Tax Filing Tips and Tax Credits

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Tax Filing Tips and Tax Credits

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.


CONTENTS

Tip #1: Say "No" to money advances: rapid refunds, "Money Now" loans, and other "fast money" products.

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: Say "No" to tax scammers.


Tip #1: Say "No" to money advances: rapid refunds, "Money Now" loans, and other "fast money" products.

Many commercial tax preparers love to sell "rapid refunds." Don't bite!

These offers are really high-interest short-term loans with outrageously high interest rates - ranging from 40% to over 700% APR. Worse yet, with electronic filing, these offers don't deliver your refund that much faster. Typically, they will speed up your refund by only a week or two, depending on your situation.

Some tax preparers are switching to "prepaid" lines of credit. Again, be careful! Waiting a few days for your tax return can be a much better deal.

If you fall for these schemes, you are giving away a chunk of your refund to a money lender. Keep all of your hard-earned money and tax credits for yourself and your family. You deserve it! Say "No" to all forms of up-front tax refund and loan offers.

According to the Center for Responsible Lending, a 2008 study found that tax preparers and lenders stripped about $737 million in fees each year from the earned-income tax credits paid to working parents. If you don't want to be a part of this statistic, just say "No!"

Learn more about "rapid refund" loans from the Center for Responsible Lending video.

Tip #2: Get free tax filing help in your area.

Every year, more free tax prep resources become available.  This recent article on VA.gov highlights several free resources geared toward veterans and servicemembers.  Whether you'd like assistance or do it yourself, these are all reliable resources.  Also, many JAG and Military Legal Assistance offices help servicemembers for free.

Here are some additional resources offering free tax filing help to people with moderate to low incomes:

  • 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
    Call the VITA Site Locator at 1-800-906-9887

VITA and AARP Tax-Aide services have better error rates (make fewer mistakes) than many commercial tax preparers. Many sites offer free e-filing, some offer home visits, if needed, and some offer help in languages other than English.

The IRS also provides Taxpayer Assistance Centers in every state. 

Tip #3: File for free online.

Again, this 2014 va.gov article highlights free online software offered to veterans and servicemembers.

Or visit the IRS site for more links to free online filing options. Each provider sets its own eligibility rules for its free filing program, so it's worth exploring several sites to see if you qualify. (If you use one of these sites, be careful about pop-up ads and add-on fees. Remember: Just say "No!")

Note: Commercial tax preparers who are offering Free File through the IRS have agreed not to sell "rapid refund" loans. However, they may still charge you to file your state tax return. Many states offer free e-filing. Check your state's taxation department website.

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 2013, the maximum credit for a household with three or more children was $6,143. 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.

    Get an estimate of the amount you could get from the Earned Income Credit now! It's easy.
  • 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.

    In the 2008 tax year the scope of this credit expanded. An estimated 2.9 million more children were eligible. An estimated 10.1 million previously-eligible children received more.

    Watch a video with more information about the Child Tax Credit.
  • Child and Dependent Care Tax Credit
    This credit is offered by the IRS and by some states. It is worth only a portion of your total child care costs, and there are caps. State rules vary from state to state.
    More on Federal Child and Dependent Care Credit

    For a video with more information about the Child and Dependent Care Tax Credit, go here.
  • Educational Tax Credits (the American Opportunity Tax Credit)
    This educational credit can be worth as much as $2,500 for students who are in their first four years of college. The credit is for your tuition and educational materials expenses. You must meet certain income requirements. However, you may be eligible 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.
  • Making Work Pay Tax Credit
    Many workers got this credit in small amounts in their regular paychecks during 2009. Read more.

Tip # 5: Say "No" to tax scammers.

Did you receive an e-mail, letter 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 and free tax help for low-income people, or just want to know more about these topics, go to the Center for Budget and Policy Priorities page: National Tax Credit Outreach Campaign


More Resources from the IRS

1040 Central
IRS page for individuals, designed "to make the agency’s Web site an even easier-to-use source of information."

Armed Forces' Tax Guide
"Covers the special tax situations of active members of the U.S. Aremd Forces."

Free Tax Help Available
This IRS press release outlines free tax help programs offered by the IRS and others.

Choosing a Tax Return Preparer
IRS Tips for finding a reputable tax preparer, and avoiding the bad ones.

New Homeowner Energy Tax Credits
Help with energy-saving renovations and purchases.

December 2015