Presenter: Megan Sullivan Director, Legal Aid Society of Columbus msullivan@columbuslegalaid.org 614-737-0142
The Legal Aid Society of Columbus Nonprofit law firm providing civil legal help and pro bono programming for low-income clients in Central Ohio Goal to Pursue Justice and Change Lives Serving Franklin, Delaware, Madison, Marion, Morrow, and Union Counties 2
Services Provided Staff attorneys, offering a range of services including: Counsel and advice Brief service Extended representation Referrals Pro Bono Programming 3
Helping Our Clients • Domestic • Public Benefits • Housing • Consumer, Bankruptcy, Foreclosure • Tax • 4
Who Do We Help? Income guidelines Total household income must be at or below 200% of the federal poverty line (250% for tax) Asset Cutoff Citizenship guidelines Citizen or Lawful Permanent Resident Asylee or Refugee Domestic violence or human trafficking victims 5
Why tax? • Tax problems can influence – Whether we can buy or sell our home – Whether we can get certain jobs – especially in financial industry – Federal tax liens or state and local tax judgments can affect our credit scores – Withholding too much tax can make life expensive! 6
2019 Tax Changes • Shutdown – IRS says refunds will be issued on time – I say plan for refund delays • Tax Reform https://taxpayeradvocate.irs.gov/taxchanges – By topic OR line by line – IRS Publication 5307 https://www.irs.gov/pub/irs- pdf/p5307.pdf 7
A quick primer on tax credits • Child Tax Credit • Earned Income Tax Credit • Other Dependent Credit • Beware tiebreaker rules and filing status issues – No EITC for Married Filing Separate – Support requirement for Head of Household 8
Who can I claim on my return for the Child Tax Credit • Your child (aged 16 or younger with a valid SSN) who lives with you – OR your child who lives with their other parent IF the other parent releases the exemption to you on a Form 8332 – OR your child who a pre-2008 decree of divorce or custody gives you the absolute right to claim. • Child can be son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of these individuals, which includes your grandchild, niece or nephew • Age and SSN applies to all 9
Who can I claim on my return for the Earned Income Credit Relationship Age Residency Joint Return The child cannot file a joint At the end of the filing Your son, daughter, Child must live with you (or return for the tax year unless year, your child was adopted child 1 , stepchild, your spouse if you file a the child and the child's younger than you (or your foster child 2 or a joint return) in the United spouse did not have a spouse if you file a joint States 4 for more than half separate filing requirement descendent of any of them return) and younger than and filed the joint return only to such as your grandchild of the year 19 claim a refund. NO EXCEPTIONS! At the end of the filing Brother, sister, half brother, year, your child was • Except maybe a little half sister, step brother, younger than you (or your exception for temporary step sister or a descendant spouse if you file a joint absences. of any of them such as a return) younger than 24 niece or nephew and a full-time student At the end of the filing year, your child was any age and permanently and totally disabled 3 10
Who can I claim on my return for the Other Dependent Credit • Dependents who can’t be claimed for the Child Tax Credit may still qualify you for the Credit for Other Dependents. This is a non-refundable tax credit of up to $500 per qualifying person. The qualifying dependent must be a U.S. citizen, U.S. national, or U.S. resident alien. • If related to you in the ways required for the Child Tax credit must live with you for more than half of the year. • If not related to you must live with you for all 12 months of the year. • This is new for 2018. 11
Tax Health Checkup Filed required returns for last 6 years Filing local and school district tax returns Has received all expected refunds Is withholding from paystubs at optimal rates Knows how to check tax transcripts Has plans to pay taxes due Has plans for refunds Self-employed individual is tracking income and expenses and paying required estimated taxes Knows what to do if there is a tax problem 12
Filed Required Returns • Filing Requirements (p. 1) • Free Filing (p. 5) • Choosing a Tax Preparer (p. 7) • Check Your Own Transcript (p. 9) 13
