpayers that even though most refunds are issued in less than 21 days, many factors can affect how long it takes to issue a particular refund. Some returns require additional review, causing it to take longer to process any related refunds. Taxpayers can track the status of their refund with the “Where’s My Refund?” tool available on IRS.gov.

Get It Right: Avoid Errors

Taxpayers are responsible for the accuracy of their tax return regardless of who prepares it. The rules for EITC are complicated. The IRS urges taxpayers to seek help if they are unsure of their eligibility.

Some common EITC errors are:

• Claiming a child who does not meet the relationship, age or residency tests
• Filing as “single” or “head of household” when married
• Over or under reporting of income and or expenses to qualify for or maximize EITC
• Missing Social Security numbers or Social Security Number and last name mismatches for both taxpayers and the children

More than half of EITC claims are prepared by tax professionals and people should choose trustworthy assistance. To help ensure that only those eligible get the credit and that everyone who is eligible gets the right amount, the IRS requires paid preparers to file Form 8867, Paid Preparer’s Earned Income Credit Checklist, with any federal tax return claiming the EITC.

The IRS continues to look for ways to reduce these errors. Taxpayers should reply promptly to any letter from the IRS requesting additional information about EITC. If taxpayers need assistance or have questions, they should call the number included in the IRS letter.

Beware of Scams

EITC provides a financial boost for millions of hard-working Americans. However, a deliberate error can have lasting impact on future eligibility to claim EITC. Beware of scams that claim to increase the EITC refund. Scams that create fictitious qualifying children or inflate income levels to get the maximum EITC could leave taxpayers with a penalty. If an EITC claim was reduced or denied after tax year 1996 for any reason other than a mathematical or clerical error, taxpayers must file Form 8862, Information To Claim Earned Income Credit After Disallowance, with their next return to claim the credit.

More information on EITC and detailed eligibility rules are available at www.irs.gov/eitc. IRS partners should also visit EITC Central at www.eitc.irs.gov for helpful resources.

Follow the IRS on New Media

Subscribe to IRS Newswire

Do It Yourself Free Tax Preparation:  English | Spanish | ASL
When Will I Get My Refund?:  English | Spanish |ASL
IRS Social Media:  English

Podcast: Do It Yourself Free Tax Preparation

IR-2014-9, Jan. 31, 2014

WASHINGTON — The Internal Revenue Service today opened the 2014 filing season by highlighting a growing array of online services and encouraging taxpayers to check out a variety of tax benefits, such as the often-overlooked Earned Income Tax Credit.

Taxpayers have until Tuesday, April 15, 2014, to file their 2013 tax returns and pay any tax due. The IRS expects to receive more than 148 million individual tax returns this year, and more than four out of five returns are now filed electronically.

About three out of four filers typically get refunds, and the IRS issues more than nine in ten of these refunds in less than 21 days. Last year, taxpayers received an average refund of $2,755. E-file, when combined with direct deposit, is the fastest way to get a refund. More than three out of four refund recipients now choose direct deposit.

“Tens of millions of people will file their taxes in the next few weeks, and we encourage taxpayers to visit IRS.gov as the best place to get quick help,” said IRS Commissioner John Koskinen. “We continue to add features and make it more user-friendly to help taxpayers. People can get everything from answers to tax questions about preparing their tax return to checking the status of their refund after they file.”

The IRS began accepting and processing individual tax returns today after updating tax forms and completing programming and testing of its systems. The IRS also has updated and strengthened its systems to help protect against refund fraud and identity theft. This annual updating process saw delays in October following the 16-day federal government closure.

EITC Awareness Day Highlighted

Today also marks the annual Earned Income Tax Credit Awareness Day. Koskinen and other IRS officials are joining local leaders and community organizations across the country at news conferences and outreach events highlighting the benefits of EITC, which helps working families with low and moderate incomes. Koskinen attended an EITC event today at Baltimore CASH with a variety of local, state and federal officials.

