Tax Tips for Maximum Refunds
Photo: DonkeyHotey via Flickr.com
By Mike Thompson,
If you are low- or low-middle income, or if you know of family and friends in this boat, there are several steps to attain the best results when submitting tax returns.
(1) Bear in mind your wages may be as high as $40,000 if a child is in your home, or as high as the $50,000 range if your household includes several, to qualify for the benefits of the Earned Income Tax Credit (ETIC) or the Child Tax Credit.
(2) "Children" can be as old as 18 as of last Dec. 31, or 24 if they are full-time students. Foster children or children in a grandparent's care can be counted too.
(3) Free-of-charge tax preparation often is available through VITA, Volunteer Income Tax Assistance. Inquire at your local United Way office, community action agency or public library.
(4) Be aware that there is no such thing as a rapid refund. The IRS cuts checks in the order in which tax forms are received. Many tax preparers (including some car dealers and rent-to-own shops striving to make a sale) offer "rapid refunds," but they actually are loans for which they assess sky-high fees, similar to payday loans. Your refund is collateral. So if you accept this option you may be paying the equivalent of a triple-digit annual interest rate, just to get your money a couple weeks ahead of time.
The EITC is very important, often worth thousands of dollars for a household. The tax credit was conceived and signed by, of all people, President Richard Nixon, as a method to include an anti-poverty work incentive, rather than simply doling out welfare grants. Presidents Bill Clinton and Barack Obama both expanded the EITC, and Michigan is among 24 states that also have their own versions, although much more modest than the federal credit.
Last year, reports the Center for Budget and Policy Priorities (eitcoutreach.com), 27 million families benefited from the EITC. Sadly, believe it or not, another 9 million qualified but failed to make the claim, for one reason or another. This begs the question of why the IRS makes things so complicated, but at any rate, this is why the center conducts national educational outreach.
The high levels of qualifying income may surprise some folks:
* Up to $13,980 for a childless individual, or $19,190 for a childless couple.
* For a home with one child, up to $36,920 for a single parent and $42,130 for a married couple.
* For a home with two children, up to $41,952 for a single parent and $47,162 for a couple.
* For a home with three children, up to $45,060 for a single parent and $50,270 for a couple.
On a political note, readers may recall Mitt Romney's sad assertion during last year's campaign that "47 percent" of Americans pay no federal income taxes and thus feel entitled to freebies from the government. The EITC is a main reason for the 47 percent figure, but of course these filers pay many other sources of taxes, including payroll deductions for Medicare and Social Security.
Furthermore, the Center for Budget and Policy Priorities notes that a mere 9 percent of federal entitlement spending, in contrast to Romney's laments regarding freeloaders, goes to unemployed adults. Other shares include 53 percent for senior citizens, 20 percent for people with disabilities and 18 percent for working adults.
When visiting a tax preparer, the following paperwork is desired:
* Photo ID.
* Social Security card, for self and appropriate dependents.
* Dependent birthdates.
* W-2, Social Security and 1099 income statements.
* Last year's tax returns (the prior two years of you feel you missed deductions in the past; recovery still is possible).
* Proof of payment of property taxes or rent.
* For tenants, landlord's name and address.
* Proof of payment for child day care, and provider's tax identification number.
* Department of Human Services statement, if appropriate.
* Divorce and alimony documents, if appropriate.
*Bank account and routing numbers.
(Final note: If you annually are receiving a large EITC, and if you would prefer larger regular take-home paychecks throughout the full year, consider asking your employer for a W-5 form, Earned Income Credit Advance Deposit Certificate. Less money will be withheld. For instance, if your EITC is $2,600 and you get paid weekly you can take home an added $50 with each paycheck (divide your own refund by 52). Biweekly, it’s $100 (divide your own refund by 26). Of course, this means you no longer can count on such a large lump sum tax return check at the start of next year. It's a tradeoff; your choice. If you work multiple part-time jobs, take caution in exercising the W-5 option so as not to under-withhold. Don't be shy about asking an employer because it makes no financial difference to them one way or another; in fact, they are legally required to provide and process the W-5.)
A Message from Adoptee
by Marina Lumsden, Yahoo Contributor
I was adopted from Colombia when I was 5 months old, and I can honestly say that at that moment I became blessed. My parents provided me with the unconditional love, guidance, structure, and support that a child needs. I am forever grateful to them. Being adopted does not mean that you were unwanted; it means that you are so special that you were chosen.
Please take a moment and check out MN ADOPT, It is an amazing program sponsored by the Department of Human Services through the Minnesota Adoption Resource Network (MARN), a 501(C)3 nonprofit organization. MN ADOPT is dedicated to supporting and sustaining the families who adopt Minnesota Waiting Children by providing a wide-range of services.
About the Author
Marina Lumsden is a full-time mother of a 18-month-old son and works for the state of Minnesota as a Guardian Ad Litem. She is very passionate about researching Children's
Social Issues and discovering the most up-to-date news and information regarding this matter. She has published as a Yahoo Contributor and as a Minneapolis Parent and Education Examiner at Examiner.com.
by Marina Lumsden, Yahoo Contributor
Minnesota’s children are our children, and for this reason alone we must not ignore the horrifying statistics and numbers that don’t even begin to dive into the cold, hard, and straight facts of child abuse and neglect right here in our state.
According to the Minnesota Department of Human Services mn.gov/dhs , April 2010, 4,742 Minnesota Children were CONFIRMED as neglected or abused in 2009. Of these 4,742 children, 70% suffered from neglect, 44 children suffered life threatening injuries and 21 children died from maltreatment.
• Median age for victims was six years old
• White Children accounted for 51 percent of maltreatment victims; African American children, 23 percent; American Indian children, 10 percent, Asian and Pacific Islander children, about one percent. Children who identified with two or more races accounted for 13 percent. Approximately two percent of the remaining cases, racial background was missing or unknown; 11 percent indicated Hispanic ethnicity.
• 76 percent of all alleged offenders were victims’ birth parents. Some children were victims of more than one offender.
• 20 percent of all those maltreated were physically abused.
• 16 percent of all victims suffered sexual abuse.
• One percent of all victims suffered medical neglect.
• One percent of all victims suffered from emotional or mental abuse.
Help prevent child abuse and neglect
Although not every Minnesotan is by law a mandated reporter, Minnesotans are greatly encouraged to report suspected child abuse and neglect to their county social service agency or law enforcement agency, and help in the following ways:
• Host neighborhood/community conversations and small get-togethers about how to strengthen and support families
• Reach out and connect parents to local resources, including parenting education programs, mental health/chemical health counseling, childcare, or financial assistance
• Provide support to your stressed, overworked, tired neighborhood parents by baby-sitting, inviting their children over to play, helping the youth with homework or volunteer to help out at school functions
• Join, or start, a local child abuse prevention council
About the Author
Marina Lumsden is a full-time mother of a 18-month-old son and works for the state of Minnesota as a Guardian Ad Litem. She is very passionate about researching Children's Social Issues and discovering the most up-to-date news and information regarding this matter. She has published as a Yahoo Contributor and as a Minneapolis Parent and Education Examiner at Examiner.com.
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