Filing Requirements • 2018 Federal Filing Requirements Then you must file a return if your If your filing status is... And at the end of 2018 you were... gross income was at least... Under 65 $12,000 Single 65 or older $13,600 Under 65 (both spouses) $24,000 Married filing jointly 65 or older (one spouse) $25,300 65 or older (both spouses) $26,600 Married filing separately Any age $5 Under 65 $18,000 Head of household 65 or older $19,600 Under 65 $24,000 Qualifying widow(er) with dependent child 65 or older $25,300 Must file if you have $400 or more in self-employment income no matter what. 14
Free Filing Options • Call 211 (614-221-2255) for free filing of Federal and State returns • Tax Time Central Ohio • Free online filing: – http://www.unitedway.org/myfreetaxes; – www.IRS.gov/freefile • only free if linked from IRS.gov – https://selfserve.thebenefitbank.org/ • Up to $95,000 for Married Filing Joint returns 15
Choosing A Preparer • You are responsible for everything on your return. When you sign it, you are swearing to its accuracy. • Check your preparer’s qualifications. – Make sure they have a Preparer Tax Identification Number. – Ask about preparer’s education or training. • Check the preparer’s history with the Better Business Bureau, etc. • Ask about fees up front. Avoid return preparers who base the fee on the amount of the refund. Get a written statement of the fees. • Be careful when a preparer says they can get you a larger refund than other preparers. Remember, even if your preparer completes your tax return, you are still responsible for its accuracy. • Don’t let a preparer file your return if they won’t print you a copy to review. 16
Filing Local & School District Taxes • Ohio Tax Finder https://thefinder.tax.ohio.gov • Look up Tax District Summary to get Municipal and School District Tax Information 17
Has Received All Refunds • Where’s My Refund? – https://www.irs.gov/refunds • Refunds on tax returns claiming EITC and/ or Child Tax Credit will not be issued until the end of February • Could be applied to a prior tax year, a state tax debt past due child support or another federal debt (like school loan) – Ohio has a refund locator too • Tax Help – Failure to receive refund could be a sign of other tax problems. Refer to Legal Aid and see the Tax Help Document 18
Withholding Optimally • Overwithholding leads to big refunds but may leave too little income for monthly expenses. • Underwithholding can lead to tax debts at the end of the year. Chronic underwithholding can sway the IRS against working with taxpayer on a collection alternative. • https://www.irs.gov/individuals/irs- withholding-calculator - use whenever situation changes • IRS Publication 505 19
Check your own tax transcripts • Federal Tax Transcripts (p. 9) – https://www.irs.gov/individuals/get-transcript • Get Transcript by Mail – Need SSN or ITIN, date of birth and mailing address from latest tax return • Get Transcript Online – Need all of the above PLUS access to your email account, your personal account number from a credit card, mortgage, home equity loan or car loan AND a mobile phone with your name on the account • Ohio transcripts: https://www.tax.state.oh.us/IFILE/IFileRegWe b/login.jsp 20
What you learn from transcripts • Unfiled tax returns • Tax debts • Existence of Liens • ID theft or other issues with income being reported to IRS 21
Paying Taxes Due • IRS (p. 19) – Late payment = penalties and interest – Full pay within 60 days to avoid late filing penalty. – If you can’t pay right now: • Installment Agreement • Currently Not Collectible • Offer in Compromise • State and Local Tax Collection (p. 21) – Full pay generally within 6 months to avoid referral to debt collector – Judgment lien for Ohio taxes if not paid within 60 days – Debt collectors can work out payment plans – See the handout 22
Plans for Refunds (p. 23) • Based on individual needs and situations • Pay necessities first – Back rent and past-due utility bills • Pay down high-interest rate loans • Create emergency savings account • Invest in retirement plan • Prepay mortgage, car loan or insurance • Car or home repairs • Treat yourself • Other? 23
Self-Employed: Tracking Income and Expenses (p. 25) • If you are self-employed he only way to accurately report your taxable income is to track your income and expenses. • This can be as simple as a notebook and envelope for receipts or as advanced as a phone app. • https://prepareandprosper.org/customer- tax-tools/ 24
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