Although an estimated four out of five eligible workers and families get this key work incentive, one in five miss out on EITC. That’s because either they don’t claim it when filing or they don’t file a tax return at all because their income is below the filing threshold. One-third of the population eligible for EITC shifts each year as their personal circumstances, such as work status or family situation, change and can affect eligibility. “We urge people to look into EITC. Many people don’t realize they are eligible and simply overlook this credit,” Koskinen said. “There are easy ways to find out more about this credit, either by visiting IRS.gov, or using Free File or a software package. The IRS is working hard to educate people about EITC while also putting in place processes that identify and prevent improper payments.”

Online Tools at IRS.gov Available to Help

Aimed at individuals and families who made $51,567 or less last year, the EITC varies by income, family size and filing status. People can see if they qualify by visiting IRS.gov and answering a few questions using the EITC Assistant, a special online tool. Eligible taxpayers can also use another helpful online resource, the VITA Site Locator tool to locate one of nearly 13,000 community-based volunteer tax sites consisting of over 90,000 volunteers that can help them file their return for free.

The EITC Assistant and VITA Site Locator are just two of a growing array of online and automated IRS services that can help taxpayers get the information they need to file their returns and get their refunds quickly.

Tele-Tax, for example, helps taxpayers see if they qualify for various tax benefits, such as the Child Tax Credit and Additional Child Tax Credit for eligible families, the American Opportunity Tax Credit for parents and college students, the saver’s credit for low-and moderate-income workers saving for retirement and energy credits for homeowners making qualifying energy-saving home improvements. The automated IRS services can also help home-based businesses check out the new simplified option for claiming the home office deduction, a straightforward computation that allows eligible taxpayers to claim $5 per square foot, up to a maximum of $1,500, instead of filling out a 43-line form (Form 8829) with often complex calculations.

When taxpayers are ready to fill out and file their returns, another online option, available exclusively on IRS.gov, enables anyone to e-file their returns for free. Free File offers two free electronic filing options: brand-name tax software or online Fillable Forms. Taxpayers who make $58,000 or less can choose free options from 14 commercial software providers. There’s no income limit for the second option, Free File Fillable Forms, the electronic version of IRS paper forms, which is best suited to people who are comfortable preparing their own tax return.

Even after taxpayers file, there are more online tools that can provide them with valuable assistance long after tax season ends. One of the most popular is Where’s My Refund?, a tool available on IRS.gov that enables taxpayers to track the status of their refund. Initial information will normally be available within 24 hours after the IRS receives the taxpayer’s e-filed return or four weeks after the taxpayer mails a paper return to the IRS. The system updates every 24 hours, usually overnight, so there’s no need to check more often.

For taxpayers whose concern isn’t a refund, but rather, a tax bill they can’t pay, the Online Payment Agreement tool can help them determine whether they qualify for an installment agreement with the IRS. And those whose tax obligation is even more serious, the Offer in Compromise Pre-Qualifiercan help them determine if they qualify for an offer in compromise, an agreement with the IRS that settles their tax liability for less than the full amount owed.

Another useful year-round tool, the IRS Withholding Calculator, helps employees make sure the amount of income tax taken out of their pay is neither too high nor too low. This tool can be particularly useful to taxpayers who, after filling out their tax returns, find that the refund or balance due was higher than expected.

Tax Help Through YouTube, Twitter, Tumblr

The IRS also offers more than 100 short instructional videos, tax tips and other useful resources year-round through a variety of social media platforms. They include:

• YouTube, available in English, Spanish and American Sign Language.
• Several twitter feeds in English and Spanish at @IRSnews, @IRSenEspanol and @IRStaxpros.
• Tumblr at www.internalrevenueservice.tumblr.com.

The IRS only uses social media tools to share information with the public, not to answer personal tax or account questions. And the IRS reminds taxpayers to never post confidential information, such as a Social Security number, on social media sites.

Follow the IRS on New Media

Subscribe to IRS Newswire